Assessment on Social-Economic impacts of COVID-19 to Tanzania Economy 2020
Increasingly stringent containment measures needed to slow the spread of the Coronavirus (Covid-19) will necessarily lead to significant short-term declines in GDP for many major economies.
Estimations showing that the lockdown will directly affect sectors amounting to up to one third of GDP in the major economies. For each month of containment, there will be a loss of 2 percentage points in annual GDP growth. The tourism sector alone faces an output decrease as high as 70%. Many economies will fall into recession. This is unavoidable, as we need to continue fighting the pandemic, while at the same time putting all the efforts to be able to restore economic normality as fast as possible.
“The high costs that public health measures are imposing today are necessary to avoid much more tragic consequences and even worse impact on our economies tomorrow,”Mr Gurría said. “Millions of deaths and collapsed health care systems will decimate us financially and as a society, so slowing this epidemic and saving human lives must be governments’ first priority.
“Our analysis further underpins the need for sharper action to absorb the shock, and a more coordinated response by governments to maintain a lifeline to people and a private sector that will emerge in a very fragile state when the health crisis is past.”
To “inoculate” economies to current and future shocks, Leaders should act immediately, to:
In all economies, the majority of this impact comes from the hit to output in retail and wholesale trade, and in professional and real estate services. There are notable cross-country differences in some sectors, with closures of transport manufacturing relatively important in some countries, while the decline in tourist and leisure activities is relatively important in others.
The impact effect of business closures could result in reductions of 15% or more in the level of output throughout the advanced economies and major emerging-market economies. In the median economy, output would decline by 25%.
Variations in the impact effect across economies reflect differences in the composition of output. Many countries in which tourism is relatively important could potentially be affected more severely by shutdowns and limitations on travel. At the other extreme, countries with relatively sizeable agricultural and mining sectors, including oil production, may experience smaller initial effects from containment measures, although output will be subsequently hit by reduced global commodity demand.
By definition, business analysis is the discipline of recognizing business needs and findings solutions to various business problems. In simpler words, it is a set of tasks and techniques which work as a connection between stakeholders. These help them understand organization’s structure, policies, and operations. They can also recommend solutions to help the business reach its goals.
Business analysis is about understanding how your organization functions to fulfill its purposes. It entails defining the abilities the firm needs to provide products to the external stakeholders. You will have to understand how the organizational goals connect to specific objectives. You will also have to make a detailed plan to help achieve the goals and objectives. In your business analysis, you will define how the stakeholders and different organizational units interact.
It is the Business analysts’ task to analyze and synthesize information provided by the immense group of people who interact with the firm. Customers, executives, staff and IT professionals send this information. The analysts do not only focus on the expressed desires but elicit the actual needs of stakeholders. The analyst facilitates communication between organizational units sometimes.
Below are 8 steps business analysts generally follow. Each of the steps is important for business analysis.
People expect business analysts to start contributing to projects as quickly as possible and make a positive impact. Sometimes, they get involved while the project is ongoing. It is essential to grant them some time to get oriented. They clarify the scope, requirements and business objectives. They spend some time to collect some basic information.
The following are the main responsibilities they have in this step:
Most business analysts start by defining the scope. This can cause problems. It is more effective to understand the business needs before defining the scope of the project.
Your responsibilities they have in this step are:
Define a clear and complete statement as scope. It will serve as a go-forward concept and help the team realize what the business needs. Remember, scope is not an implementation plan. It merely guides all the steps of the business analysis process.
In this step, the business analysts’ main responsibilities are:
The business analysis plan will provide clarity to the process of business analysis. The plan will answer several questions.
The vital responsibilities involved with creating a business analysis plan are:
Clear and actionable detailed requirements are important. Detailed requirements provide the implementation team with the information they need to devise the solution. The most important responsibilities are:
The technical implementation team builds, customizes and deploys software on a typical project. During this process, the key duties of the business analysts are:
Sometimes a business cannot use the solutions aptly. As a result, it will be difficult to attain the original objectives. The business analyst should be involved in this final step to support the business. The aim of this step is to ensure that all members are prepared to accept the changes.
The business analysts’ main responsibilities for this step are:
Throughout business analysis process, a lot of steps are involved. Business outcomes and details are discussed. Big and small problems are solved. Relationships are built, and changes are managed. Try not to lose track amid the steps. Stop and assess the value created by the solution.
The key responsibilities involved in this step are:
A company’s capital structure is arguably one of its most important choices.
From a technical perspective, the capital structure is defined as the careful balance between equity and debt that a business uses to finance its assets, day-to-day operations, and future growth.
From a tactical perspective however, it influences everything from the firm’s risk profile, how easy it is to get funding, how expensive that funding is, the return its investors and lenders expect, and its degree of insulation from both microeconomic business decisions and macroeconomic downturns.
By design, the capital structure reflects all of the firm’s equity and debt obligations. It shows each type of obligation as a slice of the stack. This stack is ranked by increasing risk, increasing cost, and decreasing priority in a liquidation event (e.g., bankruptcy).
