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Technological Environment

BUSINESS ENVIRONMENT PROJECT

ON

TECNOLOGICAL ENVIRONMENT

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Technological Environment

INDEX

TOPIC PAGE NO.


Technological Environment 4
Technological Environment in India 5
Technological Changes in Cellular Industry 6
Technological Factors in Airline Industry 9
Technological Changes in RBI 10
Technological Changes in Automobile Industry 11
Technological Changes in Broadcast Industry 12
Technological Environment in Financial Economy 13
Technological Environment in Agriculture 18

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Technological Environment

Prepared By:

Name Roll #

1. Vidhi Malhotra 26
2. Jigna Shah 50
3. Archana Nair 35
4. Saumiya Nair 49
5. Sumandevi Chauhan 12

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Technological Environment

Technological Environment

Technology relates more to technique of production or application of


scientific know-how to improve the quality and quantity of the product and
production process.

Technological environment consists of

a) State of domestic or indigenous technology

b) Facilities for Research and Development

c) Technical Collaborations etc.

A study of technological environment is very essential due to following


reasons:

i) The rate of technological development is much faster than its


acceptance and absorption by the society. If the business firm fails to take a
note of those changes, and does not replace old technology by new ones, it
would certainly affect the survival and growth prospects.

ii) Advances in technologies have made it possible to improve quality


of product, increase output and reduce the cost of production. Use of latest
technology will enhance the marketability of products and face competition
effectively.

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iii) Technology can be used to carry out more risky and hazardous jobs
in factories more efficiently and safely. The use of computers and robots is
beneficial to increase productivity and reduce industrial accidents.

Despite certain deficiencies, development and use of newer technology is


bound to influence the environment of business. Business enterprises have
to analyze technology environment, technology options, cost-benefits of
technology alternatives, adopt and absorb new technology, use it to collect
data, design product, improve productivity and finally serve the consumer in
a better way.

Technological Environment in India:

The government has realized the importance of technology in development


plan and has accorded high priority. The following measures have been
taken by the government to develop indigenous technology and import
technology from outside.

a. The government gives incentives and provides financial and


other assistance to upgrade obsolete machines or technology.

b. Foreign collaborations for import of technology are given more


importance.

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Technological Environment
c. The import of computers and modem technology is allowed at
reduced rates of import duties.

d. The government wants bridge the technology gap and thereby


improve the quality of output. In the long run it will help Indian companies
to compete successfully in the domestic and international market.

TECHNOLOGICAL CHANGE IN CELLULAR INDUSTRY

Introduction to Cellular Telephony


The technology that gives a person the power to communicate
anytime, anywhere - has spawned an entire industry in mobile
telecommunication. Mobile telephones have become an integral part of the
growth, success and efficiency of any business and economy.

The most prevalent wireless standard in the world today, is GSM. The
GSM Association (Global System for Mobile Communications) was
instituted in 1987 to promote and expedite the adoption, development and
deployment and evolution of the GSM standard for digital wireless
communications.

The GSM Association was formed as a result of a European


Community agreement on the need to adopt common standards suitable for
cross border European mobile communications. Starting off primarily as a
European standard, the Groupe Speciale Mobile as it was then called, soon
came to represent the Global System for Mobile Communications as it
achieved the status of a world-wide standard. GSM is today, the world’s
leading digital standard accounting for 68.5% of the global digital wireless
market.

The Indian Government when considering the introduction of cellular


services into the country, made a landmark decision to introduce the GSM
standard, leapfrogging obsolescent technologies and standards. Although
cellular licenses were made technology neutral in September 1999, all the
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Technological Environment
private operators are presently offering only GSM based mobile services.
The new licensees for the 4th cellular licenses that were awarded in July
2001 too, have opted for GSM technology to offer their mobile services.

Cellular Industry in India


The Government of India recognizes that the provision of a world-
class telecommunications infrastructure and information is the key to rapid
economic and social development of the country. It is critical not only for
the development of the Information Technology industry, but also has
widespread ramifications on the entire economy of the country. It is also
anticipated that going forward, a major part of the GDP of the country would
be contributed by this sector. Accordingly, it is of vital importance to the
country that there be a comprehensive and forward looking
telecommunications policy which creates an enabling framework for
development of this industry.

