TECHNOLOGY ACQUISITION AD

ABSORPTION
 TECHNOLOGY TRANSFER
• Technology Transfer is the process by which
technology is disseminated.
• It involves communication of relevant
knowledge by the Transferor to the
Recipient.
• It is in the form of technology transfer
transaction which way or may not be a
legally binding contract.
TYPES OF TECHNOLOGY TRANSFER
• Scientific Knowledge Transfer, Direct
Technology Transfer, Spin-off Technology
Transfer.
• Informal Technology Transfer & Formal
Technology Transfer.
• Internal Technology Transfer & External
Technology Transfer.
INTERNAL TECHNOLOGY TRANSFER
Internal Technology Transfer refer to such technology
transfers / investments where control on the
ownership & usage of technology resides with the
transferor.
It is a complex process involving following decisions:
• Timing : When to introduce new technology /
products in the market?
• Location : Where to transfer new technology /
products?
• Multi-functional teams --Which staff members
should be involved in transfer process ?
• Communication methods & procedures – What type
of Communication methods & procedures be
adopted to facilitate transfer ?
BARRIERS TO INTERNAL TECHNOLOGY
TRANSFER
• R & D goals are not known to Production
Department.
• Difficulties in stopping current production to test
new products / processes.
• R&D Department does not understand needs &
capability of Production Department.
• In general, Production Department is resistant to
innovation and is bound by routine.
• Non-linkage of new technologies to marketing /
customer needs.
OVERCOMING BARRIERS TO INTERNAL
TECHNOLOGY TRANSFER
• Top management support and participation in the
transfer process.
• Providing supportive organizational culture.
• Use of multi-functional teams in the transfer process
• Ensuring effective communication in the organization
• Bringing R&D closer to production.
• Rotation of few person between R&D and production
• Linking & participation of marketing elements in the
transfer process.
 EXTERNAL TECHNOLOGY TRANSFER
• In these transfers, control on the ownership &
usage of technology usually does not remain
with transferor and it passes on to the
recipient, like joint venture with local control,
licensing agreement etc.
 EXTERNAL TECHNOLOGY TRANSFER
Successful external technology transfer depends upon
following factors:
• Type of the technology being transferred.
• Complexity of the technology being transferred.
• Transfer mechanism selected.
• Relationships between the parties – building of mutual
trust.
• Core competencies of the parties & compatibilty
thereof.
• Organizational culture of the parties & mutual
understanding thereof.
METHODS OF EXTERNAL TECHNOLOGY
TRANSFER
• Co-operative & collaborative ventures /
strategic alliances
• Licensing agreements
• Contracting agreements
• Enterprise acquisition
 REASONS FOR EXTERNAL
TECHNOLOGY TRANSFER
• Technology already developed saves time & efforts.
• Sometimes Growth objectives or competitive goals cannot
be reached through internal development.
• Lack of risk taking ability for innovations.
• Lack of internal resources (physical & human) for
innovation.
• Firm does not have core competencies to deal with
complex technological developments.
• Need to keep up with competitors.
• Need to cope up with acceleration of technological change.
• As a part of firm’ strategy --- let other firms take big risks &
it will purchase technology developed by them.
BARRIERS OF EXTERNAL TECHNOLOGY
TRANSFER
• Associated costs – usually high prices are required to
be paid in the form of royalities, technical & knowhow
fees etc over medium to long term period.
• Appropriatesness of technology i.e. its suitability to
core competencies and market needs is always a point
of discussion and investigation.
• Heavy reliances on foreign technology- may make
transferee / recipient technologically dependent on
external technology providers / transferors even for
small issues.
• Lack of mutual trust between two parties may hinder
full & timely transfer.
BARRIERS OF EXTERNAL TECHNOLOGY
TRANSFER
• There is risk of loss of control over technology and the
transferee / recipient may use technology in an
arbitrary manner.
• Transfer may render earlier technology & its related
products / services / processes obsolete.
• Transferee may turn a potential competitor in future.
• Mismatch in core competencies of the transferor &
transferee may create difficulties in transfer.
• Different organisation cultures may create difficulties in
transfer.
• Lack of effective communication between the parties
may also create difficulties in transfer.
OVERCOMING BARRIERSOF EXTERNAL
TECHNOLOGY TRANSFER
• Proper & well defined technology transfer agreement
should be signed.
• Proper assessment / evaluation of appropriateness of
technology.