For large corporations, it typically consists of senior debt, subordinated debt, hybrid securities, preferred equity, and common equity. See exhibit A.
Exhibit A: Generic Sample Capital Structure
Senior Debt: A class of loans with priority on the repayment list if a company goes bankrupt. Holders of this form of financing have first dibs on a company’s assets. This means that in a liquidation event, lenders holding subordinated notes are not paid out until senior creditors are paid in full. Because of the minimal risk that accompanies this block of the capital structure, senior lenders loan money at lower rates (i.e., lower interest payments and less restrictive debt covenants) relative to more junior tiers.
Subordinated Debt: A class of loans that ranks below senior debt with regard to claims on assets. For this reason, this block of the capital structure is more risky than senior borrowings. However it also comes with commensurately higher returns, usually in the form of higher interest payments. For more, see our piece on drivers behind the rebounding popularity of subordinated debt.
Mezzanine Debt: A class of subordinated debt that blends equity and debt features. It therefore receives liquidation after senior capital and is generally used when traditional funding is insufficient or unavailable. Correspondingly, mezzanine firms lend at higher interest rates than traditional debt providers, and usually reserve the right to trade some of their debt for equity. Though mezzanine financing exhibits both equity- and debt-like characteristics, it’s usually classified as a category within subordinated debt. For more details, see our overview of mezzanine debt.
Hybrid Financing: A class of the capital structure in publicly-traded companies that also blends equity and debt features. By definition, hybrid securities are bought and sold through brokers on an exchange. Hybrid financing can come with fixed or floating returns, and can pay interest or dividends.
Convertible Debt: A class of hybrid financing. Convertible bonds are the most common type of hybrid financing, and usually take the form of a bonds that can be converted to equity. The conversion can only happen at certain points in the firm’s life, the equity amount is usually predetermined, and the act of converting is almost always up to the discretion of the debt holder.
Convertible Equity: A class of hybrid financing. Convertible equity usually takes the form of convertible preferred shares, which is preferred equity that can be converted to common equity. Like convertible debt, convertible preferred shares convert into common shares at a predetermined fixed rate, and the decision to convert is typically at the owner’s discretion. Importantly, the value of a firm’s convertible preferred shares is usually dependent on the market performance of its common shares.
Preferred Equity: A class of financing representing ownership interest in a company. As opposed to fixed income assets (e.g., debt), equity is a variable return asset. However, preferred equity has both debt and equity characteristics in the form of fixed dividends (debt) and future earnings potential (equity). Correspondingly, it gives the holder upside and downside exposure. Its claims on the company’s assets and profits come behind those of debt holders and ahead those of common stock holders. Generally, preferred equity obligates management to pay its holders a predetermined dividend before paying dividends to common shareholders. On the flipside, preferred equity typically comes without voting rights.
Common Equity: Also a class of financing representing ownership interest. Common equity is the junior-most block of the capital structure and therefore represents ownership in an business after all other obligations have been paid off. For this reason, it comes with the highest risk and the highest potential returns of any tier in the capital structure.
Any company’s capital structure serves several key purposes.
First and foremost, it’s effectively an overview of all the claims that different players have on the business. The debt owners hold these claims in the form of a lump sum of cash owed to them (i.e., the principal) and accompanying interest payments. The equity owners hold these claims in the form of access to a certain percentage of that firm’s future profit.
Secondly, it is heavily analyzed when determining how risky it is to invest in a business, and therefore, how expensive the financing should be. Specifically, capital providers look at the proportional weighting of different types of financing used to fund that company’s operations.
For example, a higher percentage of debt in the capital structure means increased fixed obligations. More fixed obligations result in less operating buffer and greater risk. And greater risk means higher financing costs to compensate lenders for that risk (e.g., 14% interest rate vs 11% interest rate).
Consequently, all else equal, getting additional funding for a business with a debt-heavy capital structure is more expensive than getting that same funding for a business with an equity-heavy capital structure.
Most likely you have already identified a business ideas, so now it's time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your business idea through a validation process before you go any further.
In order for a small business to be successful, it must solve a problem, fulfill a need or offer something the market wants.
There are a number of ways you can identify this need, including research, focus group, and even trial and error. As you explore the market, some of the questions you should answer include:
You need a plan in order to make your business idea a reality. A business plan is a blueprint that will guide your business from the start-up phase through establishment and eventually business growth, and it is a must-have for all new businesses.
The good news is that there are different types of business plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a tradidional business plan is a must. This type of business plan is generally long and thorough and has a common set of sections that investors and banks look for when they are validating your idea.
If you don't anticipate seeking financial support, a business plan can give you clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a working business plan on the back of a napkin, and improve it over time. Some kind of plan in writing is always better than nothing.
Starting a small business doesn't have to require a lot of money, but it will involve some initial investment as well as the ability to cover ongoing expenses before you are turning a profit. Put together a spreadsheet that estimates the one-time startup costs for your business (licenses and permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking, grand opening events, property leases, etc.), as well as what you anticipate you will need to keep your business running for at least 12 months (rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries, your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small business ideas , including:
You can also attempt to get your business off the ground by bootstrapping, using as little capital as necessary to start your business. You may find that a combination of the paths listed above work best. The goal here, though, is to work through the options and create a plan for setting up the capital you need to get your business off the ground.
Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change.
Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or CPA to ensure you are making the right structure choice for your business.
Your business name plays a role in almost every aspect of your business, so you want it to be a good one. Make sure you think through all of the potential implications as you explore your options and choose your own business name.
Once you have chosen a name for your business, you will need to check if it's trademarked or currently in use. Then, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
Don't forget to register your own domain name once you have selected your business name.
Paperwork is a part of the process when you start your own business.
There are a variety of small business licences and permit that may apply to your situation, depending on the type of business you are starting and where you are located. You will need to research what licenses and permits apply to your business during the start-up process.
Small businesses run most effectively when there are systems in place. One of the most important systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork. If you decide to get started on your own, make sure you consider these questions that are vital when choosing accounting software.
Setting up your place of business is important for the operation of your business, whether you will have a home office, a shared or private office space, or a retails location.
You will need to think about your location, equipment, and overall setup, and make sure your business location works for the type of business you will be doing. You will also need to consider if it makes more sense to buy or lease your commercial location.
If you will be hiring employees, now is the time to start the process. Make sure you take the time to outline the positions you need to fill, and the job responsibilities that are part of each position. The Small Business Administration has an excellent guide to hire your employee first that is useful for new small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is the time to work with an attorney to get your independent contractor employees in place and start your search.
Lastly, if you are a true entrepreneur hitting the small business road alone, you may not need employees or contractors, but you will still need your own support team. This team can be comprised of a mentor, small business coach, or even your family, and serves as your go-to resource for advice, motivation and reassurance when the road gets bumpy.
Once your business is up and running, you need to start attracting clients and customers. You'll want to start with the basics by writing a unique selling propositional and creating a market plan. Then, explore as many small business marketing ideasas possible so you can decide how to promote your business most effectively.
Once you have completed these business start-up activities, you will have all of the most important bases covered. Keep in mind that success doesn't happen overnight. But use the plan you've created to consistently work on your business, and you will increase your chances of success.
Control of market institutions
Not all financial markets operate within formally constituted exchanges, but those that do can be divided into two categories.
Regulation of financial markets
Practically all financial markets are regulated in some way or another. The regulation is typically highly complex – too complex to warrant discussion here. Very often exchanges themselves form part of the regulatory mechanism, together with the involvement of external organizations. Thus, for example, the Securities and Exchange Commission (SEC) oversees financial markets in the United States, while the Financial Services Authority (FSA) has broadly similar responsibilities in the United Kingdom. The declared purpose of regulation is normally to protect investors from practices and conduct deemed to be unfair or improper. Most directly, the protection is intended to guard against fraud. More indirectly, regulation ostensibly seeks to foster competition, with resulting benefits for the consumers of financial services. Investors themselves would possibly favour protection against all losses sustained on their investments, including losses incurred when asset prices fall. Such comprehensive protection stretches beyond the bounds of regulation that has been, or is likely to be, adopted. However, when losses occur as a consequence of what is perceived to be bad advice, investors may feel justified in seeking compensation – either from those who gave the advice or from the regulators responsible for overseeing the advisers. In these circumstances, resorting to litigation will test how far the law requires investors to bear the consequences of their own decisions. Much of the regulation in financial markets is self-regulation. Whatever the merits of such regulation (such as the expertise of the regulators in their own lines of business), the justification of its proponents should not necessarily be taken at face value. For regulation can have its drawbacks. These include:
Competition within and among financial markets
As already mentioned, many financial markets approximate the competitive ideal in that market participants typically take prices as given, beyond their individual control. However, although the underlying ‘commodities’ (the assets) are homogeneous, the services offered by brokers and dealers may well be differentiated, offering the scope for non-price competition. Moreover, the organization of exchanges and their regulation can have the effect of restricting competition among market participants. Competition among members of the market can be restricted in several ways.
Trading and asset prices in a call market
Among the market mechanisms described a call market is one of the simplest and provides a starting point for modelling flows of trading in asset markets. In the model outlined here, market participants are divided into three groups:
The informed and uninformed investors are interpreted as public investors, while market makers exist to ensure that a price that balances the purchases and sales of public investors is realized. Members of all three groups are assumed to be risk-neutral. Exchanges of assets among investors could take place for a multitude of reasons, here divided into two:
The information motive applies to those investors who trade because they seek to make gains (or avoid losses) on the basis of their beliefs about future payoffs from assets. The liquidity motive is a catch-all, encompassing the other reasons why investors trade. It includes circumstances in which investors sell assets to raise funds for consumption or to meet some unforeseen contingency, or when savings flows are invested in traded assets. The caprice and whims that motivate noise traders are also absorbed into the liquidity motive.
