Technological Factors Flashcards
(17 cards)
IMPACT OF TECHNOLOGY IN BUSINESS - outsourcing production
Improvements in technology have also led to outsourcing of production. Because quality can be remotely monitored, the fear that outsourcing leads to quality problems or supply chain delays has, to a large extent, disappeared. This means that many large businesses can reduce financial risk by letting other businesses manufacture their products for them. Apple Computers do not build a single iPad or iPhone, but they still control and monitor production on a daily basis.
IMPACT OF TECHNOLOGY IN BUSINESS - Location of business + ICT
The rapid increase in the quality of global communications technology and the matching fall in cost
of use of this technology have allowed large businesses the option of outsourcing or relocating their ‘back office’ operations worldwide. For example, call centre operations in India. The costs of these operations are far lower than in the UK – in fact, the estimated cost to the call centre operator of each 1 minute call is just 7p. This includes the cost of the call and the employee costs. When we consider wages in India can be just $200 dollars a month, (approx. just 15% of UK wage costs), and that many posts are filled by graduates, we can see the attractions of this type of relocation.
IMPACT OF TECHNOLOGY IN BUSINESS - product life cycle + speed of technological obsolescence
The more technological input into business operations there is, the greater the impact on product
life cycles. The ability to develop and bring to market new products much quicker means that
product life cycles of existing products become much shorter, and products become technologically obsolete much quicker. As a result of shorter life cycles, products must become profitable more quickly and the numbers of early adopters, willing to pay a high price, may be critical to this profitability.
Automation for retailers
For retailers, automation has
become one of the key issues in business efficiency. Whether it is automated ordering
or the more visible self-checkouts.
Automation for banks
Bank clerks are disappearing to be
replaced by machines. Those bank staff that are visible are there just to help you use the automated systems and to sell you new
products.
Automation for warehousing
Staff functions are being
replaced by robots that can do more and more tasks. Robots are not yet capable of removing all goods from shelves but can
transport and pack goods.
Automation for online services
Whole systems will be
automated; mathematical analysis will determine which products are marketed, where they will be placed and what prices
are charged.
Automation for utilities
(gas and electricity) – Smart meters
will replace the need for manual meter reading. Switching to the cheapest provider may become automatic.
Consumers benefits from
the new technology introduced by businesses
√ internet provides easy price comparison and much more information through review sites
√ convenience through home shopping and pre-arranged delivery times
√ more choice
√ lower prices
√ improved quality.
Consumers drawbacks from
the new technology introduced by businesses
X online shopping and banking can lead to fraud
X no-one enjoys phone calls trying to sell insurance, PPI claims, etc.
X rapid technological change leads to pressure to buy the latest products, potentially leading to debt.
Define technology
‘the application of science to solve problems’.
- Over the last 20 years, increasing levels of automation and use of information and communications technology (ICT) has had a major impact on all organisations and how they operate.
Information and Communication Technologies
With the current rate of progress in ICT, it will soon be possible for computers to have an impact on
every aspect of business operations. From stock control to monitoring of staff performance, from marketing goods and services to managing budgets – and much, much more. ICT has an important and growing role to play. There are several ICT applications that have had a massive impact on the
way businesses are run.
ICT - Internet Marketing
Internet sales are increasing year on year. Businesses that have already entered this lucrative market have seen share values rocket, as well as sales (though
profits are still to show up in many cases). Tesco and Iceland have a full range of products for sale on the internet. Amazon.com, initially internet booksellers, have spread their range to a vast range of products requiring massive
warehouses all over the UK to distribute them.
ICT - Web-based customer relations
It is becoming more and more typical for businesses in financial industries to have entirely webbased customer relationships. Banking is done online, bills are paid, direct debits set up and
cancelled, loans and overdrafts are arranged without a single visit to a branch - all is done over the
internet. The gambling industry has benefited greatly from the growth of this type of interaction
with the customer. Now bets on sports, poker and bingo are played through mobile technology.
ICT - B2B
B2B involves the finding of commercial buyers for businesses output, and the sourcing of components and raw materials for businesses production, via the internet. It has been estimated
by industrial economists that there are potential cost savings of between 5 and 10% if businesses operated all their purchasing through the internet. Business to business portals allow full supplier relationships to be established and maintained.
ICT - Manufacturing Resource planning 2
This system is used by manufacturing businesses to plan all aspects of business activity. The MRP2 system takes forecasts and turns them into a series of objectives and targets for each function or department in an organisation. This system, when running efficiently, can replace an entire layer of management who have previously been employed running the planning and budgeting processes. MRP2 allows the maximum possible use of ‘what if?’ questions. Senior managers are able to judge the impacts of otherwise untestable scenarios on the organisation. This ability to use computer
modelling reduces costly errors.
ICT - EPOS
The reading of bar codes at checkouts is the tip of the iceberg of EPOS systems. Beneath this, we have a stock database that controls stockholding and ordering for retailers; warehouse stockholding for manufacturers and supply from businesses in the supply chain. Used most efficiently, retailers can use EPOS to determine promotions, selling space allocations and staff requirements. Manufacturers can use EPOS systems to reduce stockholding and working capital,
thus ensuring that suppliers supply only as and when required.
