3. Natural Environment
• Watrick and Wood – “the natural environment ultimately is the
source and support of everything used by the businesses – every raw
material , every raw material , every energy source , every life
sustaining factor, even the waste disposal site”
• Fundamental for the development of the business
4.
5. • Geographical conditions – Change in marketing mix. Location of the
industry. Eg. Earthquake prone zone – affect building design
• Climatic and weather conditions – Eg. Cotton and textile industry ,
A/C, Heaters – demand pattern and demand creation varies. Eg.
Jeeps in Hilly regions
• It can call for modifications to the product packaging and storage
conditions
• Ecological Factors – Depletion of Natural resources, Environmental
pollution, Ecological balance – concern
• Govt initiatives – Increase in regulations and cost of production
6. Technological Environment
• Determinant of success of the firm – social and economic
development of nation
• Technology includes the tools – Both machines and ways of thinking –
available to solve problems and promote progress, among and
between societies
• Entrepreneurial expertise and professional know how are important
apart from knowledge to produce and distribute
• MNC – Competitive advantage to it
7. • World Economic Forum – Global Competitiveness – 8 Factors –
Technology
8. Innovation
• In the business context, innovation may be defined as Technical, industrial,
and commercial steps which lead to the marketing of new manufactured
products and to commercial use of new technical processes and
equipment.
• Provides competitive advantage
• Schumpeter – Innovation can be
- Intro of new product
- Use of new method of production
- Opening of new market
- New resource
- Reorientation of industry
9. Radical innovation
• • A basic technological innovation that establishes a new functionality. Eg:
steam engine
Incremental innovation
• A change in an existing technology system that does not alter functionality
but incrementally improves performance, features, safety or quality or
lowers cost.Eg: governor on a steam engine
Next-generation technology innovation
• A change in an existing technology system that does not alter functionality
but dramatically improves performance, features, safety or quality or
lowers cost and opens up new applications.Eg: substitution of jet
propulsion for propellers on airplanes.
10. All innovations need not be commercially
successful
• Better Mouse Trap that no one wanted
• Me too product meeting a competitive brick wall
• Competitive one – upmanship
• Environmental ignorance
• Technological dog products
• The price crunch
12. Technology S Curve
Rate of Progress of New Technology is
represented by S Curve
Poor Performance and awkward to use and costly to produce
Exponential increase
Rate of improvement is slow
Limitation can be –
Technological, social or
economic
New tech Emerges eventually
13. Technological leadership and
followership
• Technological leadership – “a firm seeks to be the first to introduce
technological changes that support its generic strategy. Leadership
can be established in technologies employed any value activity.
• Technological leadership to sustain – Faster innovation than
competitors and product cannot be duplicated
• Technological followership refers to a conscious and active strategy in
which a firm chooses not to be the first on innovations.
14. Porter’s 3 things to decide whether the
company should be a tech leader / follower
• Sustainability of Tech Lead
• First Mover Advantages – Being first, positioning, reputation, unique,
scarce materials, no imitations , early profits
• First Mover Disadvantages – Pioneering costs, Compliance, educating
buyers, demand uncertainty, imitations
15. Tech and Competitive Advantage
• When it lowers cost or enhances differentiation
• Shifts costs or improves uniqueness
• First mover advantage
• Improves overall industry structure
Sometimes it may fail and put the competitor in a favourable position
16. Time Lags in Technology Introduction and
adoption
• Developing Vs Developed countries
• Developed countries – send obsolete products to poor countries
• Eg. Late TV’s – Late in marketing and promotion of products
• Time lags – Not able to reap the market
• Electronic typewriter went down because of computer
17. Sources of Technological Dynamics
• Source of Tech Change can be internal or external – through exclusive
arrangements etc
2 Main Words in Economics which we have studied
18.
19. • Innovative drive of the company
• Customer needs and expectations
• Demand conditions
• Supplier’s offerings
• Competitive dynamics
• Substitutes
• Social forces
• Research organisations/technical facility
• Government policy
