How technology road mapping facilitate organizational large scale change

MBA Research Project
BUSI 5908
Research Project Title:
How Technology Road-mapping facilitate organizational Large-Scale
Change as a corporate strategic planning tool?
(A case study of Tehran-Mashed new electrical railway project)
A thesis submitted to:
Prof, Ian Lee
by
Majid Babaie Ebrahimabadi
Date Submitted:
April 9, 2008

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ABSTRACT
The objective of this project is to evaluate Technology Roadmapping for providing
appropriate electrical trains technology for Tehran-Mashed railway. Technology
Roadmapping is a comprehensive approach to strategic management for the integration of
market, R&D and technology development into product/service and business aspects.
In this project, special consideration has been given to sustainable development as
economic, social and environmental parameters.
The point of departure was a TESP analysis of Iran's macro environment with its structural
and economic data (in Chapter 2). Taking all the given parameters into consideration, and
on the basis of the economic analysis, it shows that Iran's macro economy is growing
rapidly and is producing increased demand for transportation that itself has considerable
effect on the economy.
The next step in the project was a comprehensive performance analysis of a wide spectrum
of transportation modes. In this step, the industry and competitors analysis was completed
to analyze rail industry in comparison to other modes. Although rail industry has
experienced increased support from government in recent years and it has many
advantages over other modes and is known as environmentally friendly, more efficient to
national economy and more accepted by social groups, the analysis shows that rail industry
has an insufficient share of the transportation sector. There are many reasons for that but
lack of adequate infrastructures and appropriate technologies could be the most important
reason.
The technology selection process (in Chapter 5 and 6) shows that customers want services
and technologies that reduce travel time and increase travel quality and safety. On the
other hand the government as a specific customer is looking for those technologies that
offer a more direct and indirect contribution to national economy. By using rail customers’

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and rail experts' opinions, the High Speed Train (HST) was determined to be the service
that satisfied the identified goals. On the basis of the data, appropriate rail technologies
based on existing and further technologies were analyzed. As a result, three available
technologies; Tilting trains, Conventional HST and Maglev trains were evaluated
concerning technical and economic parameters.
The analysis found that according to Iran's railway situation a combination of the first two
alternatives could be adopted in a 20 year plan while Maglev train (technical, economical
and technological adaptation) cannot achieve the government’s objectives in the Tehran-
Mashed railway.
Finally, the research in this project suggests a significant new process, which resulted in
new tools for acquisition of disruptive technologies in rail industry.

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ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave me the possibility to complete
this project. I want to thank the Iran's Railway for giving me opportunity to commence this
project in the first instance, to do the necessary research work and to use departmental
data. I have furthermore to thank the Mr.Ghorbanalibeyk chief executive of Iran's rail
network electrification project. I am deeply indebted to my supervisor Prof. Dr. Ian Lee
from the Sprott School of Business of Carleton University whose help, stimulating
suggestions, valuable hints and encouragement helped me in all the time of research for
and writing of this project. Also I would like to thank Prof. Dr. Uma Kumar from the Sprott
School of Business of Carleton University whose read my project and gave me many
worthwhile comments.
Especially, I would like to give my special thanks to my wife whose patient support enabled
me to complete this work.

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"Table of Contents P#
ABSTRACT 2
ACKNOWLEDGEMENT 4
EXECUTIVE SUMMARY 17
CHAPTER ONE
( INTRODUCTION)
1) Background of business 25
2) My case study 33
3) "TRM" leads to optimize providing new technology 35
4) Managerial Questions 37
5) Research Objectives 37
CHAPTER TWO
(EXTERNAL ENVIRONMENT ANALYSIS)
Part A) Macro-Environment Analysis (TESP) 42
A-1) Global economy environment 42
A-2) Middle East, a strategic region 49
A-3) Iran's Outlook Document 52
A-4) TESP Analysis 53
A-4-1) Technological Trends 59
A-4-2) Economic Trend 61
A-4-3) Socio-Cultural Trends 86
A-4-4) Political/ Legal Trends 106
Conclusion on Iran's Macro environment 108
PART B) Industry Analysis 109
B-1) Overall Review of Iran's Transport Sector 109

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B-1-1) Organisation of Transport Sector 109
B-1-2) Iran's Key Transportation Policies 110
B-1-3) Sustainable Development 111
B-1-4) Key Modes of Transport 123
B-1-5) Investments in Transportation Infrastructure 140
B-1-6) Key Issues Identified in the Transportation 142
B-1-7) The Way Forward 147
B-2) Market demand for railway as a target industry 148
B-3) Strategic Map 149
B-4) Industry Analyses by porter's five forces 152
B-4-1) Rivalry among competitors 152
B-4-2) Barriers to Entry 153
B-4-3) Substitute Services 154
B-4-4) Power of Suppliers 155
B-4-5) Power of Buyers 155
B-5) Driving Forces 157
B-6) Overall Industry Attractiveness 160
PART C) Competitor Analyses 161
CHAPTER THREE
(PROJECT DESCRIPTION)
) A) Introduction 170
A-1) 21st
century challenges 170
A-2) Iran's Rail Transport Background 172

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A-3) Iran's Railway Internal Corridors 173
A-4) Iran's Rail Network 174
A-5) Summary of RAI’s Current Situation 177
A-6) Future Vision 177
B) Project Description 178
B-1) Tehran-Mashed, A potential route for high speed rail 178
B-2) A Price-Time model 182
B-3) Why High Speed Trains (HST) 184
C) The problem and Methodology 196
CHAPTER FOUR
TECHNOLOGY ROADMAPPING
(A STRATEGIC WAY FOR CHANGE)
Introduction 199
A) Anticipating and Managing Change 200
A-1) what’s the force behind change? 200
A-2) Literature Review 201
A-3) Different Perspectives to Change 203
A-4) Managing change, A step-by-step approach 204
A-5) Key Relative Areas 206
A-6) Boosting Technological Change 207
A-7) Do employees must be change? 213
A-8) Look at the Past, Present and Future 214
B) Distinction of Planning Paradigms 215

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B-1) what is the conventional paradigm? 215
B-2) Why new paradigm? 216
C) An Overview to the Technology Roadmapping (TRM) 217
C-1) Definition and literatures 219
C-2) Differentiations of TRM & technology planning 225
C-3) Evolution of technology roadmapping 226
C-4) Why Technology Roadmapping 227
C-5) what are the main benefits of TRM? 229
C-6) Why R&D involvement? 230
C-7) Why should be avoid from exist solutions? 231
C-8) Different Modes & Approaches of TRM 231
C-9) Technology Roadmapping Process 233
C-10) which Challenges are in face of TRM's? 239
CHAPTER FIVE
(TECHNOLOGY SELECTION)
Introduction 242
Preliminary Analysis to Roadmap Creation 244
Phase 1) Market Requirements, Visions and Objectives 246
Phase 2) Service-Market Analysis 253
Phase 2-1) Matching Visions with Costumer and Technical Requirements 253
2-1-1) Using QFD for service development 253
Phase 2-2) Project’s House of Quality 263
Phase 2-3) Identification of Related Services 271

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Phase 3) Identification of Technology Alternatives 276
Phase 4) Technology Gap Analysis 293
Phase 5) Service-Technology Analysis 304
CHAPTER SIX
(ROADMAP CREATION)
A) Introduction 309
B) Influence Matrix 310
C) Roadmap Creation 314
C1) Auxiliary Tasks 314
C2) Main Tasks 318
C3) Auxiliary Tasks' Roadmap 319
C4) Main Tasks' Roadmap 321
C5) Next Steps and Recommendations 326
CONCLUSION 327
APPENDIX 1: QUESTIONNAIRES 330
REFERENCES 344

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Tables
Chapter Two
• Household-based technologies at Iran 58
• Comparison of Iran's 3rd
plan targets and performance 62
• Economic Indicators during the 4th FYDP 63
• Iran's Macroeconomic Components 73
• Iran's budget deficit 80
• Iran's Annual Population Growth 90
• Iran's labor force indices and indicators 96
• List of selected countries by life expectancy 98
• Iran's Income distribution inequality indexes in urban areas 100
• Share of Iranians states in GDP, Population and Consumption 102
• Level of Education 103
• Market share by modes of transport 115
• Iran's Road network development plan 125
• Iran's Rail development plan, quantitative targets 130
• Iran's railway performance 131
• Iran's fourth development plan (Railway Sector) 132
• Iran's Sea Transport Performance 134
• Iranian Railway companies, Annual freight performance 163
• Iranian Railway companies, Annual passenger performance 166
Chapter Three
• General Status of the Iran's Rail Transport Sector 173
• The Route's Current Traffic 181
• The European Union Plans to improve Road and HST 188
• Speed Records of High Speed Trains in different Modes 193
• World Fastest Scheduled Train Services 195
Chapter Five
• Iran's Railway SWOT Analysis 249
• Tehran-Mashed new Electrical Railway, (Visions & Objectives) 252

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• Refining Customer Requirements 256
• Technical Requirements to Satisfy Customer Needs 257
• Strong Negative Interactions among the Technical Requirements 258
• Follow-up Actions 259
• Iranian Railway companies, annual passenger performance 261
• Competitor’s Market Share and Growth rate 261
• BCG Matrix 262
• Conclusion of Competitor's Evaluation for Costumer Requirements 265
• Conclusion of Competitor's Evaluation for technical requirements 265
• Effects of technical requirements on costumer requirements 266
• Comparison of the relative importance 267
• Final priority of Costumer Requirements 269
• House of Quality 270
• Rail Transport Market-Service Linkage 271
• Tehran-Mashed new line, Choosing the Strategic Services 273
• Comparison of different rail alternatives 273
• Features Comparison Chart 284
• AHP Results for Technology Selection 286
• Tehran-Mashed new HST, Final priority of HST Alternatives 290
• Current Technological Capabilities for high speed railway 297
• Track's Desired Capabilities 298
• Equipment's Desired Capabilities 298
• Identification of the gap on the exist line 300
• Follow-up Actions 301
• Tehran-Mashed project's implementation alternatives 306
Chapter Six
• Influence Matrix 311
• Identification of Auxiliary-Tasks 315
• Categorization of Auxiliary-Tasks by Term 316
• Auxiliary Tasks' Roadmap 319

