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Technological Factors Lecture Notes.docx

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Roopa Reddy

Technological Factors Lecture Notes 12/4/2012 11:12:00 PM Elements:  Internet affects buying, selling, communication. Technology effects everything we do , how we buy, sell. o Buying things online  something we wouldn‘t been able to do as easily 10 years ago. Shift in how we operate  Information technologies affect information access, inter-firm cooperation, cycle times. o Cycle times = how long does it take you to get through a whole process.. technology helped reduce the amount of time  Computer technologies have changed how we design and build our products and products as well  Not limited to computers and information.. like automotive industry, science, agriculture How we manage and produce, sell, buy Threat: Not easy to keep up with, demands constant learning and scanning. Especially when others are innovators and you may not be Opportunities in technology  Products – innovation, uniqueness, value  Management Process o Instant access to information  becomes instantaneously and because of that can look up client info, sales, suppliers info, manufacturing products all info is at your finger tips o Better service through coordination  looking from a customer stand point, electronically things are linked. Before you get there they already know your preference if you are a frequent customer. All connected in the travel circuit o Leaner organization  means 2 things  Requiring fewer employees. Ex: banks = online banking causes the decrease in need for tellers  Other side, people can make decisions more easily – help company run smoother. o Improved operations efficiency day to day operations… how things are running, do you have a bottleneck somewhere  CAD = Computer Aided Design = basically using software to help you to design things, prototype. Reduces the need to design a physical prototype which would cost $$  ERP = Enterprise Resource Planning = anything that needs planning. All electronic now, production planning etc. o Greater independence of company & workplace  have it as opportunity but will come back as a threat  You can work anytime, any day. You can work at home, or work at location a few days and a few at home  Used to send people have a meetings in Montreal well now we can Skype  Save things like time, money, costs, if you used to send employees to fly and now we use skype makes things cheaper and more efficient = more employees (OPPORTUNITY)  TELUS  80% work remotely and only need to come in once a week Youtube Clip: Pranav Mistry – Thrilling Potential of Sixth Sense Technology What opportunities of advancement come out of it or threats:  Poses a threat to computers and phones, because if you are able project from a small thing then potential wipe out industry  Making us more dependent on technology than we already are  He is trying to make things more digital, but also combine and interact with the physical world  He is not saying newspapers/books should be obsolete but when we could see the tv screen that cool  He wasn‘t looking to profit  People who can‘t speak  communication devices at low costs  Technology helps to 3 factors, be innovative, be unique and provide some sort of value  Competitiveness o Create barriers to entry: cooperation with other firms – being able to work with similar firms who use similar technology  technology helps to improve/increase competitiveness in some way, lending itself to barriers to entry 5 forces, if you have a increase in technology that you are using, helps prevents others from entering your industry  Communication and Collaboration o Within firm and with customers o Organized to collaborate with aircrafts  being able to collaborate with other parties,not just engineers but air traffic controls, passengers, pilots all of them; reached out to hear opinions.. Now days its easy set up a survey online etc. o Customers themselves being able to reach out  Customization o Linked to the idea of mass production o Industrial revolution = when cars became widespread, one size fits all. ―you can have any colour you want as long as its black‖ everyone was getting the same car off the assembly line. o Mass Customization: when you still producing on a large scale, but within that you are still able to customize. The reason why its option because of the advancements of technology and machinery. Ability to customize has been enabled by technology so no guidance needed by humans o Customers being involved in design – backpacks and laptops bags = being able to customize them before you buy them o Say you have range of suppliers, different inputs… that enables you to integrate whatever they have to offer but also provide more selection and choice THREATS  Limitation o Information costly to develop but cheap to share  If you don‘t have a patent or anything protecting what you have developed . Sometimes it is costly to develop and cheaper to share = THREAT  New Technology in unfamiliar areas o Disruptive technologies challenge the value of organizational capabilities and resources = technology that will make a BIG difference whether it is how things are done or a new product and if you aren‘t able to keep up, it will challenge your companies values = THREAT  Unpredicted evolution o Applies to new business  the best idea doesn‘t always win… because of that it is unpredictable of how technology will evolve. The idea is that even if you have the better technology its who convinces more users to use their technology. o Hard to predict which will do better in the long run, short run & ties into Standard Wars – incompatible standards between 2 technologies they have to become compatible or one will win and the other will lose o EX: VHS vs. BetaMax o Blu-Ray vs DVD‘s  Need for constant learning and scanning o If you are not doing a good job of understanding your external environment and technological changes, you will become obsolete and will not survive. BIG THREAT o Easy to underestimate where you should be investing because of unpredictable revolution  