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Pgdibo01 - Q1
Pgdibo01 - Q1
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A seller of technology finds that it can earn returns from selling the technology. This is particularly
so in view of the fact that life cycle of the technology is short. The advances made in technological
innovations are so fast that there is a tendency to sell previous generation of technology. In
addition, the proprietorial right in a number of cases is short. Hence, the firm is induced to sell
technology.
Transfer of technology among ng various units of TNCs, which are globally operating, that is
subsidiaries, afiliates and joint venture partners, also takes place at a price and also enjoys the
benefits of total production of products and services.
Buyers of technology have three main reasons for purchasing technology. They are:
a) Innovating a new process or a product by a firm is costlier than buying technology in the
market, It is often said that one does not need to invent a wheel again and again,
b) Since a commercially successful techn
technology
ology has already proved its utility the buyer finds it
very attractive to buy the technology.
c) A firm which has no incentive to become a leader in the market either by innovating a new
product or a new process would find it more convenient to buy the most modern technology
from the owner which is most often a TNC than taking the risk of innovating a similar
technology.
NON-EQUITY
EQUITY FORMS OF TECHNOLOGY TRANSFER BY TNCs AND SMALL AND MEDIUM
ENTERPRISES
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3. Management Contract: A number of firms also sign management contracts with firms in the
host countries. Under these contracts foreign enterprise advises the host company about
various management practices which are in use in its parent company. Occasionally, under
this contract the entire management is handled by the foreign firm. For this the hos
host company
has to pay management fees, either lump sum or in instalments.
4. Franchises: Under this owner of a specific technology allows a host company under franchise
to use its specific knowledge for a franchise fee. This is a widespread practice in food in
industry,
hotels, etc.
5. Export & Technology Transfer: National firms will be able to acquire technology through
exports. one company signed a collaboration agreement with the another Company, under
which latter provided: six months of training for; assistanc
assistance in start-up
up activities, including the
installation of machinery purchased from it; supervision of production managed by former; and
marketing services.
6. Strategic Alliances and Technology Transfer: High risks and rising R&D R& costs (especially in
the area of new technologies) and the rapid obsolescence of new products have forced many
TNCs to form technology-related
related strategic alliances to share development costs, acquire new
technologies and make better use of scarce qualifie
qualifiedd personnel. The substantial number of
strategic alliances in existence now is a relatively new phenomenon. There are indications,
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however, of an emerging trend towards a very high proportion of agreements involving the
development of and access to technol
technologies.
In services, non-equity
equity arrangements have played an important role. There are some grou
groups of
services which have used non-equity
equity firms.
2. Business and professional services such as accounting, consulting and legal services
whose main assets are human capital, reputat
reputation,
ion, connections and brand names: They
do not require expensive fixed assets that could be the basis for capital equity, but their key
competitive advantages can be codified and easily transferred through non non-equity
arrangements, such as partnership.
3. Business
ess services such as engineering, architectural and technical services, and some
advertising requiring adaptation to local tastes, accounting and legal services. Partnerships or
minority of joint ventures with local partners provide access to local knowled
knowledge. This can also
lead to preliminary transfer of technology.
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