Technological Environment influencing the Cellular Industry

The technological development in the cellular industry has been


incredible. Some years back the handsets used to cost somewhere between
Rs.30,000 to Rs.40,000. But the evolution in technology has brought down
the prices to Rs.2000 today. Apart from the handsets, the display screens in
the cell phones have also changed. From black and white they have evolved
to colorful display screens with the help of technology. This was about the
evolution in cell phones. There has been equal and outstanding development
in the networking of cellular phones. In other words, the service or network

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through which the cell phone can be reached has improved drastically in
terms of clarity in hearing and coverage of areas. The service providers have
also increased over a period of time. They are still trying to cover as many
areas they can for the betterment of the consumer. Earlier, the cell phones
were just used for calling purposes. But today, with the advancement in
technology, the cell phones have varied uses from serving as a reminder to a
computer. Recently, in the year 2001, camera cell phones were introduced.
These kinds of changes project the rapid development of the telecom
industry.
Keeping the camera cell phones aside, latest technology enables the user
to connect to the internet at broadband speeds more than 386kbps. This new
technology is known as the 3G technology. Our very own MTNL will be
providing us with this 3G service very soon. This service enables the user to
stream or download audio and video content or applications over-the-air,
including sports highlights, music videos and multi-user games. It also
provides the services of in – built video camera. It also enables the user to
participate in live conferences without missing their 9 – 5 schedule. This
new service will be beneficial to the service providers providing 3G because
it would enable them high data applications. This 3G network will have a
capacity of 4 million lines and will be operational next year. The total
investment will tune up to Rs.4000 crores. The company has already started
discussions relating to the equipments and this service will be first started in
Mumbai and Delhi. 3G services have already become popular in Japan, UK,
Hong Kong, Australia, Sweden and Denmark. NTT DoCoMo has a
subscriber base of more than 3.5m in Japan. Swedish mobile service
provider ‘3’ has a subscriber base of 350,000 in Sweden and Denmark,
adding around 150,000 customers since mid-August. In UK, Hutchison is
the 3G service provider. Other developments in this field are that now the
users can have mobile phones with in built soft wares like Bluetooth, which
enable them to download audio – visual movies and other videos and then
pass the same to other people. Various other soft wares are available like
Smart Crypto, Photo Fusion, Avecradio, Wow Screen, Antithief, etc.
At the most basic level, mobile phones are either analog or digital.
Some are both. Today's mobile phones are primarily digital, especially in
India and run on different technologies such as CDMA (Code Division
Multiple Access) and GSM .Code Division Multiple Access (CDMA) is a

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very new concept in wireless communications, which has lead to improve
both; the system capacity as well as the service quality.
CDMA is a form of spread-spectrum, a family of digital
communication techniques that have been used in military applications for
many years. The core principle of spread spectrum is the use of noise-like
carrier waves, which have bandwidths much wider than that required for
simple point-to-point communication for the same data rate. The CDMA
systems are the latest technology on the market and are quite competitive in
terms of cost and call quality. Many current CDMA systems boast of having
at least three times the capacity of GSM systems. Apart from the soft wares,
viruses that affect the computers, similar kind of mobile viruses have started
infecting cell phones. To fight against these viruses, technological experts
have introduced anti viruses. Technology is evolving in many such ways.
These were the technological developments taking place in the cellular
industry. Technology always has a dark side to it. So the dark side can
worsen if the misuses are not regulated. Keeping the misuses and their after
effects in mind we have an act called the Information Technology Act, 2000.
This Act looks after the misuse of any service provided to the user which is
harmful to the society or the people.

