Transcript Technology and Global Trends

Chapter 2
Technology and Global
Trends
Chapter Objectives
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Identify the Significant Global Change
Identify the Significant Technological
Change
Impact of Technological Change on
Society and economy
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1-Significant Global Change
Forces
Examples
Nature of the workforce
. More cultural diversity
. Increase in professionals
. Faster and cheaper computer
Technology
. New mobile communication devices
Economic shocks
. Rise and fall of stocks
. Decline in the value of the Dollar
. Surge in Oil Prices
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Significant Global Change (count-)
Forces
Examples
Competition
. Global competitors
. Growth of e-commerce
Social trends
. Retirement of Baby Boomers
. Increase interest in urban living
World politics
. Opening of markets in China
. The war on terrorism following 9/11/01
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2-Significant Technological Trends
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Electronic commerce – is commerce, but it is
commerce accelerated and enhanced by information
technology.
Telecommuting – the use of communications
technologies to work in a place other than a central
location.
Information Technology– the use of computer to
store, process, analyst and design data and information.
Information Communication Technology– a
combined of IT and Telecommunication.
Development of new materials – increasing
competition with, and substitution of traditional materials
generated from natural resources.
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3-The affect of Technological
Change on Society
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Technological change has been an important factor
in economic growth, both in developed and
developing countries.
We must also remember that it is through R&D
efforts and technology transfer the firms will get
technological change.
In this session our objectives will examine the affect
of technologies change on society:
 Economy
 Productivity
 Employment
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affect of technological change on
economic growth
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Conventionally the rate of economic growth is
defined as the rate of increase of GDP
Economists like Solow, Abbramowitz,
Fabricant, and Denison and other have tries,
in the USA to study, using very sophisticated
statistical techniques the link between
economic growth and technological change.
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“Denison Study”, He concluded that between 1929 and
1957, in US, technological innovations accounted for
40% of economic growth.
Based on many such studies, there is evidence to believe
that the introduction of technological innovation has had
a significant affect on economic growth.
In fact, there is evidence to link the growth of the
Japanese economy with increased R&D expenditure and
decline in the US economy with decreased R&D
spending.
Look at Singapore , Taiwan, Japan, S. Korea etc,.
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Affect of technological change on
Productivity
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Economic society uses input factors of labor, capital and
natural resources to produce outputs of goods and services
to meet its needs. Technology is the means by which
inputs are used to produce an output.
The productivity of a factor of production is defined as the
ratio of the total output to the amount of that inputs used.
An important in the productivity of any one of the factors
of production, it therefore,
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Reduction in amount of that factor required to produce a fixed
amount of output or
An increase in the amount of output that could be produced using
a fixed amount of the input
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Affect of technological change on
Employment
The impact of technological change on employment
has controversial
 Two widely divergent views have been held
regarding the impact of R&D outputs on employment
 View 1 Technologies change eliminated jobs
 View 2 Technologies change creates jobs
 A third view is that both are correct depending on
time horizon
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If R&D is carried out to produce new production
technology that makes labor more productive
then fewer workers will be needed
Thus in the short run jobs are lose with all the
associated social problem
If the higher labor productivity is translated into
lower prices for the products then the demand
for the products could increase and more labor
will be needed to produce them
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When productivity increases and sales increase due
to lower prices for the products, profits become
available for reinvestment.
This reinvestment could be used to create new jobs
and new industries.
This could then absorb workers who have lost their
jobs due to increases in labor productivity.
However, whether they can be absorbed or not
would depend on whether they have necessary skills
to accept the new jobs
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Affect of technological change on
corporate profitability and growth
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The main objectives of bringing technological change
in a firms are:
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To support current businesses
To provide new business venture
To explore new technology bases
Technological change intended to support current
businesses will have as objectives:
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The extending of the product lifetimes of current products
Lowering the costs of production of current products
Creating new models of existing products
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Technological Change which intended to provide new
business ventures will have as its main objectives:
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The creation of new product lines to enter new businesses
Technological change to explore new technology
bases will have as its main objective
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The deepening and broadening of the existing and
potentially new technology bases of the company.
Putting it differently it simply means that firms have
to introduce technology to:
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Survive
Increase profit and
Growth
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Example Transportation Cost cutting of JAL
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The cargo division at Japan air line (JAL) has
devised a new air cargo container which
keeps fish alive, but in a state of suspended
animation without seawater.
To keep fish alive at room temperature they
must be transported in 20 times their own
weight of seawater
However, using seawater has disadvantage
due to its weight and corrosive properties
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JAL has found that by chilling the seawater further makes
the fish comatose and their demand for oxygen virtually
drops to zero. Thus water can be dispensed with, and the
fish flown more economically. This process is called
“anabiosis”
JAL estimate that by this method a package of five sloe
weighing 5 kg can be shipped USD 8.70 whereas the
old method would have cost approximately USD 60.00
This new technology has great benefits for JAL, customers
and fish producers close to Japan (Philippine and
Vietnam)
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