Technology means the practical application of scientific knowledge into the aims of human in order to change the human environment. Technology uses tools, machines and science in an industrial context.
Low technology means using basic tools such as hammers, nails, drills or screwdrivers. High technology means using advanced machines and robots for industrial actions. While low technology has been used by human beings on earth for thousands of years, high technology is fairly recent development, the invention of modern times dating back only a few decades in the past.
Technology is important for creating competitive advantage of the business these days in the globalized world.
By looking at technological opportunities and threats in The STEEPLE Analysis, we can evaluate the impact of the introduction of high technology (via machines) on businesses. The technological environment presents constant threats and opportunities to a business.
Technological opportunities
Opportunities that technology can bring to businesses include:
1. Faster access to information. Technology increased the speed of accessing knowledge. Information enables managers to better review and control operations of their businesses. Management information systems such as CRM for sales management by Salesforce.com can provide power to centralized managers to improve the performance of a business.
2. Faster analysis of data. Managers can use computers to gather and process the data rapidly to make decisions on the basis of them.
3. Easier to transfer data. Technology helps decision-makers to transfer the data and most important information instantly from and to the areas of the business most in need of action.
4. Reduced time to communicate decisions. Management can use technology to accelerate the process of communicating crucial decisions to those in the organization who need that knowledge.
5. Increased productivity and efficiency improvements. Robots and machines are much faster, more precise and more accurate than human beings when it comes to production. Unlike humans, machinery can be put to work for very long hours without the need for bathroom and lunch breaks, financial rewards, non-financial motivation, sick days, maternity/paternity leave, etc. Despite the large initial costs of automation, capital-intensive firms, especially in the mass production of goods, can benefit from lowering the average cost of production achieved over a long period of time.
6. Reduced costs. Thanks to high technology, business can reduce or even eliminate defects (waste) from the production process. Automated stock control systems will also automatically reorder stocks when necessary, so there is no need to hire any workers to handle inventory. Firms with an online presence can benefit immensely from E-commerce too by trading at any time from any part of the world without the need for a physical outlet. Staffing costs and rent can therefore be reduced in both cases increasing profitability.
7. New products. Technology is a source of innovation allowing to bring new products into the market, e.g. wireless Internet, touch-screen smartphones, high-definition art televisions, electric cars, smart home appliances, paying for products using QR codes, etc. Thanks to developing highly successful range of innovative products, Apple became one of the biggest businesses in the world in recent years.
8. Quicker product development time. With the use of CAD technology (Computer Aided Design), CAM technology (Computer Aided Manufacturing) and 3D printing, companies can produce prototypes quickly and cost-effectively, speed up the design, manufacturing and launch of new products.
9. Additional job creation. When technology breaks down, it therefore creates a need for maintenance and technical support staff, e.g. programmers, hardware and software engineers, graphic designers, ICT lecturers, spare parts manufacturers, etc.
10. New working practices. Multinational companies have started using video conferencing to lower the costs of flying their managers around the world to have face-to-face meetings. These days much more people are working from home by using information communication technology such as Zoom or Cisco Webex. International recruitment can also be done online, so do marketing such as online advertising.
11. Reduced language and cultural barriers. Information on the Internet can be easily translated into different languages by using online translators, samples can be accessed within days without the need of visiting a factory, and contracts can be signed electronically. Therefore, technology can reduce the costs of trading overseas.
12. Overcoming geographical limitations. The use of Internet and mobile devices has fueled E-commerce which eliminated any limitations of geographical proximity of customers to physical retailers.
Technological threats
The technological environment also presents certain threats to businesses and this includes:
1. High initial capital required. It is usually very expensive to purchase advanced machinery or the newest computer software.
2. Higher production costs. In order to ensure that workers are competent and confident in using those latest Internet technologies, businesses face training costs. With machines breaking down, computers failing or hacked files, high maintenance costs can present serious problems for businesses as problems with reliability increase costs.
3. Reduced labor productivity. Labor productivity can be seriously decreased by those employees who spend time using social networks during working hours instead of efficiently producing goods and delivering services.
4. Price transparency. Not only customers but also competitors can easily compare the prices without even leaving their homes or offices. Because there is no physical presence where customers can see and touch the product, it can be difficult for new businesses to guarantee a product’s quality.
5. Increase in online crimes. Security is more and more of an issue these days. With increased number of online customers, cases of online crime (e.g. hacking into email accounts, phishing for personal information and passwords, online banking frauds, stealing trade secrets, etc.) will increase too, and it will cost E-commerce businesses a huge amount of money.
6. Shorter product life cycles. After just one or two years, equipment and software may become obsolete increasingly quicker, therefore will need costly upgrading or replacing. This can make it increasingly difficult for smaller firms to compete. Another issue is shorter product life cycles – businesses will need to devote more resources to new product development more frequently.
7. Job losses. As automation has led to unemployment in the primary and secondary sectors, businesses need to carefully manage the process of staff redundancies not to negatively impact brand image. In the tertiary sector, many blue-collar workers who work at supermarket checkouts were replaced by self-service checkout machines.
8. Abuse of power by managers. The best central managers are supposed to use detailed information provided by the modern IT systems to speed up and improve their decision-making for the sake of controlling all aspects of the organization. They need to delegate the authority down to middle managers and empower work teams. Managers are not supposed to abuse the power that information and knowledge give them. If they do, information used for central control in an oppressive way (e.g. enforcing authoritarian leadership style) could reduce job enrichment and hence motivation levels.
It is obvious that development of technology and work processes improvements have increased productivity and efficiency, however, the high cost of staying up to date with the latest technological advancements can cause many financial problems for businesses, especially for start-ups and small companies.
