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Why Is Technological Superiority Especially Significant for International Firms?

Essay by   •  April 1, 2012  •  Essay  •  541 Words (3 Pages)  •  2,418 Views

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Why is technological superiority especially significant for international firms?

Technology: The technology of a society is the mix of the usable knowledge that the society applies and directs toward the attainment of cultural and economic objectives; it exists in some form in every cultural organization.

Technology surely plays a vital role in business today. Businesses have become reliant on technology and if it didn't exist, almost all business operations around the world could not function. Technology is used in all industries extending from the most basic to the most complex of operations. Commerce and trade around the world most definitely is thriving because of technology. Long before there were computers the world has been doing business; starting from the simple concept of barter trade when the concept of a currency was not yet introduced but trade and commerce was still slow up until the point when the computer revolution changed everything. Technology is used for Point of Sales systems, information management systems capable of handling all kinds of information such as employee profile, client profile, accounting and tracking, automation systems for use in large scale production of commodities, package sorting, assembly lines, all the way to marketing and communications. It doesn't end there, all these commodities also need to be transported by sea, land, and air.

According to Ball, "Technological superiority is the goal of most companies, of course, but it is especially important to international companies for a number of reasons (151).

1. It enables a firm to be competitive or even attain leadership in world markets.

2. It can be sold (via licensing or management contract), or it can be embodied in the company's products.

3. It can give a firm confidence to enter a foreign market even when other companies are already established there.

4. Conditions are better for foreign market investment, provided that wholly owned subsidiary is established.

5. It can enable a company with only a minority equity position to control a joint venture and preserve it as a captive market for semi-processed inputs that it-but not the joint venture- produces.

6. It can change the international division of labor. Technology has enabled firms that had moved overseas to return home because production used with technology has reduced the direct labor content of their products.

7. It is causing major firms to form competitive alliances in which each partner shares technology and the high cost of R&D, known as strategic technology leveraging, which is the concept of using external technology to complement rather than substitute for internal technology.

In closing, without technology in our societies, the idea of globalization

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