Digital technology

Question 1

E commerce

Answer 1

Causes low barriers to entry

The buying or selling of goods electronically

M-commerce; buying or selling using mobiles

Benefits
- don’t need to buy or rent property
- greater access to international markets ( less language barriers and worldwide delivery)
- keep track of online order history to make recommendations (Amazon)

Drawbacks
- easy for consumers to compare prices and look at reviews
- may lose out on potential customers (elderly)
- increased competition (bigger market)

Question 2

Pressures for new technology

Answer 2

Increased competition
- barriers to entry are reduced

More informed customers
- increased transparency means need good prices and reviews

Change
- technology moves fast so it can be hard to keep up

Disruptive technology
- firms decide to adopt new or stay with old

Question 3

Big data

Answer 3

When large amounts of data are captured due to technology
- such as barcodes, GPS, social media

Can be mined for useful information

Benefits
- allows for deeper understanding of consumers, predict buying habits or make personised recommendations

Question 4

Data mining

Answer 4

Analysing data to identify patterns/ relationships which can be used to make informed decisions

Example; buying behaviour in supermarkets, Tesco’s clubcard

Benefits
- better understanding of customer needs, allows for them to target customers with products/ offers they want
- accurately predict sales
- leads to lower waste

Drawbacks
- only used if they have large sets of data (not for small firms)
- current correlation doesn’t guarantee future pattern

Question 5

Automation

Answer 5

Use of machinery to replace humans

Aim; improve efficiency and productivity, reduce costs

Heinz
- went from US to UK
- 3 millions cans a day made by machines

Sainsburys
- AI forecasting helped to reduce waste and improve efficiency

John Lewis
- automated returns, reduced labour costs and improved convenience

Threats
- call centres are at risk as chatbots take over issues
- however roboys cause frustration

Benefits
- long term reduction in unit costs
- can work 24/7 (productivity)
- improved accuracy/qualith

Drawbacks
- current staff become demotivated
- high initial costa
- loss of human interaction

Question 6

Benefits

Answer 6

• faster access to information
• offers new ways of doing business (crowdfunding, contactless payment)
• improves efficiency and reduced costs

Question 7

Impacts on functions

Answer 7

Marketing
- can check sucess if promotion (sales before and after)
- promote across channels to improve interaction
- big data can be used to understand customer needs and develop campaigns on this

Operations
- can track stock levels and productivity
- change in distribution may change the process
- quality assurance through computers
- CAD and CAM help businesses such as Moonpig
- automation changes how they operate
- JIT stock control systems automatically place orders

Finance
- create budgets to improve levels of profit to invest in new technology
- greater efficiency as technology monitors cash flow and budgets

HR
- can check productivity of staff to see who need training (supermarkets check cashier speed)
- may have to make staff redundant or train more if usinf automation
- don’t need staff to make decisions (have data)