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• Main Tasks' Roadmap, Modification of current line 321
• Main Tasks' Roadmap, Execution of Dedicated HST Line (350 Km/h) 324
• Project's Fast Facts 329

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Figures
Chapter Two
• External Environment Components 40
• Effective & non-effective factors 41
• Selected countries comparative GDP 45
• G7 Group's GDP 46
• G7 economic indicators 46
• Global indicators 47
• Global productivity performance 47
• Risks to the global outlooks 48
• GDP at Middle East 49
• Middle East economic indicators 50
• Export and government revenue of OPEC 50
• Middle East in compare to G7 51
• Science and Engineering students 57
• Distribution of economic freedom 66
• Economic freedom, world average vs. regions 67
• Economic freedom VS per capita GDP 67
• Global distribution of economic freedom, results 68
• Iran's Economy Freedom 69
• Iran's ten economic freedom indicators 70
• Iran's GDP & GDP per capita 71
• Iran's GDP growth rate 71
• Contribution to GDP growth, Iran 72
• Iran's GDP (constant & current price) 72
• Iran's GDP (share of world total) 73
• Iran's GDP by sectors 73
• OPEC basket prices 75
• World's oil demand & supply 76

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• OPEC total crude oil production 76
• Iran's liquid production and consumption 77
• Iran's interest and inflation rate 79
• Iran's inflation rate in 26 years 80
• Iranian Rial in compare to other currencies 83
• Iran's HDI scores 87
• Iran's HDI trends 88
• Iran's population for 20 years 90
• Population and HDI trends in compare together 91
• Iran's Age distribution 93
• Iran's Gini Index 101
• Iran's Misery Index 104
• Iran's misery Index in compare to G7 Group 105
• Iran’s GDP by economic sector 111
• Iran’s GNP by economic sectors 112
• Value Added by Transportation sectors 113
• Share of railway in transportation value-added 114
• Iran’s value-added growth rate by sectors 114
• Governmental assets by transportation sectors 115
• Contribution of different fuel on total consumption in transport 120
• Gasoline consumption growth trends in different region of the world 121
• Energy intensity of GDP in different mode of transport 122
• Iran’s registered vehicles 124
• Vehicles to main roads 125
• Iran’s road network 125
• Public investment in road network 127
• Freight and Passenger by road 128
• Railway Transportation 132
• Share of freight and passenger in railway 132
• Iran’s Aviation Performance 136

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• Road and Railway comparison chart 139
• Transportation Investments as % of GDP 140
• Transportation investment by sectors 141
• Strategic Map at railway industry 150
• Iran’s railway industry attractiveness 156
Chapter Three
• Iran's Railway Internal Corridors 174
• Iran's railway critical routes 176
• Map of Rail's Passenger volume 180
• Price–Time Model 183
• Effect of Train Journey Time on Air and Rail Travelers 183
Chapter Four
• Lewin's Force Field Analysis Model 202
• Key Areas of Change Management 207
• Technological Change Life Cycle 209
• Looking at the Past, Present and Future 214
• Linking between TRM and Business Strategies 218
• Technology Life Cycle 220
• Evolution of technology roadmapping 227
• Public & Private sectors in R&D investment 230
• TRM in different modes 232
• TRM Process 234
• Dynamic effect of different dimension 236
• The Project's Process Algorithm 238
• Roadmapping Challenges 239
Chapter Five
• The project's Roadmap Phases 244
• Roadmap Hierarchy 245

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• Conceptual Framework of Technological Renovation 247
• Trip time by Technology 280
• Technology Selection Diagram 291
• Technological Gap Process 296
Chapter Six
• Influence Map 313
• Integrated Relationships in both of internal and external 325

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Executive Summary
 Introduction
This business case represents the significant effects of different modes of High Speed Train
(HST) technology in Iranian railway system. The project aims to assess how to structure the
ongoing collaborative technological advancement, the exploration of the opportunities and
the threats over the next twenty years. In addition it analyses how to manage the transition
towards knowledge based technology and a more sustainable rail industry. This vision is
being translated into a set of technology development destinations and a total of distinct
initiatives for targeted project.
Railway transportation has direct and indirect cost to society and may reduce competition.
By use of HST in Iranian Railway system, there are many advantages to society, economy
and environment. Also, we are going to find out how the implementation of HST
technology can improve the competitive advantageous of the railway industry comparing to
other alternative transportation networks such as Road ways and airways in order to provide
a better and more efficient services to the customers.
 Meeting tomorrow's challenges
Nowadays new generation of science and technologies help companies to facilitate serving
new product and services to satisfy customer expectations. Despite of all opportunities, the
new global market has several threats for the firms. In addition to the new markets, new
competitors are emerging. The global competition is becoming more intense and firms face
serious challenges in order to survive. Customers in the new global market do not accept
the standardized products and they prefer goods or services that satisfy their individual
requirements.
In addition businesses are under tremendous pressure to make tangible productivity gains
and to hold costs in check, just to stay even with their competition. Modern companies are

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in a state of technological and cultural change. Furthermore, in the next decades,
technology will hold the key to improving the quality of our lives and resolving
longstanding conflicts between economic goals and resource constraints. In response,
costumer expectations for technology have increased dramatically, placing greater demands
on the application and performance of services. Also sustainable development is vital to
provide new technologies and the triangle of society, economy and environment are needed
to evaluate simultaneously.
On the other hand the Iranian economy is entering a transitional phase. The economy
enjoyed a sustained growth, partly due to policy decisions and extensive deregulations to
enhance private sector contribution to economic activities and partly to positive movements
of crude oil prices in international markets. Foreign trade system moved toward further
liberalization through revision in trade tariffs and granting more flexibility to exporters in
managing their exports proceeds. Also like to the global market that the most part of
world's trade has more focused on services than products, 48.2% of Iran's Gross Domestic
Product (GDP) is come from service sector. In recent years Iran has changed some
traditional approaches to make country more attractive for global economy and particularly
to increase foreign investments.
Due to implementation of structural reforms in the 3rd plan, most of economic indicators
show a better performance as compared to the previous periods. According to positive
trends of Iran's macroeconomic criteria such as GDP and GDP/per capita the country will
be faced with a huge demand for transportation services in both of freight and passenger.
 Background of Business
To response desired demand the railway network currently operated by the Iranian
Railways Co. (RAI) that is 8565km of main track. All tracks are standard gauge. Tehran is
the hub of the railway network, which consists of four main corridors. Although in compare

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to road section, rail transport volumes are low, they are growing. In addition because of the
geographic position of the country and the long distances involved, rail transport has
considerable potential for development, and a favorable comparative advantage (such as
environmentally friendliness, lower fuel consumption, lower fatalities, lower price,…) over
road and air transport.
Although investment in the rail transport has experienced special growth in recent years but
share of rail transport from GDP is decreased. It means governmental investment in the rail
transport hasn't been effective to improve its market share or other modes of transport
growing faster. Statistics shows that in recent years Iran has experienced around 5% by
average in its GDP and also government has spent considerable investment on
transportation sector. Moreover share of transportation sector from country's value-added
has been increased during two decades ago. So it can be estimated that transportation sector
will be facing with a huge demand in the next years. On the other hand railway with a wide
range of advantages that mentioned before can play a strategic role in transportation section
in both of passenger and freight modes.
City of Mashed is an important religious city in the country and the second Islamic
religious city in the world. Millions of pilgrims plan to travel there every year. Around 50%
of total rail's passengers travel there. The route is 926Km and is known as long distance
route. Although there are operated many semi high speed trains with maximum 160 Km/h,
but average trip time for the whole of route is around 12 hours. In recent years the route has
no experienced any passenger train accident and fatalities. As a technical point of view the
route is doubled track and in recent years many substantial projects such as signaling and
track's long welding are done. Also the existence route is ready to operate trains with speed
of 200Km/h.

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The route (Tehran-Mashed) has a good passenger potential with around 12 million
passengers at 2006 and will be expected to increase in future. In addition rail transport has
51% of the route market share, road and air transport with 36% and 13% are the next modes
of transport respectively. It means rail transport is the main mode of transport in the route.
As a result, it can be predicted that any rail's network development and in particular
providing high speed trains technology will be effect on the rail transport market share.
 Providing High Speed Train technology
Electrification of Iran's rail network is an essential solution for productivity improvement
and sustainable development. On the other hand high speed railway is vital to productivity
growth in transportation sector. As such, it lies at the heart of the sustainable development
and technological transformation projected through 2025 and beyond.
Development of High Speed Trains (HST) in last decades makes it more attractive in
compare to car. Many direct and indirect advantages such as low travel time, lower
emissions and safer trip are discussed by governments to implement new HST
infrastructure around the world. Generally, High speed rail is defined as where trains run at
a maximum speed of at least 250km/h. Capable of traveling at speeds of 250 to 350 km/h or
higher, HST would offer an efficient, attractive and convenient alternative for passengers
between large urban areas for trips of up to 1000 kilometers. HST is economically efficient
and respectful of the environment; it's a major asset in efforts to ensure sustainable
development in transport.
According to the high passenger traffic in the Tehran-Mashed route that still is going up
rapidly and also the critical capacity of the route, the RAI is going to provide an electrified
high speed railway there. Previous feasibility study shows that the route has the most
priority to implement an electrified high speed railway. The project is mostly technology-
based and estimating around $15 billion and will be implemented in 15 years.

