Technological environment

From CEOpedia | Management online

The technological environment is a dynamic set of phenomena which, even though they seem to be unrelated to the industry in which the company operates, such as banks or department stores, may constitute a source of threats or opportunities for the company [1]. Technological changes may lead to the collapse of some branches of industry, but also lead to the emergence of new ones [2]. In recent years, a new economy has developed, based on digital technologies and a significant increase in the importance of information services. A phenomenon that accompanies rapid technological development is deindustrialisation, which means the disappearance of traditional industries [3]. Knowledge of the technological progress taking place in the world may bring weapons to the company in the fight against competitors in the market. On the other hand, a lack of interest in technological development may quickly turn into a problem for the company[4].

Development

The technological environment after the end of World War II accelerated significantly. In leading countries in terms of development, the time between a new invention and its introduction on the market has shortened. In the US and Western Europe, for example, it takes about 4-5 years and in Japan 3-3.5 years [5].

Internet

In recent years, the development of the Internet has been particularly important, as it has contributed, among other things, to the emergence of e-business. The traditional distribution channel has been eliminated and a new way of communication has emerged. The Internet can also influence the organisation of companies, e.g. by resigning from office work in favour of "teleworking"[6].

It is also worth mentioning the emergence of the term "web 2.0", i.e. both the creators and recipients of content published on the Internet are the Internet users themselves (as opposed to web 1.0, where the recipients are Internet users, but the creators of the provider's content, who may have links, for example, with traditional media). This results in, for example, the success of companies that are able to build an "Internet community" around their business [7].

The Internet also causes some spheres of business activity, such as marketing, to look quite different in the 'old economy' and 'e-business'. Moving effective marketing methods directly from the "old economy" to "e-business" may end in failure (e.g. due to the ease of "jumping" between different websites) [8].

New industries

The development of technology has also resulted in the emergence of new industries, such as biotechnology, which, in the age of an ageing population of highly developed countries, will probably become even more important. It is also worth stressing, for example, the importance of digital technology, which will mean that traditional television stations, which in a sense were "monopolists", will lose their dominant position [9].

Technological progress is also accompanied by the process of deindustrialisation, which does not mean, however, the disappearance of the industry, but its constant modernisation. It also means a reduction in employment and new ways of managing companies [10].

Main factors in the analysis of the technological environment

The development of technology may lead to the growth of some and marginalization of other industries, or even to the creation of completely new industries while eliminating some obsolete ones. The main factors that need to be taken into account when analysing the technological environment of an enterprise are [11]:

  • financial outlays for the development of technology,
  • the processes used,
  • emerging products and technologies,
  • standardisation and unification.

PEST - Method of analysis of the technological environment

PEST analysis is a method used to study macro-environment - macro-economic environment of the enterprise [12]. In other words, it is called general segmentation of the environment. It defines the basic spheres of the environment, i.e. the areas which have a key impact on the functioning of the organisation [13]. It also determines the future strategy of the organisation through in-depth analysis [14].

The starting point is a list of basic external factors of the organisation (hence its name):

  • Political
  • Economic
  • Social
  • Technological [15]

In some variants of the analysis there is also an independent environmental factor - Environment (the analysis is then called PEEST) [16]. Sometimes we still meet with a distinction of the Legal environment (the name of the analysis - PESTEL) [17].

Examples of Technological environment

  • The Internet of Things (IoT): The Internet of Things (IoT) is a network of physical objects, including machines, devices, and sensors, that are connected to the internet. This technology enables businesses to collect data from objects and then use it to improve operations, streamline processes, and provide better customer service.
  • Automation and Robotics: Automation and robotics are technologies used to automate manual processes and replace repetitive tasks that are currently done by humans. Automation and robotics can help companies increase efficiency and reduce costs.
  • Artificial Intelligence (AI): Artificial Intelligence is a technology that enables machines to learn from the environment and make decisions without human intervention. AI can be used in a variety of ways to help businesses automate processes and make better decisions.
  • Cloud Computing: Cloud computing is a technology that allows companies to store and access data and applications over the internet. Cloud computing can be used to reduce costs, increase scalability, and improve collaboration.
  • Augmented Reality (AR): Augmented reality is a technology that overlays digital information on the real world. AR can be used to help businesses provide a better customer experience, improve training, and enable remote collaboration.

