Selection of Technology for business establishment08/03/2020
They say money makes the world go ’round, but the rapid advancements of technology aren’t far behind. Companies worldwide are relying on emerging technology more than ever to help drive innovation, strategy, growth and increase competitive advantage. Technology has become a crucial and indispensable part of almost every kind of business. Without the role of technology in business, many businesses simply could not survive. Just imagine a multinational organization or a small business enterprise trying to operate without the use of a telephone or computer — or even the Internet. Whatever form business technology takes — from video conferencing to the virtual sale of a new car or house or a more secure method for online banking and shopping — the role of technology in business continues to change the way we live and work.
Technology in business allows organizations to improve both the performance and overall effectiveness of products, systems and services, which, in turn, enables businesses to expand quickly and efficiently. Technology has a wide range of potential effects on management, as well as various ways it can impact the operations, productivity, profitability and sustainability of an organization. Modern technology offers numerous tools and applications — such as electronic email and live chat systems — that help managers effectively communicate with staff and oversee projects. Business technology not only improves communication in the workplace but also with clients. Companies use technology systems to improve the way they design and manage customer relationships. Technology such as electronic files speeds up the workflow process and can save space, paper and printing costs. Business technology enhances accounting procedures and recording of financial documents and improves inventory management. Technology in the workplace also improves the efficiency of recruiting, screening and hiring potential candidates. Another importance of the role of technology in business is to provide security to a business. Major advancements in electronic security systems and biometric alarm systems are helping keep businesses safe from hackers and thieves.
The Management of Information Systems
More corporations and small businesses than ever use technology to collect, store, analyze and manage information. Companies effectively use that stored data as part of their strategic planning process and to support their marketing efforts. Management information systems (MIS) enable companies to track sales data, expenses and productivity levels. The information gathered can provide reports on every function of a business, including manufacturing, human resource management, finance and accounting, consumer behaviors, market trends, demographics and competitor pricing. Data also can be used to identify areas of improvement within a business as well as opportunities for change and growth.
The management of information systems involves the planning, designing, organizing, coordinating, operating and control of technological products. Business managers need to have a thorough knowledge of technology tools as well as the field of technology management. If management of information systems is handled well, a business can reduce its costs of operations, create and implement new products, enter new markets, improve customer service, streamline administrative operations and create competitive advantage in the marketplace. The proper management of information systems will benefit both the organization and its customers, which will lead to the growth of that organization.
The assessment is based on an outline design of system requirements in terms of Input, Processes, Output, Fields, Programs and Procedures. This can be quantified in terms of volumes of data, trends, frequency of updating, etc. in order to estimate whether the new system will perform adequately or not. Technological feasibility is carried out to determine whether the company has the capability, in terms of software, hardware, personnel and expertise, to handle the completion of the project.
When writing a feasibility report the following should be taken into consideration:
- A brief description of the business
- The part of the business being examined
- The human and economic factor
- The possible solutions to the problems
At this level, the concern is whether the proposal is both technically and legally feasible (assuming moderate cost).
Technical aspects relate to the production or generation of the project output in the form of goods and services from the projects inputs. Technical analysis represents study of the project to evaluate technical and engineering aspects when a project is being examined and formulated. It is a continuous process in the project appraisal system which determines the prerequisites for meaningful commissioning of the project.
Aspects of Technical Analysis
Technical analysis broadly involves a critical study of the following aspects, viz.,
1) Selection of Process/ Technology: For manufacturing a product, more than one process/technology may be available. For example, steel can be manufactured either by the Bessemer process or by the open-health process. Cement can be manufactured either by the wet process or by the dry process.
The choice of technology also depends upon the quantity of the product proposed to be manufactured. It the quantity to be produced is large, mass production techniques should be followed and the relevant technology is to be adopted. The quality of the product depends upon the use to which it is relevant technology is to be adopted. The quality of the product depends upon the use to which it is meant for. A product of pharmaceutical grade or laboratory grade should have high quality and hence sophisticated production technology is required to achieve the desired quality. Products of commercial grad do not need such high quality and the technology can been chosen accordingly.
A new technology that is protected by patent rights, etc., can be obtained either by licensing arrangement or the technology can be purchased outright. Appropriate technology: A technology appropriate for one country may not be the ideal one for another country. Even within a country, depending upon the location of the project and other features, two different technology may be ideal for two similar projects set up by two different firms at two different locations. The choice of a suitable technology for a project calls for identifying what is called the ‘appropriate technology’.
The term ‘appropriate technology’ refers that technology that is suitable for the local economic, social and cultural conditions.