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On the other hand, to implement of this project RAI needs to make government more
confident about the situation that will be emerged in project's life cycle. As a result the
crucial questions are:
1. Which kind of high speed railway is more efficient to implement in the route
2. How related technologies should be chosen
3. How related departments should be involved in an integrate decision process
In conclusion, it’s very important for RAI to know what the best plan to implement project
is. Previous experiences for the same projects show that usually there has been a lack of
integrated strategic planning to use all of the potentials that each part of project has alone
and usually there is no synergy between departments. Furthermore in most of previous
projects providing technologies were being insufficient or over design. It means after
implementing of those projects the results will not be completely adapted to the target
strategies.
 Technology Roadmapping(TRM), Thinking Strategically
Over the last 20 years, Technology Roadmapping (TRM) has become a popular method for
strategic planning in science and technology. Generally, a roadmap provides a consensus
view or vision of the future landscape available to decision makers. When conducted
properly, a roadmapping effort provides a way to involve critical stakeholders as well as to
identify, evaluate and select alternatives that can be used to achieve a desired objective. It
uses to integrate between firm's business strategies and market requirements. Also by using
roadmapping the R&D tasks will be canalized to the desired visions and objectives. On the
other hand the Iran's rail industry has undertaken a bold technology planning initiative to
position itself to compete effectively in Iran's transportation market. This business case
represents technology roadmapping as a strategic tool to respond to new market
opportunities and challenges in Iran's rail industry. The roadmap will help align the

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technological resources of industry and government to meet the future demands of
established and emerging customers.
This roadmap is an initial effort to provide the critical link between the broadly defined
strategic goals and the detailed research portfolio that will be pursued through cooperative
R&D partnerships. It is meant to be a dynamic document that is reevaluated at regular
intervals to incorporate new market and technical information and to ensure that the
research priorities remain relevant to customer needs.
 Conclusion & Findings
Finally, the conclusions and findings of this business case for implementation of TRM to
provide new rail technology for Tehran-Mashed route are as follows:
 Although there are many negative economical and political points, but Iran's
economy indicators shows that the country will be faced with the better situation in
the next decades that helps it to provide pioneer technologies for rail transport.
 In recent years the government has spent considerable investments on rail projects
that show the importance of railway transportation for decision-makers.
 To keep pace with the country's rapidly growing population, rail transport must
reach the equivalent capacity for around 100 million people per year by 2025.
 Costumers are looking for services to make their travel safer, shorter and more
convenience.
 Macro economic goals of, technological advancement, international
competitiveness, and oil conservation would be supported by the development and
building of HST systems.
 A critical priority for Tehran-Mashed railway is the development and deployment of
an advanced portfolio of related technology options; Tilting and Conventional HST.

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 Providing very high tech alternatives such as Maglev trains will not be feasible for
the route as different points of view; technology adoption, high cost, Safety, no
international acceptation and so forth.
 Integrated partnership of different stakeholders in the government, industry and firm
is needed to ensure that the project's roadmap will provide the best technology for
the route.
 There is no necessary experience to integrate R&D tasks with the main project's
activities. Related R&D tasks should be identified as secondary roadmap.
 Although privatization in rail transport has started for many years, but there is no
sufficient effort by government to facilitate the process of private section's
replacement.
 High-speed trains and high-speed trains' network are beneficial from a socio-
economic point of view and that they probably alleviate the major environmental
disadvantages of cars and airplanes.
 By using HST, technology innovation will be emerged as the primary driver for
economic growth.
 The project results shows that creating a sustainable future will require
improvements in a number of areas, including economic productivity, energy
efficiency, and emissions reduction over at least the next 20 years.
 As key to energy efficiency, high speed railway will increasingly shoulder society's
burden for energy-related environmental control.

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Introduction:
1) Background of business
1-1) Rail transport history
The role of railway transportation has grown steadily in both scope and importance over the
past century. Developments in key technologies such as high speed locomotive and
vehicles, tilting bogies, mechanized maintenance equipments and telecommunications,
continuously reshaped our life as well as the productivity of its commercial and industrial
foundation. These technology advances have steadily extended the precision and efficiency
attributes of railway. As a result, railway has gained a progressively larger share of the total
transportation use.
In the coming decades, railway's share to the total transportation is expected to continue to
grow, as more efficient and intelligent processes are introduced into industry, transportation
and business.
Although sometimes identified as a mode that enjoyed its heyday during the 19th
century,
rail transport is enjoying resurgence because of technological advances in the latter part of
the 20th century. In passenger transport this has come about through significant
breakthroughs in speed. For instance, in Europe and Japan high speed rail systems reach
speeds up to 515 km/hr. This gives rail in a competitive advantage over road transport and
even with air transport over short and medium distances. Unit trains, where trains are made
up of wagons carrying one commodity-type only, allow economy of scale and efficiencies
in bulk shipments, and double stacking has greatly promoted the advantages of rail for
container shipments. Rail transport is also enjoying resurgence as a mode for commuters in
many large cities.

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1-2) Iran’s railway network
The railway system in Iran has been started almost 75 years ago. Passenger and Freight
transportation is the main target of Iran railway system.
The air and maritime transportation system within the country have small ratio of the whole
transportation network in the country. The air transportation system is mainly focused on
passenger transportation and high prices of jet fuel are not cost benefited for consumers to
send their merchandize with air transportation unless there is urgency. On the other hand,
Iran is only connected from south to open waters for transportation out of country. There is
no sea inside the country to make the transportation available between cities. As a result
these two other transportation systems are not considered as a competitors for railway
transportation system. The only remaining competitor in the field is the road way systems.
Because of the geographic position of the country and the long distances involved, rail
transport has considerable potential for development and a favourable comparative
advantage over road transport. The competitive advantageous of the railway industry over
the road ways are:
 Cheaper price.
 Capability of transporting bulk raw materials
 Lower external cost for the government (Environment, fuel consumption &
Accidents)
 More safety for the carried goods & passengers
Governmental support of expansion of the railway network is planned for the next 20 years
in order to maximize the portion of railway transportation to 50%, compared to the whole
transportation net work of the country (at present the portion is about 15%). The national
rail network in Iran is growing rapidly. An additional 3300 km of routes are currently under

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construction, which will increase the total length of the system by almost half, and there are
many more proposed extensions under study.
For freight traffic, the differences between road and rail are even more pronounced. Rail
remains nearly constant over the period at an average of 14 billion ton kilometers, while
road transport increases three times over the same period.
Iranian Railway requires tracks along which the locomotives and rail cars move. The initial
capital costs are high because the construction of rail tracks and the provision of rolling
stock are expensive. Historically, the investments have been made by the same source
(either governments or the private sector). These expenditures have to be made before any
revenues are realized and thus represent important entry barriers that tend to limit the
number of operators. It also serves to delay innovation, compared with road transport, since
rolling stock has a service life of at least twenty five years.
1-3) Key Issues Identified at Iran railway sector
Lack of Price Incentives
This issue may be characterized as a threat. Transport users are not aware of the true costs
of transport. All transport modes are heavily subsidized.
Lack of Efficiency in Investment Spending
Three issues are of concern under this heading:
 Project justification
 Successful project completion
 Successful achievement of the desired benefits from the project
Safety
Although rail safety in Iran is matter of concern but as a comparative point of view,
railway is many times safer than road transport

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On the other hand, because of current situation there is no proper safety atmosphere for
providing high-tech technologies. (Standards, trained human, work culture, disciplines …)
Poor Quality Services
Quality problems affect every transport user in Iran. Some examples of poor quality of rail
transport services include:
 Slow services
 Infrequent services
 Lack of information
 Overcrowding
 Uncomfortable vehicles
 Low standards of safety and security
 Unreliability and delays
 Inattentive staff
 Untrained staff;
1-4) Technology management
First of all I chose a definition for technology management that creates by the European
Institute of Technology Management (EITM):
"Technology management addresses the effective identification, selection, acquisition,
development, exploitation and protection of technologies (product, process and
infrastructural) needed to maintain [and grow] a market position and business
performance in accordance with the company’s objectives".
Managing any technology for business benefit requires effective and systematic processes
and systems to be put in place to ensure that investment in new facilities, knowledge and
skills is aligned with market and industry needs, now and in the future. In other words
technology management deals with all sides of integrating technological issues into
business decision making.

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Development of railway transportation requires vast technological infrastructure and
equipments in which all of them should be match with internal factors such as;
organizational culture, technology adoption, skills and proficiency, capital investment and
also external factors such as business aspects ( market needs and trends, market share,
profitability, competition,…) , environmental impacts (air and noise pollution, land use,
utilization of natural resources), and social aspects(safety and accessibility). It means if the
firm needs to make appropriate decisions for providing new technology in the project; they
should manage the whole of factors that I mentioned above.
1-5) Sustainable transportation (provide a win-win strategy):
Sustainable development is one of the greatest long-term challenges facing the entire planet
and transportation represents an important part of the challenge everywhere.
Sustainable Transportation is talking about finding and maintaining a dynamic equilibrium
between three forces that are seldom synchronized and often opposing each other. They are:
• Economic needs of a safe and efficient transportation system,
• Environmental impacts on the quality of our air, water and land,
• Social priorities of the people (access and choice)
In this matter the question that should be answered every time is: 'What the appropriate
transportation technology is?' A major constraint on future sustainable transport systems
will be how various environmental, social and economical challenges are met. Major
restructuring of social, economic and environmental values is urgently needed, and the
scope of changes must transcend performance of transportation providers by also
influencing the factors that motivate decisions and preferences of carriers and travelers. In
other word providing new technology must be done by analyze three different mentioned
aspects.