Bid–ask spreads: inventory-based models
Explanations of the bid–ask spread fall into two groups: inventory-based theories, and information-based theories. In each case market participants are classified into market makers and public investors. Market makers are assumed to be dealers who quote bid and ask prices at which they guarantee to buy and sell the asset (if the size of each order falls within a pre-announced range). Public investors are subdivided into informed and uninformed investors as in the previous section, though this distinction is relevant only for the information-based models. The framework studied here abstracts from reality in a number of ways. Dealers who are not market makers are ignored. Brokerage services are not treated separately from the services of market makers. Hence, the bid–ask spread should be interpreted as including all transaction costs (such as commission fees and taxes). Also, phenomena such as deals made within quoted spreads and special arrangements for large block orders are neglected.
In both inventory-based and information-based theories, public investors are assumed to arrive at the market in a random flow and to issue orders to buy or sell one unit of the asset. The market makers execute buy orders at the ask price and sell orders at the bid price. Price quotations are then changed according to some rule, studied below, according to the market makers’ observations of orders to buy or sell the asset. Inventory-based models view the price quotations as determined by the need for market makers to hold inventories of the asset to satisfy the flow of demands and supplies from public investors. The main influences on the bid–ask spread are assumed to be these.
Bid–ask spreads: information-based models
The information-based models studied in this section take it for granted that inventories are always adequate and that the costs of holding them can be ignored. Instead, the analysis highlights
At its simplest level, a business enterprise represents a series of contractual relationships that specify the rights and responsibilities of various parties. People directly involved include customers, stockholders, management, employees, and suppliers. Society is also involved because businesses use scarce resources, pay taxes, provide employment opportunities, and produce much of society’s material and services output. Firms are a useful device for producing and distributing goods and services. They are economic entities and are best analyzed in the context of an economic model.
Expected Value Maximization
The model of business is called the theory of the firm. In its simplest version, the firm is thought to have profit maximization as its primary goal. The firm’s owner-manager is assumed to be working to maximize the firm’s short-run profits. Today, the emphasis on profits has been broadened to encompass uncertainty and the time value of money. In this more complete model, the primary goal of the firm is long-term expected value maximization. The value of the firm is the present value of the firm’s expected future net cash flows. If cash flows are equated to profits for simplicity, the value of the firm today, or its present value,
The Corporation Is a Legal Device
The firm can be viewed as a confluence of contractual relationships that connect suppliers, investors, workers, and management in a joint effort to serve customers.
Constraints and the Theory of the Firm
Managerial decisions are often made in light of constraints imposed by technology, resource scarcity, contractual obligations, laws, and regulations. To make decisions that maximize value, managers must consider how external constraints affect their ability to achieve organization objectives. Organizations frequently face limited availability of essential inputs, such as skilled labor, raw materials, energy, specialized machinery, and warehouse space. Managers often face limitations on the amount of investment funds available for a particular project or activity. Decisions can also be constrained by contractual requirements. For example, labor contracts limit flexibility in worker scheduling and job assignments. Contracts sometimes require that a minimum level of output be produced to meet delivery requirements. In most instances, output must also meet quality requirements. Some common examples of output quality constraints are nutritional requirements for feed mixtures, audience exposure requirements for marketing promotions, reliability requirements for electronic products, and customer service requirements for minimum satisfaction levels.
Some critics question why the value maximization criterion is used as a foundation for studying firm behavior. Do managers try to optimize (seek the best result) or merely satisfice (seek satisfactory rather than optimal results)? Do managers seek the sharpest needle in a haystack (optimize), or do they stop after finding one sharp enough for sewing (satisfice)? How can one tell whether company support of the United Way, for example, leads to long-run value maximization? Are generous salaries and stock options necessary to attract and retain managers who can keep the firm ahead of the competition? When a risky venture is turned down, is this inefficient risk avoidance? Or does it reflect an appropriate decision from the standpoint of value maximization?
Business Versus Economic Profit
The general public and the business community typically define profit as the residual of sales revenue minus the explicit costs of doing business. It is the amount available to fund equity capital after payment for all other resources used by the firm. This definition of profit is accounting profit, or business profit.
The economist also defines profit as the excess of revenues over costs. However, inputs provided by owners, including entrepreneurial effort and capital, are resources that must be compensated. The economist includes a normal rate of return on equity capital plus an opportunity cost for the effort of the owner-entrepreneur as costs of doing business, just as the interest paid on debt and the wages are costs in calculating business profit. The risk-adjusted normal rate of return on capital is the minimum return necessary to attract and retain investment. Similarly, the opportunity cost of owner effort is determined by the value that could be received in alternative employment. In economic terms, profit is business profit minus the implicit (noncash) costs of capital and other owner-provided inputs used by the firm. This profit concept is frequently referred to as economic profit.
Even after risk adjustment and modification to account for the effects of accounting error and bias, ROE numbers reflect significant variation in economic profits. Many firms earn significant economic profits or experience meaningful economic losses at any given point. To better understand real-world differences in profit rates, it is necessary to examine theories used to explain profit variations.
Compensatory Theory of Economic Profits
Compensatory profit theory describes above-normal rates of return that reward firms for extraordinary success in meeting customer needs, maintaining efficient operations, and so forth. If firms that operate at the industry’s average level of efficiency receive normal rates of return, it is reasonable to expect firms operating at above-average levels of efficiency to earn above-normal rates of return. Inefficient firms can be expected to earn unsatisfactory, below normal rates of return.
