Technological factors affecting business

Technological factors affecting business
See also
Importance of international business Examples of opportunities Ecological factors affecting business Knowledge economy Globalization Economy based on knowledge Tourism and hospitality Economic factors affecting business PEST analysis

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:

• rapid development of fact communication networks,
• growing efficiency of computer systems (processor speed, database and memory capacity),
• global reach of information about company and competitors,
• new web 2.0 (and newer) technology supports dynamic communication with customers,
• new IT security challenges (encryption, certificates, SSL, HTTPS, etc.),
• Internet infrastructure (fibre optics, Internet speed, availability, mobile capabilities),
• Internet banking and shopping,
• distribution of non material goods over Internet, social media influence on marketing, SEO (search engine optimization activities),
• capabilities of CRM systems,
• information system security (i.e. based on ISO 27001),

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,
• patents law and intellectual property legislation,
• cyber crime protection, data protection, cyber security laws
• government spending on technological research,
• government actions in areas of education and training of highly competent engineers and technology users,
• regulations concerning licensing of technologies,
• regulations concerning online money transfer, offshore accounts and protection against competitive technologies 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,
• equipment,
• research and development software (CAD/CAM, CIM, simulation software),
• environmentally friendly technologies (less energy consumption, less waste),
• reduced need for manual labour (automation, robotization),
• better productivity, speed of work and accuracy
• shorter life cycles of technology increase cost of updating of machinery,
• new generations of equipment could be incompatible with old (higher costs of service, lack of spare parts),
• smart technologies (Internet of Things, etc.)
• cooperation with scientific institutions allows faster implementation of innovative product and technological ideas,
• lowering of health hazards for workers,

Technological advances in business process management

• BPNM software,
• work-flow software (simulation and optimization of complex business processes) allow reduction of operational bottlenecks,
• MRP, ERP and other types of integrated IT systems,
• outsourcing of production to other countries (technological capabilities, logistics networks),
• supply chain capabilities of producers and suppliers allowing easy integration of complex processes, faster delivery speeds
• new transport routes and means (better quality and cost efficiency of transport),
• possibility to retain organizational knowledge in IT supported knowledge bases,
• technological forces used in area of organizational development

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

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