30
On the other hand, modern life styles are based on using the available technology. What is
used may not be ideal for many reasons. Progress tends to eliminate inappropriate
technology. For instance, over the last several decades environmental sustainability played
a small role in transportation planning and operations but at present this situation has
changed. The future of the transport industry is likely to be compromised without an
understanding of environmental sustainability.
Moreover, Win-Win transportation solutions are cost-effective and technically feasible that
helps solve transportation problems by increasing consumer options and removing market
distortions that encourage inefficient travel behavior.
Win-Win solutions consist of strategies that have only positive or neutral impacts on
economic, social and environmental objectives. Win-Win strategies also provide multiple
benefits; they offer opportunities for cooperation and coordination between interest groups.
1-6) Creation of a new vision
The challenge in transportation to guarantee the growth that the global economy requires to
transport more goods and passengers, faster and reliably.
In addition investments in the transportation sector are long-term and capital-intensive.
Vision, good planning and good policy are therefore required if optimal vehicles,
infrastructure, corridors, organization and information management systems are to be
developed.
Back-casting from the year 2007 to 1970, it is apparent that there have been enormous
technological changes in railway and it is rather clear that the growth and changes in the
coming decades will be even faster.
As a result there is an urgent need for a vision of the future. New concepts for any
transportation systems require 4 to 6 years from design to realization and 5 to 10 years is

31
needed for construction. Also the payback period for transportation's mega projects is often
more than 15 years. As a result the vision should be shaped for the several coming decades.
In this condition, as a win-win strategy point of view, the most appropriate vision for Iran
railway in the new project (my case study) is sustainable high speed electrical railway that
meets the needs of society, industry and the environment for the coming decades.
1-7) "Technology" work as organizational change factor
The acquisition of new technologies continues to be important to both public and private
sector organizations, especially larger organizations.
According to the above mentioned the most important question is: "why technology is
important for Railway Transportation as a special change factor"?
A) General view:
Technological change is important because it mostly leads to organizational change
for the following reasons:
 Technology and markets are changing more and more rapidly
 Often it has seen as a most competitive advantage
 Technology is usually seen as a specialized field of development policy
 The evolution of technology is a complex process
 Technology bring Modernity and Values that both of them can change
organization
B) Business view:
Providing a proper range of technology for railway industry is important because:
 Railway is a technical based business
 New expectations by customers can be done by providing related technology
 As a strategic planning point of view, "Technology" is the most important
element that influence on the whole of internal and external expectations

32
On the other hand making any change in an organization needs to manage change processes
accurately. As we know managing change is a very important factor in the success of every
business. To achieve success in today’s global economy, companies must be able to
produce the right product/service at an appropriate time and with necessary specifications.
So it leads companies to have more competition together for providing sustainable
resources.
Moreover there are many drivers for change in organization such as Customer expectations,
Technology, Competition, Legislation, and Economy. Depends on organizational situation
such as Urgency/Pressure, Organisational climate, Culture, and Management style,
companies needs to recognize Critical Success Factors (CSF) for prioritizing all of drivers
to managing change properly. As we know in most of technical-base companies such as
railway, technology issues mostly are part of the main problems that organizations are
facing to solve them. Therefore, the process of technological change (market needs,
competitors' situation, organizational culture, and other internal and external factors)
influence on technological planning that should be consider by any company.
Also there are many obstacles to implement any change in an organization such as:
 Lack of related knowledge
 Power of existence systems
 Lack of integration between departments
 Lack of transparency in objectives from managers
 Cost of installing new system
Furthermore every organization depends on its different situations needs to make different
level of change those are named as tree key concepts:
 Change,
 Transition,
 Transformational

33
This range recognizes any change in an organization from newness of some elements
(change) to make a new vision for firm (transformation).
2) My case study
"Development of exist Tehran-Mashed route to new Electrical high speed railway"
Mobility and transportation infrastructure are essential pre-condition for the industry and
the national economy. They are providing the basis for trade, goods and passenger traffic
and consumption. Moreover mobility and transportation infrastructure are a primary need
for the population. They guarantee a high grade of quality for the citizens, for their work
and leisure time.
In spite of these facts, infrastructure is hold responsible for many negative impacts;
especially environmental pollution, disturbing noise and land use are complained.
On the other hand in today's business there are two important factors for evaluating of
transportation efficiency, they are: speed and reliability.
In Iran railway's network, the Tehran-Mashed route constitutes one of the main routes
between other corridors in terms of traffic demand which have two unique aspects:
1) The route has a special role for connecting Central Asian Countries to European
Countries
2) More than 50% of whole of passenger traffic around the country are carried in
this route
Furthermore there are many problems to operate the exist line, they are:
 the operation system is based on non-electrical infrastructures (track & vehicles)
 Although fuel consumption in compare to road way is around 20%, but using
fossil fuel that is more expensive than other alternate energies can be a threat in
future.

34
 Environmental impacts (emissions of CO2)
 the route average speed for passenger trains is around 100 km/h and for freight
trains is 70 km/h
 Although the route is double track but depends on trains speed, line's capacity
can't cover whole of market demands
 Big part of the exist technologies are obsolesced
 Safety is a big managerial concern
As a result make a strong change in the infrastructure as I mentioned above can affect
extremely on the whole of Iran railway.
By this condition, Iran railway has a new plan for development of exist line from non-
electrical system to a high speed electrical system. This project is one of the most important
projects for Iran railway, because:
 It's the first high speed railway
 More than 2 billion dollars investment for the whole phases is estimated
 It makes a new set of technologies and knowledge
 Create a set of organizational behaviors (cultures, structures, standards…)
The main goals for implementation of this project by Iran railway are as follows:
 Increasing freight and passenger capacity
 Decreasing travel time for both of freight and passenger trains
 Decreasing environmental impacts
 Decreasing project life cycle cost
The whole of project is expected to come into new service by 2015 as a phased process in
which cover the whole of 900 km between Tehran and Mashed.
This thesis tries to analyze the impact that preparing a Technology Roadmap (TRM) have
on technology providing for the project. I also try to explore how integration between

35
market, services and R&D activities can improve our technology planning in the project life
cycle. This is a flexible plan that can be modified in accordance with the needs of any given
moment. It works also as a window to the future in which the firm manages its capital
investment with appropriate risk and challenges.
3) "TRM" leads to optimize providing new technology:
As I understand there is a strong correlation between using new technology and making a
set of changes in an industry such as railway. For example in this case, providing high
speed railway technology extremely affects on whole of railway industry stakeholders'
behavior (government, customers, employees, experts, managers...).By using of this new
technology in Iran Railway system, it can reduce the cost of transportation and travel time
by increasing network capacity. Both of above factors affects on industry, market &
customers needs. Perhaps the most important obstacle in this way is lack of long term
master plan for providing new technology as a phased process.
Also at the moment there is no any proper integration between market, services and
required technology in Iran railway. So any part of decision-makers work as an island. In
this situation, choosing any technology often start by present solutions instead of analyzing
the stakeholders needs.
Moreover, good design, management, and planning for providing new technology require
an understanding of:
 Where we are?
 Why we are here?
 Where we may be going?
 What is the gap?
It is very important to anticipate what probably will, and reject what probably will not
happen.

36
In this way, I'm going to find out how the implementation of a technology roadmap can
improve the competitive advantageous of the railway industry and how it makes a long
term plan for providing required technologies in order to provide a better and more efficient
services to the customers. Also recognizing the main obstacles in the implementation phase
such as resources, training and communicating is needed.
Technology Road-mapping (TRM) has known as an analytical tool with the capacity to
chart future market directions, forecast technological change and help to determine the
strategic choices that companies need to make. Through this process, TRM provide impetus
for research and development, technological innovation and technology transfer. It helps
companies to identify, select and develop technology alternatives to satisfy future service,
product or operational needs and also helps companies to think strategically, decide
intelligently and collaborates strongly to deliver the critical solutions they need to succeed
in tomorrow’s markets. Technology road-mapping works as a master plan that can bridges
gaps. In this situation no departments in organization is an island, selecting and integrating
railway technology must be a collaborative process.
In addition a Technology Roadmap can effect on organizational change behavior because:
 It helps an industry to predict the market’s future technology and
product/service needs
 Defines the "road" that industry must take to compete successfully in
tomorrow’s markets
 Guides R&D decisions
 Increase collaboration, shared knowledge and new partnerships
 Reduces the risk of costly investment in technology
Furthermore, before considering the use of TRM, there are a number of challenges that
have to be considered:
 Starting up the TRM process

37
 There has tended to be too great a concentration on the integrated
cooperation and cross-functional teams. (none of us is as smart as all of us)
 Keeping the TRM process alive
 Developing a robust TRM process
After the roadmap is produced, the participant's works together to launch development
projects with the aim of providing technologies that will help them capture future markets.
Also the risks and benefits are shared, and the whole industry grows stronger.
4) Managerial Questions
1) How to improve technology providing process for the project as a main
competitive privilege?
2) How Iran railway can chart future market directions, forecast technological
change and determine the strategic choices that need to make in the project?
3) Is there any capacity (know-how, skills, processes & systems…) in the
organization to adopt new technology (maybe as a disruptive technology)?
4) How prevent investment on the inappropriate technologies
5) Research Objectives
In summary, in this business case I'm looking forward to doing following:
 First of all, the main objective of this research is to identify required
technologies as a systematic way for future.( using TRM)
 Secondly, explore how preparing a Roadmap can influence the improvement of
providing proper technologies for Iran new electrical railway.
 Thirdly, the research focused on the evaluating of technology road-mapping as a
strategic planning tool by making a strategic plan through analyzing firm and
industry factors.

38
 Fourthly, the research examines QFD to make integration between market needs
and technology providing.
 Finally, the research explains how technology roadmap uses as stimulate for
organizational change.

