Chapter 2

Technology and Global Trends

Chapter Objectives

Identify the Significant Global Change Identify the Significant Technological Change Impact of Technological Change on Society and economy

1-Significant Global Change

Forces Nature of the workforce Technology Economic shocks Examples . More cultural diversity . Increase in professionals . Faster and cheaper computer . New mobile communication devices . 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 Competition Examples . Global competitors . Growth of e-commerce

Social trends

. Retirement of Baby Boomers

. Increase interest in urban living

World politics Climate Change

. Opening of markets in China

. The war on terrorism following 9/11/01

. Volcano, Earthquake in Japan
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2-Significant Technological Trends

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

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

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.

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,. 8

Affect of technological change on Productivity

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,

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

The main objectives of bringing technological change in a firms are:

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:

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:

Technological change to explore new technology bases will have as its main objective

The creation of new product lines to enter new businesses

Putting it differently it simply means that firms have to introduce technology to:

The deepening and broadening of the existing and potentially new technology bases of the company.

Survive Increase profit and Growth

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Example Transportation Cost cutting of JAL

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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