Technological factors affecting business

Technological factors affecting business (also called technological forces) are all externally generated changes in technologies and processes which are used (or may be used) by the company or its competitors. Proper identification of this factor during strategic analysis (PEST analysis, STEEP analysis, SWOT analysis, TOWS analysis) could lead to better strategic decision about investments and development of the organization. Rapid technological development in modern economy requires quick and flexible reactions of managers to better adapt and to survive in turbulent competitive environment.

Technological factors connected to information revolution

The information revolution refers to the rapid advancement of digital technologies and the widespread availability of information through the internet and other digital platforms. Some technological factors connected to the information revolution that can affect businesses include:

• The rapid development of advanced communication networks such as 5G, which enables faster data transfer and improves the connectivity of devices, has led to new opportunities for businesses to communicate and collaborate with customers, suppliers, and partners.
• The growing efficiency of computer systems, including the development of faster processors, larger database and memory capacity, and improved storage technology, has led to increased productivity and efficiency in various industries.
• The global reach of the internet has made it possible for businesses to easily access information about their competitors and the market, providing insights into new opportunities and trends.
• The emergence of web 2.0 and newer technologies, such as social media and collaboration tools, has made it easier for businesses to engage with customers and build relationships through dynamic communication and feedback.
• New IT security challenges: With the increasing amount of sensitive information being stored and transmitted electronically, businesses must constantly adapt to new IT security challenges. For example, encryption is used to protect data from unauthorized access, certificates are used to verify the identity of websites and users, SSL (Secure Socket Layer) and HTTPS (Hypertext Transfer Protocol Secure) are used to secure online transactions, and various other technologies are used to protect against malware, phishing, and other cyber threats.
• Internet infrastructure: The availability and speed of internet access is becoming increasingly important for businesses, as more and more transactions and communications are conducted online. The use of fiber optics and other advanced technologies is improving internet speed and reliability, and mobile capabilities are allowing businesses to reach customers and employees in more remote locations.
• Internet banking and shopping: The rise of e-commerce has made it possible for businesses to sell products and services online, and internet banking has made it easier for businesses to manage their finances. However, these developments have also brought new security risks, such as the risk of fraud and theft.
• Distribution of non-material goods over the internet: Many businesses are now distributing non-material goods such as music, movies, e-books, and software over the internet, rather than through traditional physical channels. This has led to new business models and has made it easier for businesses to reach global customers.
• Social media influence on marketing: Social media platforms have become an important tool for businesses to connect with customers and build brand awareness. Businesses use social media to share content and engage with customers, and social media influencers have become an important part of the marketing mix.
• SEO (Search Engine Optimization) activities: SEO refers to the process of optimizing a website to improve its visibility in search engine results. Businesses use SEO to increase their visibility on search engines and drive more traffic to their websites.
• Capabilities of CRM systems: CRM (Customer Relationship Management) systems are used by businesses to manage and analyze customer interactions and data. Modern CRM systems are able to track customer interactions across multiple channels, including social media, and provide businesses with insights into customer behavior and preferences.
• Information system security: The security of business information systems is a critical concern, as a security breach can lead to the loss of sensitive data and the disruption of business operations. Standards such as ISO 27001 provide guidelines for securing information systems and protecting against cyber threats.

Overall, the information revolution has had a significant impact on businesses, providing new opportunities and tools for growth and innovation, while also presenting challenges that need to be addressed.

Legislation of technological processes

Legislation of technological processes refers to laws and regulations that govern the development, use, and impact of technology. Some examples of legislation related to technology include:

• Privacy laws concerning customer privacy and data security: Privacy laws are designed to protect the personal information of individuals and businesses from being collected, stored, or used without their consent. These laws can include provisions related to data security, data breaches, and data retention, as well as regulations about how companies can use personal information for marketing and other purposes.
• Patents law and intellectual property legislation: Patents and intellectual property laws are designed to protect the rights of inventors, authors, and other creators of original works. These laws can include provisions related to patents, trademarks, copyrights, and trade secrets, and they can have a significant impact on businesses, particularly those in the technology industry.
• Cybercrime protection, data protection, and cyber security laws: Cybercrime is a rapidly growing problem, as hackers and other cybercriminals use technology to steal sensitive information, disrupt business operations, and commit other crimes. Cybercrime protection laws, data protection laws, and cyber security laws are designed to protect against these types of crimes, and they can include provisions related to cybercrime reporting, data retention, and incident response.
• Government spending on technological research: Governments invest in technological research to promote innovation and economic growth. This can include funding for basic and applied research, as well as for the development of new technologies, such as renewable energy and autonomous systems.
• Government actions in areas of education and training of highly competent engineers and technology users: Governments also invest in education and training programs to ensure that the workforce has the necessary skills to support technological innovation. This can include funding for science, technology, engineering, and math (STEM) education, as well as for training programs in specific areas, such as cybersecurity and data analytics.
• Regulations concerning licensing of technologies: Governments also regulate the licensing of technologies to ensure that they are used in a safe and responsible manner. This can include regulations related to the licensing of software, hardware, and other technologies, as well as regulations related to the use of technologies in specific industries, such as healthcare and transportation.
• Regulations concerning online money transfer, offshore accounts and protection against competitive technologies from abroad: Governments also regulate the use of online money transfer and offshore accounts to prevent money laundering, tax evasion, and other financial crimes. They also regulate the import and export of technology products to protect domestic businesses from unfair competition from abroad.