39
Chapter Two
(External Environment Analysis)

40
External Environment Analysis (EEA):
In this chapter, the external environment is defined as everything outside an organization
that is capable of affecting the survival or success of the business. Everything from macro-
environment trends, related industry and competitors are included in the external
environment. Competitors are also a part of an industry which itself is part of the external
environment. In addition there is a common area between three sections that is allocated to
those of factors with greater influence on the business.
Macro
Environment
Analysis
Industry
Analysis
Common area
In the modern era, the rapid of change in the global economy is expected to continue. It
means businesses that facing the future need to be more strategic. They must become much
more responsive. So firms need to use up to date information concerning the external
environment of the business.
Mostly we
can find
more
effective
factors
that
influence
on
business

41
I have organized the chapter in three main categories; Macro-environment, industry and
competitive analysis. We can recognize those kinds of factors which have the most
positive or negative effect on the business with high probability (most effective factors).
Moreover, we will understand non-effective factors that do not any considerable effect on
the business.
Don't spend
money and
time
Mostly is
located in
the common
area,
Spend
Money and
Time
We aren't
sufficiently
sure to spent
Money and
Time

42
Part A) Macro-Environment Analysis (TESP Analysis):
A-1) Global economy environment:
I introduce this chapter with "the millennium development goals" 0F
1
that are emphasized by
World Bank as follows:
a) eradicating poverty and hunger
b) Achieving universal primary education
c) Promoting gender equality
d) Reducing child mortality
e) Improving maternal health
f) Combating diseases
g) Ensuring environmental sustainability
h) Developing a global partnership
In the latter decades of the 20th century, the general business environment has experienced
major changes. Physical boundaries have declined in importance and an enormous global
market is emerging. Emerging markets and developing countries are expected to continue
to grow strongly. There have also been significant improvements in global technology and
other broad measures of well-being, including life expectancy and education. Traditional
small stores have changed to huge chain retailers (one stop shopping). Information
technology is serving the globalization process as a powerful tool. Information technology
and globalization are changing the history of the world. An increasing number of firms
invest a significant part of its income on R&D activities.
1
World Bank at http://devdata.worldbank.org/atlas-mdg/

43
New generation of science and technologies help companies to facilitate serving new
product and services to satisfy customer expectations. Presently, in the global economy, a
steadily increasing percentage of world's trade is in services rather than products. For
instance 48.2% of Iran's Gross National Product (GNP) is from service sector.1F
2
Despite these opportunities, the new global economy poses several threats for firms. In
addition to new opportunities, new competitors are emerging. Global competition is
becoming more intense and firms face serious challenges in order to survive. Customers in
the new global market do not accept standardized products and they prefer goods or
services that satisfy their individual requirements. Companies must cope with product
diversification while offering the best goods and services taking into account the different
needs of diversified customers (mass customization). On the other hand, there are different
threats from governments from new regulations, monetary policies, environmental
limitations and international organizations such as WTO.
Moreover, there are many disparities closely linked to the human impact on the
environment. This game has two sides, one of them are people in the developing & non-
developing countries that produce raw materials for global economy. They use the
environment in an inefficient manner e.g. land use, water and natural resources. On the
other side, developed countries are the greatest consumers of natural resources, and also
have much greater power to shelter themselves from environmental impacts such as
pollution, scarcity and climate change. So the immediate challenge for policymakers is to
continue to steer the global economy on a sustainable path that is consistent with low
inflation and global expansion.
2
Central Bank of Iran, Annually Report, Statistical appendix 2004

44
Furthermore, the global economy has changed as free markets have spread to more parts of
the world than ever before. During the past two decades international trade and investment
have sharply increased and global economy has grown steadily. Nowadays, countries are
trying to increase their share of produced goods and services. On the other hand there are
millions of Chinese and Indians that can make the same goods and services at much lower
prices. Although some developing countries such as China, India and even Iran have
experienced high growth rate in a recent years, the economic growth has slowed in
advanced countries.
According to the World Economic Outlook report annually prepared by IMF, the global
economy volume steadily increased during the most recent decade. World real GDP growth
increased significantly for three decades. Although most developing countries experienced
growth rates higher than advanced countries, some of them e.g. China, achieved more than
10% annual growth. In this way they have learned to produce goods and services in a more
productive manner. Global productivity performance in recent years in China & developing
countries has surpassed advanced countries in terms of growth rate.
So far, advanced countries (mostly the members of G7 group) are the most important
players in the global economy and represent a large share of global GDP.
As demonstrated in the next figures, 25 years ago global trade was experienced differently.
At the beginning of the 1980s most of global economy was produced by western countries
(North America and Western Europe) but starting in the 1990s there was a revolution in
global partnership and due to an increase in communications technologies the world
economy became more globalize. During this period, firms looked for goods and services
that were more reliable, and cheaper than others. In this situation, emerging and developing
countries such as China, India and southeast countries entered the global market with a
different set of competitive advantages. As a result, in recent years the emerging countries

45
have become much more involved in international trade. For instance at 2005, China
experienced B$ 8000 in terms of GDP that is rather equal with four advanced country total
GDP (UK, Germany, France and Italy).
Countries Comparative GDP(by PPP)
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
1980 1985 1990 1995 2000 2005
Billion$
Total United States China Japan Germany
France India United Kingdom Italy Canada
Australia Iran Linear (Total)
Data Source: IMF, World Economic Outlook, April 2007

46
G7 Group at 2006
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Canada
France
G
erm
any
Italy
Japan
United
KingdomUnited
States
Billion$
GDP, current price
GDP, by PPP
G7 economic indicators at 2006
0
5
10
15
20
25
30
Canada France Germany Italy Japan United
Kingdom
United
States
Percentage
Investment, % of GDP
Inflation, Annual percent change
Unemployment rate

47
Source: IMF, World Economic Outlook, April 2007

48
Although there are many socio-economic and political threats and barriers such as
international and regional challenges, unemployment, wars and resource limitation, there
are also many positive signals, potentials and opportunities that contribute to the global
economy to ensure increased performance in a persistent growth rate. As demonstrated in
the next figure, global economy growth decreased drastically between 2004 and 2005 with
Iraq and Afghanistan wars and the drastic increase in oil prices the main reasons for
flattening the world GDP growth rate curve.
Considerable
fail as a result
of Iraq war

49
A-2) Middle East, a strategic region:
Although the region has experienced intensive regional challenges and wars in recent
years, most countries in this region experienced high economic growth strongly influenced
by oil price.
Gross domestic product, current prices, 2005
188.479
309.945
130.256
80.78
42.463
13.378
30.835
12.712
21.428
0
50
100
150
200
250
300
350
Iran,Islam
ic
Republic
ofSaudiArabia
United
Arab
Em
irates
Kuw
ait
Q
atar
Bahrain
O
m
an
Jordan
Lebanon
Middle east countries
Billion$
Iran is
ranked as
a second
economy
in the
region

50
Middle East Economic Indicators
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005 2006
Year
Billion$
GDP- current price
GDP- PPP
1-OPEC
members'
economy
completely
depends on
their oil
exports
2-the
economies are
mostly public

51
Middle East in compare to G7
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
2000
2001
2002
2003
2004
2005
2006
GDP (by
PPP)middle East
G7 Group
In summary, the global economy is facing gaps between different countries. Some of them
are too rich and have larger shares in global economy. The rest includes developing and
non developing countries that are preparing themselves to achieve better situation in the
future. But there is no single recipe for success; each country needs to identify priorities
and appropriate solutions to the national context.
The gap is too
considerable

52
A-3) Iran's Outlook Document
In order to draw a clear picture of Iran during the next fifth of century (up until 2025) as the
country emerges following structural reform initiatives. Iran prepares itself to become the
first power in the fields of economy, science and technology in the region at 2025.2F
3
The
outlook document was prepared by government in different fields of economy, social and
political. It shows a long term vision for the country. The other midterm and annual plans
such as the five years plans must be prepared based on forecast indicators.
3
The Expediency Council at: http://www.irec.ir

53
A-4) TESP Analysis:
A-4-1) Technological Trends
Rapid advances in technology, especially information and communication technology
(ICT) are accelerating the pace of change in production and service activities. ICT, and the
Internet in particular, is today a key business enabler, and has contributed significantly
towards a borderless global economy by removing physical distance as an obstacle to trade.
Moreover access to information and the mobility of capital and talent have also been
significantly enhanced by technological progress.
In recent decades our socio-economic activities have been influenced by science and
technology. We live in an era of increasing use of diverse technologies in all aspects of our
life; as a result life style is extremely changed as a technological replacement and most of
socio-economic indicators such as life expectancy and communication are improved. The
world is undergoing a global technology revolution that is integrating developments in
biotechnology, materials technology, and also information technology at an accelerating
pace.
Today, technology not only plays a role stimulating invention and innovation, but works
simultaneously as a product. On the other hand there are many problems to implement any
kind of technologies. For instance, capacity to acquire a new technology (particularly a
disruptive technology) does not necessarily equal capacity to implement, because the latter
requires a threshold level of physical, human, and institutional capacity; financial resources;
and the social, political, and sometimes even cultural environment necessary to maintain
and sustain widespread use of the technology.
On the other hand, there are usually limitations for using current technologies that have
environmental and economical impacts such as air pollution, land use and energy
consumption. A term used in recent decades is alternative technology that refers to

54
technologies which are more environmentally friendly than the functionally equivalent
technologies dominant in current situation.
This kind of technology has more focus on resources and wasteful industry, aims to utilize
resources sparingly, with minimum damage to the environment, at manageable cost and
with a possible degree of control over the processes. According to this new concept,
industries should move toward development of an appropriate range of technology that
creates a difference in our lives and work. An appropriate technology, in this sense,
typically requires fewer resources, as well as lower cost and less impact on the
environment. Some famous examples in transportation are hybrid fuel vehicles and
electrical trains as both are cost-effective and environmentally friendly.
The railway technology which is only 100 years old is developing very quickly. Trains are
being equipped with new tracking technologies as GPS & RFID. Many safety tools are
becoming common in every train. Electrical trains have made travel more secure, faster,
reliable and economical for both of freight and passenger end-users.
Besides these improvements, revolutionary technologies have been commercialized. High
speed trains with around 400 km/h operational speed (e.g. France TGV, Japanese
Shinkansen and German ICE) are the innovative response of wagon and locomotive
manufacturing technologists to increasing customer expectations. As any other industry, the
railway will face major changes in the new future and there is a threat that the existing
technologies will become obsolete in the next decade. Also there is a big challenge that
private sector has no effective role as a competitor for public sector.
As a result Science and Technology development play the most important role for the
significant growth in railway because:
 It facilitates cost reduction
 It increases productivity
 It creates more quality

