Technology Management :Technology Management Session – 2


Porter’s Five Forces Model :Porter’s Five Forces Model An industry’s profit potential is largely determined by the intensity of competitive rivalry within that industry


Porter’s Five Forces Model :Porter’s Five Forces Model


Porter’s Five Forces Model :Porter’s Five Forces Model Entry of competitors How easy or difficult is it for new entrants to start competing, which barriers exist? Rivalry among existing players Does a strong competition between the existing players exist? Is one player very dominant or are all equal in strength and size? Threat of substitutes How easy can a product or service be substituted, made cheaper? Bargaining power of buyers How strong is position of buyers? Can they work together in ordering large volumes? Bargaining power of suppliers How strong is the position of sellers? Do many potential suppliers exist or only few potential suppliers, monopoly?


Porter’s Five Forces Model :Porter’s Five Forces Model BARRIERS TO ENTRY Absolute cost advantages Proprietary learning curve Economies of scale Capital requirements Brand identity Switching costs Access to distribution BUYER POWER Buyer volume Buyer information Price sensitivity Threat of backward integration Product differentiation Buyer concentration Substitutes available THREAT OF SUBSTITUTES Switching costs Buyer inclination to substitute Performance of substitutes SUPPLIER POWER Supplier concentration Switching costs Presence of substitutes Threat of forward integration Cost relative to total purchases DEGREE OF RIVALRY Exit barriers Industry concentration Fixed costs/Value added Industry growth Intermittent overcapacity Product differences Switching costs Brand identity Diversity of rivals Corporate stakes


Porter’s 5 Forces: Movie Industry :Porter’s 5 Forces: Movie Industry DEGREE OF RIVALRY Few competitors - high concentration High exit barriers – stockholders High fixed costs Slowing industry growth Intermittent overcapacity No real product differences No brand identity


Porter’s 5 Forces: Movie Industry :THREAT OF NEW ENTRANTS No economies of scale Capital requirements falling – digital technology No brand identity Direct, internet distribution Porter’s 5 Forces: Movie Industry


Porter’s 5 Forces: Movie Industry :Porter’s 5 Forces: Movie Industry SUPPLIER POWER Limited suppliers: actors, writers, directors, special effects people Actors command high salary Need limited actors for successful film – few substitutes Some threat of forward integration (independent studios) High costs relative to total purchases


Porter’s 5 Forces: Movie Industry :Porter’s 5 Forces: Movie Industry BUYER POWER Buyer volume vital (1st weekend sales!) Buyer information strong – blogs, internet buzz Pricing more sensitive ($10+) / piracy! No studio brand loyalty High movie / actor loyalty Low consumer concentration High DVD buyer concentration Many substitutes available


Porter’s 5 Forces: Movie Industry :Week 4: Chapter 9 Competition Porter’s 5 Forces: Movie Industry THREAT OF SUBSTITUTES No switching costs for consumers Moderate threat of substitution by consumers Increasing performance of substitutes – everyone wants ‘entertainment dollars’ Movie companies responding with new distribution (VOD, Same-day internet/theatre release, iPod, etc.)


Intellectual Property Rights :Intellectual Property Rights


Intellectual Property(Creations of the Mind) :Intellectual Property(Creations of the Mind) Inventions Literary and artistic works Company and product names Product designs Commercially valuable, secret business information


Types of Intellectual Property :Types of Intellectual Property Patents Trade secrets Copyrights Trademarks


The Value of Intellectual Property :The Value of Intellectual Property U.S. IP is worth between $5 trillion and $5.5 trillion equivalent to 45% of U.S. GDP and greater than the GDP of any other nation 2002 - copyright industries (music, publishing and software) accounted for 6% of the U.S. GDP - $600 billion Intangibles account for 70% of the current value of equities in the U.S.


What is a Trade Secret? :What is a Trade Secret? Any formula, pattern, physical device, idea, process or compilation of information that both: Provides a competitive advantage in the market place Is treated by the owner in a way that can reasonably be expected to prevent the public or competitors from learning about it Examples of information protectable as trade secrets: Engineering technology Customer lists Novel laboratory processes


Common Trade Secret Mistake :Common Trade Secret Mistake Failure to take precautions to ensure secrecy Solutions: Confidentiality agreements Business partners Employees/consultants Physical measures to ensure secrecy Computer system security Segregation of secret information Limited disclosure of secret information


What is a Patent? :What is a Patent? Patentable Subject Matter: Any new and unobvious substance, product, apparatus, method of making something or method of doing something Design Patents Plant Patents


Inventorship :Inventorship Conception of an idea Formulation in the mind of a definitive way of realizing that idea (i.e. – a concrete and complete solution to a problem)


Who Is Not An Inventor? :Who Is Not An Inventor? Individuals that merely act as technicians under the direction of the actual inventors


What Constitutes Public Disclosure? :What Constitutes Public Disclosure? Websites Advertisements Publications Discussions/Presentations – not under confidentiality agreement


