BUSINESS STRATEGY &

TECHNOLOGY STRATEGY

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 OBJECTIVE:
• Overview of the concept of strategy and its perspectives
• Present the fundamentals of strategic management of
technology
• Highlight the various types of technology strategies
• Present the relationship between technological
innovation and organizational competitiveness
• Present the link between technology and strategy
• Highlight the importance of linking technology strategy
with business strategy.

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Introduction

• Between planning and strategizing:

Strategy charts the direction and winning formula, while
planning charts the procedures and action at various
level of the organization and to be followed in-line with
the winning formula.

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 MAJOR LIMITATIONS OF PLANNING PRACTICED IN
INDUSTRY

• STEADY-STATE CONDITION
• 12-MONTH CYCLE
• DATA RATHER THAN INFORMATION/ KNOWLEDGE
• LACK OF RATIONAL THOUGHT
• COMMUNICATING THE STRATEGY
• IGNORING TECHNOLOGY

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 STRATEGY:

Envisioning and planning for the future.

Detailed plan to be followed to compete and win in a continually

changing environment.

Organization's fundamental approach to accomplishing its overall

objective

The concept of strategy from a broader perspective is about

planning and attaining objectives while maintaining a fit between
the organization's objectives and resources and its changing
market opportunities.

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 Hierarchy of Strategy

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 FORMULATION OF A STRATEGY: The Core and
Operating Units For The Execution of Strategy

A B

Mission, Vision,
F Objectives & C
Goals
Operating
Units
E D

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 • MISSION:
The reasons for which the business is established

• VISION:
A picture of a different reality for the future

• OBJECTIVES:
A target that will help accomplish vision

• GOALS

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 CONTEXT IN WHICH STRATEGY IS FORMULATED:

• INTERNAL FACTOR
Strengths & Weaknesses
Personal values of Key Personnel

• EXTERNAL FACTORS
Opportunities & Threats
Societal Expectations

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 Context in Which Strategy is Formulated

EXTERNAL FACTORS

Opportunities & Threats Societal Expectations

INTERNAL
- Consumer Needs FACTORS - Government Regulations

Strengths & Values of

- Emerging Weaknesses of Key - Social Responsibilities
Technology Resources Personnel
- Core Competency - Motivation
- Know-How - Drive - Business Ethics
- Market Expansion
- Resources - Ethics
- People - Others - Workers Union
- Competitor’s - System
Strategies
- Others - Environmental Issues

- Others - Others

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 Model of a Strategic Management Process

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 Mission/ Vision

Evaluate External
Evaluate Internal Factors Strategy Formulation
Factors

Long & Short Term

Objectives

Generate, Evaluate and

Select Appropriate
Strategy

Establish Relevant Units, Plans of Action and

Implementation
Structure and Policies Schedules

Allocation of Resources

Evaluatio
n

Figure: Strategic Management Model

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 SOME OF THE METHODS USED IN STRATEGIC
ANALYSIS AND DECISION MAKING:
The Use of Decision-Matrix Techniques

• PRODUCT EVALUATION MATRIX

• MARKET-GROWTH-MARKET-SHARE ANALYSIS
MATRIX
• X-Y COORDINATE POSITIONING METHOD
• M-by-N MATRIX
• STRENGTHS, WEAKNESSES, OPPORTUNITIES,
THREATS (SWOT) MATRIX

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 Technology Strategy
• Strategy involves envisioning and planning for the future.

• Technology strategy is the task of building, maintaining and

exploiting total sum of a company's technological assets

• Technology strategy refers to the choices that companies make in

acquiring, developing and deploying technology in order to achieve
their business goals.

• Technology strategy should be linked to, consistent and supportive

of business strategy.

• While business strategy is to gain a sustainable economic

advantage, technology strategy concern with the sustainable
technology advantages leading to competitive edge.

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 FORMULATION OF A TECHNOLOGY STRATEGY

• BUSINESS STRATEGY
- To gain a sustainable economic advantage.
• Focuses on improving competitive position of company’s
products or services within the specific industry or market
segment

• TECHNOLOGY STRATEGY
- To gain sustainable technological advantage that provides a
competitive edge.

Concern with exploiting, developing and maintaining the sum

total of the company’s knowledge and abilities.