These laws and regulations can have a significant impact on businesses and technology companies, as they can shape the development and use of technology and affect their operations and bottom line. Companies must be aware of and comply with relevant laws and regulations to avoid penalties and legal liabilities.

Technological advances in production systems and logistics

• New machinery and services: New machinery and services can greatly improve the efficiency and productivity of a business, but it also requires significant investment and training for employees to use these new technologies.
• Equipment: Upgraded equipment can improve the quality and speed of production, but it also requires regular maintenance and may have higher costs associated with it.
• Research and development software: CAD/CAM, CIM, and simulation software are important tools for research and development, but they also require specialized skills and knowledge to use effectively.
• Environmentally friendly technologies: Environmentally friendly technologies can help reduce the environmental impact of a business, but it also requires changes in production processes and additional costs for implementation.
• Reduced need for manual labor: Automation and robotization can greatly increase productivity and efficiency, but it also raises concerns about job displacement and the need for retraining of employees.
• Better productivity, speed of work and accuracy: New technologies can improve productivity, speed, and accuracy, but it also requires businesses to adapt to new processes and tools.
• Shorter life cycles of technology increase cost of updating of machinery: The rapid pace of technological change can make it difficult for businesses to keep up with the latest advancements, and the cost of updating machinery can be significant.
• New generations of equipment could be incompatible with old: New generations of equipment can be incompatible with older versions, which can lead to higher costs of service and a lack of spare parts.
• Smart technologies: Smart technologies such as the Internet of Things can greatly improve the efficiency and productivity of a business, but it also requires businesses to adapt to new technologies and processes.
• Cooperation with scientific institutions allows faster implementation of innovative product and technological ideas: Collaboration with scientific institutions can accelerate the development and implementation of new products and technologies, but it also requires businesses to navigate the complex landscape of academic research and intellectual property laws.
• Lowering of health hazards for workers: New technologies can greatly improve the health and safety of workers, but it also requires businesses to invest in new equipment and processes, as well as training for employees.

Technological advances in business process management

• BPNM software: BPNM (Business Process and Network Management) software allows businesses to monitor and manage their processes and network, but it also requires businesses to have a clear understanding of their processes and networks in order to effectively use the software.
• Work-flow software: Work-flow software allows businesses to simulate and optimize complex business processes, but it also requires businesses to have a clear understanding of their processes in order to effectively use the software.
• MRP, ERP and other types of integrated IT systems: MRP (Material Resource Planning) and ERP (Enterprise Resource Planning) systems are integrated IT systems that allow businesses to manage their resources, but it also requires businesses to have a clear understanding of their processes in order to effectively use the software.
• Outsourcing of production to other countries: Outsourcing production to other countries can allow businesses to take advantage of technological capabilities, logistics networks, and lower labor costs, but it also requires businesses to navigate the complexities of international trade and cultural differences.
• Supply chain capabilities of producers and suppliers allowing easy integration of complex processes, faster delivery speeds: Advancements in supply chain management technologies have made it possible for businesses to easily integrate complex processes and achieve faster delivery speeds, but it also requires businesses to have a clear understanding of their supply chain and supplier capabilities.
• New transport routes and means: New transport routes and means can improve the quality and cost efficiency of transport, but it also requires businesses to adapt to new transport systems and logistics networks.
• Possibility to retain organizational knowledge in IT supported knowledge bases: IT-supported knowledge bases allow businesses to retain organizational knowledge, but it also requires businesses to have a clear understanding of their processes and knowledge management systems.
• Technological forces used in area of organizational development: Technological forces can be used to improve organizational development, but it also requires businesses to have a clear understanding of their processes and organizational development strategies.

Check also other:

• Social and cultural factors affecting business
• Economic factors affecting business
• Ecological factors affecting business
• Political factors affecting business
• Legal factors affecting business
• Ethical factors affecting business

Technological factors affecting business — recommended articles

Technological environment — Economic infrastructure — Innovative technologies — New economy — Examples of opportunities — Information strategy — New technologies in management — Design capacity — Marketing information system

References

• Croteau, A. M., & Bergeron, F. (2001). An information technology trilogy: business strategy, technological deployment and organizational performance. The journal of strategic information systems, 10(2), 77-99.
• Edelman, L. B., & Suchman, M. C. (1997). The legal environments of organizations. Annual review of sociology, 479-515.
• Pearce, J. A., Robinson, R. B., & Subramanian, R. (2000). Strategic management: Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.
• Ritter, T., & Gemünden, H. G. (2004). The impact of a company's business strategy on its technological competence, network competence and innovation success. Journal of business research, 57(5), 548-556.
• Coccia, M. (2014). Driving forces of technological change: the relation between population growth and technological innovation: analysis of the optimal interaction across countries. Technological Forecasting and Social Change, 82, 52-65.

Author: Krzysztof Wozniak