TECHNOLOGY AQUISITION

VII QUARTER
By
Dr. G. Sunitha, Asst. Professor

SCHOOL OF MANAGEMENT
NATIONAL INSTITUTE OF TECHNOLOGY
WARANGAL
hat is Technology Planning?

Technology Planning encompasses the development of plans for

the acquisition of technologies that will impact a firms
competitiveness.
Information about these technologies is derived from technology
audits that detail all technologies and sub-technologies used in
value chain
The audit also reveals Technologies owned by the company and
those owned by outside companies
The forecasting of technological changes is also needed, as well
as gaining knowledge of what competitors are doing.
The later can be done by benchmarking the firms technologies
in relation to the technologies of others in the same domain or
markets.
 Methods of Acquiring Technology
Using internal R & D
Participating in a joint venture (IBM, Apple, Motorola)
Licensing in of technology(Sony Corporation and AT&T)
Contracting out for R & D (Company can conduct R&D without
having invest heavily in an in house R&D)
Buying of technology

Ford Developed a very useful Matrix that shows the

applicability of different acquisition methods under different
circumstances.
It consists five factors upon which a company can make an
acquisition decision
1.Tthe company relative standing in the technology 2.The
urgency of technology 3.The level of commitment to the
acquisition or the level of investment involved. 4. The technology
position on the life cycle curve 5. Classification of the technology
as distinctive, basic or external
Ford Matrix:
 Exploitation of Technology
Exploitation means the action of making use of and benefiting
from resources
Technology can be though of as an asset or a commodity to be
purchased and sold. A company that owns certain technology
should include technology exploitation as a component of its
technology strategy.
The methods of technology exploitation resemble those used for
acquisition
Decision to exploit often contradict those of acquisition
Ford (1988) developed an exploitation matrix which includes
factors affecting technology exploitation decisions.
Factors Affecting The Technology
Exploitation Decision
 Technology Creation through R&D
The creation of technology can result from either an individual
or a group effort
In the past individual efforts of inventor and trail and error
approaches were the dominant modes used to develop technology
In modern era, these approaches were replaced by more
organized efforts
Complex organisations, involving many employees, have been
established to undertake R&D activities, and the scientific
approach to problem solving has been widely utilized.
Contemporary R&D involves coordinating the activities of
many disciplines that are collaborating to make a contribution of
technological progress
Ex: Thomas Edison(1876), Alexander Graham Bell (later
AT&T), Du pont, Dow Chemical and General Motor created huge
R&D laboratories
 Stages of Technology Development
Organised technological development follows a hierarchical
progress
1. Basic Research (To gain new scientific knowledge or under
standing)
2. Applied Research (it directs toward a specific practical aim or
objective and conducted to develop ideas into operational form)it
is a mix of science and engineering
3. Development: Development involves the systematic use of the
knowledge or understanding gained from research to produce
useful materials, devices, systems or methods, including the
design and development of new or improved services.
Technology Enhancement: this is the continuous effort by
scientists and engineers to support and improve existing or
developed technologies.
 Technology Portfolo and industrial R&D

One of the main concern of managers is what type of research

the firm should undertake and which technologies it should
emphasize for development. It depends on the objectives of the R
& D programme, type & sector of the business, its technology
base, its customer, its financial and technical resources.
Merten and Ryu (1982) proposed dividing industrial laboratory
research activities into five categories.
1. Basic Research
2. Exploratory Research
3. Development of new commercial activities
4. Development of existing commercial activities
5. Technical services
A Generic Technology Portfolio Model
Technology Portfolio and industrial R&D
Corporations use R & D basically to lead and support
innovations. Areas where this is relevant are
Product Innovations
Material Innovations
Process Innovations
Market Innovations
Service Innovations

Justifiction of R&D Expenditure

R & D is supported as an overhead expenses
R & D is supported as an investment (ROL)
 Global Management of R&D
The complexity of todays technology based R&D, business
dynamics, and market is compelling companies to reconsider
scale, size, and location as well as the scope and direction of their
activities. Trends in R&D was explained by Perrino and Tipping
as follows
While markets are global, technology will continue to develop
locally in pockets of innovation
Critical mass will be a key factor in successful technology
development. Cost has increased because of the need for
interdisciplinary teams
External relationships are becoming more important survival in
longer as a matter of being technological island
Companies can get more out of their research by linking it more
closely to market needs and customer requirements rather than
by increasing spending
 Global Management of R&D
Perrino and Tipping found that European, American and
Japanese companies deploy their R&D resources in different
patterns
The European pattern is based on acquisition of entire
companies
The Japanese pattern is based on home production and
centralized R&D plus listening posts for acquiring technology
rather than on overseas expansion of R&D
The U.S pattern is based on setting up overseas laboratories
staffed by their own companys U.S or foreign national employees