Information Overload o As a organization its costs $$ to find the info – Blessing and Curse  Greater independence of company & workplace o Working from home etc. THREAT WHY? o No monitoring of employees o Connecting with people, building a reputation Technology Standards  Represents standards between technologies not compatible with each other  Why SO important? They can determine whether or not companies will survive. Not limited to Info Technology  STANDARD WARS o Battles between incompatible technologies o Can determine survival of companies involved Blu-Ray vs DVDs  2000 – new set of standards evolved; reason for that each of these were backed by different companies  Blu-ray: sumsang, Panasonic and HD DVDs = Toshiba, mircrosoft  Had the same intent; wanted to store data, but used different technology  Blu-ray used this technology laser which made it look development different than DVDs, physically different  2008 = tried to make the technology compatible but problem was they couldn‘t; because the differences in technologies so there was a standard war.  By 2006 they were available in the market  Warner Brothers shifted to Blu-Ray in 2008 from HD DVD  makes a difference in support  End of standard war when they stopped no more HD dvds. Why would you not want to start a standard war: AVOID IT  During the battle, the consumers may react negatively.  consumers don‘t buy either, customers that are sitting on the fence, they may hold off. Confusion in customers  BIG FACTOR: who convinces more people that they should have this product Strategic Alliances – big players moving Also Sony included an HD Blu- Ray player in PS3 Important Technology Terms  Installed Base – referring to # of users of a particular product o Larger the users are = greater influence ie. FB big influence in social media—there installed base is over 10000000 people  Lock- In – size of investment o Spend 500 on a blu ray player, that‘s considered the ‗lock in.‘ You already invested in the product so you don‘t want to get rid of o The greater initial investment the greater resistance will be to switch to another product  Switching Costs – all the cost of moving from one product anoher o Entry barrier; makes ‗lock in‘ worse o Magnifies what you think is the cost is.. opportunity costs o PC to Apple  learning curve adds to the cost  Complementary goods – needed for value; creates vicious or virtuous cycle o If you have a blu ray disc but not a player they have no value separately until you own both o Virtuous Cycle  if one product is missing then the other one will suffer  Network Effects – value depends on users already using it o As more and more people are using this standard or product then the value to you increases, growth is exponential o In the dominant company wins when more people drive towards it o Facebook for an example, as the # of users or installed base increases then you as a potential customer sees more a purpose in joining face book. o Reaches a tipping point where net growth is exponential, over a billion users o Bad for other social media ventures Key Assets & Strategies to Win Standards War What can you do as a business in the industry already to not become obsolete ? How to make sure people stay with you?  Control over installed base of users o First-mover advantages  preemption= is you are trying to preempt other competitors by building the wall of users more quickly than they can.  CANON over Kodak.. helped Canon move along curve before Kodak  So being the first mover in that industry, you have the advantage of no one else you are competing against; you move further along the learning curve before anyone gets in. They will play catch up. o Expectations management  important because with customer behavior a lot of the time it has to do with expectations; what is going to happen in the future. Apple does this well where they release things like everyone knows when the next iPhone is coming out. These types of releases helps to manage customers expectations so they don‘t jump ship and go to another company . PREVENT PEOPLE FROM LEAVING. If they are satisfied by a company then they will stay. o Offer customers a migration path  Companies like Apple customers a migration path. Think of it a stair case.. that path offers incremental improvements to their existing products so you are not tempted to go elsewhere  At the end of this path there will be a significant improvement from the product they offer today. Keeping your interest or loyalty to the brand in the period before a big release  Intellectual Property Rights o Slows imitation or requires cooperation o Things like patents and copyrights, protects yourself to stay ahead in terms of technology and innovations  Ability to innovate o Stay on your guard o For larger companies already established in the market its harder to hit this point. Tip for them is to be aware of what is happening outside other companies whose products may not seem like a threat  Strength in Complements o RIM who is not known for developing apps, what they do adds software developers. RIM has reached out to software developers to help build apps for them. Apps become a complement to blackberry o Compare to Apple—apple has their own developers and are very good at this. No Problem – strength for them. But RIM who is struggling to stay competitive.. They need to do what they can.. Sustaining Technology Understanding two different paths to innovation.  Presents improvements to existing products in expected ways  Provides mainstream, high-margin customers with enhancements in product functionality  Existing firms normally win Basically we are looking at over time how is this product performance improve. Technology helps this happen.. Two parallel lines, mini arrows which section off different levels of performance expectations  Performance demanded at a lower level  The higher line represents performance demanded at the high level market, customers expectation high, also willing to pay for it  RED arrow  progress due to sustaining technology o Not as steep as the blue arrow  showing that the
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