55
 Facilitate to produce a wide range of products, and
 It also increases competition

56
Iranian current technological potential:
 Human Capital (as a technological aspect)
Iran has the second largest population, after Egypt, in the Middle East and North Africa region. Most of
its 65.5 million people (70 million in 2007) are young, with increasing hopes and expectations of a better
future. Larger numbers of increasingly well-educated women seek opportunities to participate at all
levels of Iran’s labor market and civil society. The country’s health and education indicators are among
the best in the region. 3F
4
The most common source of technology development in countries is educated people. As a
result it has an important role for providing new technology and sciences to enhance
economic growth. In other words the skill and training level in each country creates
competitive advantages for their economic. The above statement by World Bank
emphasizes Iranian human capital potentials that can play a considerable role on
technological development.
For instance by 2004, for each 1000000 Iranian there were 560 researchers in which the
index for some other countries are as follows4F
5
:
 Japan- 4909 researchers
 United States - 3776 researchers
 Germany- 2831 researchers
 England- 2448 researchers
 South Korea- 2193 researchers
 Egypt- 459 researchers
 Indonesia- 182 researchers
 Malaysia- 117 researchers
4
World Bank at http://web.worldbank.org
5
Central Bank of Iran, annually report 2004

57
Source: Economist.com, "More pain than gain", Sep 14th 2006
More attention
to Science and
Engineering in
developing
countries is a
result of huge
growth in
technology
transfer from
industrialized to
developing
countries in
recent years

58
 Household-based technology:
Percentage of Iranian Distribution of Households by Using Equipments and
Appliances-2004
Equipments and Appliances Percent
Personal Car 25.1
Motorcycle 18.9
Bicycle 22.4
Sewing Machine 72.2
Radio Cassette Recorder 73.8
Television 98.4
Video and CD Player 52.3
Personal Computer 20.6
Refrigerator 79.9
Freezer and Fridge – freezer 51.1
Gas Cooker 98.4
Vacuum Cleaner 78.2
Washing Machine 66.1
Mobile Phone 15.8
Data source: Iran's Central Bank, Household Budget Survey 2004-05

59
 High-tech exports:
High tech products' export by each country is an important indicator to measure level of
technological potential of country. In 2004, only 2% of Iran's total exports came from high-
tech products. But at the same time the index is 80.8% for Japan, 74.9% for Singapore,
67.4% for Malaysia, 66.7% for South Korea and 16.9% for Australia. In each country,
there is a strong correlation between the level of technological potentials and the amount of
high-tech exports in percentage of GNP. According to the cited statistics, those countries
that have greater ability to produce new technologies have greater ability to export them to
others. As a result it means that Iran's technological potential is very low compared to some
selected developed country.
 Transportation Technology
To satisfy the increase of market demand for transportation during the next decade, the
whole Iranian transportation network has to be radically improved. In this way
technological process should suggest solutions and methodologies that could improve the
quality handling of the transportation systems. In recent years, Iran's transportation system
has experienced a set of new technologies in a wide range of services. For instance using
RFID to trace wagons and trucks, implementation of Intelligence transportation systems
(ITS) such as streets monitoring, contact less toll pay system and streets' green wave
system.

60
 Scientific growth:
Based on Iran's 2007 annual budget report, 1.2% of GDP should be spent for R&D
activities.5F
6
Iran is a good example of a country that has made considerable advances by
focusing on education and training. Despite sanctions in almost all aspects of research
during the past few decades, Persian scientists have been producing cutting-edge science.
Their publication rate in international journals has quadrupled during the past decade.
Although it is still low compared with the developed countries, this puts Iran as one of the
most important Islamic countries. Considering the country's brain drain and its poor
political relationship with the USA and some Western countries, Iran's scientific
community remains productive, even while economic sanctions make it difficult for
universities to purchase equipment or send people to developed countries to attend
scientific activities.
Iran's university population has swelled from 100,000 in 1979 to 2 million in 2006.6F
7
Theoretical and computational sciences are quite developed in Iran. Despite the limitations
in funds, facilities, and international collaborations, Iranian scientists have been very
productive in several experimental fields as pharmacology, pharmaceutical chemistry, and
organic and polymer chemistry. Recently in last months of 2006, Iranian biotechnologists
announced that they, as a third manufacture in the world, have sent CinneVex (recombinant
type of Interferon b1a) to the market. Also, Royana, which is the first live cloned sheep in
Iran, has passed the critical months of his life.
6
Central Bank of Iran, Annual report 2006
7
Ministry of science, research and technology

61
A-4-2) Economic Trend
Iran has experienced two important events since 1970s that caused the country to become
less competitive in the world.
The first one occurred after a shock in the oil prices in 1975. As a result Iran's revenue
increased considerably. It led the country to emphasis an open door approach for imports.
In addition, this change made the country more dependent on the oil economy and
decreased the importance of other sectors.
The second one was Iran's revolution in 1979. After the revolution, Iran's economy was
affected by the new political, social and economic policies. These policies caused some
major problems in the country's economy such as:
 Decreasing the role of supply and demand in the market
 Decreasing competitiveness between economy players
 most of the economy regulated by government
 Prices completely controlled by government
 Productivity (in both of efficiency & effectiveness) has decreased in all of factors
On the other hand, in recent years Iran has changed some previous approaches to make
country more attractive for global economy and particularly to increase foreign
investments. As a result the economy started to grow during the past 5 years. We will
demonstrate these changes from different aspects as follows:

62
A-4-2-1) Development plans
Like most developing countries, Iran places great emphasis on long-term development
plans. Despite regional tensions, the Iranian economy performed relatively well during the
3rd FYDP (Third Five-Year Development Plan- 2000/01-2004/05) ending 1383(2005).
During the 3rd Plan, the economy enjoyed sustained growth, partly due to policy decisions
and extensive deregulations to enhance private sector contribution to economic activities.
Foreign trade system moved toward further liberalization through revision in trade tariffs
and granting more flexibility to exporters in managing their exports proceeds.
Due to implementation of structural reforms in the 3rd plan, most economic indicators
showed improved performance compared to the previous periods.
COMPARISON OF TARGETS AND PERFORMANCE OF
THE IRANIAN ECONOMY DURING THE 3rd FYDP
Indicators Average
performance of
the 2nd Plan(%)
Annual growth
target
of the 3rd Plan
(%)
Average
performance of
the 3rd Plan (%)
Annual GDP growth
(at basic price)
3.2 6 5.5
Investment growth 8 7.1 5.5
Inflation rate 25.6 15.9 14.1
Unemployment rate 12 10.7-12.6 12.5
Data Source: Central Bank of Iran, Economic Research & Policy Department, July 21, 2005,
"ECONOMIC REPORT AND BALANCE SHEET 1383 (2004/05)"
In addition, despite intensive regional tensions, the 4th FYDP (Fourth Five-Year
Development Plan- 2005/06-2009/10) was formulated, with a view to realities of the

63
international and Iranian economy and with regard to the experiences gained from the
implementation of the previous five-year development plans. Creating an appropriate
framework for rapid economic growth, establishing proactive interaction with the global
economy, enhancing economic competitiveness, restructuring the government, improving
standards of living, maintaining social justice, and providing national security are among
the main objectives of the 4th Plan.
Some of the most important indicators during the Iran 4th
FYDP ¹are as follow:
Economic Indicators During the 4th FYDP (percentage change)
2005 2006 2007 2008 2009 Period average
GDP (at constant 1381 prices) 7.1 7.4 7.8 8.4 9.3 8.0
Gross fixed capital formation 11.3 11.0 11.7 12.9 14.1 12.2
Aggregate consumption expenditure 4.8 5.5 5.9 6.4 7.4 6.0
GDP (per head) 6.6
Inflation 14.6 11.5 9.1 7.9 6.8 9.9
Non-oil exports 10.7 10.7 10.7 10.7 10.7 10.7
Imports 5.0 6.5 6.2 8.9 6.6 6.6
Unemployment rate (percent) 8.4
Productivity of labor 3.5
TFP 2.5
Iranian economy performed relatively well in the first year of the 4th
Development Plan,
1384 (2005/06). In line with the economic policies drawn up in the Fourth Plan on the basis
of constructive interaction with the global economy as well as the expansion of
competitiveness, the government attempted to prepare the ground for economic growth and
development through further participation of the non-public sector, enhancement of
productivity, facilitation of trade regulations, establishment of fiscal discipline,
implementation of decentralization policies, and reduction of disparities among various
regions of the country. The continued price rise of oil in international market also played a
pivotal role in creating growth environment in this year. Achieving a sustainable long-term

64
economic growth, in particular provision of economic justice, as the main priority of the
government, requires price stability and curbing inflation.
Iran's five-year economic plans emphasized a gradual move towards a market-oriented
economy, but political and social concerns, and external debt problems, have hampered
progress. Faster movement, however, occurred under the third five-year plan (2000-04),
which advocated a more ambitious program of liberalization, and privatization.

65
A-4-2-2) Major Macroeconomic Indicators:
The Iranian economy is entering a transitional phase. The economy enjoyed sustained
growth, partly due to policy decisions and extensive deregulations to enhance private sector
contribution to economic activities and partly to positive movements of crude oil prices in
international markets. Foreign trade system moved toward further liberalization through
revision in trade tariffs and granting more flexibility to exporters in managing their exports
proceeds. The successful implementation of exchange rate unification and deregulating
foreign trade procedure were among the salient achievements of the Iranian economy
during the 3rd Plan period. Also, investors were further encouraged to invest in Iranian
firms via the stock exchange. Due to implementation of structural reforms in the 3rd plan,
most economic indicators showed a better performance as compared to the previous
periods. Here I try to explain some important indicators in the Iranian macroeconomic field.

