MGT 563 OPERATIONS STRATEGIES

1. MGT 563OPERATIONS STRATEGIES Dr. Aneel SALMAN Department of Management Sciences COMSATS Institute of Information Technology, Islamabad

2. Recap Lecture 21 • Why are strategy and organizational learning important and linked? • What is organizational design and how is it linked to strategy? • How does technology influence organizational design? • How does the environment influence organizational design?

3. Technology Strategy & Development

4. What is technology strategy ? According to Oxford English Dictionary --- the word ‘Strategy’ means: A plan designed to achieve a long-term aim The planning and directing of military activity in a war or battle. According to Mintzberg and Quinn, a strategy is the pattern or plan that integrates a nation’s or organization’s major goals, policies and action sequences into a chosen whole.

5. What is technology strategy ? • A strategy serves to allocate a nation’s or organization’s resources into a unique and viable posture which is based on its strengths and weaknesses, and anticipated changes in the environment. • Technology Strategy is the way or plan of attaining technological goals and technological changes. • Technology strategies are formulated at the national level and at the enterprise level.

6. Technology Strategy at National level At national level, two types of strategy options are usually explored i.e internalisation oriented strategy & externalisation oriented startegy. A nation may adopt any of the two technology strategy or suitable combination of both. Internalization Oriented Strategy This strategy aims at seeking technological development with an objective to become internally self reliant. This strategy aims at seeking technology transfer by TNCs / MNCs via Foreign Direct Investment (FDI). The strategy seeks proactive role in attracting TNCs / MNCs and focusses on ensuring a stable macro-economic environment & good supportive infrastructure.

7. Technology Strategy at National level Externalization Oriented Strategy This strategy aims at seeking technological development with an objective to tap external market. Under this strategy, there is restricted role for FDI. This strategy seeks to foster / encourage indigenous technology development i.e developing domestic technology capabilities in general or in selected strategic industries. Some examples of this type of strategy are : Minority joint ventures (with minor share to foreign collaborator), Technolgical assitance to domestic firms, Encouraging import of capital Goods

8. Technology Strategy at Enterprise level According to Bentz, Martino & Mintzberg Technological Strategy at enterprise level means --- “A formal set of enterprise intentions that allocates available resources and sets priorties based on clearly stated technological and enterprise objectives and a perceived environment in which the process is to be embedded.

9. Technology Strategy at Enterprise level According to Porter- following three factors influence enterprise’s Technology Strategy : Sustainability of technological lead : Technological leadership can be sustained only if competitors cannot copy it. First mover advantages : Enterprise gets many advantages like increased reputation, pre-empting competition, early profits, new sales etc,

10. Technology Strategy at Enterprise level First mover disadvantages – Certain disadvantages and risks can adversly affect the first mover like cost of regulatory approvals, cost of educating buyers, demand uncertainity, low cost imitation by competitors, risk of technological discontinuities of existing technology / products / processes

11. Technology Strategy at Enterprise level Based on factor analysis, an enterprise may adopt any of following technology strategies. Technology Leadership Strategy – Under this strategy, a firm seeks to be the first to introduce technological changes / innovations. Technology Followership Strategy – A conscious & active strategy, by which a firm chooses not to be first oninnovations.

12. What is Technology Development / Generation ? Generation of technology is the process by which technology is generated / developed by various entities. In communist or socialist countries, the technology is mainly generated by government owned research institutions, universities and other bodies with a very lesser contribution coming from private sector. In capitalist countries, the technology is mainly developed by private sector and there is some contribution from government agencies as well. In countries with mixed economic system, both government and private setor play a significant role in technology generation .

13. Technology Development / Generation

14. Technology Development / Generation The government technology policy framework directly influences technology generation in a nation. Thereafter, technology genaration depends upon the technology strategy of the organization / enterprise i.e. whether it wants to become technology leader or technology follower?

15. Technology Generation The technology strategy of the organization sets the direction for technology development in the organization and to some extent also influences technological strataegies of competitors as well. At organizational / enterprise level, generation of technology is both an individual & group activity, but its management is solely an organizational responsibilty and activity Technology develops through a process of Creativity, Invention and Innovation.

16. What is S Curve of Technology Evolution Although the initial development of new technology often appears to be a random process, once a technology comes into existence, its evolution over time displays a reasonable stable pattern. Technology Evolution refers to changes in the performance characteristics of specific technology over time It is generally perceived that technology evolution follows an S shape curve. S-curve of technological evolution” is widely cited to determine at what point managers should shift investments from a mature technology to a new one. [ Exceptions: A study done by Sood and Tellis suggests that many technological evolutions do not follow S shape curve.]

17. What is S Curve of Technology Evolution S curve of technological evolution summarizes four major stages in the evolution of performance characteristics: 1. Emergence : when the new technology comes into existence, but shows little improvement in its performance characteristics 2. Rapid Improvement : When performance characteristics improve at an accelerating pace 3. Declining Improvement: When the pace of improvement declines 4. Maturity: When further improvements become very difficult to achieve

18. What is S Curve of Technology Evolution? Stage 2 Stage 3 Stage 4 Stage 1 Performance Characteristics Time

19. What is S Curve of Technology Evolution S curve shape of technological evolution occurs due to following reasons / effects: Learning processes – which, in the first stage, generates more or less stable design & process and in the second stage generates rapid improvements Technology Limits – Once a technology reaches full potential, technology limits come into play during later stages. These technology limits are also known a technology frontiers –as called by Dosi. In later stages, radical breakthrough occurs, as a result new technology emerges which replaces existing technology, This is known as Technology Progression The performance of the newer technology initially is lower than that of the older technology, but because of their relative positions on their respective S-curves, the performance of the newer technology soon surpasses that of the older.

20. What is S Curve of Technology Evolution? Technology Progression Performance Characteristics Physical limits of technology <Technology Regime 2 Technology Regime 1 > Time

21. Dan Tapscott • Four Principles for the Open world • Digital Capital • Naked Corporation • Wikinomics