This article focuses on technology transfer for the development of the Tanzania national. In other words, this transfer of technology it focus on the following activities covering basic research, applied research, development, and even technical support for operational activities though development of the industry, this is our first mission activities when we focusing on the industry era. Non-mission-oriented research have their objectives defined primarily in scientific terms—for example, the study of high-energy physics, nuclear energy, toxic substances, atmospheric physics, and bioacoustics. Academic research is generally non-mission-oriented and is usually small-scale research carried out in academic departments of universities. Much of the technology transfer from non-mission-oriented research to application in real-life situations is likely to occur via a buffer industry similar to a mission-oriented R&D , and hence the focus on such national.
A new technology has to have considerable relative advantage and has to provide significant value to the customer before it is embraced by the wider user community. The new technology can be more expensive than the older technology, but the value in terms of quality, flexibility, and responsiveness it provides motivates the user to take the necessary steps in adopting this technology. In utilizing new technology, there are numerous management challenges. Continuous improvement is the basis of future competitive advantage for a firm.
Suggested five main steps leading to the adoption of technology:
Knowledge occurs when a potential user learns about the new technology and gains some understanding of its capabilities and usefulness. At this stage the user wants to know what the innovation is, what its capabilities are, and how it works.
Persuasion occurs when the user forms a favorable or an unfavorable attitude toward the innovation. Here the user is looking at comparative advantages and disadvantages of the innovation.
Decision occurs when the user engages in activities that lead to adoption or rejection of the innovation.
Implementation occurs when the user incorporates the innovation into the way of doing things.
Confirmation occurs when the user seeks to confirm the implementation decision and continues to use the innovation. This step is not always well understood, which is why many innovations first implemented are later discontinued. Certain activities to reinforce user acceptance of the innovation need to continue after implementation.
Adoption of innovation involves considerable uncertainty and thus some risk since it is not always clear what benefits will follow. Operational problems can often occur during the implementation stage, thus increasing costs and reducing benefits. Some of this uncertainty can be reduced by demonstration projects and by implementing the innovation on a partial basis. Organizations that do not reward prudent risk-taking are less likely to adopt innovations.
Adoption of innovation typically follows a bell curve, or an S-curve if considered cumulatively. Describes five categories of adopters. In general, early adopters are prudent risk-takers, are better informed and educated, and act as opinion leaders for the organization. The role of early adopters is to decrease the uncertainty about an innovation by adopting it and by adjusting it to fit the organization’s needs. Early adopters then communicate this information to other potential users within the organization and to peers outside the organization. The late majority and laggards adopt innovation last.
Successful adoption normally requires resources (people, funds, and time), some training in using the innovation, and, at times, some changes in the way organizations operate. This involves commitment to and acceptance of the innovation at both the individual and organizational levels. Organizational structure and its routine functioning provide stability and continuity to an organization. The adoption of innovation may seem to threaten this stability and continuity, and thus it is understandable that there often is some resistance to innovation. Some innovations may require manufacturing before they can be utilized by the ultimate user. For example, if the innovation involves a longer-lasting light bulb or a complex instrument to monitor toxic wastes, the device must first be manufactured.
Some innovations, such as computer systems, improved analysis procedures, or improved design criteria, can be transferred to the user without major intermediate steps. In both cases, before the innovation is implemented, the manufacturing department or the user has to become aware of the innovation and be persuaded to go on to the next steps: decision and implementation. During the early steps—knowledge and presentation—marketing people can play an important role. Marketing people may, for example, develop information brochures or demonstrations that capture the imagination of the users, motivating them to seek further information. As users move to the decision stage and beyond, the R&D group and other individuals intimately familiar with the innovation need to play the pivotal role.
Three general approaches used by industrial research organizations to facilitate research utilization: These are the personnel approach, the organizational link-pins approach, and the procedural approach.
The Personnel Approach
The personnel approach involves movement of people, joint teams, and intensive person-to-person contact between the generator and the user of the research. Suppose an R&D group develops an intelligent and stand-alone air-pollution monitoring device that has a built-in microprocessor capable of real-time analysis. The innovation is complex, requiring some modifications or debugging during manufacturing. Some key members of the R&D group may be transferred to manufacturing to facilitate the process. The enthusiasm and keen insight of the R&D group can thus be transferred to manufacturing, increasing the probability of effective technology transfer.
The Organizational Link-Pins Approach
This encompasses specialized transfer groups that contain engineering, marketing, and financial skills; use of integrators who act as third-party transfer coordinators; and new venture groups. Some organizations may find that the movement of people creates other unacceptable personnel problems or is not economical. A special “technology transfer group” is formed to specialize in moving innovations from R&D to demonstration, to manufacturing, and to the ultimate user. It is important to recognize that a technology transfer group cannot consist of just a sales or public affairs office (PAO).
