Technological environment

Technological environment
See also
Green innovation External analysis Macro environment analysis Intercultural management Innovation and change Domestic market Global risk Organizational innovation Aggressiveness strategy

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 . Technological changes may lead to the collapse of some branches of industry, but also lead to the emergence of new ones . 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 . 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.

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 .

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".

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 .

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) .

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 .

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 .

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 :

• 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 . 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 . It also determines the future strategy of the organisation through in-depth analysis .

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

• Political
• Economic
• Social
• Technological

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

References

• Bowman C.,(1998). Strategy in practice, Prentice Hall Europe, p. 201.
• Carruthers H.,(2009). Using PEST analysis to improve business performance., In Practice, ISSN:0263-841X.
• Gupta A.,(2013).Environment & PEST Analysis: An Approach to External [[Business environment|Business Environment, inL International Journal of Modern Social Sciences2013, 2(1): p. 34-43, Florida, USA, ISSN:2169-9917
• Kolios A., Read G.,(2013)A Political, Economic, Social, Technology, Legal and Environmental (PESTLE) Approach for Risk Identification of the Tidal Industry in the United Kingdom, Energies 2013, 6, 5023-5045
• Koumparoulis, D. N.,(2013). Analysis: The case of E-shop. International Journal of Economy, Management and Social Sciences, 2(2), 31-36, ISSN:2306-7276
• Megantz R.C.,(2002). Technology Management: Developing and Implementing Effective Licensing Programs, 2 nd Edition, Wiley, p. 7-8.
• Peng G. C. A., & Nunes M. B. (2007, July). Using PEST analysis as a tool for refining and focusing contexts for information systems research., In 6th European conference on research methodology for business and management studies, Lisbon, Portugal,(p. 229-236).
• Pearce J. A., Robinson R. B., & Subramanian R.,(2000). Strategic management: Formulation, implementation, and control., Columbus, OH:Irwin/McGraw-Hill.

Footnotes

Author: Justyna Wąsiołek