2_TPC_Second week lectures

Instructor Information

• Department: Dipartimento di Economia

• Course: Business Management - Technology of Production Cycles

• Teacher: Prof. Giovanni Mondello

• Contact Info:

  • Phone: 090 6762212

  • Email: giovanni.mondello@unime.it

• Office Hours:

  • Location: Department of Economics – via dei Verdi, 75, Building D, III floor, Room 58

  • Time: Friday 10:00 – 12:00 a.m.

• Academic Year: 2024/2025

Introduction to Technology

• **Definition of Technology: **

  • Sequence of operations adapting original materials into products with distinct features.

  • Involves the use of production factors according to specific procedures, influencing quantity and quality.

• Economic Efficiency:

  • Achieving optimal results with production factors for maximizing output.

  • Various combinations of capital and labor can yield the same product quantity, demoing flexibility in technology.

Technology as a Production Function

• Production Function Formulation:

  • Can be represented analytically, numerically, and graphically.

  • Example: Nitrogen (1) + Hydrogen (3) = Ammonia (1).

  • Factors influencing the process: Temperature, pressure, reagent concentration, catalyst, contact time.

Technology as a System of Variables

• Understanding a System:

  • A system is characterized by parts working together toward a goal.

• Systematic Nature of Technology:

  • Various technological components collaborate predictably to achieve a unified outcome.

Components of a Technological System

• Goals: Designed to reach desired outcomes, often multiple.

• Inputs: Include elements drawn from resource types; classified into seven categories:

  • People

  • Information

  • Materials

  • Tools and Machines

  • Energy

  • Capital

  • Time

• Process: Involves all activities leading to expected results; includes research, management, marketing, and finance.

• Outputs: Results from inputs and processes (intended or unintended, such as waste).

• Feedback: Critical for monitoring system performance; aids in improvements and new developments.

Benefits of the System View of Technology

• Functional Measures: Defined and objectively measurable (e.g., thermal efficiency).

• Practical Utility: More valuable for engineering than traditional production functions.

• Innovation Weighting: Allows assessment of major/minor innovations with appropriate importance.

• Product Characteristic Changes: Facilitates consideration of product property changes.

• Multidimensional Nature: Addresses diffusion of innovations and related problem areas and policies.

Limitations of the System View of Technology

• Data Availability: Lack of functional data over time (e.g., patent stats).

• Dimension of Change: Innovations across multiple factors complicate measurement.

• Micro-level Suitability: Best suited for detailed, focused analysis.

Technological Substitution and Competition

• Substitution Principle: Competition among processes/products varies by sector.

• Assessment of Production Factors: This dynamic assessment promotes technological flexibility in production:

  • Same goods with different methods (e.g., raw materials).

  • Different goods with similar uses.

  • Substituting production factors (e.g., labor vs. capital).

Types and Forms of Technology

• Categories of Technology:

  • Hard Technologies

  • Soft Technologies

  • Intermediate Technologies

  • Appropriate Technologies

Hard Technologies

• Used in industrialized countries (up to the 70s):

  • High energy and capital intensity

  • Minimal human labor

  • Neglect of environmental issues.

• Declined due to:

  • Rising environmental and safety concerns

  • Transfer failures in developing nations.

Soft Technologies

• Promoted for developing nations (1970s):

  • Simplicity and market applicability.

  • Independence from non-renewable resources.

  • Balance between labor, capital, and resources.

Intermediate & Appropriate Technologies

• Intermediate Technologies:

  • Simple production and maintenance; low capital and labor intensity.

  • Many failures attributed to misguided policies.

• Appropriate Technologies:

  • More complex, tailored to local needs.

  • Focus on renewable resources and zero-waste principles.

Applications of Appropriate Technologies

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• Goals include:

  • Reducing raw material and energy dependency.

  • Expanding the quality of market goods.

  • Enhancing working conditions and skills.

  • Promoting knowledge dissemination and entrepreneurial innovation.

  • Supporting rural development and environmental respect.

  • Ensuring safer production practices.

Clean Technologies Definition

• Technologies that efficiently use natural resources and minimize harmful outputs during production processes.

• Emphasizes prevention and minimization of risks to health and environment.

• Addresses the industry's environmental responsibility due to increased awareness.

The Economic Cycle of Technology

• Stages: Introduction, Expansion, Maturity, Obsolescence.

• Introduction Phase:

  • New product deployment with uncertain consumer demand.

• Expansion Phase:

  • Sales growth leads to increased profits and heightened competition.

• Maturity Phase:

  • Market saturation calls for strategic marketing updates and product rejuvenation.

• Obsolescence Phase:

  • Decline in sales initiates technological updates to maintain market competitiveness.