TECHNOLOCIAL FACTOR IN AIRLINE INDUSTRY

The increasing use of the Internet has provided many opportunities to


airlines. For e.g. Air Sahara has introduced a service through the internet,
wherein the unoccupied seats are auctioned one week prior to the departure.
Air India also provides many internet based services to its customer
such as online ticket booking, updated flight information & handling of
customer complaints.
USTDA (US trade & development association) is funding a feasibility
study and workshops for the Airports Authority of India as part of a long-
term effort to promote Indian aviation infrastructure. The Authority is
developing modern communication, navigation, surveillance, and air traffic
management systems for India's aviation sector that will help the country
meet the expected growth and demand for air passenger and cargo service
over the next decade.
A proposal for restructuring the existing airports at Delhi, Mumbai,
Chennai and Kolkata through long-term lease to make them world class is
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under consideration. This will help in attracting investments in improving
the infrastructure and services at these airports. Setting up of new
international airports at Bangalore, Hyderabad and Goa with private sector
participation is also envisaged.
A good example of the impact of technology would be that of AAI,
wherein with the help of technology it has converted its obsolete and unused
hangars into profit centers. AAI is now leasing these hangars to international
airlines and is earning huge profits out of it. AAI has also tried to utilize
space that was previously wasted installing a lamination machine to laminate
the luggage of travelers. This activity earns AAI a lot of revenue.
These technological changes in the environment have an impact on
Air India as well. Better airport infrastructure, means better handling of
airplanes, which can help reduce maintenance cost. It also facilitates more
flights to such destinations.

TECHNOLOGICAL CHANGES IN RBI INDUSTRY

Say no to 25, 50 paise coins at your own peril


Mumbai: Next time your next door shopkeeper refuses to accept a 25
paise coin, take him to task. In a categorical statement, the Reserve Bank of
India (RBI) has said that all small denomination coins including those of 50
and 25 paise coins are legal tender and non-acceptance of any such coins is
an offence. Mostly banks under the RBI and shopkeepers are those who
discourage the use of these coins.
Taking a note of this practice by banks, the RBI has advised all banks
to desist from any such restrictive practices. Also, the apex bank has asked
the public to assert their right to get appropriate change and acceptance of all
denomination coins by banks in exchange. So next time, someone plays
truant, take him to task.

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The RBI after being flooded with complaints against banks reluctant
to accept 50 paise and 25 paise coins asked the Birla Institute of Technology
(BITS), Pilani, to do a study to suggest remedial solution. As recommended
by the BITS, the RBI has now decided to act tough with those who refuse to
accept the legal tender.
The Government of India has the sole right to mint coins in the
country as per the Coinage Act, 1906. The designing and minting of coins in
various denominations is also the responsibility of the government. The
coins are minted at the four government mints at Mumbai, Alipore in
Kolkata, Saifabad in Hyderabad, Cherlapally in Hyderabad and Noida in UP.
Coins in India are presently being issued in denominations of 10
paise, 20 paise, 25 paise, 50 paise, one rupee, two rupees and five rupees.
Coins up to 50 paise are called 'small coins' and coins of Rupee one and
above are called 'Rupee Coins'. Coins can be issued up to the denomination
of Rs 1000 as per the Coinage Act, 1906.

TECHNOLOGICAL CHANGES IN AUTOMOBILE


INDUSTRY

Hyundai Motor India ties up with Tata Indicom

New Delhi: Hyundai Motor India Ltd (HMIL) signed an MoU with
telecom service provider Tata Indicom to facilitate the implementation of its
Global Dealer Management System, a software that will help its dealers stay
connected with the company in real time.
Under the five-year MoU signed by HMIL president B.V.R. Subbu
and Tata Indicom Enterprise Business Unit president Sandeep Mathur, the

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telecom player will enable the GDMS by providing the Virtual Private
Network and VSAT technologies. It will also be the technological service
partner of HMIL to ensure the smooth operation of the GDMS system.
GDMS, a web-based communication software, will enable dealers to
place online orders of cars, spare parts and accessories to HMIL and speed
up operations and eventually benefit the customer. It will initially be run as a
pilot on about 20 dealer locations and will be extended to all HMIL dealers
in 305 locations across India by May 2005.
"With the implementation of GDMS, we aim to make it the first
integrated system, on which our dealers can view stocks of products online,"
Subbu said.