66
a) Economic Freedom
"Economic freedom is that part of freedom that is concerned with the material
autonomy of the individual in relation to the state and other organized groups. An
individual is economically free who can fully control his or her labor and property".
Definition by: Economist, the index of economy freedom
Iran has
unfree
economy
(Repressed),
It is
improving
slowly

67
Source: Economist, Index of economic freedom
Economic freedom VS per capita GDP
Countries
with
higher
GDP have
mostly
high
Economic
Freedom
Score

68
According to Economist 2007 assessment on "Economic Freedom", Iran's economy is 43.1
percent free which makes it the world's 150th freest economy. Iran is ranked 16th out of 17
countries in the region of Middle East/North Africa, and the whole score is considerably
low—almost one-third below the regional average.
The government acts as an intermediary. As a result, businesses need to get permission for
all of internal and foreign trades' processes. Business licensing and closing are regulated
heavily by an intrusive and highly inefficient bureaucracy. High tariff rates and non-tariff
barriers impede trade and foreign investment alike. Also property rights in a court of law
cannot be guaranteed.

69
In the same report, it is revealed that Iran's economy is not free in different ways. The
economy is rather free in the "Fiscal freedom" that Iran has a high income tax rate (35
percent) and a moderate corporate tax rate (25 percent) and "Labor freedom". Iran's score in
this factor is above the world average.
On the other hand, there are other factors in which Iran's economic freedom not only
measured as an un-free but also there are many factors that reveal a large gap between Iran
and world average score such as Investment Freedom, Financial Freedom and Property
Rights.
Source: Economist.com, Index of economic freedom
Iran has
changed some
of rules and
regulations
towards more
economic
freedom during
third five years
plan (2000-05)

70
Source: Economist.com, Index of economic freedom
Very bad
condition in
these factors
directly affect
on sustainable
economic
growth
Lack of
PR
destroy
Creativity
&
Innovative
progress

71
b) GDP
Iran's economy relies heavily on oil export revenues. As you see in the next tables Iran's
real GDP increased for 2004, 2005 and 2006 by around 5.1, 4.4 and 4.3 percent,
respectively.
Iran's Macroeconomic Indicators
0
100
200
300
400
500
600
700
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Billion$
GDP, Current prices
GDP (by PPP)
GDP, per capita
0
2,000
4,000
6,000
8,000
10,000
1980
1984
1988
1992
1996
2000
2004
$
GDP Per capita,
Current Prices
GDP, per capita (by
PPP)
Data Source: (IMF), world economic outlook, April 2007
Source: Central Bank of Iran, Annually report of 2005-2006
The gap between
results of GDP
calculation
methods
(Nominal and PPP)
in developing
countries is higher
than developed
countries. It's
mostly accrue as a
result of lower
prices, wages and
raw materials

72
Source: Central Bank of Iran, Annually report of 2005-2006
Iran's GDP (constant & current price)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2000 2001 2002 2003 2004 2005
Years
BillionRial
Gross domestic product, constant prices
Gross domestic product, current prices
Data Source: International Monetary Fund, world economic outlook, April 2007
The gaps
creates as a
result of
inflation

73
Gross domestic product based on purchasing-power-parity (PPP)
share of world total
0.78
0.8
0.82
0.84
0.86
0.88
0.9
0.92
0.94
2000 2001 2002 2003 2004 2005
Years
percentage
Gross domestic product based on
purchasing-power-parity (PPP) share of
world total
Linear (Gross domestic product based on
purchasing-power-parity (PPP) share of
world total)
Data Source: International Monetary Fund (IMF), world economic outlook, April 2007
share of important sections in GDP
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2000 2001 2002 2003 2004
Percentage
Agriculture
Transportation,commu
nication
Industry
Education
Mining
Data Source: Iran Statistical Center

74
Iran's Macroeconomic Components
Origins of
gross
domestic
product 2004
% of
total
Components of gross domestic
product 2004
%
of
total
Services 51.8 Private consumption 54.2
Agriculture 13.7 Public consumption 10.9
Industry 34.5 Gross fixed investment 35.2
Main
destination of
exports 2005
% of
total
Main origins of imports 2005 %
of
total
Japan 17.3 Germany 14.2
China 11.4 France 6.2
Italy 6.2 Italy 7.5
South Africa 5.5 China 8.3
South Korea 5.2 UAE 6.7
Major exports
2004
% of total Imports 2004 % of
total
Oil & gas 82.8 Raw materials & intermediate goods 47.7
Chemicals &
petrochemicals
4.1 Capital goods 34.2
Dried fruit &
nuts
1.8 Consumer goods 18.0
Leading
markets 2005
% of total Leading suppliers 2005 % of
total
Japan 17.0 Germany 14.0
China 8.3 France 7.1
Italy 8.4 China 8.3
Source: Economist.com, economic structure, May 30th
2007
Indicators 2002 2003 2004 2005 2006
GDP (US$ bn) 116.4 134.0 161.3 188.5 202.6
Real GDP growth (%) 7.5 7.1 5.1 4.4 4.3
Consumer price inflation (av;
%)
14.3 16.5 14.8 13.4 12.0
Total external debt (US$ bn) 9.2 12.3 13.6 12.5 12.3
Exchange rate (av) IR:US$ 7,958.1 8,281.5 8,719.0 9,026.0 9,227.1
FDI inflows (% of GDP) 2002-2006 (av. 0.2)

75
c) Oil price
Iran is ranked in second place for oil production as a member of OPEC. Oil is the most
important part of the country's export. At 2004, the major Iran export is oil & gas
accounting for 82.8% and 4.1% by chemicals & petrochemicals products. To implement
infrastructure plans, Iran completely relies on oil revenue but recent growing of oil price
increase the country's potentials for investment in other parts of economic sectors such as
intermediate industry (specially in oil industry) and related services.
When the second Iraq war started in 2003, economists predicted oil prices would increase.
Indeed, now the market has achieved a new record of $78 per barrel. In 2003, the OPEC
basket was around $27 per barrel but during the past 4 years the price has reached around 3
times the 2003 price. On the other hand there is another shock to oil market as a result of
supply shortage at 2007.
Source: Energy Information Administration (EIA)

76
world's oil demand & supply
83
83.5
84
84.5
85
85.5
86
86.5
87
87.5
88
2006 2007(s) 2008(s)
Millionbarrel/day
Total World Demand
Total World Supply
Data Source: EIA / Short-Term Energy Outlook – July 2007
Continues
increase in
the oil price
can be result
of surplus
demand and
also
regional
tensions

77
Iran has
experienced
fuel
consumption
more than
world's
average as a
result of
subsidize
policy

78
d) Interest Rate
Iran has experienced high interest rates during last decade. There is an inverse correlation
between inflation and interest rate. High inflation rate requires high interest rates to reduce
inflation. Low interest rates make it less attractive to deposit funds with banks for
investment. But on the other hand it makes financial cost lower for manufacturers. As a
result Iran's government has a policy of low interest rates as a monetary policy.
Interest Rate Inflation Rate Economy Recession
Interest Rate Inflation Rate Economy Recession
The above diagram reveals different outcomes for each policy. The point is that countries
should make policies to optimize economy's growth. Each policy has negative and positive
results simultaneously. For instance, although expansion policies accelerate economy
growth and reduce recession but it fosters inflation growth. On the other hand, if an
economy is constricted by government it means they are willing to reduce inflation rate but
it causes a reduction in economic growth.
Expansion
Monetary
Policy
Constriction
Monetary
Policy

79
Interest* & Inflation rate
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007
Percent
Inflation Rate
Avg. Interest Rate
Data Source (inflation): IMF, world economic outlook, April 2007
Data Source (interest): Central Bank of Iran

80
e) Inflation rate
Iran's Inflation Rate
0
10
20
30
40
50
60
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Percentage
Inflation rate
Linear (Inflation rate)
Data Source: IMF, world economic outlook, April 2007
Iran's budget deficit
(Billion Rial)
Year Volume of money Budget Deficit
1963 56.1
1973 296.3 -57.1
1979 2097 -365.5
1979 2578.9 -508.5
1989 18753.3 -1135.3
2001 526596.4 -81241.5
Data Source: Central Bank of Iran
Iran
experienced
high inflation
rate as a result
of expansion
monetary
policy after
war
End of
Iran-Iraq
war

81
Iran's budget deficit
-200000
-100000
0
100000
200000
300000
400000
500000
600000
1963 1973 1979 1989 2001
Billionrials
Volume of money
Budget Deficit
Data Source: Central Bank of Iran
Iran
started its
expanding
monetary
policy
after war

82
f) Value of Rial
In recent years, the interaction of the Iranian economy with the world economy posted a
surplus in major accounts of the balance of payments. The noticeable growth in oil price is
the main driving force behind the surplus in trade balance and remarkable rise in the foreign
reserves, albeit a surge in imports.
Relaxation of foreign trade, along with the stability of exchange rate, resulted in the
continued upward trend of imports in the review year. The value of Iranian Rial has
decreased continually in the latter period in compare to some other important foreign
currencies. It means there is a powerful potential to continue this trend but result of
government policy to implement unique currency rate is keeping the pace of change.
Iranian Rial (IRR) in compare to other currency
Foreign
exchange
2004 2005 2006 2007
1 USD ($) 8729 8991 9095 9270
1 EUR (€) 10715 11082 11715 12807
1 GBP (£) 16115 15990 17350 18940
1 CAD ($) 6665 7394 8070 8794
Data source: XE.COM, all of rates at 06th
of august

83
Iranian Rial in compare to other
currency
0
5000
10000
15000
20000
2004 2005 2006 2007
Rial
1 USD ($)
1 EUR (€)
1 GBP (£)
1CAD ($)
Data source: XE.COM

