How Does the Technological Environment Affect Business?
A technological environment refers to changes in output, production methods, equipment use, and product quality. The term includes innovation in both products and production technologies as well as scientific innovations. As a part of the company’s external environment, the technological environment encompasses developments and changes in technology. In addition, the word ‘technology’ is usually associated with equipment and technique. As a result of their change, the company faces threats as well as opportunities.
A company’s website is one of the most important aspects of its technological environment. For a website to retain customers, it needs to be user-friendly and easy to navigate. It is likely that a customer who has a bad experience on a company’s website will never visit that site again, as well as tell others about their bad experience. It can damage a company’s reputation and lead to a loss of business.
As a result of recent improvements in technology and computerization, many firms are now able to market and sell their products online, resulting in increased sales and output.
What Is the Importance of the Technology Environment?
There are a variety of ways in which it affects the business. Depending on how you look at it, that could either be a threat or an opportunity. Technological factors cannot be controlled, so companies must respond to them. Therefore, companies need to be able to adapt to changes in technology.
Market share and returns are often higher for early adopters of new technology. Therefore, companies need to keep an eye out for trends and changes. Taking advantage of opportunities while minimizing threats is the goal. As a result, the company will be able to compete.
The types of Technology
There are several ways in which technology can be classified. Hard technologies include blueprints, machinery, equipment, and other capital goods, while soft technologies include management know-how, finance, marketing, and administrative skills. The production process of a relatively primitive (traditional) technology is often referred to as labor-intensive. The term “capital-intensive” is generally used to describe a highly advanced technology.
Technological environment components
The level of technology
- Technology based on labour
- Technology based on capital
Technological change at a rapid pace
There are several ways in which technological changes affect organizations.
Technology transfer refers to the importation of technology from technologically advanced foreign countries. The following methods can be used to transfer technology:
- MNCs and globalization
- Turnkey projects that can be used or operated immediately
- Manufacturers’ trade sales of equipment
- Technical assistance is provided by bilateral and multilateral donors
Impact of the technological environment on businesses
An organization’s technological environment is composed of all technological factors. Technology encompasses everything from what an organization uses to how it uses it. In terms of technology, the environment can have a major impact on an organization, affecting everything from the way the organization does business to the way it competes in the market.
The technological environment is influenced by a number of factors. Technology change, technological capability, and technological use are the most important.
Technology affects all aspects of business, not just products and services. By using technology in production, we can increase our total output by:
- Productivity increased. The company can produce more output per unit using the same input.
- Computers and transportation technology are examples of cost reduction
- Growth in output ultimately contributes to economic growth. As a result, the production possibilities curve shifts outward.
Technology, however, also makes products obsolete more quickly. A smartphone with a high-resolution camera, for example, reduces the demand for conventional camera equipment.
Moreover, technological change can affect the organization as a whole in the following ways:
- Techniques for selling products. As an example, more retailers are turning online rather than opening physical stores. It is clear that these changes have a significant impact on their business strategy.
- Making products in different ways. Automating processes, for example, is it beneficial.
- Research on the market. Marketers can better analyze the market with a database system. Marketing strategies can be better planned when marketers have access to more accurate data.
- Expertise needs to be updated. Data analysts and programmers are increasingly needed for the interpretation of data and digital information.
Various communication methods, such as websites, social media, and email, can be used to communicate with stakeholders.
Business and technology relationships
In modern society, running a successful business relies heavily on technology. As technology continues to evolve, entrepreneurs must keep up with the ever-evolving business setup. A lot of businessmen would be surprised to learn how much impact modern technology can have on their businesses.
Positive effects on business
- Achieving productivity
- An advantage over the competition
- Technological innovation
- An increase in profits
- Value for customers
Negative Effects on business
- Investing a lot of money creates a huge capital burden.
- Quick replacement as a threat.
- Cost increase: regular maintenance.
- There is a need for skilled workers.
An organization’s technological use is how it makes use of technology. The use of technology and how it is integrated into operations are both part of this. Technology can be used by organizations in a variety of ways, such as to improve efficiency, increase productivity, reduce costs, and gain a competitive advantage.
If organizations want to remain competitive, they must stay on top of the latest trends in the technological environment. It is important to keep track of the factors that contribute to the technological environment as they change constantly. A failure to do so may result in an organization’s disadvantage in an increasingly technological world.