TECHNOLOGY CHANGES IN BROADCAST INDUSTRY

Broadcast industry will make more waves in 2006: Govt

New Delhi: Having laid out a broad policy framework for regulation
of the television industry and growth in the FM radio sector, the government
has expressed optimism that the broadcast industry would make more waves
in terms of growth in 2006.

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"Our interest is that growth should not be impeded and we should not
give a signal that we are overbearing," Information and Broadcasting
Secretary S.K. Arora said here. Commenting on the developments in the
I&B sector in 2005, he said it had been a "fairly good year" as far as
expansion of television and electronic media was concerned.
"TV channels have increased considerably and, in fact, have been
growing rapidly over the last three years," Arora said, adding that as per
projections made in studies conducted by Ernst & Young and
PricewaterhouseCoopers, the growth rates are going to sustain for the next
five years. The year gone by saw the government come out with the much-
awaited revisions to downlinking and uplinking policies, that govern
television channels in India. The government also came out with a bold
policy on the private FM radio front, where it not only allowed 20 per cent
foreign direct investment (FDI) but also switched over to a revenue share
regime from the license fee structure adopted in the first round of bidding.
"There is far greater optimism on the FM radio side," Arora said, and
pointed out that the government not only went in for wide-ranging
consultations with the stakeholders but also kept in mind the commercial
viability of the projects while reviewing the policy. "This time we kept
commercial aspects, to which the industry contributed largely, in mind while
designing the policy," he said.

TECHNOLOGY CHANGES IN FINACIAL ECONOMY

It is surely not news to a group of bankers that the same forces that
have been reshaping the real economy have also been transforming the
financial services industry. Once again, perhaps the most profound
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development has been the rapid growth of computer and telecommunications
technology. The advent of such technology has lowered the costs, reduced
the risks, and broadened the scope of financial services, making it
increasingly possible for borrowers and lenders to transact directly, and for a
wide variety of financial products to be tailored for very specific purposes.
As a result, competitive pressures in the financial services industry are
probably greater than ever before.
As is true in the real economy, it is difficult to overestimate the
importance of education and ongoing training to the advancement of
technology and product innovation in the financial sector. I doubt that I need
to tell any of you about the importance of education and training for
employees. But the same is almost surely true for your customers. Surveys
repeatedly indicate that users of electronic banking products are typically
very well educated. For example, data from the Federal Reserve Board's
Survey of Consumer Finances suggest that a higher level of education
significantly increases the chances that a household consumer will use an
electronic banking product. Indeed, this survey indicates that, in late 1995,
the median user of an electronic source of information for savings or
borrowing decisions had a college degree--a level of education currently
achieved by less than one-third of American households.
Technological innovation and more sophisticated users have
accelerated the second major trend--financial globalization--which has been
reshaping our financial system, not to mention the real economy, for at least
three decades. Both developments have expanded cross-border asset
holding, trading, and credit flows and, in response, both securities firms and
U.S. and foreign banks have increased their cross-border operations. Once
again, a critical result has been greatly increased competition both at home
and abroad.
A third development reshaping financial markets--deregulation--has been as
much a reaction to technological change and globalization as an independent
factor. Moreover, the continuing evolution of markets suggests that it will be
literally impossible to maintain some of the remaining rules and regulations
established for previous economic environments. While the ultimate public
policy goals of economic growth and stability will remain unchanged,
market forces will continue to make it impossible to sustain outdated
restrictions, as we have recently seen with respect to interstate banking and
branching.

