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.

Motorolas success highlights the fact that the

firms technology choices have significant
competitive implications.

MOTOROLA
Motorola 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 companys 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 1940s , 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 1940s , the company entered into the television

business

This period , also saw their first flop product : An automatic

push button gasoline car heater.

 During 1950s , 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 1950s , the company began to face

competition from overseas manufacturers.

1960s 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 1980s Motorola rolled out several new

products electronic engine control for
automobiles, 32 bit microprocessor , low cost
telephone terminals.

 During the 1980s 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 1990s the company continued the

reorganization efforts .Motorola also launched
new products wristwatch pagers and cellular
communication system.

Reasons for Motorola

Success
The Motorolas 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 Appropriation
A firms 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 firms 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.