Technology Strategy

What is meant by strategy?

It involves envisioning and planning for the
future
A strategy entails
Defining goals
Deciding the way to reach these goals
Setting action plans to execute specific tasks, and
Following up on accomplishments to ensure that
objectives have been met
 Some visions
3M Be innovative and satisfy our customers
Microsoft Information at your fingertips
GE To be number one or two in every
business
Oracle Enabling the information age
Methods used in strategic analysis
Product evaluation matrix used by 3M

Business Competitive Position

No Yes
New Consider acquiring Most promising
Product new to marketing expertise
the world Known Least promising Should fit one of the
Inventors encourage to go existing divisions
outside 3M
Methods used in strategic analysis

Quality
Low High

Low May be Acquire

Price
High Avoid Maybe
 Methods used in strategic analysis
Market Dominance
Low High
Market growth High Problem children Stars
Low Dogs Cash cows

Portfolio Strategy
classification
Stars Continue the product development effort
Focus on core competencies
Continue market development and market penetration
Consider vertical integration or product diversification to
reduce risks
Cash cows Consider diversifying into higher growth areas
Pursue joint ventures
Utilize market segmentation strategies and pursue defensive
R&D to keep their products competitive
Methods used in strategic analysis

Problem children Evaluate marketing strategies

Liquidation can be considered to reduce losses
Joint venture can be pursued
Dogs The companies have weak technology and compete in slow
growth industries
Retrenchment strategies might be pursued
Reengineering of the company can be pursued
Liquidation of operation should be also considered
Require Innovation to save the company
Methods used in strategic analysis

A mx n matrix can be utilized to aid in decision making when decision criteria have
multiple levels

Marketing High Medium Low

competence

Technical
competence
High Star Success Doubt
cutting edge
Medium Success Doubt Failure
state of the art
Low Doubt Failure Disaster
obsolete
 Technology Evaluation for adoption
decision
Phase
Phase 1: Identifying the technologies and
the attributes (the criteria for selection)
Phase 2: Rating the technology according
to specific attribute
Phase 3: Rating the importance of each
attribute
Phase 4: constructing the decision matrix
Actions
Identify all the possible technologies that
are capable of solving a problem. List all
the attributes , positive and negative,
associated with each technology
Rate each technology based on the
attribute list identified in Phase I
Evaluate the importance of each attribute
with the application being considered
Attribute Name of Device 1 Device 2 Device 3 Device 4 Device 5
ranking attribute
2 1 5
10
0 2
1 3
2 4
Total
 Voice Mag. Slot Wand OCR hand laser
held
5 Price of
reader
4 Substituti
on error
rate
1 Price of
media
2. Life of
media
 SWOT matrix
Strengths (S) Weaknesses (W)
List strengths List Weaknesses
Opportunities (O) SO Strategies WO Strategies
List Opportunities
Use strengths to take Over come weaknesses by
advantage of opportunities taking advantage of
opportunities

Threats (T) ST strategies WT strategies

List threats Used strengths to avoid Minimize weaknesses and

threats avoid threats
 Strengths (S) Weaknesses (W)
1. Current ratio increased to 2.52 1. Legal suits not resolved
2. Profit margin increased to 6.94 2. Plant capacity has
3. Employee morale is high falling to 74%
4. New computer information
3. Lack of strategic
system
5. Market share has increased to management system
24%
Opportunities (O) SO Strategies WO Strategies
1. Western European
unification 1. Acquire food company in 1. Form a joint venture to
2. Rising health Europe (S1, S5, O1) distribute soup in
conscious
2. Build a plant in Mexico (S2, Europe (W3, O1)
3. Free market
economies S5, O5) 2. Develop new
4. Demand for soups 3. Develop new healthy soup pepperidge farm
increasing my 10% (S3, O2) products (W1, O1, O4)
annually 4. Form a joint venture to
5. US/Mexico NAFTA distribute in Asia (S1, S5, O3)
Threats (T) ST strategies WT strategies

List threats Used strengths to avoid threats Minimize weaknesses and avoid
threats
 Technology Strategy: Definition

Technology strategy is the revealed pattern in

the technology choices of firms.
The choices involve the commitment of
resources for the appropriation, maintenance,
deployment, and abandonment of
technological capabilities
 Technology Strategy
Technology strategy focuses on the kinds of
technologies that a firm selects for acquisition,
development, deployment or divestment.
Commitments surrounding technology selection
define technology strategies.
Technology strategies are not confined to high-
technology industries.
Technology strategies embrace both the
hardware and software elements of a technology.
 Business strategy Technology Strategy
Create Change the Support
fundamentally rules of rivalry existing
new business business
Appropriation Technological
capabilities
Resource Deployment in Product
Commitments products Platform
Deployment in Process
value chains platform
 The key principles underlying
technology strategy
Drivers
Environment
Technology opportunity
Appropriability
Firm
Technology development
Technology deployment
Decision criteria
Focus
 Drivers
Does the environment offers sites for value
creation?
If such profitable sites dont currently exist,
can they be created?
Is the firm well positioned to exploit the sites?
 Environment
Technological opportunity: Lies at the
juncture of technical feasibility and
requirements of the market place
Appropriability: Availability of patents,
regulatory entry barriers, lead time in
technology development, resource
requirements in development may enhance
appropriability
 Firm
Technology Development : Leads to three
outcomes: create new competitive domains,
alterations in the patterns of rivalry and
support for firms strategies
Technology deployment: Technology has to be
deployed in the product or in the value chain.
The firms should have relevant collateral
assets to exploit the deployment
Decision criteria
 TS Types
Technology leadership strategy
Niche strategy
Follower strategy
Technology Rationalization
 TS types
SCOPE

