Technological portfolio
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Technological portfolio is one of the methods used in the analysis of development opportunities of the company. Development of this method and its raise in popularity was due to continuous development of products, stronger competition and rapidly changing technology. Quick change in technology contribute to the fact that not every product has the time and ability to generate excess financial surplus. Often this causes crowding out products that have the largest market share. In this situation, it is considered appropriate to use portfolio analysis methods.
Technological portfolio is determined on the basis of the position in life cycle of the technology, the degree of attractiveness of future technology and the size of the production potential of the company. It is measured on the basis of the comparative studies of the company and its competition. The criteria for this evaluation are: the possibility of developing the technology, process of dissemination of technology, level of standardization, possibility to use technology in a variety of production fields, or the versatility of the technology, time and cost needed for its development and implementation.
Stages of design of technological portfolio
- the grouping of products according to technology used,
- determine the level of attractiveness of technology,
- to develop a forecast of anticipated technological changes in the industry and related sectors,
- determine the level of production with current technology
- estimation of the level of risk arising from the loss of technological advantage over competing companies
- evaluation of the applicability of specific policies in the enterprise in the field of research and development
The technology is attractive in situations where its application causes a reduction in costs as well as enhance the quality of products. The attractiveness of the technology and its skillful use is the basis for portfolio creation and according to these guidelines, the company can make a variety of decisions, for example: invest in technologies implemented with medium or large mastery, select and reject badly applied technologies. The concept of technological portfolio encourage managers to take action adjusted to the requirements of the market, as well as to cope with the competition.
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Examples of Technological portfolio
- Strategic Technology Portfolio: A strategic technology portfolio is a comprehensive assessment of the current and future potential of each technology within an organization’s portfolio. It allows management to evaluate the relative strength and weaknesses of each technology and make decisions on which technologies should be leveraged, developed, or discarded.
- Technology Investment Portfolio: A technology investment portfolio is a systematic approach to making decisions on which technologies to invest in. It takes into account a variety of factors such as market trends, competitive advantage, and return on investment. This method helps managers to assess the risks and rewards of investing in a given technology and make decisions about the best way to allocate resources.
- Technology Roadmap: A technology roadmap is a tool that helps define the future direction of a technology. It provides a comprehensive view of the technology landscape and how it is likely to evolve over time. This tool is used to make decisions on which technologies should be developed and which should be discarded.
- Technology Innovation Portfolio: A technology innovation portfolio is a comprehensive assessment of an organization’s technology innovations. It helps to identify opportunities for innovation, assess the risks and rewards associated with each innovation, and make decisions on which technologies should be pursued.
Advantages of Technological portfolio
Technological portfolio has a number of advantages. These include:
- Increased ability to forecast and plan for future technology developments. By constructing a portfolio of technologies, it is possible to anticipate upcoming trends and optimize the development of new technologies. This helps to ensure that the company remains competitive in the market and is well-positioned to capitalize on new opportunities.
- Improved efficiency and effectiveness. By analyzing the technological portfolio, companies can identify the most cost-effective and efficient technologies to develop, leading to improved performance and cost savings.
- Expand the competitive advantage. By utilizing a portfolio of technologies, a company can develop a competitive edge by identifying areas of technology where they have an advantage over their competitors. This can help a company to gain a foothold in new markets and to differentiate itself from its rivals.
- Increased agility. By having a portfolio of technologies, companies can be more responsive to changes in the market and adjust their strategies to capitalize on new opportunities. This allows companies to remain agile and competitive in a fast-changing market.
Limitations of Technological portfolio
One of the biggest limitations of technological portfolio is that it does not take into account the external environment. *It does not consider the impact of external factors such as customer preferences, economic environment, competition, etc. on the development of new products. *It also does not consider the cost of developing new products and the resources needed to bring a new product to the market. *It ignores the customer's needs and preferences, which can have a significant impact on the success of any product. *It also does not account for the changing technology and does not consider the implications of changing technology on products and its success. *In addition, it does not consider the long-term implications of launching a new product and its potential to generate revenue in the future.
Technological portfolio is not the only method used for analysis of development opportunities of the company. There are some other approaches that can be helpful in this process such as:
- Strategic Analysis – it is a method used for the analysis of the competition, environment, resources and capabilities of a company. It helps to determine the development opportunities and threats of the company.
- Market Analysis – it is used to analyze the current and potential market of the company. It helps to identify the target groups, their needs, preferences and behavior.
- Financial Analysis – it is used to analyze the financial performance of the company. It helps to identify the financial resources and the ability to finance the future projects.
- Product Analysis – it is used to analyze the existing products of the company. It helps to identify the opportunities for product improvement and development.
- Technology Analysis – it is used to analyze the existing technologies used in the company. It helps to identify the opportunities for technological improvement and development.
In summary, there are several different approaches related to Technological portfolio which can be used for the analysis of development opportunities of the company. These methods are used to identify the target groups, competition, financial resources, existing products and existing technologies.
References
- Farrell, J. L., & Reinhart, W. J. (1997). Portfolio management: theory and application. McGraw-Hill.
- Luehrman, T. A. (1998). Strategy as a portfolio of real options. Harvard business review, 76, 89-101.