2) Scale of operations: Scale of operations is signified by the size of the plant. The plant size mainly depends on the market for the output of the project. Economic size of the plant varies from project to project. Economic size of the plant for a given project can be arrived at by an analysis of capital and operating costs as a function of the plant size. Though the economic size of the plant for a given for a given project can be theoretically arrived at by above process, the final decision on the plant size is circumscribed by a number of factors, the main factor being the promoter’s ability to raise the funds required to implement the project. If the funds required implementing the project as its economic size is beyond the promoter’s capacity to arrange for and if the economic size is too big a size for the promoter to manage, the promoter is bound to limit the size of the project that will suit his finance and managerial capabilities. Whenever a project is proposed to be to be set up at a size blow its economic size, it must be analyzed carefully as to whether the project will survive at the proposed size (which is below the economic size). Performance of existing units operating at blow economic size will throw some light on this aspect.
3) Raw Material: A product can be manufactured using alternative raw materials and with alternative process. The process of manufacture may sometimes vary with the raw material chosen. If a product can be manufactured by using alternative raw materials, the raw material that is locally available may be chosen. Since the manufacturing process and the machinery/requirement to be used also to a larger extent depend upon the raw material, the type of raw material to be used should be chosen carefully after analyzing various factors like the cost of different raw materials available, the transportation cost involved, the continuous availability of raw material , etc. Since the process of manufacture and the machinery/ equipments required depend upon the raw material used, the investment on plant and machinery will also to some extent depend upon the raw material used, the investment on plant and machinery will also to some extent depend upon the raw material chosen. Hence the cost of capital investments required on plant and machinery should also be studied before arriving at a decision on the choice of raw material.
4) Technical Know-How: When technical know-how for the project is provided by expert consultants, it must be ascertained whether thee consultant has the requisite knowledge and experience and whether he has already executed similar projects successfully. Care should be exercised to avoid self-styled, inexperienced consultants. Necessary agreement should be executed between the project promoter and the know-how supplier incorporating all essential features of the know-how transfer. The agreement should be specific as to the part played by the know-how supplier (like taking out successful trial run, acceptable quality of final product, imparting necessary training to employees in the production process, taking out successful commercial production, performance guarantee for a specified number of years after the start of commercial production, etc). The agreement should also include penalty clauses for non-performance of any of the conditions stipulated in the agreement.
5) Collaboration Agreements: If the project promoters have entered into agreement with foreign collaborators, the terms and conditions of the agreement may be studied as explained above for know-how supply agreement.
Apart from this, the following additional points the deserve consideration:
(i) The competence and reputation of the collaborators needs to be ascertained through possible sources including thee Indian embassies and the collaborator’s bankers.
(ii) The technology proposed to be imported should suit to the local conditions. A highly sophisticated technology, which does not suit local conditions, will be detrimental to the project.
(iii) The collaboration agreement should have necessary approval of the Government of India.
(iv) There should not be any restrictive clause in the agreement that import of equipment/machinery required for the project should be channelized through the collaborators.
(v) The design of the machinery should be made available to the project promoter to facilitate future procurement and/or fabrication for machinery in India at a later stage.
(vi) The agreement should provide a clause that any dispute arising out of interpretation of the agreement, failure to, comply with the clauses contained in the agreement, etc., shall be decided only by courts within India.
(vii) It must be ensured that the collaboration agreement does not infringe upon any patent rights.
(viii) It is better to have a buy–back arrangement with the technical collaborator. This is to ensure that the collaborator would be serious about the transfer of correct know-how and would ensure quality of the output.
6) Product Mix: Customers differ in their needs and preferences. Hence, variations in size and quality of products are necessary to satisfy the varying needs and preferences of customers, the production facilities should be planned with an element of flexibility. Such flexibility in the production facilities will help the organization to change the product mix as per customer requirements, which is very essential for the survival and growth of any organization.
For example, a plastic container manufacturing industry can be produced according to the market requirement. This will give the unit a competitive edge.
7) Selection and Procurement of Plant and machinery
Selection of machinery: The machinery and equipment required for a project depends upon the production technology proposed to be adopted and the size of the proposed. Capacity of each machinery is to be decided by making a rough estimate, as under; thumb rules should be avoided.
i) Take into consideration the output planned.
ii) Arrive at the machine hours required for each type of operation.
iii) Arrive at the machine capacity after giving necessary allowances for machinery maintenance/breakdown, rest time for workers, set up time for machines, time lost during change of shifts, etc.
iv) After having arrived at the capacity of the machinery as above, make a survey of the machinery available in the market with regard to capacity and choose that capacity which is either equal to or just above the capacity theoretically arrived at.
In case of process industries, the capacity of the machines used in various stages should be so selected that they are properly balanced.
Procurement of Machinery
Plant and machinery form the backbone of any industry. The quality of output depends upon the quality of machinery used in processing the raw materials (apart from the quality of raw material itself). Uninterrupted production is again ensured only by high quality machines that do not breakdown so often. Hence no compromise should be made on the quality of the machinery and the project promoter should be on the lookout for the best brand of machinery available in the market. The performance of the machinery functioning elsewhere may be studied to have a first hand information before deciding upon the machinery supplier.