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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.