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 Key Area in Technology Strategy
Formulation
1. Identify the mission, vision and goals
• The company mission, vision and goals have to be identified in order
for the firm posture on the market to be clear
1. Know the firm’s posture
• Company must examine the opportunities within the firm external to
the firm and trajectories of technology.
1. Make aggregate project plan
• An aggregate project plan should be created to align vision and
mission statement of the company.

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4. Decide on acquisitions and organization

• Decision and acquisitions and the organization have to be made. External factors are not only
the agent but they can determine the alternative of an innovation strategy.

5. Make resource allocation

• Resource allocation is a process and strategy where a company has to decide which scarce
resources should be used in producing goods or services within the time constraints.
6. Lead the innovative effort
• The innovative effort of the company needs to be led. Innovation is very important towards
the survival of an organization as it emphasize on the innovation culture, innovation climate
and performance appraisal.
7. Set up evaluation methods (1.5 marks)
• To excel in a technology strategy, a company should set up evaluation methods to assess the
technology utilized.
8. Choose market entry strategy (1.5 marks)
• As a final step, the company has to choose a market entry strategy to reach the customers and
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position the product successfully in the market.
 TYPES OF TECHNOLOGY STRATEGIES
• Technology Strategy Types for Product Development :
In product development, the degree of product
sophistication, timing of new product introduction and
frequency of new product development can be classified as
technology strategy types.
First to Market, Follow the Leader, Application Engineer and Me Too

• Technology Strategy Types for Production:

strategies in production methods, rate of innovation and
product sophistication.
• Technology Strategy Types for Management:
wherein the firm seeks to identify and exploit technologies
in the pursuit of competitive advantage through and within
its organizational structures and practices.
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COMPETITIVENESS OF FIRMS

• A firm’s competitiveness depends on its ability to provide

goods and services to the marketplace more efficiently
and effectively than its competitors.
• This depends on firm’s ability to exploit resources and
ideas in a timely, cost-effective manner to accomplish
objectives and to create products and services desired
by customer.
• How? Management must develop a strategy for
competing (those that can give an advantages over its
competitor).

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CORE COMPETENCIES AND TECHNOLOGY
STRATEGY

• FUNDAMENTAL CONCEPT IN BUILDING

TECHNOLOGY STRATEGY – core competencies

• i.e. INNER STRENGTH UPON WHICH A STRATEGY

SHOULD BE BUILT.

• IN THE FORM OF TECHNOLOGY, PRODUCTS,

PROCESSES OR IN THE WAY IT INTEGRATES
TECHNOLOGICAL ASSETS.

• COLLECTIVE SETS OF KNOWLEDGE, SKILLS,

AND TECHNOLOGIES THAT A COMPANY APPLIES
TO ADD VALUE TO CUSTOMERS.
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 • USUALLY CONVERTED INTO CORE PRODUCT
THEN TO END PRODUCT.

• PERCEIVED VALUE OF END PRODUCT

INCREASES WHEN THE ORGANISATION
RELATES THE PRODUCT TO ITS SPECIFIC
COMPETENCE.

• HOW TO IDENTIFY CORE COMPETENCIES:

1. Provide distinct advantage of the organization.
2. Competitors find it difficult to imitate.
3. Contribute significantly to end product.
4. Access to variety of market.
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EXPLOITING COMPETENCIES:

• Develop, nurture and enhance core competencies

• Widely deploy core competencies
• Align other activities around competencies
• Optimal plan for technology integration and outsourcing
• Build barriers to competitors
• Look for long-term rather than short-term gains

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 TECHNOLOGY AND CORE COMPETENCE:

A PRODUCT OF A COMPANY IS BASED ON A SET OF

TECHNOLOGIES LINKED TO ITS CORE COMPETENCIES OR
DEPENDENT ON ACQUIRED TECHNOLOGIES

LAYERS OF TECHNOLOGY IN A COMPANY

• DISTINCTIVE TECHNOLOGIES

• BASIC TECHNOLOGIES

• EXTERNAL TECHNOLOGIES

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 Classification of Technologies in Relation to its Standing in
a Product

External
Technologies

Basic Technologies

Distinctive
Technologies

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DIRECTION OF STRATEGY

• The reasons for which the business is established – to satisfy

societal or customer needs. Companies are formed to provide a
structure and a mechanism that faciltate the spinning out of
technology to satisfy those needs.

• Components of Being Competitive and Achieving Wealth:

a. Strategy with clear direction.
b. Exploitation of technological competence.
c. High level of productivity.
d. Aggressive and persistent marketing.

