Technology transfer plays a big roll on firm development and becomes competitive on the market. The actual practice of technology transfer and absorptive capacity of Ethiopian metal industry is very weak and have no enough models in the metal production sector. Because of this weakness, the country cannot compute foreign imported technologies and cannot sustain in the market. This study investigates the practice of absorptive capacity and technology transfer of Hibret manufacturing and machine building company in Adiss Ababa region. The researcher collected data from the case company then used SPSS and MS Excel software application to enter, compile, and analyze the data, and AmosSPSS Module for the development of factor analysis and develop structural conceptual model, Vensim software for the development of system dynamic model and make a simulation.From the analysis, the researcher found that Absorptive capacity is developed by acquisition capacity, assimilation capacity, transformation capacity, and exploitation capacity development. As we observe from the data analysis there are optional models to achieve technology transfer development, from those optional models based on the structural equation model and system dynamics model development the preferable model for Hibret manufacturing and machine building company is model eight (8) which is focuses on exploitation capacity development. This exploitation capacity is developed by increasing the development of firms acquiring capacity, assimilation capacity, and transformation capacity. The primary means for building these capacities is working on internal capacity building which is learning capacity development and motive workers. The nature of absorptive capacity is basically concern on the ability of employees acquiring capacity, therefore, we can conclude that technology transfer will not be successfully accomplished if technology absorptive capabilities are not taken seriously. This model is show integration problem and solves those problems which are occurred in Hibret manufacturing and machine building company.