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In such an environment, I share your frustration with the pace of
legislative reform and revision to statutorily mandated regulations.
Nonetheless, we should not lose sight of the remarkable degree of re-
codification of law and regulation to make banking rules more consistent
with market realities that has occurred in recent years. Deposit and other
interest rate ceilings have been eliminated, geographical restrictions have
been virtually removed, many banking organizations can do a fairly broadly
based securities underwriting and dealing business, many can do insurance
sales, and those with the resources and skill are authorized to virtually match
foreign bank competition abroad. Moreover, it seems clear that there is
recognition by the Congress that the basic financial framework has to be
adjusted further. The process, as you know, is not easy when the results of
regulatory relief create both a new competitive landscape and new
supervisory and stability challenges.
Change will, I believe, ultimately occur because the pressures
unleashed by technology, globalization, and deregulation have inexorably
eroded the traditional institutional differences among financial firms.
Examples abound. Securities firms have for some time offered checking-like
accounts linked to mutual funds, and their affiliates routinely extend
significant credit directly to business. On the bank side, the economics of a
typical bank loan syndication do not differ essentially from the economics of
a best-efforts securities underwriting. Indeed, investment banks are
themselves becoming increasingly important in the syndicated loan market.
With regard to derivatives instruments, the expertise required to manage
prudently the writing of over-the-counter derivatives, a business dominated
by banks, is similar to that required for using exchange-traded futures and
options, instruments used extensively by both commercial and investment
banks. The writing of a put option by a bank is economically
indistinguishable from the issuance of an insurance policy. The list could go
on. It is sufficient to say that a strong case can be made that the evolution of
financial technology alone has changed forever our ability to place
commercial banking, investment banking, insurance underwriting, and
insurance sales into neat separate boxes.
Nonetheless, not all financial institutions would prosper as, nor desire
to be, financial supermarkets. Many specialized providers of financial
services are successful today and will be so in the future because of their
advantages in specific areas. Moreover, especially at commercial banks, the

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demand for traditional services by smaller businesses and by households is
likely to continue for some time. And the information revolution, while it
has deprived banks of some of the traditional lending business with their
best customers, has also benefitted banks by making it less costly for them to
assess the credit and other risks of customers they previously would have
shunned. Thus, it seems most likely that banks of all types will continue to
engage in a substantial amount of traditional banking, delivered, of course,
by ever improving technology.
Community banks, in particular, are likely to provide loans and
payments services via traditional on-balance sheet banking. Indeed, smaller
banks have repeatedly demonstrated their ability to survive and prosper in
the face of major technological and structural change by providing
traditional banking services to their customers. The evidence is clear that
well-managed smaller banks can and will exist side by side with larger
banks, often maintaining or increasing local market share. Technological
change has facilitated this process by providing smaller banks with low cost
access to new products and services. In short, the record shows that well-
managed smaller banks have nothing to fear from technology, globalization,
or deregulation.
For all size entities, however, technological change is blurring not
only traditional distinctions between the banking, securities, and insurance
business, but is also having a profound effect on historical separations
between financial and nonfinancial businesses. Most of us are aware of
software companies interested in the financial services business, but some
financial firms, leveraging off their own internal skills, are also seeking to
produce software for third parties. Shipping companies' tracking software
lends itself to payment services. Manufacturers have financed their
customers' purchases for a long time, but now increasingly are using the
resultant financial skills to finance noncustomers. Moreover, many nonbank
financial institutions are now profitably engaged in nonfinancial activities.
Current facts and expected future trends, in short, are creating market
pressures to permit the common ownership of financial and nonfinancial
firms. In my judgment, it is quite likely that in future years it will be close to
impossible to distinguish where one type of activity ends and another begins.
Nonetheless, it seems wise to move with caution in addressing the removal
of the current legal barriers between commerce and banking, since the

