CH. 5 TECHNOLOGY AND COMPETITION. THEORITICAL LINKAGES Globalisasi Time Compression TechnologyIntegrationGlobalisasi TechnologyIntegration InnovationDiffusionInnovationDiffusion.

CH. 5TECHNOLOGY

AND COMPETITION

THEORITICAL LINKAGES

Globalisasi

Time Compression

TechnologyIntegration

Innovation

Diffusion

1. Competitive Dynamic

2. Organization

TechnologyEnvironment

Process ofTechnical Change Consequences

COMPETITIVE DOMAIN

► Competitive domain refer to arenas where multiple firms compete for the hearts and minds of customers.

► In many instances, industries constitute the primary competitive domains of technology.

CompetitiveDynamics

CompetitiveAdvantage

ValueCreation

TECHNOLOGY AND COMPETITIVE ADVANTAGE

TECHNOLOGY

COMPETITIVE CONSEQUENCES OF TECHNOLOGICAL CHANGE

FOUR clusters of consequences evolve from technological change:1. Creation of new product2. Change in Value chain3. Change in Value constellation4. Competitive rivalry

1. CREATION OF NEW PRODUCT

New product represent arguably the most visible battleground in the marketplace.

Product improvement (incremental and modular innovations), architectural innovation, radically new product, and technology convergence, are the manifest ways that product competition evolves.

1. CREATION OF NEW PRODUCT

a. Product Improvements. Product improvement have helped firms extend the market reach of their products.

b. Architectural innovation. Architectural innovation provide opportunities to serve previously untapped market segments and enable firms to change their competitive position.

c. Radically New Product. Technological innovation sometimes spawns totally new products.

d. Technology Convergence. Technology integration leads to convergence. For example, convergence is now taking place in the computer, telecommunications, and entertainment to converge to form an “information industry”.

2. CHANGE IN VALUE CHAIN

► Technological changes enable firms to reconfigure their value chains, thus influencing the cost and speed of doing business.

► We may identify two ways in which value chains are transformed: ► Automation, and► Reconfiguration of process.

(1) AUTOMATION► Automation refers to the replacement of labor

with less expensive capital-intensive technologies.

► Automation has been an ongoing phenomenon in developed countries during the twentieth century, with capital-intensive equipment and machinery replacing blue-collar job.

(2) RECONFIGURATION OF PROCESS.

► Firm also reconfigure their value chains by introducing superior processes into their operations.

► Superior processes may evolve from technology progression or technology evolution.

3. CHANGE IN VALUE CONSTELLATION

The value constellations (IN: tatanan nilai) of firms are often upset by technological developments in three ways:

1. Shifting balance of power, shift the balance of power between firms and their suppliers and distributors.

2. Potential for outsourcing. As a result of the market forces and the standardization of production processes, firms are discovering opportunities to outsource many activities that had hitherto been conducted in-house.

3. Different ways of managing value constellation. Better manage their supplier and distributor relationship.

4. COMPETITIVE RIVALRY

► Product and process innovations are two means by which the competitive game is played and won.

► This innovations enable firms 1) to erect entry barriers to competitors; 2) to bring about product and process substitution; and 3) to redefine the rules of competition.

4. COMPETITIVE RIVALRY

► Barrier to entry. Misal dengan hak patent, maka dapat menghalangi new entrance untuk memasuki industri. Contoh lain adalah perusahaan yang bersaing berbasis pada know-how yang dihasilkan dari kegiatan R&D, maka akan membatasi new entrance.

► Product and process substitution. Contoh: plastik sebagai pengganti plat baja, word processor sebagai pengganti mesin ketik, microwave oven sebagai pengganti oven biasa. Juga diferensiasi produk: mengasilkan DVD yang menghasilkan play time yang lebih panjang, gambar lebih tajam, suara lebih jernih, dsb.

