Technological Change

Definition

Technological change refers to the process of innovation and development of new technologies, which significantly alters the ways businesses operate, produce goods, and deliver services. This change can lead to improved efficiencies, new products, and the transformation of industries, impacting competitive strategies and market dynamics throughout the industry life cycle.

5 Must Know Facts For Your Next Test

1. Technological change can lead to shifts in competitive advantage as firms adopt new technologies faster than their rivals.
2. The introduction of disruptive technologies often creates new market leaders while causing established companies to struggle or fail.
3. Industries in the early growth stage of their life cycle are more likely to experience rapid technological changes that reshape their structures.
4. In mature industries, technological change may focus more on process improvements rather than product innovations, affecting efficiency and cost structures.
5. Firms that invest heavily in R&D are typically better positioned to leverage technological change to their advantage throughout the industry life cycle.

Review Questions

• How does technological change influence competitive strategies during different phases of the industry life cycle?
  • Technological change plays a crucial role in shaping competitive strategies across various phases of the industry life cycle. In the introduction phase, firms may focus on innovation to establish their market presence, while in the growth phase, rapid technological advancements can create opportunities for differentiation and expansion. As the industry matures, companies may shift their focus to process improvements and cost reduction strategies driven by new technologies, impacting how they compete against one another.
• Evaluate the impact of disruptive technologies on established firms within an industry experiencing technological change.
  • Disruptive technologies can have a profound impact on established firms by challenging their traditional business models and market positions. When these technologies emerge, they often attract new customers and create alternative markets that established players may overlook. As a result, these firms can face significant challenges, including declining market share and profitability, unless they adapt quickly by innovating or adopting new technologies themselves.
• Synthesize how research and development efforts influence the pace of technological change within an industry and its implications for competitive strategy.
  • Research and development efforts are pivotal in driving the pace of technological change within an industry. By investing in R&D, firms not only create new products but also enhance existing ones and improve operational efficiencies. This continual innovation allows companies to stay ahead of competitors and respond proactively to emerging trends. Consequently, organizations that effectively leverage R&D can shape industry standards, dictate market dynamics, and position themselves favorably in terms of competitive strategy throughout the industry life cycle.

Related terms

Disruptive Innovation: A type of innovation that significantly alters the way that industries operate, often displacing established businesses and creating new markets.

Product Life Cycle:

The stages a product goes through from introduction to decline, which can be influenced by technological change and market evolution.

Research and Development (R&D): The activities companies engage in to innovate and introduce new products or processes, critical for fostering technological change.