TECHNOLOGY STRATEGY AND ITS

RELATIONSHIP WITH BUSINESS STRATEGY

Firms continually make decisions about technology .

These decisions often lie at the heart of the firms competitive advantage and in turn the value created by the business .

Technology is the cornerstone of many strategic decisions made by the firm.

Motorola’s success highlights the fact that the firm’s technology choices have significant competitive implications.

MOTOROLAMotorola Inc. has been one of the very

successful businesses in the US.

Began in 1928, when Paul Galvin and his brother Joseph Galvin purchased the battery eliminator business from bankrupt Stewart Storage battery company in Chicago.

It had 5 employees, assets worth $565 in cash, $750 in tools, and design for the company’s 1st product – a battery eliminator.

During 1930s, Galvin Manufacturing Corporation produced the first practical and affordable auto radio because they were not available from automobile manufacturers .

By1936, Motorola entered into a new field of radio communications

Over the years, Motorola introduced several firsts – push button tuning, fine tuning and tone controls in the auto radio market.

During 1940’s , Motorola hired Daniel Noble, FM communications pioneer as its director and established a research function.

The company introduced the first handheld two way radio for the US army and the first two way portable FM radio.

During this time the company changed its name to Motorola Inc. .

In 1940’s , the company entered into the television business

This period , also saw their first flop product : An automatic push button gasoline car heater.

During 1950’s , some of their products met with success , such as 3 amp power transmitter , auto radio , whereas the television business was lackluster.

At the end of the 1950’s , the company began to face competition from overseas manufacturers.

1960’s witnesses several strategic moves my Motorola.

They continued their process development efforts and implemented several low cost production methods.

Motorola also introduced many new products like the pageboy radio pager and entered into strategic alliances.

With the joint venture with National Video, they developed the first rectangular picture tube for television

With a joint program with Ford, Motorola designed the first 8 track tape players.

Between 1967-1978, Motorola began globalizing and entered many new markets , such as England, Germany and Australia.

In 1974, Motorola exited the television industry.

In 1977, it acquired Codex Corporation and in 1978, It acquired Universal data systems.

In 1980’s Motorola rolled out several new products – electronic engine control for automobiles, 32 bit microprocessor , low cost telephone terminals.

During the 1980’s Motorola exited the auto radio business and divested itself of its display system business as well as its automotive alternator and electrochemical meter product lines.

In 1986,it started employee reduction program and undertook several reorganizations as well.

During 1990’s the company continued the reorganization efforts .Motorola also launched new products – wristwatch pagers and cellular communication system.

Reasons for Motorola Success

The Motorola’s success depended critically on its technology-related decisions, such as choice of appropriate technologies, as well as the divestiture of technologies whose time had run out.

These decisions involve investing in programs to develop technologies for commercial applications.

These decisions also include the appropriate mode of implementation – whether the firm decides to implement the decision by itself or through strategic alliances.

TECHNOLOGY-BUSINESS CONNECTION

Firms make numerous technology choices as they compete in the marketplace.

These choices are made in three domains :

1.Technology appropriation, or commitments to build technology capabilities.

2.Deployment in products, or commitments to exploit technological capabilities through new product development.

3.Deployment in value chains, or commitments to exploit technological capabilities in operations.

Technology AppropriationA firm’s technology appropriation decisions

often lie at the core of their future successes.

These decisions influence the ability to create new businesses and to pioneer new markets.

Historically, firms aspiring to develop strong technological capabilities have relied on the strong in house R & D ., but increasingly , they are also relying on collaborative arrangements to accomplish the same goals.

Even when technological capability is not viewed as a source of future competitive advantage , firms need to appropriate technological capabilities, because :

1.In some industries, the acquisition of certain capabilities is necessary for survival

For example –In the airline industry, computer reservation systems have become an integral part of the value chain. It is difficult to operate in the industry without acquiring the capability to handle information systems.

2.Acquisition of capabilities often enables a firm to manage its value chain more effectively.

The speed with which Wal-Mart can make rapid changes on the shop floor is to some extent attributable to its capability at telecommunications and satellite communication capability.

3. Acquisition of capabilities sometimes enable firms to redesign existing products or to develop new products so that they can differentiate themselves in the marketplace.

Appropriation of technology capabilities is not confined to high tech technology industries.

Even in low tech industries, certain firms may choose to develop technological capabilities for deployment in their own business or for development of some new business.

For example , in a capacity driven industry like agriculture , some firms are acquiring biotechnology in order to stay infront.

DEPLOYMENT IN VALUE CHAINS

Every activity in the value chain of a firm uses some technology to combine raw materials and human resources to produces some output .

This technology may be simple or complex, like logistics, which combines disciplines such as industrial engineering, electronics and material technology.

A firm’s value chain, represents innumerable technology choices made over a period of time

This value chain suggests multiple opportunities to render each activity faster, more efficient and effective.

For example – the substitution of fax machines for mail delivery has speeded the handling of documents and information .

Technology deployment at the value chain level includes not only specific technologies but also potential for improvement by the efficient combination of the existing activities.