Technology Acquisition

Objective
Appreciation of the role and importance of technology acquisition. Distinguish between internal and external technology acquisition. Understanding of the R&D as an internal technology acquisition. Understanding of task/processes in external technology acquisitions

Decision in Technology Acquisition

Significant factor in a firms technology strategy. Affect the firms future performance.

Lanctot and Swan, 2000 Decision concerning technological acquisitions are a significant factor in a firms technological strategy since such decision affects the firms future performance.

Why Organization need to be Technologically Equipped?

To meet their strategic objective. To create new opportunity as well as response to any threat in future and competitors.

How to deal with Technological Challenge?

Organization must be able to acquire adequate technologies base/capabilities.

Technological Capabilities.
Technical capabilities refer to those technological asset that have strategic significant as well as the process and practices by these assets are acquire and deploy.

Why Technological Capabilities is required?

Technological capabilities seen as having impact on firms competitiveness.

Determination of Technological Capabilities

Technological capabilities determined from technology audit and forecast carried out during the planning stage. Technology audit determines: a) The strength and weaknesses of technologies owned. b) Forecasting brings knowledge to firm of what competitors are doing.

Technology Needs
Internal acquisition External acquisition

Jones et al, 2001

Both internal and external acquisition of technology has pro and cons. Hence, determining whether to use external acquisition vs. internal development and specifying the right moment for alternating between them has become a crucial decision for managers particularly high technology- based firms.

Internal acquisition

It is refers to creation of technology through innovation process. a) The firms rely on its own resources and capabilities to develop the require technology in house. b) The creation of technology can be either as a result individual or group effort.

It is involves complex process in planning and execution because may involves: a. Time and resources require. b. Financial commitment. c. Risk related to failure. Strategy to achieve the success in internal acquisition: a. To built appropriate environment that encourage innovation and accepts failure. b. Having a clear plan of how to move technology from development to the

Advantages and disadvantages of the strategy:

Advantages Greater control of the process and outcome. Better understanding of the technology produced and its applications. Greater ability to potentially develop the next generation of technology. Greater benefit (including profit) as a first mover. Disadvantage Time required for internal development is normally longer. Resources/investment required can be too high. Risk attached to failure to develop the right technology at the right time. Risk relating to the infringement of intellectual property.

The main advantages of developing/ creating technology that are unique and that other firm could not easily duplicate providing competitive advantage to the firm.

Research and Development (R&D)

The corporation use R&D to lead and support innovation including: a. Product b. Material c. Process d. Market e. Service innovation

The contemporary R&D involves coordinating (many in virtual form) the activities of many disciplines that are collaborating to contribute to technological process.

R&D Terminology
The term research and development though commonly lumped together as R&D and actually differ by their hierarchical progression. R&D by some other definition of the terminology: a. Research

Refers to the systematic, intensive study directed towards fuller scientific knowledge of the subject being studied.

Research can be classified into basic and applied. a. Basic Research

Research undertaken to gain new scientific knowledge or understanding not directed towards a specific practical application.

b. Applied Research
Directed towards some kind of practical application of knowledge and is conducted to develop idea into operational form.

Development
Systematic use of scientific knowledge directed towards the production of useful materials devices, system or method including design and development of prototypes and process.

Development efforts builds the link between research and commercial use of ideas. Development normally falls within the realm of engineering rather that science.

The example of R&D activities/effort:

a. The establishment of scientific research laboratory by Thomas Edison.
http://www.ece.msstate.edu/courses/ece1002/notes/edison.htm. Edison was the first person to fund, build and staff an industrial laboratory for product research and development. It was at this laboratory in Menlo Park, New Jersy that Edisons team invented the electric lighting system. Edisons laboratory housed remarkable variety of the latest equipment and supported a host of highly skilled technicians, as well as some formally educated engineers and scientists.

Different Stages of R&D Activities

R&D activities.
a. Adopted an R&D content that cover both new product development and all other R&D activities that aim finally towards end product. (Aalto et al, 2003). b. They use the term R&D to include the three stages of process ie research, technology development and product development in line. (Bailyn, 1988), (Turner,1999) & (Cooper, 2001).

- Product development is the shortest term and best known activity in the R&D funnel.

These 3 stages have their special nature and can be demonstrate as a funnel: a. Research b. Technology Development c. Product Development

Research
a. The large and more establish corporation in typical organized research unit. b. The goal are often not as definite as in product or technology development. c. They are primarily technological or knowledge oriented. d. Project size at this stage small e. Though risky and has potential to provide great rewards. f. Less standardization of activities. g. Promote renewal and new kinds of solutions towards an improved competitive advantage. h. Represent core activity of organization.

Technology Development
a. Characterized by typically more focused on certain technology or combination. b. Aim to create new knowledge or capability that support spawns new product or process. c. Major Innovation required. d. Organized into business unit. e. More volatile by nature than subsequent stage. f. Comparison from research stage: i. The goal are less strict ii. The time scope shorter iii. The management practice relatively strict. iv. The risk level low.

Product Development
a. Product development is the shortest term and best known activity in the R&D funnel. b. Characterized by a activities which normally consisting of product program that aim towards a complete verified & tested end product. b. The size of product may very large as end product and can be very complicated. c. The goal and the final specification of the end product are clear. d. Radical innovation are rare where technologies use are quite mature and verified by the earlier stage of the R&D process. e. The method are formal and management process as well defined and standardized. f. The risk level is quite low.

R&D Funnel & Stages of R&D Activities

Risk level Radical nature of project Number of project Operational and strategic freedom

Technology Research development (long term) (medium term)

Product development s (short term)

End product

Size of projects Clarity and measurability of goals Strictness of methods Technology maturity

Why the type of stage of R&D effort is very important?

To recognized some fundamental dimensions of this internal technology acquisition effort among other are: a. The firm must acknowledge that the goal of internal acquisition. b. R&D is a process that involves many individuals, capabilities and resource. c. Resource are critical to the R&D process.

Evaluating and Selecting R&D Projects

R&D project are considered as part of implementation of corporate strategy towards the attainment of operative objective. A firm should look into at: a. The whole set (portfolio) of project. b. To consider their interrelations and alignment with business objective.
Stevens, 2000. Project portfolio management is a response is a response to the challenge of finding the right ideas and the project that meet the strategic goal of company and making sure that they progress from an idea into the market place.

An overflow of potential ideas and technologies is more challenging than the lack of ideas. Critical success factor in creating competitive advantage: a. To have a good system for deciding which idea to pursue. b. To make sure they end up to end product to market. c. Project that brings less value must be abandoned. d. The strategy of the company as well as number of resource must be taken into account. e. Managers must undertake evaluation process in order to select the best R&D project.

R&D Investment Decision Framework.

Marketing Needs Information about competitor Resource restriction R&D Investment

Assess the R&D Project

Business or Technologies strategies

Assess the R&D Project

Decide the distribution of R&D Investment