We find out six principles of technology that are essential. All of them are described in detail below:
Principles of technology
Appropriateness of technology: Technology should be valued more for its appropriateness to the work situation. Depending upon the work situation, capital investment capability, labor supply, and the decision to be taken whether to go for capital-intensive or labor-intensive technology.
The difference in the cost structure of alternative technology: The alternative technology may differ based on differences in the capital, set up time, and run time, and hence different cost structures. The choice should be made based on the nature of the business.
Automation: Automation is a capital-intensive technology. It is technology. It is a technological change that results in the substitution of capital equipment for labor. It typically changes the cost structure.
Capital saving technology: Capital saving technology is the opposite of automation where a lower-cost variable input is a substitute for higher capital input resulting in lower fixed cost.
Learning curve: Workers’ skills improve with experience as they learn to work more efficiently.
Technological strategy: The technological strategy is to be formulated based on the analysis of the company’s technological profiles which is characterized by the following factors:
- Product life cycle
- Research and development
- Downstream computing
- Research & development investment ratio.
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