Role of technological Environment in international in Business

The type of technology in use, the level of technological developments, the speed with which new technologies are adopted and diffused, the type of technologies that are appropriate, the technology policy etc are important to business.

Advances in technology may also cause relocation of production. For example, several companies in the advanced countries had shifted the TV production to developing countries to take advantage of the cheap labor. However, when further technological development reduced the labor content of the TV some firms relocated their production back to the developed countries.

Some labor abundant countries have a preference for labor intensive technology. Mechanization and automation may be opposed in such countries. Such a situation may adversely affect the business.

Particularly in the past, several countries, like India did not have a favorable attitude towards foreign technology. The overemphasis on the development of technology indigenously had led to high costs and distorted developments. Again, the policy bias in favor of small business has resulted in production units of uneconomic size in a number of industries. Further, the reservation of certain products exclusively for the small scale sector promoted several companies, including multinational, to resort to such strategies as franchising and contract manufacturing in some of these industries in India. The reservation of products for the small scale sector some times comes in the way of adoption of modern technology if it involves capital investment higher than the specified.

In many developing countries, including India, the TV arrived very late. Although the color TV had become quite common in the advanced and even in some developing countries when the telecast started in India, in the early period there was only black and white telecast. The cable TV came to India only by about the beginning of the 1990s. The late introduction and the slow expansion of the telecast affected not only the TV business but also the advertising industry and product promotion.

The time lags in the introduction of technologies may even result in some products not being able to reap the market. The electronic typewriter became popular in India before the electric typewriter could penetrate the market. The electronic typewriter could not achieve growth because of the advent of the computer.

Many companies in advanced countries have considered the developing countries as a market for their obsolete technology. Several developing countries even import second hand plant and machinery

There is often a time lag between countries in the adoption and diffusion of technologies. The developing countries generally lag behind the developed ones. Even among the developed countries the technology absorption is not simultaneous and similar. The lag has, however, been diminishing in several cases. Black and white television sets extensively penetrated households in the United States nearly a dozen years before they reached comparable number of viewers in Europe and Japan. With color television, the time lag fell to about five to six years for Japan and a few more for Europe. With video cassette recorders, the difference was only three of four years but this time Europe and Japan led the way, the United States, with its focus on cable TV followed. With the compact disc, household penetration rates evened up after only one year. Now with MTV available by satellite across Europe there is no lag at all.

Technological environment of the use facilities etc. also have very important implication for business. For example, advances in the technologies of food processing packaging, and preservation, transportation etc. have facilitated product improvements and introduction and have considerably improved the marketability of products. The advent of microwave ovens has given a new dimension to food marketing. In the US by the end of 20th century nearly 90% of the households were using microwave ovens. Experts predict that by the turn of the century, in-home preparation of the main evening meal will take only fifteen minutes. In early days, anything microwaveable was OK. Now consumers are looking for more quality and even more convenience.

Intermediate technology, which often means a technology which combines elements of traditional technology with elements of modern technology gained importance in the developing countries. Thus, the sophisticated capital intensive technologies in use in the developed countries are not acceptable in some sectors in several of the developing countries.