- In PESTLE analysis, technological factors are variables which relate to the existence, availability and development of technology.
- This could include things from computational power to engine efficiency.
Impact on business
- Improved efficiency and reduced waste
- New, better products and services
- Advances in communication
- Improved working environment
- Wealth creation and higher living standards
What might the problems in introducing new technology be?
- The cost of keeping up to date with the latest technology
- Choosing the right new technology
- Industrial relations
- Personnel issues
Practice exercise 3 (NF)
Identify and explain one example of the impact of technological change on each functional area within a business
- The warehouse team at a distribution company would benefit from more capable technology. If all the items in the warehouse are tracked digitally, then a phone-type device could be used by workers to navigate to and quickly locate any item.
- This would lead to a temporary decrease in productivity whilst workers get used to the new system
- There would be higher costs as the handhelds would need purchasing and powering, and the system would have license fees
- However, in the long-term there will be increased productivity across the organisation as more orders can be fulfilled more efficiently.
Identify and explain one example of the impact of technological change on business strategy.
- Artificial Intelligence (AI) will be able to provide lots of previously human only labour at much lower costs, much faster and likely at a more reliable quality.
- If a business adopts AI as a replacement for a human role, they will likely be able to outcompete other businesses in the area, assuming that AI is capable enough to perform the role properly. This will put pressure on competitors to make the same change.
- This may also demoralize employees, as they may feel their job security has been weakened.
- The business will likely have to plan for making a smooth transition towards AI technologies at the correct time for each area of the business.
Explain two benefits to consumers of the use of new technology.
- Less waiting time. New technology typically increases productivity, as people have to do less manual work due to automation. This improves customer experience because their interactions with the business will be faster and have less friction.
- Less work, an automated order form on a website is easier than sending an email or a letter and having a back and forth with a sales rep.
Explain two benefits to firms of the use of new technology.
- Lower costs. Fewer people are needed to fulfil the same roles, as a computer system can probably take on some of the previously human workload. AI threatens to completely replace many human roles in the future.
- Greater productivity. Employees can spend their time doing the more complex tasks as the repetitive or menial tasks can be automated. This saves time for everyone, improves employee motivation and makes employees more efficient.
Identify and explain four factors that illustrate the pressure for socially responsible behaviour.
- Customers want to buy ethical products. This might be people looking for something like a Fairtrade badge or organic foods. In other industries, it may be a matter of looking for products that are produced without any slave labour, where people across the whole production chain are treated well.
- Businesses want to trade with reputable partners. If a business is considering a deal with another, they won’t want to be affiliated with someone who has negative ethical credentials, and will actively favour businesses with positive ethical credentials. Therefore, acting ethically will provide businesses with greater opportunities.
- Staff want to work for an ethical business. If a business treats their staff well, and their partners ethically, staff are more likely to enjoy working there, which will in turn lead to improved employee productivity and a better reputation.
- Markets are not shaped by the business, but by the consumers and the investors. If a business cannot comply with the expectations of both of these stakeholder groups, then they cannot succeed. Increasingly frequently, all stakeholders want business to act transparently and in an ethical way.
- “The Court of Public Opinion” is an increasingly relevant concept, with the advent of social media and instant global communication, if someone finds something out about a business behaving unethically, it can spread extremely rapidly around the globe and impact a business’s ability to function.