MANAGEMENT

of
TECHNOLOGY
The Key to Competitiveness and Wealth
Creation
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Tarek Khalil | Ravi Shankar

Competitiveness

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

INDIAS COMPETITIVENESS: A
FEW INDICATORS

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Nations have to compete with one another because world

markets are now quite open
Dependence on other countries is due to uneven
distribution of natural resources, wealth, technology, and
human capability
In the Global Competitiveness Report 20112012,
Switzerland tops the overall rankings followed by
Singapore (2nd), Sweden (3rd), Finland (4th), United
States (5th), Germany (6th), the Netherlands (7th),
Denmark (8th), Japan (9th) and the United Kingdom
(10th). Few other rankings are: China (26th), Thailand
(39th), Sri Lanka (52nd), Brazil (53rd), India (56th),
Vietnam (65th), Pakistan (118th), and Nepal (125th)

DEFINITIONS AND INDICATORS

OF COMPETITIVENESS

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Competitiveness is the process by which one entity strives to

outperform another
At the macro level, the competitiveness of nations reflects the
standard of living of their citizens
National competitiveness is a consolidation of the micro level
performances of companies and individualsthe true agents of
economic growth
The fall of communism, the trend toward democracy, the
opening of the market and military spending have created a
new environment for business
The Washington-based U.S. Council on Competitiveness
adopted this definition and depicted the determining factors of
competitiveness as a four-section pyramid

DEFINITIONS AND INDICATORS

OF COMPETITIVENESS (Contd.)

Source: Based on Council on

Competitiveness, 1995

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The Competitiveness Pyramid

MANAGEMENT OF
TECHNOLOGY AND GLOBAL
COMPETITIVENESS

At the macro level, countries must be able to:

In the past, national competitive advantage focused on the

availability and successful exploitation of raw materials, labour,
transportation, and sources of capital

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Create an economic growth policy

Provide an infrastructure permitting the support of technological
enterprises and the facilitation of commerce and trade
Encourage cooperation between government, industry, and
education and research institutions
Energize and support technological innovation and develop plans
to enhance creativity and support R&D activity
Promulgate necessary but unburdensome legislation and regulation
measures to protect the environment and strengthen social structure

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
(Contd.)

The strength of the national research enterprise

The quality of technical education
The presence of a large pool of technical talents
The strength of information technology infrastructure
The ability to cultivate individual creativity and initiative
Synergy between basic research and downstream technical
activities
The scale of domestic markets and the openness of global markets
as engines for innovation and its commercialization

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The National Academy of Engineerings Committee on

Engineering as an International Enterprise concluded that the
comparative strength of a nations technical enterprise depends
upon the following factors (Lee and Reid, 1991):

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
(Contd.)

The ability to continually modernize plant and equipment

Collaboration between industries and universities and the
government
National savings and the level of investment in industrial
modernisation
National policy supporting initiatives to enhance adoption,
adaptation, and diffusion of technology and related know-how
The development of the necessary human, physical, financial,
regulatory, and institutional infrastructures
Public support of generic and domestically developed technologies

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The National Academy of Engineerings Committee on

Engineering as an International Enterprise concluded that the
comparative strength of a nations technical enterprise depends
upon the following factors (Lee and Reid, 1991):

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
(Contd.)

The ability to continually modernize plant and equipment

Collaboration between industries and universities and the
government
National savings and the level of investment in industrial
modernisation
National policy supporting initiatives to enhance adoption,
adaptation, and diffusion of technology and related know-how
The development of the necessary human, physical, financial,
regulatory, and institutional infrastructures
Public support of generic and domestically developed technologies

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The National Academy of Engineerings Committee on

Engineering as an International Enterprise concluded that the
comparative strength of a nations technical enterprise depends
upon the following factors (Lee and Reid, 1991):

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
The Case of Japan

(Contd.)

Factors contributing to Japans success include:

Thoughtful strategic planning
Targeting of niche products and markets
Teamwork and excellent execution
Commitment and the desire to win

In the automotive industry, Japan observed that the quality of

American cars could be improved to provide better customer
satisfaction
Japanese industry, although helped by the global economic situation,
did what had to be done: compete in process technologies with
techniques such as KANBAN, Single Method Die Exchange (SMDE),
and statistical process control

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The planned transfer of technology

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
The Case of Japan

(Contd.)

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Japan was able to consolidate several important

ingredients for technology development: strategic
planning, know-how, and collaboration between
institutions
A sound strategy for cooperation was formulated
by the Ministry of International Trade and
Industry (MITI) (Cheney and Grimes, 1991)
The required know-how was provided by
cooperating universities and industries while the
capital was provided by strong conglomerates
known as kereitsus

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
(Contd.)

The Case of Singapore

Poh-Kam Wong (1995) three main problems facing

them:

Wong (1995) mentions three strategic approaches

that Singapore used in overcoming these problems:
Serving as a regional business service hub for other
nearby nations
Engaging in niche specialisation
Acting as a home base and R&D hub for global firms

All of these approaches are based on acquiring

technologies from outside the country

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

A small domestic market

Limited natural resources
A limited supply of indigenous human resources

MANAGEMENT OF TECHNOLOGY
AND GLOBAL COMPETITIVENESS
(Contd.)