The Easiest Way to Protect Your Invention :The Easiest Way to Protect Your Invention January 1, 2009 – Disclose January 2, 2009 – Patent BAD


The Easiest Way to Protect Your Invention :The Easiest Way to Protect Your Invention January 1, 2009 – Patent January 2, 2009 – Disclose GOOD


What is a Copyright? :What is a Copyright? Protects certain works that meet the following requirements: - Original - Sufficiently creative - “Fixed in a tangible medium of expression” Protects “expression” of ideas, not ideas Registration not necessary but affords additional rights - Legal presumptions of copyright ownership - Right to recover statutory (presumed damages) - Right to recover attorneys’ fees


What is a Copyright (cont.)? :What is a Copyright (cont.)? Examples of copyrightable works: Literary works, musical works, sound recordings, motion pictures, sculptures, paintings Grants “author” of the work the exclusive right to: Make copies Make changes to Distribute Publicly perform (e.g., choreographic works) Publicly display (e.g., sculptural works) Life of a Copyright is Long Author’s life plus 70 years (works made for hire is 95 years from publication or 120 years from creation)


Copyright Notices :Copyright Notices Example: ©2007 Archer & Greiner, P.C. All Rights Reserved Use of notice not required Registration not necessary to use notice


Common Copyright Mistake :Common Copyright Mistake “Work for Hire” Doctrine - Absent agreement to the contrary: Copyright in work created by an employee within scope of employment is owned by employer Copyright in work created by a third party is owned by the third party Solution: Written agreements confirming copyright ownership Website developers Marketing/PR Agency Software/technology developers


Copyright Infringement :Copyright Infringement Unauthorized copying of copyrighted work resulting in a “substantially similar” work Can be exact copying of small portion of copyrighted work Can be substantial paraphrasing of copyrighted work “Fair Use” Defense


What is a Trademark? :What is a Trademark? An indicator of the source of goods (trademarks) or services (service mark) “Any word, name, symbol, or device, or any combination that is used to identify and distinguish the goods of one seller from goods manufactured or sold by others, and to indicate the source of the goods.” Examples of trademarks: Archer & Greiner Coca-Cola ExxonMobil


What is a Trademark (cont.)? :What is a Trademark (cont.)? Like copyrights, registration not necessary but affords additional rights Legal presumptions of copyright ownership Right to recover treble damages Right to recover attorneys fees Trademark rights generally exist for as long as trademark is used in commerce


Trademark Notices :Trademark Notices Examples: ARCHER & GREINER® ARCHER & GREINER™ Use of notice not required Registration not necessary to use notice


Trademark Infringement :Trademark Infringement Generally prohibited from using a mark that is confusingly similar in use and appearance to another party’s mark Use may be prohibited even if two trademarks are not the same Use may be permitted even if two trademarks are identical


Common Trademark Mistakes :Common Trademark Mistakes Registration of a corporate name or domain name does not mean the name does not infringe a third party’s trademark rights Solutions: . Trademark availability search . Review of registered and unregistered marks Trademark registration . Helpful but not necessary for protection . (like copyrights) .


Technology Transfer to Developing Countries :Technology Transfer to Developing Countries Source: UNCTAD Series on Technology Transfer & Development


Why is it needed? :Why is it needed? Research & Development which gives birth to new technology is capital intensive Incubation of new technology is time consuming and at times takes decades to be commercially viable Developing nations often lack the infrastructure for developing new technologies


What is in for the Developed Nations? :What is in for the Developed Nations? Lower cost of labour Tax benefits from host country Extended technology life cycle Spreading various risks over a large geographical area Exploitations of host countries’ natural resources Global presence and over all increase in turnover Strategic trade & investment initiatives Reduction of Carbon Footprint in Home country … and many more...


Measures of Technology Transfer to Developing Nations :Measures of Technology Transfer to Developing Nations Financing of Technology Transfer Training Partnerships & Alliances(Public Private Partnership Programs) Support for equipment purchase or licensing(FDI)


Financing of Technology Transfer :Financing of Technology Transfer Direct financing of technology transfer related activities such as Purchase of Equipment Licensing of particular technology Training of operators & maintenance personnel Adaptation of technologies to suit local conditions & standards Feasibility studies, project planning, etc.