► Redefine the rules of competition. Contoh: dengan mempelajari Jepang yang memperkenalkan mesin fotocopy ukuran kecil, maka Xerox menemukan cara lain untuk menjual, saluran distribusi, dan bersaing.<

TECHNOLOGICAL CHARACTERISTICS OF COMPETITIVE DOMAINS

SIX CHARACTERISTICS OF COMPETITIVE DOMAINS INFLUENCE THE RIVALRY:

1. Technological Opportunity2. Appropriability3. Resource Requirement4. Collateral Assets5. Institutional Milieu6. Speed

TECHNOLOGICAL CHARACTERISTICS OF COMPETITIVE DOMAIN

1. Technological opportunity, refer to the degree to which innovation potential exists in an industry.

2. Appropriability, refer to the degree to which the potential economic benefits from an innovation can be appropriated by the firms engaged in technology development.

TECHNOLOGICAL CHARACTERISTICS OF COMPETITIVE DOMAIN

3. Resource requirement. Competitive domains differ in the magnitude of resource commitments required to bring about an innovation. Competitive domains differ in terms of the resources flowing into technology development. Competitive domains differ vastly in terms of their resource requirements and commitments.

4. Collateral assets, of competitive domains is the need and availability of collateral assets for an innovation to yield a firm competitive advantage.

TECHNOLOGICAL CHARACTERISTICS OF COMPETITIVE DOMAIN

5. Institutional milieu. In many competitive domains, technology-based rivalry gets enacted not merely in the marketplace but in the institutions that are linked to the technology, as well. Three sets of institutional players: market participants, nonmarket institutions, enabling institution.

6. Speed. Competitive domains also differ in terms of the speed of execution they demand of competing firms. Speed refers to the velocity of change in a competitive domain that sets the pace of the internal operations of the competing firms.

No CharacteristicsCapacity Driven Customer Driven Knowledge Driven

1. Opportunity Process ProcessProduct Improvement

New Product

2. Appropriability Variable Variable Short run

3. Resource requirement for technology

Low Moderate High

4. Institutional milieu Market Market Markets and technological communities

5. Clockspeed Low Moderate High

DYNAMICS OF CHANGE IN COMPETITIVE DOMAINS

DYNAMICS OF CHANGE IN COMPETITIVE DOMAINS

Technology change can create turbulence as well as predictable incremental change in competitive domains:

1. During certain periods, radical innovations create upheavals within an industry, and the patterns of technology change drive the evolution of competitive domains.

2. During other periods, we witness predictable evolution of technology when existing characteristics of industries exert a major influence on technology development.

3. These two periods correspond respectively to the two types of innovation identified by Joseph Schumpeter: entrepreneurial innovation and managerial innovation.

Overturn

Appearance of Technological Discontinuity

Era of Ferment

Emergence ofDominant Design

Incremental Product Innovation

ProcessInnovation

Stability

The incremental change phase

The Technology Emergence Phase

(bergejolak)

EVOLUTION OF COMPETITIVE DOMAINS

FRAMEWORK OF TECHNOLOGY EMERGENCE ANALYSIS

FRAMEWORK OF TECHNOLOGY EMERGENCE ANALYSIS

Technical EconomicActivities

Applied R&D TestingManufacturing

Marketing & Distribution

Resource EndowmentsBasic Science Finance

Competent Labor

Institutional Arrangement Legitimation Regulation

Standards

GLOBALIZATION

The scope of competition is increasingly global:► Competitors from all over the world can potentially

compete on many technological battlegrounds. ► Technological competition is not confined to markets but

extends to the institution milieu; institutions in different parts of the world follow different practices, regulations, and approaches. Knowing each one of them is a formidable task.

► On the positive side, globalization has provided opportunities for rapidly acquiring collateral assets, because the number of possible alliances has increased considerably.

TIME COMPRESSION

► Membutuhkan respon yang cepat dalam persaingan antar perusahaan.

TECHNOLOGY INTEGRATION

► Perusahaan kecil dapat bergabung dengan yang lebih besar untuk melengkapi value chain.

MANAGERIAL IMPLICATION

1. Competitive Strategy2. Investment in Innovation3. Learning4. Internal Operation.