84
A-4-2-3) Future Outlooks for Iran's Economy
Iranian Economy Aims for Long-term Growth. In this way associating with WTO is an
important strategy for the country. At the moment Iran is an observer member of WTO.
This suggests Iran is going to become formal member of WTO in the next decade. There
are different opinions by economists. Some believe that admission to WTO will force Iran
to open its market to other stronger countries and brands and this will destroy internal
industry and make economical, political and social problems. On the other hand, some
believe the most important problem in Iran trade is competitiveness. Low quality, lower
productivity and higher price are the results of a closed economy and they are the main
Iranian product and services obstacles in competition with others. As a result, if Iran
becomes a member of WTO it can help to increase competition and then Iranian firms try to
improve their abilities at the global economy. But there are many problems in the Iran's
trade framework that create delays in that goal. Some of the most important obstacles in
this way are as follow:
o Country's trade completely is dependent to oil market
o Country's trade strategies are unknown
o share of non-oil exports are low in comparison to total exports
o There are very limited target markets for exports
o Iran has a low share of global markets
o trade is affected by considerable weaknesses in banking system
In summing up there are many forces driving and also pressures on the Iran's economic
development.
 Forces driving the Iranian economy
The forces that are assumed to drive the Iranian economy forward include the following:
 Stable growth of the world economy leads to make more consumption for
natural resources

85
 The moderate recuperation in industrial (in particular petrochemical),
agricultural productions and service section
 The sharp rise in crude oil prices
 The accelerating of the pace of involving private sector in economy
 The accelerating pace of ICT leads whole of sectors to become more productive.
b) A downward pressure on the economic development:
 Large governments could have a negative impact on economic activities through
public sector inefficiency
 Decline in corporate profits because of difficulties in implementing price-
shifting(tariff limitation by government)
 Two digit unemployment rate
 International political pressures
 Iran located in a risky region that limits foreign direct investment
 Tariff policy is considerably towards to limit competition between Iranian and
foreign corporations

86
A-4-3) Socio-Cultural Trends
In the two past decades, Iran has experienced sustained effort involving cultural, social,
political and economic transformation that has wrought considerable achievements in
human development. Also execution of three development plan represented the pursuit and
expansion of those reforms.
"In our view, desirable development is comprehensive, balanced and sustainable
development, guaranteeing the participation of all individuals, social groups and
sectors, including women and youth, in the process of growth and progress. This
development is centered on human beings and is directed towards the enhancement of
their ability to enjoy the material and spiritual benefits life has to offer."
President Seyed Mohammad Khatami, 1996
Since 20 years ago, the social environment has changed such that Iranians' choices have
expanded considerably, but even more progress could be made. Here I will emphasize
social indicators that are more influenced by Iranian social, economical and political
situation in recent years.

87
A-4-3-1) Human Development Index (HDI)
According to UNDP program at human development (annually report), perhaps one of the
most important elements that has influenced on socio-cultural development in each country
is economic growth. For instance, countries with high GDP per capita usually experienced
high HDI rate (Human development Index, The HDI measures the average progress of a
country in human development). On the other hand, there is a remarkable correlation
between economic indicators and human development. It shows that some countries do
better than others in converting income into education and health opportunities. For
example Luxembourg not only has experienced $69961 GDP per capita at 2004, but also
simultaneously obtained 12th
place in HDI (HDI=0.945) at the same time. In comparison to
Luxembourg, Iran at the same time experienced $7500 GDP per capita while the HDI for
Iran is 0.746, which gives Iran a rank of 96th out of 177 countries. It means the country has
not been completely successful in using its income to improve human development. As a
result, this ratio shows that 95 countries have a better situation (better human development)
than Iran.
Source: UNDP, Human Development Report 2004

88
Moreover, there are other indicators for evaluation of HDI that Calculated each year such as
life expectancy at birth, adult literacy rate and human poverty index. Although the index
shows considerable growth for Iranians' human development in which Iran has improved its
index from 57% at 1975 to 74% at 2004 (28% growth for 30 years), Iran has been ranked as
an median country with a place of 96 at 2004.
Iran's HDI Trend
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
1975 1980 1985 1990 1995 2000 2004
TotalScore
HDI Trend
Data Source: UNDP, Human development Report 2004
Iran's human development index 2004
HDI value
Life
expectancy at
birth
(years)
Adult literacy
rate
(% ages 15 and
older)
GDP per capita
(PPP US$)
Human Poverty
Index*
2004
In world's place
of 96th
, (0.746)
In world's
place of 85th,
(70.7)
In world's place
of 85th
, (77.0)
In world's place
of 72nd
, (7,525)
In world's
place of 35th
,
(16.4)
Data Source: UNDP, Human Development Report 2004
* The Human Poverty Index for developing countries (HPI-1) focuses on the
proportion of people below a threshold level in the same dimensions of human development as the
human development index - living a long and healthy life, having access to education, and a decent
standard of living.

89
Source: UNDP, Human Development Report 2004
Another measurement is "Gender Empowerment Measure" (GEM) that reveals whether
women take an active part in economic and political life. It tracks the share of seats in
parliament held by women; of female legislators, senior officials and managers; and of
female professional and technical workers- and the gender disparity in earned income,
reflecting economic independence. Iran, Islamic Rep. of ranks 71st out of 75 countries in
the GEM, with a value of 0.326. It means Iran has low level of gender empowerment and
women have no participation in economy as well as men and most of important seats in the
public and private sectors are occupied by men.

90
A-4-3-2) Populations:
Periods Iran's Annual Population Growth
1946-1956 3.13
1956-1966 2.92
1966-1976 2.71
1976-1986 3.91
1986-1996 1.96
1996-2006 1.45
Reduction in the population growth rate has been among the main achievements during the
recent years, which is mostly due to the economy, life style, culture of households and
downward trend of female fertility rate. The high growth of population during 1977-1987
evolved the population age-structure and brought about additional demand for education,
health and employment. Improvement in the social indicators such as education, health and
income distribution reflects special attention paid to the social affairs during the recent
years. However, to meet accelerated pace of labor force supply, certain measures were
taken in the area of mobilization of potential resources to raise the demand for labor force
and to reduce unemployment rate.
Iran's Population
40
45
50
55
60
65
70
75
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Million
Iran's Population
Data Source: Iran Statistical Center
Population
was affected
by first
decade's
believes of
Iran's
revolution

91
Iran's Annully Population and HDI
growth rate
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
1978
1981
1984
1987
1990
1993
1996
1999
2002
%
Population Growth rate HDI Growth rate
Lessening of Iran's
population growth
rate has affected
directly by high
growth in its HDI
index. During three
decades ago HDI
index always has
been bigger than
population growth
rate.

92
A-4-3-3) Age distribution:
Percentage Distribution of Households’ Members
By Age Groups, 2004-05
Age Groups Percent
0-5 years 7.5
6-10 years 7.8
11-15 years 11.1
16-20 years 13.9
21-30 years 20.0
31-50 years 26.1
51 years and over 13.6
Total 100
Data source: Iran's Central Bank, Household Budget Survey 2004-05
Iran is known as a young country in the world because more than 45% of population is
under 30 years old. Due to this demographic distribution, there are many opportunities and
threats facing Iran:
Opportunity:
 Good potentials for labor market
 Good potentials for buying goods and services (does consumption style
change as a result of age distribution?)
 Good potentials for scientific activities
Around 70%
of Iran's
population
involves in
job market
Around 45%
of Iran's
population
is young
(Good
potential
for market
demand)

93
Threats:
 Need to spend huge investment on training and education
 Unemployment emerge as an social crisis for government
 Aging and Challenges for Medical Care and Long-term Care
Most of Iran's
population is
young and are
known as
market
demand
potential

94
A-4-3-4) Unemployment, An emerging social crisis
Year Population
(Million)
Unemployment Rate
(%)
1956 18.9 3
1966 25.7 9
1976 33.7 10
1986 49.4 14
1991 55.8 11
1996 60 9
2001 64.5 14.2
2006 70 10.2
Data Source: Iran's statistic center
Employment and unemployment are among major economic issues of every country so that
any changes in unemployment are treated as development indicators in societies.
Meanwhile, unemployment rate is one of the indicators used to evaluate the economic
conditions of the country.
Unemployment is currently the Islamic Republic’s most acute single economic concern.
Demography, rapid urbanization and a shift in the country's economic structures are the
main causes of growing unemployment in Iran. As an increasing number of youth, born
during the 1980s baby boom, is reaching adulthood and want jobs, the unemployment
concern is quickly developing into an acute crisis. In recent years Iran has experienced
double-digit unemployment rate. The challenge is formidable not only because of
unemployment’s debilitating impact on the economy, but also due to its dire political,
social, and even cultural consequences for the country's stability and staying power.

95
Unemployment in Iran is around 11 percent, but is significantly higher among young
people. Iran is attempting to diversify its economy by investing some of its oil revenues in
other areas, including petrochemicals production. Perhaps the main factor for the double-
digit unemployment has to do with the inadequate pace of economic growth. By a
consensus of Iranian and foreign economists, Iran’s gross domestic product must grow at a
rate of at least 8% a year in real terms in order to absorb all the new job seekers, and by
more than 9% to reduce unemployment below 10% in compare to Iranian economy’s 5.6%
average yearly growth during 2002-2006. Another important reason for the mushrooming
of young job applicants has been the mismatching of Iran’s education system with the
country’s occupational needs. The large number of unemployed college graduates classified
as “unskilled” suggests that their formal training is not suitable for the market place’s
requirements.
There is a fundamental solution to decrease unemployment rate which is Foreign Direct
Investment (FDI). Iran needs to concentrate more on the potential of foreign investment for
two reasons: on the one side, productive foreign investment will create additional jobs and
on the other, increasing levels of FDI will encourage the country's vast private sector
engage more actively in investment activity. Clearly, without remarkable amounts of
foreign investment, it will be impossible for Iran to close the gap between the current and
the required level of unemployment rate.

How technology road mapping facilitate organizational large scale change

How technology road mapping facilitate organizational large scale change

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