technology management

Technology Management

April 16, 2010, Istanbul TR

Conference, Session – 2

A presentation to Information Technologies for the Enterprise

Ufuk KILIÇOrcas Information Technologies

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 ModelEntry 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 ModelBARRIERS TO ENTRYAbsolute cost advantagesProprietary learning curveEconomies of scaleCapital requirementsBrand identitySwitching costsAccess to distribution

BUYER POWERBuyer volumeBuyer informationPrice sensitivityThreat of backward integrationProduct differentiationBuyer concentrationSubstitutes available

THREAT OF SUBSTITUTESSwitching costsBuyer inclination to substitutePerformance of substitutes

SUPPLIER POWERSupplier concentration

Switching costsPresence of substitutes

Threat of forward integrationCost relative to total purchases

DEGREE OF RIVALRYExit barriersIndustry concentrationFixed costs/Value addedIndustry growthIntermittent overcapacityProduct differencesSwitching costsBrand identityDiversity of rivalsCorporate stakes

Porter’s 5 Forces: Movie Industry

DEGREE OF RIVALRYFew competitors - high concentrationHigh exit barriers – stockholdersHigh fixed costsSlowing industry growthIntermittent overcapacityNo real product differencesNo brand identity

THREAT OF NEW ENTRANTSNo economies of scaleCapital requirements falling – digital technologyNo brand identityDirect, internet distribution



SUPPLIER POWERLimited suppliers: actors, writers, directors, special effects peopleActors command high salaryNeed limited actors for successful film –few substitutes

Some threat of forward integration (independent studios)High costs relative to total purchases


BUYER POWERBuyer volume vital (1st weekend sales!)Buyer information strong – blogs, internet buzzPricing more sensitive ($10+) / piracy!No studio brand loyaltyHigh movie / actor loyaltyLow consumer concentrationHigh DVD buyer concentrationMany substitutes available


Week 4: Chapter 9Competition

THREAT OF SUBSTITUTESNo switching costs for consumersModerate threat of substitution by consumersIncreasing 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(Creations of the Mind)

• Inventions

• Literary and artistic works

• Company and product names

• Product designs

• Commercially valuable, secret business information

Types of Intellectual Property

• Patents

• Trade secrets

• Copyrights

• Trademarks

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?

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

• 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?

Patentable Subject Matter:

• Any new and unobvious substance, product, apparatus, method of making something or method of doing something

• Design Patents

• Plant Patents

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?

• Individuals that merely act as technicians under the direction of the actual inventors

What Constitutes Public Disclosure?

• Websites

• Advertisements

• Publications

• Discussions/Presentations – not under confidentiality agreement

The Easiest Way to Protect Your Invention

January 1, 2009 – Disclose

January 2, 2009 – Patent

BAD

The Easiest Way to Protect Your Invention

January 1, 2009 – Patent

January 2, 2009 – Disclose

GOOD

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.)?

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

• Example: ©2007 Archer & Greiner, P.C. All Rights Reserved

• Use of notice not required

• Registration not necessary to use notice

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

• 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?

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.)?

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

• Examples:

– ARCHER & GREINER®

– ARCHER & GREINER™

• Use of notice not required

• Registration not necessary to use notice

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

• 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

Source: UNCTAD Series on Technology Transfer & Development

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?

• 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

• Financing of Technology Transfer

• Training

• Partnerships & Alliances(Public Private Partnership Programs)

• Support for equipment purchase or licensing(FDI)

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• 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

• 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

• 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

• 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

• PPP present an opportunity for combining

• Entrepreneurial, innovative & efficiency of private firms

• Flexibility of public institutions to deliver services in neglected areas

Example

Access to Venture Capital & Technology Transfer

• VC provides

– Support for product development

– Commercialisation of the product

– Management support

– Business & Marketing strategies

– Matchmaking services

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

• 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

• Human Genome project

• International Rice Genome Project

• Australian Centre for International Agriculture Research

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

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

Domains of Technology Policy

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

• 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

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

• 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

• 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

Aims

• 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

• 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;

• 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

• 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

• Strengthening the Technology Base in

– R&D

– Education & training

– Skilled manpower

– Newly emerging areas such as information and material science, electronics & biotechnology

Questions?

Ufuk KILIÇLearn with us at ufukkilic.netThoughts on business, technology, mobile, culture, design, and living life well.

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