In one case we studied, the PAO was driving the train and results, predictably, were disappointing. After the initial knowledge and presentation stages, further activities quickly faded away. The PAO group did not have the technical understanding to successfully carry out other tech transfer activities. Even at the knowledge and persuasion stages, misleading and at times erroneous information was provided to the user groups. This further reduced the probability of success for the follow-up stages. For a technology-based innovation, it is essential that knowledgeable engineers and scientists play a leading role in the technology transfer group at all stages. As the technology moves to the decision stage and beyond, the PAO group’s role is minimal.
The Procedural Approach
This includes joint planning, joint funding, and joint appraisal of research projects using research and user groups from manufacturing and marketing. This procedural approach, which involves joint planning and participation in the innovation process by the user community, can be utilized quite effectively. User groups that include personnel from manufacturing, marketing, field users, corporate funding sponsors, and the research community can be organized for major R&D products. It is important to note that participants in these user groups still continue their normal duties. Their participation in the user group is an added responsibility. Researchers often comment on how many new ideas are generated as a result of their interaction with this user group. Such approaches require considerable organizational support, but the effort is worth the cost. In many cases, movement of people or formation of specialized technology transfer groups is simply not feasible due to organizational or cost considerations. Procedural approaches such as formation of user groups can serve as a tool for effective technology transfer without requiring movement of people or extra resources for establishing technology transfer groups. Procedural approaches can also be used to complement the other two approaches. The number of factors affecting technology transfer:
ROLE OF PEOPLE
The role of people in technology transfer has been well recognized. The existence of a technology gatekeeper, a person who links the organization to the outside world of scientific and technical knowledge, the two other gatekeepers—market gatekeeper and manufacturing gatekeeper—who have relevance to technology transfer.
The market gatekeeper is a communicator who understands what competitors are doing, what regulators might be up to, and what is happening with regard to the marketplace. This type of a gatekeeper brings vital information to the R&D organization and keeps the R&D research focus on target and toward the kinds of activities that are likely to be accepted and implemented successfully.
The manufacturing or operations gatekeeper understands enough of the practical and constrained environment of manufacturing and of the operations of the user community to keep the R&D personnel well informed about the manufacturing and operations requirements. This individual makes sure that the concepts developed by R&D can either be manufactured profitably or be made a part of the operation procedures of the user community.
CONFLICT WITHIN INDIVIDUALS
Many kinds of conflict occur within individuals. The first one we will discuss is role conflict. Roles are ideas about correct behavior for a person holding a position in a social system. For example, the position of chief engineer specifies particular activities that are appropriate for the position. When analyzing roles, it is important to talk about prescribed, subjective, and enacted roles. A prescribed role is a role that is prescribed by other people. In other words, the chief engineer usually receives definitions of what he or she is supposed to do from the boss, from subordinates, and from peers, and each has specific ideas about the engineer’s role, which are integrated into a concept of what he or she is supposed to be doing. In other words, when the chief engineer says, “I am doing this because I am the chief engineer,” that is an element of the subjective role; the role thought appropriate by the individual. Finally, we have the enacted role, which is the actual role behavior of the chief engineer. It is useful to look at the enacted role and see if it corresponds to the subjective role or to the prescribed role. According to research, the three kinds of roles—the prescribed, the subjective, and the enacted—frequently do not match very well.
A second kind of role conflict is related to workload—in other words, how much is one supposed to do. Given a particular role, there are different definitions of how much one should do. A third conflict has to do with creativity. Who is supposed to initiate what or who is supposed to do new things does vary according to role senders. Finally, there are conflicts that have to do with company boundaries and who has responsibility for what activity—for example, who must decide whether a laboratory member is to go to a conference. The research by Kahn shows that the greater the role conflict:
Technicians versus Researchers
Other kinds of intrapersonal conflict occur when certain technical employees have problems with the way they are perceived by members of the company. A good example is provided by Fineman (1980), who discusses the problem of technicians in large R&D Company. They are often in a supportive role; in other words, they are supposed to be helping the researcher do the work. This frequently makes them feel like second-class citizens who are being “used” by the researchers as servants rather than as co-workers. Furthermore, their job appears to lack creativity, since it is the researcher who does all the original work and they are only providing the technical support. Naturally, such people often feel that their technical skills and qualifications are underutilized and that their superiors do not take their personal needs into account. In R&D company, quite often, support personnel experience helplessness and lack of power and influence. Managers must find ways to integrate support staff by providing common goals for them and for the researchers.
Supervisor–Subordinate Expectations
A frequent problem in most company is that the expectations of one’s supervisor and of one’s subordinates may be quite different. This problem becomes especially difficult to solve when the training backgrounds of the supervisor and the subordinates are very different. For example, in some commercial company the top management has MBA training or degrees in law or finance. Managers of the R&D functions may report to an MBA while their subordinates might be physicists or engineers. The expectations of people with such varied kinds of training can be very different. As a result, the managers find that their supervisor expects a particular set of behaviors while their subordinates expect a different set with minimal overlap between them. Such “role conflicts” have been found to result in health problems (e.g., ulcers), job dissatisfaction, and even depression.