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unrestricted association of banking and commerce would be a profound and
surely irreversible structural change in the American economy.
Were we fully confident of how emerging technologies would affect the
evolution of our economic and financial structure, we could presumably
develop today the regulations which would foster that evolution. But we are
not, and history suggests we cannot, be confident of how our real and
financial economies will evolve. If we act too quickly, we run the risk of
locking in a set of inappropriate rules that could adversely alter the
development of market structures. Our ability to foresee accurately the
future implications of technologies and market developments in banking, as
in other industries, has not been particularly impressive. As Professor
Nathan Rosenberg of Stanford University has pointed out, ". . . mistaken
forecasts of future structure litter our financial landscape."
Indeed, Professor Rosenberg suggests that even after an innovation's
technical feasibility has been clearly established, its ultimate effect on
society is often highly unpredictable. He notes at least two sources of this
uncertainty. First, the range of applications for a new technology may not be
immediately apparent. For instance, Alexander Graham Bell initially viewed
the telephone as solely a business instrument--merely an enhancement of the
telegraph--for use in transmitting very specific messages, such as the terms
of a contract. Indeed, he offered to sell his telephone patent to Western
Union for only $100,000, but was turned down. Similarly, Marconi initially
overlooked the radio's value as a public broadcast medium, instead believing
its principal application would be in the transmission of point-to-point
messages, such as ship-to-ship, where communication by wire was
infeasible.
A second source of technological uncertainty reflects the possibility
that an innovation's full potential may be realized only after extensive
improvements, or after complementary innovations in other fields of science.
According to Charles Townes, a Nobel Prize winner for his work on the
laser, the attorneys for Bell Labs initially refused, in the late 1960s, to patent
the laser because they believed it had no applications in the field of
telecommunications. Only in the 1980s, after extensive improvements in
fiber optics technology, did the laser's importance for telecommunications
become apparent.
It's not hard to find examples of such uncertainties within the financial
services industry. The evolution of the over-the-counter derivatives market

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over the past decade has been nothing less than spectacular. But as the
theoretical underpinnings of financial arbitrage were being published in the
academic journals in the late 1950s, few observers could have predicted how
the scholars' insights would eventually revolutionize global financial
markets. Not only were additional theoretical and empirical research
necessary, but, in addition, several generations of advances in computer and
communications technologies were necessary to make these concepts
computationally practicable.
All these examples, and more, suggest that if we dramatically change
the rules now about banking and commerce, with what is great uncertainty
about future synergies between finance and nonfinance, we may well end up
doing more harm than good. And, as with all rule changes by government,
we are likely to find it impossible to correct our errors promptly, if at all.
Modifications of such a fundamental structural rule as the separation of
banking and commerce accordingly should proceed at a deliberate pace in
order to test the response of markets and technological innovations to the
altered rules in the years ahead.
The need for caution and humility with respect to our ability to predict
the future is highly relevant for how banking supervision should evolve. As I
proposed to this audience last year, regulators are beginning to understand
that the supervision of a financial institution is, of necessity, a continually
evolving process reflecting the continually changing financial landscape.
Increasingly, supervisory techniques and requirements try to harness both
the new technologies and market incentives to improve oversight while
reducing regulatory burden, burdens that are becoming progressively
obsolescent and counterproductive.
Concerns about setting a potentially inappropriate regulatory standard
were an important factor in the decision by the banking agencies several
years ago not to incorporate interest rate risk and asset concentration risk
into the formal risk-based capital standards. In the end, we became
convinced that the technologies for measuring and managing interest rate
risk and concentration risk were evolving so rapidly that any regulatory
standard would quickly become outmoded or, worse, inhibit private market
innovations. Largely for these reasons, ultimately we chose to address the
relationship between these risks and capital adequacy through the
supervisory process rather than through the writing of regulations.

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Technology Change Association with Agriculture