Full Selective

Leadership Full line technology leaders Niche Players

LEADERSHIP

Technology followers Technology Rationalizer

Followership
 Appropriateness of TS types
Technology Leadership strategy Applicable for firms that have strong
technological and market position.
Niche strategy Useful for technologically strong but
competitively moderate positions
Technology Follower Strategy Requires strong competitive position
although firm may lack technological
superiority
Technology Rationalization Useful for competitively weak firms
 Era of technology Emergence
Competitive position
Strong Medium Weak
Technology Strong Leader Leader Follower
position Medium Leader Follower Acquisition
Niche
Weak Niche Joint venture rationalization
 Late stages of incremental change
Competitive position
Strong Medium Weak
Technology Strong Leader Follower Acquisition
position Medium Niche Follower Rationalization
Rationalization
Weak Joint venture Rationalization Divestment
Framework for technology strategy
Strategic diagnosis
Technology inventory and requirements Firms competitive positions

Formulation of Technology Strategy

Appropriation of technology Deployment in products and/or process

Crafting an implementation approach

Mode of implementation Organizational strategy, IPR strategy

Execution
 Appropriate form of collaborative
arrangements
Technology
Existing New but familiar New and un
familiar
New and Joint venture Venture capital Venture capital
unfamiliar Venture nurturing Venture nurturing
Educational Educational
acquisition acquisition
New but Internal market Internal venture Venture capital
Market familiar development Acquisition Venture nurturing
Acquisition Licensing Educational
acquisition
Existing Internal Internal product new style joint
development (or development venture
acquisition) Acquisition
Licensing
 Collaborative arrangements
Involve two or more firms
Partners learn and acquire from each other
the technologies, products, skills and
knowledge that are otherwise not available
 New trends in collaborative
arrangements
R&D alliances
Marketing alliances
Outsourcing arrangements and
Collaboration between small and large firms

Sharing of resources
Pooling of risks
Leveraging each others
capabilities
Small firms
Small-large firms To build new technology
collaboration Build company resources
Access to expert user
Open new markets
Product development
Gain major overseas principal
Extend range of company and increase
distribution network

Collaboration may be
STRATEGIC or
OPERATIONAL
 STRATEGIC
1. Controlling the evaluation of competitive
domains
Dominant design
Establishment of standards
Cooperative research to compete with other firms
in the technology development
Obtain favorable treatment from the government
 2. Knowledge acquisition and transfer
P&Gs diversification in to the biotechnology was
implemented through a series of acquisitions
3M routinely invests in small firms to gain
technology in the form of products and process
3. Links to environment
Firms encourage to maintain links to people and
information
Senior science personnel will be members of
advisory committee
 Operational
Competitive benchmarking is used to
improve their current operations
Operating efficiencies outsourcing
Time to market
Capturing value from technology development
 Collaborative arrangements in
domains of technology strategy
Collaborative arrangements can be made in
Four domains of technology strategy
1. Appropriation of technological capability
2. Deployment in new products
3. Deployment in the value chain
4. Deployment in marketing of technology
 1. Appropriation of technology
A. Collective research
Research ranges from fundamental research to testing and
measuring with many associations engaging in more than
one activity
Uses collective facilities of the members, own-in-house-
sites, non-profit institutes etc
A strong relationships exists between the universities and
collective research organizations and government facilities

B. Strategic alliances
Firms undertake joint endeavors with other firms for
appropriation, deployment and marketing of technologies
Benefits are strictly proprietory
 1. A. Collective research organisations
Trade/ Industry University Company Research
associations associations based centers funded corporations
foundations research
institutes
Objective Non Competitive Competitive Noncompetitiv Competitive
competitive research research e research research
research
Focus of Technical and Research Mission based Technical Technical
activity nontechnical programs advance,
activity research
related to
public welfare
Facilities Mostly owned University- University- Owned Owned
based or based
owned
Funding by Member Member Industry Member Group of
companies companies support companies companies
Proprietary Mostly non Mostly non Mostly non non Prop and non
proprietary proprietary proprietary proprietary proprietary
 1. B. Strategic alliances
Corporate venturing relationship between a
small and large company. A mechanism for
technology flow.
Joint technology development: Two or three
firms come together for a limited period of time
to conduct research projects. Partners can bring
technology, marketing, management or operating
expertise
Outsourcing: firms contracts out some activity in
technology appropriation
 2. Deployment of technology in new
products
Speeding the time to market and creating
potential for new products through
technology integration are propelling the firms
to undertake joint activities
Inward technology Licensing (ITL) : refers to
contractual arrangement. Obtained through
patents, trademarks, manufacturing,
marketing and technical expertise)
 ITL advantages and disadvantages
The investment in ITL is lesser than the
developing a new product
Faster method of acquiring and upgrading
internal capabilities
Relatively lower degree of control over
technology
Lengthy transactional cost and negotiations
 3. Deployment of technology in the
value chain
Logistic alliances : to minimize storage
operating costs and distribution costs
Information partners
Joint Marketing partnerships
Inter-Industry partnerships
Customer-supplier partnerships
IT vendor driven partnership
Outsourcing
 4. Marketing of technology
Firms that have technology capabilities
partner with firms that need the requisite
technology for mutual benefit
 Corporate Technology Outsourcing Marketing of
venturing appropriation technology
Objectives Enabler of Joint Building Appropriating
technology development relationships to value from
strategy of products perform key technology
and processes activities developed in-
house
Typical Financial Joint venture, Manufacturing Licensing
arrangements participation, Joint R&D capacity consulting
equity utilization services
purchase,
acquisition
Type of Long-term
arrangement exclusive