• Proper assessment / evaluation of compatability of core
competencies of the parties.
• Building pre-agreement relationships so as to develop
mutual trust and so as to understand culture of opposite
parties.
• Seeking cross cultural training.
• Ensuring effective communication.
• Anticipating problems and adopting measures for
facilitating transfer.
 MODES OF PAYMENT FOR
TECHNOLOGY TRANSFER
• Lumpsum payment or periodical instalments
• Royalities as a %age of sales over next few years
• Cross-licensing agreements
• Contracted supply of output
• Issue of equity shares in lieu of technology
transferred
• The regulation is undertaken in two directions:
– Regulation of import of technology / technology inflows
– Regulation of export of technology / technology
outflows & Setting up of Joint Ventures (JV) and Wholly
Owned Subsidiaries (WOS) Abroad
 TECHNOLOGY ACQUISITION
• It is a process of acquiring new technology, new
product, process or service by the efforts of an
individual, or an enterprise or any other macro
entity.
• Internal Technology Acquisition is the result of
efforts that are initiated and controlled by the
firms itself. It requires existence of technology
capability in the firm.
• External Technology Acquisition is the process of
acquiring technology by the others for the use by
the acquirer enterprise.
 STEPS INVOLVED IN INTERNAL
ACQUISITION PROCESS
• Planning new products/services/processes to
be offered.
• Screening new products/services/processes.
• Initiating development process.
• Carrying out trial production on small scale
and test marketing.
• Improving design and production processes.
• Commercialization.
 STEPS INVOLVED IN EXTERNAL
ACQUISITION PROCESS
1. Identification of Need
2. Developing list of suitable technology providers
3. Short listing / selecting suitable technology providers
on the basis : Cultural compatibility, compatibility of
core competences, appropriateness of technology,
technical feasibility etc
4. Negotiation
5. Agreement
6. Payments as per agreement
7. Transfer of specifications, blueprints, designs,
documents, CDs to purchaser
8. Training of technical personnel of purchaser
 ACQUISITION OF TECHNOLOGY BY
NATION
• Attracting TNCs / MNCs
– Through direct measures viz. making a positive list of
industries open to FDI
– Through indirect measures - viz by offering incentives &
subsidies
• Attracting TNCs / MNCs into natural resource processing &
inducing greater value additions
• Using TNCs / MNCs to attract / encourage their overseas
suppliers to invest into country
• Improving skills & training of local technologists by involving
TNCs / MNCs
 ACQUISITION OF TECHNOLOGY BY
NATION
• Developing industrial parks / technology parks to
attract high technology investors.
• Offering incentives to existing investors to move to
more complex technologies and to increase or upgrade
technological R& D base.
• Changing competitive environment and existing
incentive structure to encourage world class
technology & management.
• Improving technological access for local firms for
outsourcing / technology transfer.
• Collecting, organising & disseminating information
about technology development.
 TECHNOLOGY ABSORPTION
• Technology Absorption means putting
“acquired technology” to further
development, assimilation & utilization.
• The technology absorption is wider in scope
than technology acquisition.
In two ways:
• Technology Adoption
• Technology Adaptation
 TECHNOLOGY ADOPTION
• Adoption of a technology is a process under which the
various features of the technology, which is the subject of
transfer, are suitably modified, changed or altered keeping
in view the needs of the buyer.
• In other words, the needs of the buyer of technology get
crystallized and the supplier makes suitable modifications
in the technology being supplied so that it conforms to the
requirements of the buyer as far as possible
– This in essence would mean that a foreign technology is
scaled up or down or modified, where necessary by the
supplier in accordance with the requirements of the
buyer of technology. Such adopted features are finalized
as a part of the technology package.
 TECHNOLOGY ADAPTION
• Adaptation of technology is a phase that takes place after a
technology has been adopted and put to use in production
activities/facilities.
• During this stage, a number of alterations and modifications to
suit the indigenous conditions are made and they may relate to
the use of raw materials/components manufactured, practical
difficulties in down scaling, etc.
– Thus the particular plant in India could gear itself up to meet
the desired capacity, production, product quality and other
related aspects as planned.
• The adaptation exercise covers both product modification as
well as production technology changes, using indigenous skills
and facilities as well as local materials.
 COMPONENTS OF TECHNOLOGY
ABSORPTION
Technology Absorption involves following four basic components:
• Hardware – refers to particular physical structure of components
& also their logical layout which are subject matter of absorption
• Software - refers to Know-how of carrying out tasks to achieve
goals & objectives
• Brainware - refers to application & justification of hardware,
software development, know-what & know-why of technology.
