Business (9225) | Technology

Hello Future Business Leader! Welcome to the Technology Chapter

Welcome! Technology is one of the biggest and fastest influences affecting businesses today. Think about your phone, the internet, or even self-checkout machines—these things didn't exist in business a few decades ago, but now they are essential!

In this chapter, we will look at how rapid changes in technology influence business decisions, operations, costs, and profits. Don't worry if some terms sound complicated; we will break them down into simple, easy-to-understand steps.

Key Learning Goal: Understanding Technology as a Business Influence

We are focusing on how technology forces businesses to change and adapt, and the pros and cons of these changes.

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1. What Exactly is Technology in Business?

Technology, in a business context, means using new scientific knowledge, equipment, and methods to make tasks easier, faster, and more efficient.

The Nature of Technological Change

The most important characteristic of technology is that it changes very rapidly. What was a modern system five years ago might be outdated today. This means businesses must constantly spend money to upgrade or risk falling behind their competitors.

• Examples of Business Technology: E-commerce websites, automated factory robots, high-speed Wi-Fi, complex accounting software, and video conferencing tools.

2. The Influence on Business Functions

Technology doesn't just affect one part of a business; it influences every single department. This is where understanding the influence becomes crucial for your exams.

A. Influence on Operations (Production)

Operations is all about making the product or providing the service. Technology has revolutionized this process.

Key Concept: Automation

Automation is when technology (like robots or machines) performs tasks previously done by humans.

• Efficiency Boost: Robots can work 24 hours a day without needing breaks or sleep. This dramatically increases productivity.
• Quality Control: Machines make fewer errors than humans, leading to more consistent, higher-quality products (fewer defects).
• Cost Reduction: While the initial cost of robots is high, they reduce long-term costs because the business needs fewer paid human workers. This lowers unit costs (the cost to produce one item).

Did You Know? (Design Tech)

Many companies use Computer-Aided Design (CAD) to design products digitally, saving time and allowing quick adjustments before any physical product is made.

Key Takeaway for Operations: Technology drives efficiency, increases quality, and lowers unit costs through automation.

B. Influence on Marketing and Sales

Marketing has been transformed by the internet. Technology allows businesses to reach customers globally and understand their preferences better than ever before.

E-commerce (Electronic Commerce)

E-commerce means selling products and services online (like buying clothes from a website).

• Wider Market Reach: A small local shop can suddenly sell to customers around the world, increasing potential revenue.
• 24/7 Selling: Online stores never close, meaning sales can be made even while the owners are asleep.
• Targeted Advertising: Websites track customer behavior (what they click on). This allows businesses to send specific advertisements only to people who are likely to buy, making marketing spend much more effective.

Analogy: Imagine trying to advertise a skateboard shop. Without tech, you might put up a poster that everyone sees (even grandmothers who don't skate). With technology (social media), you only show the ad to teenagers interested in extreme sports, saving you money!

Key Takeaway for Marketing: Technology enables global sales and smarter, more focused advertising.

C. Influence on Finance (Money Management)

• Faster Transactions: Digital payments (credit cards, mobile payments) speed up the flow of money.
• Accurate Record Keeping: Accounting software (like spreadsheets or dedicated programs) automatically manages income, expenditure, and inventory. This reduces human error and makes preparing financial reports faster.
• Lower Costs: Online banking reduces the need for physical visits and paper records.

Key Takeaway for Finance: Technology improves accuracy and speed in handling money and records.

D. Influence on Human Resources (HR)

HR deals with the people who work for the business.

• Recruitment: Technology allows companies to advertise job vacancies online (e.g., LinkedIn) and hold initial interviews via video call, saving time and travel costs.
• Training: E-learning (online training courses) is cheap and flexible, allowing employees to train at their own pace.
• Remote Working: Tools like video conferencing (Zoom, Teams) allow staff to work from home (flexibility), which can cut down on office overhead costs for the business.

Key Takeaway for HR: Technology allows for more flexible and cost-effective hiring and training processes.

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3. General Benefits of Technology for Business

When you are asked about the advantages of technology, focus on these main points:

1. Increased Speed and Efficiency

Technology automates repetitive tasks (like filling out forms or counting stock), allowing the business to produce more in the same amount of time. This boost in productivity is vital for profitability.

2. Reduced Costs in the Long Run

Although technology is expensive to buy initially, the long-term benefits of needing fewer staff and making fewer mistakes usually leads to significant cost savings.

$$ \text{Productivity} \uparrow \implies \text{Unit Costs} \downarrow \implies \text{Profit} \uparrow $$

3. Better Communication

Email, instant messaging, and video conferencing allow employees and management to communicate quickly, regardless of where they are in the world. This helps speed up decision-making.

4. Improved Customer Service

Technology allows businesses to track customer orders, respond quickly via chatbots or email, and gather feedback instantly, leading to higher customer satisfaction.

4. Challenges and Drawbacks of Technology

Technology is not always a perfect solution. Implementing new systems comes with significant risks and costs that businesses must manage.

1. High Initial Costs (Capital Expenditure)

Buying new machinery, software, and IT systems requires a huge upfront investment (a lot of cash). Small businesses, or those just starting up, might struggle to afford this capital expenditure.

• Common Mistake to Avoid: Don't just say "it's expensive." Explain that the cost is a large, initial investment that may take years to pay off.

2. Need for Training and Retraining

If a business buys new software, the employees need to learn how to use it. This requires time and money spent on staff training. While staff are training, they are not working, which lowers immediate productivity.

3. Security and System Failure Risk

If a business relies entirely on technology (e.g., all sales are online), a system breakdown, power cut, or a cyber-attack could stop the entire business from operating (this is called downtime), leading to massive loss of sales and customer trust.

4. Resistance to Change and Redundancy

When new technology is introduced, some employees may feel threatened or worried that they won't be able to adapt. Worse, automation can lead to redundancy—when staff are laid off because machines have taken over their jobs. This is bad for staff morale.

Example: A bank introducing an automated phone system might make several customer service jobs redundant.

Key Takeaway on Challenges: Technology requires high initial investment, staff training, and careful security management.

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5. Conclusion: Technology and Decision-Making

Technology is a powerful external influence. When business owners decide whether or not to invest in new technology, they must weigh the benefits (lower long-term costs, higher efficiency) against the major risks (high initial cost, training time, and security risks).

How Technology Affects Competitive Advantage

Businesses that adopt the right technology quickly can gain a competitive advantage (an edge over rivals). They can offer lower prices (due to lower unit costs) or faster service (due to higher efficiency), making them more attractive to customers.

If a business ignores technological changes, it will quickly become outdated and unable to compete on price, quality, or speed.