Engineers’ Status and Company Conflicts
An analysis of the kinds of stresses that professional engineers face is provided by Keenan (1980). Keenan also identifies, as a problem, the fact that professional engineers have a relatively low status in society (mostly the case in the United States, not so in Japan and Germany) despite their academic level of qualifications and their level of contributions to society. A number of scholars have pointed out that scientists and engineers who work in industrial company are likely to experience strains due to the conflict between their professional values and the goals of the company for which they work. Conflicts between the technologist and the company over issues such as which project to focus on and how and in what way to do them can drain the engineer’s energies.
Role Overload and Underload
In some cases, there is role overload; that is, the work that needs to be done is too difficult and exceeds the individual’s abilities, skills, or experience. In a study summarized in Keenan’s (1980) paper, French and Caplan (1973) found that engineers and scientists more frequently experienced situations in which the job was too difficult than did administrators. Another problem is role underload; the demands made by the job are insufficient to make full use of the skills and abilities of the scientist. The Keenan paper suggests that this is a frequent problem among engineers. Engineers receive sophisticated training (e.g., in mathematics) that results in skills often not required by their job. In one study, more than half of the engineers complained that many aspects of their jobs could be handled by someone with less training.
Boundary Role
Another source of stress or interpersonal conflict comes from occupying a boundary role, one that connects the company with the external environment. There is some evidence that engineers who are in such roles experience more stress and strain than other engineers. Individuals in boundary roles frequently complain that they experience greater deadline pressure, fewer opportunities to do the work they prefer, and less opportunity for advancement. They also claim that they are not attaining the maximum utilization of their professional skills.
Coping with Conflict and Stress
The ways engineers cope with work-related stress is discussed by Newton and Keenan (1985), who point out that there are different ways in which one can cope. For example, one can talk with others, take direct action, withdraw from the situation, or simply resent it. Exactly what is done depends on (1) individual differences (for example, people who are characterized as having a Type A personality are most likely to be resentful), and (2) situational variables (for example, withdrawal or doing as little as possible occurs more frequently among those who work in company that lack a supportive climate). Withdrawal appears to be more common in some fields of engineering than in others. Also, the way the person looks at the stressful situation determines whether the person will talk to others or take action, such as quitting. One cannot generalize and say that there is an effective coping technique that should be taught to everyone, because coping differs from person to person and from company to company. It also depends on the way the person perceives the conflict situation. Nevertheless, in training engineers and scientists, we can sensitize them to intrapersonal conflict and teach them stress-reduction techniques (such as biofeedback). Often being able to understand that role conflict and role ambiguity are “normal” in company makes dealing with such conflict more manageable. Facing the conflict squarely by “negotiating” one’s role is most helpful.
CONFLICT BETWEEN INDIVIDUALS
Chan (1981) has studied conflict between R&D managers and non managers in four company, and he found that they perceived conflict as generally having negative consequences. Most conflict occurs in the areas of reward structure (most important), control of goals, authority, and insufficient assistance. Most respondents saw a negative link between conflict and performance and job satisfaction, but a few respondents saw conflict as having positive consequences such as increased performance. Reactions to conflict were perceived as quite different. Competition and avoidance reactions were seen as most detrimental to the effectiveness of the work group; cooperation was seen as the most desirable reaction to conflict. In general the ideal way to deal with conflict is to be creative and try to reach win–win solutions. For example, if authorship of a paper is a disputed issue, arranging for one of the persons to do extra work on it, in order to justify joint authorship, can result in a win–win situation.
Conflict between groups is very common in company. In what follows, we will summarize some of the major findings in social psychology concerning the study of intergroup relationships (Worchel and Austin, 1985).
In-Groups, Out-Groups
The first point is that it is very easy to create confrontations between in-groups and out-groups. An in-group is one with which the individual is ready to cooperate and whose members consist of individuals who trust each other. An out-group consists of people one distrusts. It is very easy to create in-group/out-group distinctions. For example, in a laboratory experiment, one can say to teenagers, “You belong to the yellow group,” and the others constitute “the red group.” With no other visible distinction, one says, “All right, you yellows, here is a pile of money. Divide the money between your group and the other group.” This simple manipulation is sufficient to make the individuals who are doing the dividing favor their in-group. For instance, they may give 60 percent of the money to the in-group and 40 percent to the out-group. It is as if there were a natural way of thinking that “since I belong to this group and the other group is my ‘enemy,’ it is natural for me to give more to my group and to be a little distrustful of the other group.” The research also shows that out-groups are perceived as more homogeneous than in groups. In other words, the “other” people are “all the same.” By contrast, in-groups are perceived as relatively heterogeneous. The members of one’s in-group are perceived as “all different” from one another. These tendencies imply that we stereotype members of out-groups and may perceive them more inaccurately than we perceive the in-group. It is useful to distinguish relationships that are intergroup from those that are interpersonal .
