TECHNOLOGICAL ENVIRONMENT
OF BUSINESS
Why is the technology environment important?
It affects various aspects of the business. That could
be an opportunity or a threat. And, companies cannot
control technological factors but must respond to
them. Therefore, companies must be able to adapt to
new technological developments.
Early adopters of new technology often achieve higher
market share and get higher returns. Therefore,
companies need to scan for trends and changes. The
aim is to take advantage of opportunities while
minimizing threats. That way, the company can be
competitive.
Effect of technological change on the organization as a whole can affect:
•Product sales technique.
• For example, more retailers are turning online than physical stores. These changes certainly
have a significant impact on their business strategy.
• Ways of making products.
• For example, is process automation
• Market research.
• Marketers can more easily analyze the market with a database system. The technology
element enables marketers to access data more accurately, allowing them to plan marketing
strategies better.
• Management and operation of the company.
• Now, employees do not have to attend the office to work. Instead, they can do work at home,
as long as they are connected to the internet.
• The choice of communicating with stakeholders,
• through websites, social media, and email.
• Needs for new expertise.
• Companies increasingly need data analysts and programmers for the interpretation of data and
digital information processes.
• Change the needs and desires of consumers.
FACTORS OF TECHNOLOGICAL
ENVIRONMENT
1] Pull of Technological Change
Technological change generally refers to the advancements
in the production and manufacturing process of different
goods and services. So it is when we improve the way
products are made or services are delivered. In these times
there is always a new invention or better technology around
the corner.
This technological change brings both opportunities and
threats to a business. There is always the advantage of
assessing the technological environment and embracing the
new technology.
This can make your product better, bring down costs, edge
out the competition, increase production capacity, etc. But
at the same time, such changes if not adopted by the
2] Opportunities from New Innovations
There are so many concepts, products, services, etc that
have been unexplored in the market. The advancements in
technology mean that there is the possibility of a new
invention every single day.
And firms have to be alert about their technological
environment to smell out a great opportunity. If the firm can
capitalize on a new invention or product, it can become a
pioneer in the industry.
For example, see the boom in the smartwatch and fitness
tracker market. It all started back in 1998. Such new
products enter the market every year. And to capture this
market a firm has to be aware of its technological
environment.
3] Risk of Technological Environment
With opportunities come threats. If the company does
not keep a track of the new innovations and
advancements in the industry, they risk being out of
date. If a business cannot adopt a new technology it
can be forced out of the competition. There is also the
ever-present risk of new innovations and entrants to
the market.
4] Role of Research and Development
The other important aspect of the technological
environment is the role of the R & D of the country.
Technology and business are very interdependent. The
benefits of all the R&D a country does reaches the
public via the businesses. These findings and
developments improve our quality of life and uplift the
economy and society.
Matters to be considered while assessing the technological
environment:
What production technology and information technology does
the company employ?
How important is each technology to the firm?
Is there an external technology that the company depends on?
What is the reliability of such technology?
What has been the extent of investments in technology? Is the
investment in the design or the implementation or the
maintenance?
How much have other competitors in the same industry
invested in their technologies?
Which technological investments should be withdrawn or
limited?
What are the additional technological requirements to meet
The impact of the technological environment on companies
Technological developments affect all aspects of business, not only in
products and services. In production, technology can increase total
output through:
Increased productivity. With the same input, the company can
produce more output per unit.
Cost reduction for example computers and transportation technology
Technology has also allowed companies to produce new products.
For example, the presence of internet technology allows book
publishers to launch e-books.
However, technology also makes products obsolete faster. For
example, the emergence of smartphones with high-resolution
cameras reduces interest in conventional camera products.