Examples :Examples Canada Brazil & Southern Cone-Canada Technology Transfer Fund supports organisations in Argentina, Brazil, Chile, Uruguay, Paraguay C. T. Gas, Brazil Private Sector Development Program of Danida (Denmark) Best Foods Ltd. of Bangladesh


Transfer of Technology through FDI :Transfer of Technology through FDI FDI is one of the channels of technology transfer Bring along new opportunities and challenges that may encourage suppliers to innovate Direct trainings to suppliers and retailers of their product and services Facilitate movement of manpower between firms thereby inducing higher efficiencies in utilisation of resources


Matchmaking and Provision of Information on Technologies :Matchmaking and Provision of Information on Technologies Information over-load is the biggest challenge Which technology to choose and which to reject?? This is especially true where technologies change rapidly United Sates – Asia Environmental Partnership (US-AEP) is one such body which aids developing countries to determine the best solution


Example :Example Removal of arsenic from drinking water in India US-AEP worked with Central Ground Water Board & Rajiv Gandhi Drinking Water Mission India purchased $4Million worth of treatment equipment from Apryon Technologies and Water Systems International Apryon sells an integrated water treatment system that provides safe water on demand (8-12 liters per minute), easy to maintain & runs without electricity.


Promoting Public Private Partnerships :Promoting Public Private Partnerships PPP present an opportunity for combining Entrepreneurial, innovative & efficiency of private firms Flexibility of public institutions to deliver services in neglected areas


Example :Example


Access to Venture Capital & Technology Transfer :Access to Venture Capital & Technology Transfer VC provides Support for product development Commercialisation of the product Management support Business & Marketing strategies Matchmaking services


Example :Example Aureous Capital Fund supports SMEs in developing countries Aureous East Africa invested $4 million in Shelys Pharmaceuticals of Tanzania Development banks are examples of VC


International Alliances and ToT :International Alliances and ToT Global business environment has led to formation of network involving partners in different countries These networks reduce risks and share the costs associated with development of new products Such arrangements are important in the area of financing and technology


Examples :Examples Human Genome project International Rice Genome Project Australian Centre for International Agriculture Research


Measures to Improve Host Country Absorptive & Technological Capacity :Measures to Improve Host Country Absorptive & Technological Capacity Some developed countries support human resource development in developing countries They provide scholarships for higher education in their home countries Also provide research and equipment support to academic, research and professional institutions in developing countries


Technology Policies :Technology Policies


Need for Technology Policy :Need for Technology Policy Need for technology policy is made by two things Market failures that call for remedial action to restore equilibrium Ability of the Government to undertake measures so that benefits of intervention exceed their costs Technology policy is only justified where market failures are clearly established and investment is able to create net social benefit


Technology Policy :Technology Policy Domains of Technology Policy


Skills :Skills Skills are essential pre-requisites for national competitiveness and technological mastery Competitive advantage of developing countries lies in their low cost labour. In the long run, countries have to raise skill levels to grow in open and competitive markets


Technological Effort: Research & Development :Technological Effort: Research & Development According to “technological gap” theory innovation is essential to trade & competitiveness Countries that innovate, gain an advantage & export to countries which are lagging technologically


Research & Development Funding :Research & Development Funding


Internalised Technology Transfer :Internalised Technology Transfer FDI is an efficient way of transferring technology Transnational Corporations are important investment agents FDI can directly increase technology stocks by providing machinery, equipment as well as technological assistance and know-how For many new technologies, internalised transfers are preferred, since innovators resist technological transfers to unrelated parties


“Externalised” Technology Transfer :“Externalised” Technology Transfer This is through transfer licensing and arm’s length purchases of know-how, patents, blueprints, etc. Licensing - is an agreement to transfer the exclusive rights to use technology from the innovator to the licensee in exchange for payments of royalty and licence fees


Infrastructure :Infrastructure It is an essential pre-requisite for both individual firms’ and national competitiveness Includes technological infrastructure in telephone mainlines, personal computers, mobile phones, optical fiber networks, Internet hosts, etc.


Indian Technology Policy :Indian Technology Policy


Aims :Aims a) attain technological competence and self-reliance, to reduce vulnerability, particularly in strategic and critical areas, making the maximum use of indigenous resources; b) provide the maximum gainful and satisfying employment to all strata of society, with emphasis on the employment of women and weaker sections of society; c) use traditional skills and capabilities, making them commercially competitive; d) ensure the correct mix between mass production technologies and production by the masses; e) ensure maximum development with minimum capital outlay;


Aims :Aims f) identify obsolescence of technology in use and arrange for modernization of both equipment and technology; g) develop technologies which are internationally competitive, particularly those with export potential; h) improve production speedily through greater efficiency and fuller utilization of existing capabilities, and enhance the quality and reliability of performance and output; i) reduce demands on energy, particularly energy from non-renewable sources; j) ensure harmony with the environment, preserve the ecological balance and improve the quality of the habitat; and k) recycle waste material and make full utilization of by-products.


Objectives :Objectives Self Reliance In a country of India’s size and endowments, self-reliance is inescapable and must be at the very heart of technological development We must aim at major technological break-through in the shortest possible time for the development of indigenous technology appropriate to national priorities and resources For this, the role of different agencies will be identified, responsibilities assigned and the necessary linkages established


Objectives :Objectives Strengthening the Technology Base in R&D Education & training Skilled manpower Newly emerging areas such as information and material science, electronics & biotechnology


Thank You :Thank You