The Case of Singapore

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

After the initial success of Singapores economic

development strategy, another shift in Singapores
plans took place
The government is now putting emphasis on
promoting innovation and creativity in design and
services along the entire business-value chain
The shift from being a technology user to being a
technology innovator is a more advanced step in an
economic development strategy
Singapores spectacular success in economic
development provides a good model of a successful
national strategy in a small, young, yet growing
nation

in terms of its gross domestic product

This index reflects the wealth created within the borders of a
nation and represents the output (total market value)
produced by people, firms, and governments domestically
The GDP index is different from the GNP index, which
measures output produced by citizens of a country either
within or outside the borders of that country
The GDP index is becoming a more commonly used index
because it correlates well with many other economic
indicators, such as industrial production and employment
GDP can be adjusted for inflation to produce another index,
called real GDP

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

A COMPARISON OF
INTERNATIONAL
COMPETITIVENESS: ECONOMIC
INDICATORS
The economic performance
of a nation is commonly expressed

THE U.S. COUNCIL ON

COMPETITIVENESS
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Standard-of-Living Indexes - A more representative index for

the standard of living is purchasing power parity (PPP)
Trade Indexes - A trade balance represents the difference
between the total value of merchandise goods and services
exported by a country and the total value of merchandise
goods and services imported
Productivity Indexes - Reflects the efficiency of an operation
Investment Indexes - Investment in R&D, plant and
equipment (P&E), and education provides a base for longterm economic growth
Patents Index - Patents reflect innovativeness or a countrys
ability to create technology

EMERGENCE OF THE TIGERS

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Global competition intensified in the mid-1980s with the

emergence of a host of newly industrialized countries
(NICs) that became known as 'the Tigers
The infusion of foreign direct investment (FDI) into
newly industrialized and developing countries,
combined with those countries support for better
education and their push for technology transfer,
resulted in higher rates of real growth in their wealth
than the rates in industrialized countries
Countries with developing economies have succeeded in
penetrating global markets and have increased their
share of wealth

COMPETITIVENESS: THE GAME

OF NATIONS

indices (0 to 100) generated

for the unique purpose of
constructing charts and
graphics

Source: IMD
International,
1999, 2011.

A Few Past and Recent Ranking of Countries Competitiveness

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

NB. The scores are actually

COMPETITIVENESS: THE GAME

OF NATIONS (Contd.)

A nation must first have a stable political system that permits

economic growth
Develop strong institutions to foster proactive involvement in the
development, transfer, and implementation of technology
Develop strong financial institutions capable of supporting
sustained technical progress
Strengthen educational and training systems that permit citizens
to move up the knowledge ladder
Develop technology strategy and support generic critical
technologies

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The following are some MOT guidelines for improving

and sustaining a nations competitive position in the
global arena:

COMPETITIVENESS: THE
GAME OF NATIONS (Contd.)
Support R&D activities
Encourage creativity and entrepreneurship
Vigorously participate in international debates on technological
as well as trade issues
Predict the social and environmental consequences of
technology and develop appropriate public policies to deal with
them
Develop strategic alliances with compatible countries to enhance
technological progress and strengthen trade partnerships

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The following are some MOT guidelines for improving

and sustaining a nations competitive position in the
global arena:

COMPETITIVENESS OF FIRMS:
THE MICRO LEVEL (Contd.)
At the firm level, management must develop a strategy for
competing. Some are:
Offer products or services desired by a customer
Achieve technological superiority in (a) products, (b) process, (c)
service, and (d) marketing
Concentrate on quality of product or service
Reduce cost and/or price
Be first to market
Reduce the product development cycles time from concept to market
Create and target niche markets for products
Eliminate waste
Build in flexibility to change

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Rely on innovation to introduce new products or services

COMPETITIVENESS OF FIRMS:
THE MICRO LEVEL
To become or to remain competitive, firms must be able to:
Develop a culture in which the value of technology as a strategic
competitive weapon is fully appreciated
Monitor and forecast technological changes
Develop and adopt effective methodologies to measure the impact of
new technologies on their business
Facilitate the implementation of new technologies in their operations and
build the infrastructure or migrating from one technology to another
Prepare, train, and hire the proper workforce to implement the new
technology
Develop an organizational structure that permits effective and efficient
implementation of technological changes
Develop an appropriate reward system for employees and managers

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Understand the dynamics of the process of technological innovation.

COMPETITIVENESS OF
FIRMS: THE MICRO LEVEL
(Contd.)

At the firm level, management must develop a strategy for

competing. Some are:
Improve efficiency
Promote creativity and entrepreneurial spirit
Develop and harness employee knowledge and talents
Follow a progressive culture for the organization
Encourage teamwork
Introduce a progressive management style
Enhance the ability to forecast
Sharpen the ability to plan
Focus on increasing market share

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Improve customer service

COMPETITIVENESS OF
FIRMS: THE MICRO LEVEL
(Contd.)

Competitive firms can be recognised by a set of characteristics:

Profitable
Stable
Has ability to maintain or increase market share
Capable of developing and introducing innovation in a timely manner
Is a pacesetter, often setting industry standards
Has an ability to utilize technology and to capture market share through
products, process, information systems, or service innovation
Has the ability to match its strengths with targeted market needs better
than other companies can
Aggressive in its desire to reach planned goals
Flexible

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Capable of leading in innovation and technology

COMPETITIVENESS OF
FIRMS: THE MICRO LEVEL
(Contd.)

Competitive firms can be recognised by a set of characteristics:

Progressive
Fair
Knowledgeable about its strengths and weaknesses
Knowledgeable about its competitors
Has visionary leaders
Knows how to fully utilize the capability of its employees
Motivates and rewards employees appropriately
Knowledgeable about the technology and business life cycles and
knows when to hold and when to fold new projects
Knowledgeable about its social, political, and legal environment

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Knowledgeable about its core technology

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