Technology Decision Making
Making technology decision is one of the most important parts of business decision making activities. The technology decision adopted should meet the minimum standards that allow production of high quality products with minimum cost of production possible. Technology in product development plays a key role in manufacturing efficiency, which is the performance indicator of an organization. When faced with three technological alternatives that include licensing rights from other firms, internal development or outsourcing technology, various factors should be put into perspective. Each of the options has its merits and demerits depending on how it connects with the organization’s goals.
The most viable technological option is to develop the technology internally and if possible, license it out to interested companies. Given that manufacturing a product is a sensitive initiative, the technology in use should function without interruption. This will involve applying the expertise resource in research and development to develop a technology that solves the needs of the target market, while at the same time retaining the ownership rights of the technology.
The merits of an internally developed technology are diverse. Despite the initial high cost of developing the technology, the subsequent costs of running it are minimal. Once the technology is up and running, it becomes an investment and the company has the option of licensing it to another company, thus recovering the set up costs from revenue inflows or royalties (Gary, 2008). The infinite ownership of the technology gives the company freedom of redesigning it whenever need arises leading to efficiency in production of the product. This is unlike in the licensing rights of use from another where the company will have to pay license fees at all times as long as it continues using the technology, while at the same time the ownership will never pass over to the licensee.
Licensing the internally developed technology to other firms creates a positive reputation of the firm especially when the product so produced is performing well in the market. This makes the firm to win a competitive edge over its rivals through efficient technology. It involves giving the right to use the intellectual property to the licensee which may also include trade secrets and patents. The advantage of this is that, the licensor will still retain the control of the usage of the license and where it feels aggrieved; it can withdraw the license depending on the terms of the license.
Being an investment, the internally developed technology allows the company to draw periodic cash flows through licensing while at the same deriving the benefit of market penetration through the licensee without having to incur addition costs of introducing the product to new markets.
Ownership of the technology allows the firm to take control of quality checks effectively.
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