Advantages of Technological environment

The technological environment can be a great source of opportunities for the company. Specifically, it can offer the following advantages:

  • Increased productivity: Technology can help companies increase their productivity by automating tasks and processes, reducing manual labor and increasing efficiency.
  • Improved communication: Technology also allows companies to improve their communication capabilities through email, social networking, and video conferencing. This can help improve collaboration between departments and enhance customer service.
  • Enhanced customer experience: Technology can also help companies create a better customer experience by providing easier access to information and services. This can be done through the use of websites, mobile applications, and other digital solutions.
  • Cost savings: Technology can also reduce costs for companies by reducing the cost of labor, reducing overhead costs, and increasing efficiency.
  • Competitive advantage: Technology can also give companies a competitive edge by allowing them to develop unique products and services, or to provide services faster than their competitors.
  • Access to new markets: Technology can also help companies access new markets by providing access to new technologies or by providing access to new customers through e-commerce or digital marketing campaigns.

Limitations of Technological environment

  • The technological environment is constantly changing and evolving, which means that the company must stay up to date with the latest developments in order to remain competitive.
  • Technology can also be expensive and difficult to implement, making it difficult for companies to take advantage of the latest trends.
  • Companies may be limited in their ability to use certain technologies due to legal and ethical considerations, such as data privacy laws.
  • Companies may also lack the resources or expertise to implement certain technologies, such as artificial intelligence or blockchain.
  • The technology may not be suitable for the company’s needs or may be too complex to use effectively.
  • Finally, the technology may not be reliable or secure enough for the company’s operations, leading to data breaches or other security issues.

Other approaches related to Technological environment

Other approaches related to the Technological Environment include:

  • Monitoring the competition: Companies should be aware of the technology their competitors are using, as well as the technological trends in their industry, in order to stay ahead of the game.
  • Investing in new technology: Companies should invest in new technology to stay ahead of the competition and keep up with the changing environment.
  • Utilizing data analytics: Companies should leverage data analytics to gain insight into their customers' buying habits and preferences, in order to better serve them.
  • Automation: Companies should consider automating processes in order to improve efficiency, reduce costs, and improve customer experience.
  • Cybersecurity: Companies should take measures to ensure their systems are secure and protected from cyber-attacks.

In summary, other approaches related to the Technological Environment involve monitoring the competition, investing in new technology, utilizing data analytics, automating processes, and ensuring cybersecurity. By taking these steps, companies can stay competitive and stay ahead of the changing landscape.


Technological environment — recommended articles
Changes in technology — Technological factors affecting business — Innovative technologies — New technologies in management — Retail innovation — Technological factors — Marketing information system — Information strategy — Smart organization

References

Footnotes

  1. ↑ (Kolios, Read 2013 pp. 5023-5045)
  2. ↑ (Megantz 2002 pp.7-8)
  3. ↑ (Kolios, Read 2013 pp. 5023-5045)
  4. ↑ (Kolios, Read 2013 pp. 5023-5045)
  5. ↑ (Gupta 2013 pp. 34-43)
  6. ↑ (Koumparoulis, 2013, pp. 31-36)
  7. ↑ (Koumparoulis, 2013, pp. 31-36)
  8. ↑ (Koumparoulis, 2013, pp. 31-36)
  9. ↑ (Megantz 2002 pp.7-8)
  10. ↑ (Megantz 2002 pp.7-8)
  11. ↑ (Megantz 2002 pp.7-8)
  12. ↑ (Bowman, 1998 pp. 201)
  13. ↑ (Carruthers, 2009, p.31)
  14. ↑ (Gupta 2013 pp. 34-43)
  15. ↑ (Peng, Nunes 2007 pp. 229-236)
  16. ↑ (Koumparoulis, 2013, pp. 31-36)
  17. ↑ (Pearce, Robinson, Subramanian 2000, p.15)

Author: Justyna Wąsiołek

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