Blackwell Reference Online

Extract

A technology tier is a level in a product system: final product, system, subsystem, component, part. As a concept it contrasts with traditional categorizations of “vertical” technologies (i.e., specialized areas such as mechanics, electronics, materials, etc.). More and more companies are moving from selling discrete products to selling functions that create customer value; in other words, it is not just the product itself that is important, but also the product functionality and the associated brand, etc. In order to be able to cope with correspondingly more complex product offerings, firms are abandoning lower “levels” of technology and complex product development is increasingly dependent upon fewer and larger suppliers who provide “technology systems solutions”: e.g., a braking system in the automotive sector. The division of labor between the original equipment manufacturer (OEM) and its subcontractors and suppliers is hence increasingly based on the idea of technology levels or tiers. Suppliers take care of technical specialization, while further development of product functions takes place within the OEM. This means that the OEM manufacturer specializes in concept development and integration of technical functions. Specialist technical fields, however, become the domain of big and more technically proficient suppliers. This is a possibility but also becomes a risk. So‐called ... log in or subscribe to read full text