See Fig. 8-14

Setting the direction depends on the changes in technology,

customer needs, and environmental factors. (e.g. Microsoft)

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Figure 8.14 The Vehicle For Creation of Wealth

Wealth
Creation

Marketing

Productivity

Technology

Strategy

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 FACTORS TO BE CONSIDERED IN DECIDING
TO INTEGRATE?

• TECHNOLOGY FIT WITHIN THE COMPANY

COMPETENCY PORTFOLIO
• HOW CRITICAL A TECHNOLOGY IS TO THE
BUSINESS
• IMPORTANCE OF MAINTAINING CONTROL OVER
THE TECHNOLOGY
• COST ASSOCIATED TO THE PROPOSED
INTEGRATION

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DEVELOPING ALTERNATIVE STRATEGIES FOR
INTEGRATION

• IMPORTANCE v LEVEL OF DIFFICULTY MATRIX

• TIME v INVESTMENT REQUIRED

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IMPORTANCE v LEVEL OF DIFFICULTY MATRIX

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TIME v INVESTMENT REQUIRED

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 INTEGRATION
• VALUE CHAIN IN MANUFACTURING

• OWNING OR HAVING CONTROL OVER ACTIVITIES ALONG

THE VALUE CHAIN

• HOW? Mergers, Acquisition, Takeovers, Collaboration and

Alliances

• TYPES OF INTEGRATION:
a. Backward integration
b. Forward integration
c. Horizontal integration
d. Vertical integration

• DEGREE/ EXTENT IN WHICH A COMPANY OWNS OR

CONTROL OVER THE TECHNOLOGIES MUST BE GUIDED
BY COMPANY’S STANDING IN TECHNOLOGY

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 HOW DOES ONE FORMULATE TECHNOLOGY
STRATEGY?

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 Figure: Hierarchical view of technology strategy

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 TECHNOLOGY STRATEGY FORMULATION (Porter,
1985)

1. IDENTIFY ALL THE DISTINCT TECHNOLOGIES AND SUB-

TECHNOLOGIES IN A VALUE CHAIN.
2. IDENTIFY POTENTIALLY RELEVANT TECHNOLOGIES IN OTHER
INDUSTRIES OR UNDER SCIENTIFIC DEVELOPMENT.
3. DETERMINE THE LIKELY PATH OF CHANGE OF KEY
TECHNOLOGIES.
4. DETERMINE WHICH TECHNOLOGIES AND POTENTIAL
TECHNOLOGICAL CHANGES ARE MOST SIGNIFICANT FOR
COMPETITIVE ADVANTAGE AND INDUSTRY STRUCTURE
5. ASSESS FIRM’S RELATIVE CAPABILITIES IN IMPORTANT
TECHNOLOGIES AND THE COST OF MAKING IMPROVEMENTS
6. SELECT A TECHNOLOGY STRATEGY
7. REINFORCE BUSINESS-UNIT TECHNOLOGY STRATEGIES AT A
CORPORATE LEVEL.

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 EFFECTIVE TECHNOLOGY MANAGEMENT is based
on successfully linking business and technology
strategies

The two must be closely intertwined and highly

integrated.

• Technology gives a company competitive edge

• Failure to integrate the two contribute to

competitiveness decline.

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 LINKING TECHNOLOGY AND BUSINESS
STRATEGIES

• Business success – bringing product and services to

market – i.e. technology is the basis.

• Competitive organization - able to link technology

strategy and business strategy.

• Getting the business side and the technical side to agree

on common set of priorities is a big challenge.

• Both side must integrate into one organizational strategy.

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Process of Technology Strategy
1. Technology drives many changes, especially in the business environment which
impact one companys staretgies.
2. First, companies need to first understand their current business environment. The
company also has to understand the nature of particular technology that should be
used in their industry.
3. Then, the company itself has to prepare the changes happening inside and outside
their organization.
4. The main requirement for a company to be competent in the technology
environment and bet he backbone of its technology product is deploying
technology startegy in the production process.

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 Company Strategy
Demand
Create

Company Strategy Company Strategy

Change

Figure 1 : Process of technology strategy in business

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 QUESTIONS FOR BOTH SIDES:

1. To What extent is technology relevant to business?

2. Which business strategies require technology?
3. Where will we get it (the technology)?
4. What are our core technologies for the business?
5. In which technology should we focus our research
effort?
6. What new strategic options will technologies provide?

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