That is what to employ, how, when, where, and why?
• Support Net - refers to complex network of physical,
informational and socio–economic transformations that support
the proper use and functioning of given technology.
 TECHNOLOGY ACUISITION &
TECHNOLOGY ABSORPTION
If both Technology Acquisition & Technology Absorption
occur simultaneously, then there is no difference in
two terms. Sometimes there may be time lag between
two. In case of time lag, differences may be as follows:
• 1. Technology Acquisition - Focus is on acquiring
technology i.e. becoming owner; Technology
Absorption - Focus is on putting the acquired
technology to use; i.e. reaping the benefits from
technology acquired
• 2. Technology Acquisition - Leads to firm specific
technological knowledge and advantage; Technology
Absorption - Leads to market competitive advantage
 TECHNOLOGY ACUISITION &
TECHNOLOGY ABSORPTION
• 3. Technology Acquisition - Requires substanical costs for
acquistion of technology; Technology Absorption - Inovolves
some costs for putting the technology to use and leads to
increase in revenues, improvement in efficiences etc.
• 4. Technology Acquisition - Precedes technology absorption ;
Technology Absorption - Succeeds technology acquisition
 MANAGEMENT OF TECHNOLOGY
ABSORPTION BY ORGANISATIONS
• Generally, enterprises / organizations plan for
technology absorption within reasonable time /
planned time as it provides following advantages like –
early use of acquired technology and reaping benefits
therefrom, gaining technological competitive edge etc.
• Sometimes there could be delays in technology
absorption due to variety of reasons.
• Delays in technology absorption could be harmful to
the organization.
• Therefore technology absorption needs to properly
managed by the organization.
 MANAGEMENT OF TECHNOLOGY
ABSORPTION BY ORGANISATIONS
Organizations take following steps to manage technology
absorption:
• Developing good understanding and mutual trust
between technology transferor and technology
recipient organizations
• Proper, clearcut and well-defined agreement between
technology transferor and technology recipient
organizations
• Developing time-bound and target-oriented schedule
for technology absorption
• Top management support to the technology absportion
 MANAGEMENT OF TECHNOLOGY
ABSORPTION BY ORGANISATIONS
• Use of multifunctional teams by the technology
acquiring organization
• Regular review of the absorption progress by the
highest level.
• Installation of effective communication system by
the technology acquiring organization.
• Seeking workers’ particicpation, involving one
and all in the absorption process; overcoming the
resistance to change through education and
motivation through rewards etc.
 MANAGEMENT OF TECHNOLOGY
ABSORPTION BY ORGANISATIONS
• Hiring of requisite skilled workforce; if same is
not available, seeking early training of own
current employees by technologists /
technicians from the transferor enterprise.
• By actively complying with various
government directives and requirements on
technology upgradation and technology
absorption
 GOVERNMENT GUIDELINES ON
TECHNOLOGY ABSORPTION
Due to variety of benefits of technology absorption,
national governments seek quick absorption of
technology.
While seeking approval to Foreign Technology
Transfer Agreements under the approval route
from Government of India, the technology
acquiring organizations / enterprises are required
to indicate and commit timebound schedule for
technology absorption. This puts pressure on
organizations to plan systematic and timebound
technology absorption.
 GOVERNMENT GUIDELINES ON
TECHNOLOGY ABSORPTION

• In addition, under Section 217(1) of the

Companies Act, 1956, every company is required
to attach a Board’s Report / Directors’ Report to
every Balance Sheet which is laid before a
company in general meeting.
• According to subclause(e) of the above section
217(1), amongst other things, the Board’s Report
shall deal with the steps taken for technology
absorption by the company.
 OPTIMIZATION
• According to Merriam – Webster Dictionary – Optimization
means – to make as perfect, effective or functional as possible
• In mathematics , computational science, or management
science, mathematical optimization etc refers to the selection
of a best element / alternative from some set of available
alternatives.
• In the simplest case, an optimization problem consists of
maximizing or minimizing a real function by systematically
choosing input values from within an allowed set and
computing the value of the function.
• Generally, optimization includes finding "best available"
values of some objective function given a defined domain,
including a variety of different types of objective functions
and different types of domains.
• Optimization in technology development & usage implies
maximizing the benefits & minimizing the costs
THANK

YOU