In an interpersonal relationship, the individual is very much aware of who the other is. In the intergroup relationship, the individual is not aware of the other’s personal characteristics. For example, when soldiers shoot at the enemy they do not care who that particular individual is. It is just a global reaction or judgment about the other person as a representative of a group. Intergroup relationships are more likely to develop than interpersonal relationships under the following five conditions:
Conflicts in Company
Recent reviews of experimental work on conflict in company (DeDreu and Gelfand, 2008) suggest that there are many circumstances when moderate amounts of conflict may stimulate innovation and creativity. When a research team includes a member who looks at the research problem very differently from the way the other members do, even when that member is wrong, the difference of opinion can increase information search, and may uncover a solution that was not considered by any member of the research team. Therefore if, when the work begins, the best solution is not evident to any of the members of the research team, the team’s work can benefit from dissent. Of course, dissent is not without costs. In dissent situations the decision will probably take longer, the research members may feel antipathy toward the member who has different views, and may emotionally block the implementation of the best solution. On the other hand, if the research team has the norm described in “Ethos of a Scientific Community”, even if individuals are critical of the solutions proposed by others, the negative effects of dissent can be minimized. The complexities of the way dissent may be used to stimulate creativity are discussed in Schultz-Hardt, Mojzisch, and Vogelgesang (2008).
Coping with Conflict between Groups
What we said in the case of interpersonal conflict also applies to intergroup conflict: If superordinate goals (goals of both groups that neither group can reach without the help of the other) can be found, the relationship can be improved. There are two orientations that one can adopt in an intergroup situation: One is called a win–lose orientation and the other is called a win–win orientation. In the win–lose orientation, one tries to win for one’s in-group something that the out-group loses, while in the win–win orientation, one tries to win something for both groups. Another way to look at conflict is to examine the Conflict Resolution Grid of Blake and Mouton (l986, p. 76). The win–win orientation corresponds to position 9.9. The win–lose orientations are 1.9 and 9.1. Two other orientations—compromise and all lose, both less satisfactory than the win–win.
Intercultural conflict is a special case of intergroup conflict. “Culture” here is defined as unstated assumptions, beliefs, norms, roles, and values found in a group that speaks a particular language and lives in a specific time period and place. Potentially, there can be cultural conflict whenever people speak a different language including dialects, live in a different (e.g., Australia versus Canada), or have been socialized in different time periods (e.g., old versus young). Other contrasts, such as differences in religion, social class, and race, can also create intercultural conflict. Socialization in a particular culture results in a specific “world view.” Unstated assumptions (e.g., one must not start a new venture without consulting an astrologer), customs, and ways of thinking (e.g., starting with facts and abstracting a generalization versus starting with a generalization or an ideological position and finding facts that fit it) can create more trouble in interpersonal or intergroup relationships than even having something valuable to divide. This is because unstated assumptions appear so natural to the thinker. Intercultural disagreement can be more damaging to interpersonal relationships than disagreement within culture situations because rational arguments are not particularly helpful. There are basically four approaches to intercultural training: the cognitive approach, the affective approach, the behavioral approach, and self-insight.
The Cognitive Approach. The cognitive approach teaches people the worldview of the other culture. As Norman’s (1998) article argues, issues contributing to conflict are unlikely to go away and therefore must be managed rather than resolved. Management involves open communication to increase understanding. This is done with a series of “critical incidents” in which interpersonal behaviors between members of cultures A and B are described. After each incident, there are four explanations of the behavior of the people in the incident. If one is training a person from culture A to understand the point of view of persons from culture B, three of the four explanations are commonly given by people in culture A and one by people from culture B.
The Affective Approach. The affective approach involves exposing trainees to situations in which their emotions are aroused when in interaction with members of the other culture. This can be done by having them interact with members of the other culture in specific situations. When negative emotions develop, they are exposed to a positive experience that competes with the negative emotions. In some cases, simply breathing deeply or doing some exercise that reduces stress in the presence of the negative emotion is helpful. In other cases, arranging for pleasant experiences, such as the sharing of tasty food, listening to enjoyable music, or being exposed to agreeable perfumes, can create the right mood.
The Behavioral Approach. The behavioral approach involves shaping the behavior of the trainee to make sure that behaviors that are objectionable in the other culture do not occur. For example, crossing your legs and showing the bottoms of your shoes is absolutely insulting in some cultures, but many Americans do this and are not even aware of it. Simply telling them that they must not do it (the cognitive approach) is not effective. They have to experience rewards and punishments that will change their habits. The best way to accomplish this is to reward a competing behavior, such as keeping one’s shoes on the ground.
Self-Insight. Self-insight is an approach designed to make the trainee understand how much culture influences behavior. The aim in this case is to give the trainee a chance to analyze his or her own culture. Understanding how much of one’s own behavior is under the influence of norms, customs, and values unique to one’s culture can be very instructive. The technique used in this kind of training is to have the trainee interact with a person who is a trained actor and who acts in the opposite way from the way people in the trainee’s culture usually act. The experience of interaction with such a person and discussion of the experience with the trainer makes very clear that one’s behavior and feelings are shaped by culture. When people know how culture influences their behavior, they are able to be more sensitive to culture as a variable affecting social behavior and interaction.
For a research company, there are some ethical issues that either create special cases of conflict or provide a rather different framework for resolving conflicts. The following discussion of conflict within individuals, interpersonal conflict, and intergroup conflict focuses specifically on R&D Company.