Surprisingly, the shift to an agricultural way of life was not very


dependent on new technology. Early farmers used techniques and tools
which had long been familiar to hunter-gatherers. The stone axe, hoe, sickle,
milling stones were already being used as people exploited plant materials
more and more.
Profound cultural rather than technological changes were necessary at
first to permit adaptation to the new mode of life. But once the shift had
occurred, ever more changes, both cultural and technological, became
possible.
To agriculturalists, survival is dependent upon getting the seeds to
sprout and grow in the soil. There task is relatively simple. Yet it involved
hard work. Originally fields were cleared of weeds and prepared for planting
by hand at great effort, using primitive hoes or digging sticks. The invention
of the scratch plow in Mesopotamia about 6,000 years ago was a great labor-
saving device for early farmers. It also marked a revolutionary stage in
human development where man began a systematic substitution of other
forms of energy, in this case animal power, for human muscles.
The techniques for gathering or harvest in cereal crops, shown in a
tomb painting from Egypt remind us how precious a commodity grain was
to early civilizations. Grain was dearly bought with human sweat and
diligence. Most cultures quite naturally came to associate the main crops that
sustained their existence with the substance of life itself, either worshipping
those plants or seeing them as symbols of the power of life. To a Hopi in the
American Southwest, corn (maize) is life. Corn becomes the essential
element by which to not only eat but symbolizes life itself to Hopi.
At the right, a kind of sled is being pulled by oxen over the harvested
grain to separate the hard, compact seeds from the unusable plant material of
the hulls and stalks of the wheat. Sometimes this threshing of the grain is
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achieved by flailing piles of grain with a club or by treading on it. A man
also seen winnowing the threshed grain by tossing it into the air with a
shovel: gravity returns the heavier grains to the pile at his feet while a breeze
separates the light chaff and blows it away.
The efforts of labor extended beyond planting and harvesting. To live
by exploiting grain crops, humans must process the grain before it can be
eaten. Human teeth, jaws, and digestive tract are simply not adapted for this
kind of diet. The typically human solution to this problem is, however, not to
evolve biologically, but to find cultural or technical solutions to problems: in
this case, to develop the knowledge and techniques for processing grain.
One early and universal technique of transforming grain into food is
to mill the seeds slightly between two stones and then to boil the grain in
water, making a kind of gruel. If ground into coarse meal, boiling in water
will produce something like the oatmeal we still eat at breakfast. If ground
fine and mixed with water into a paste and then baked, the grain is
transformed into bread. The yeast cultures which leaven some forms of
bread are naturally occuring, but were regarded as magical prior to the
relatively recent discovery of micro-organisms.
If stored grain gets wet and begins to sprout, the stored carbohydrates
in the seed begin converting into sugar. While the grain is spoiled for bread-
making, it can still be consumed if treated in another process called
fermentation. The sprouted grain is first baked, ground into a paste (called
malt), and then added to water. With the right yeast and little luck, the result
is beer, another of the food inventions of early Mesopotamian
agriculturalists. Some archaeologists even believe that making beer was one
of the driving forces behind domestication of wheat and barley. Large vats
for storage of beer have been found in early Sumerian cities.
Another advantage of sedentary life is the ability to use heavy and
breakable--but none the less very useful--household objects made of baked
clay. Hunter- gatherers have no use for pottery because they have to carry
their possessions with them when they move. Agriculturalists, in contrast,
can accumulate such objects--and put them to multiple uses. This discovery
was made many times by human communities all over the globe, and seems
to have occurred almost as soon as they settled down in one place.
In the photo above, an Egyptian woman fashions a bowl out of rings
of clay-- probably the oldest way of making pottery. At right, an Egyptian
craftsman fashions a large container using the next level of technological

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Technological Environment
development--a potter's wheel, which he moves with his foot. Technology as
basic as the potter's wheel allowed early humans to enjoy the first fruits of
mass production.
The wheel may have first been developed--invented--for these
purposes rather than for use in vehicles. In any case, the settled mode of life
led to many new discoveries out of which elaborate technologies eventually
developed.
Agricultural societies world-wide have discovered that "baking" clay
in extremely hot fires for a long period creates hard, durable objects such as
the plates, jugs, and pots above. These examples are from 'Ubaid' culture in
Mesopotamia, one of the earliest pottery-making societies.
Another step in a sequence of technological development was the
modification of the pottery kiln into a furnace capable of melting metal ores.
Note that the earliest forms of furnaces for smelting ores retain the
form of the mud oven. Over time, smelting ores became a highly refined
technology and furnaces evolved into new forms.
The discovery of techniques for turning plant and animal fibers into
cloth represented a revolutionary improvement in the quality of human life.
Weaving may have preceded agriculture, as it grew naturally out of basketry
and the weaving of reed mats. Life in sedentary agricultural villages
permitted the refinement of ancient techniques and the adoption of more
complex looms.
One of the most important contributes that stemmed from the
agricultural revolution was the invention of writing. As commercial
activities increased as trade became more and more important, there was a
need to record trade activities. As a result, Mesopotamians began to use clay
tokens to keep track of economic exchange values. Later, this rather
cumbersome mechanism was replaced by written symbols in clay tablets.
With time, Mesopotamian scribes began to write down everything on these
clay tablets as a record of life emerged.

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