The technological environment is part of the company’s external environment related to developments and changes in technology. Furthermore, the word “technology” is usually associated with technique and equipment. Their change brings threats and opportunities for society.
The impact of the technological environment on companies
Technological developments affect all aspects of business, not just products and services. In manufacturing, technology can increase overall performance through:
Increased productivity. With the same input, a company can produce more output per unit. Reduction of costs, for example, on computers and transport technology
The increase in production ultimately contributes to overall economic growth. This shifts the production possibilities curve outward.
Not only did overall output increase, but technology also allowed companies to produce new products. For example, the presence of Internet technologies allows book publishers to publish e-books.
However, technology also makes products obsolete faster. For example, the advent of smartphones with high-resolution cameras is reducing interest in mainstream camera products.
And the impact of technological changes on the organization as a whole can affect:
Product sales technique. For example, more retailers are turning to the Internet than brick-and-mortar stores. These changes certainly have a significant impact on their business strategy.
Ways of manufacturing products. This is, for example, the automation of processes
Market research. Marketers can analyze the market more easily with a database system. The technology element gives marketers more accurate access to data, allowing them to better plan marketing strategies.
Management and operation of the company. Now employees don’t have to come to the office to work. Instead, they can work at home as long as they are connected to the Internet.
Ability to communicate with stakeholders, for example via website, social media and email.
The need for new expertise. Companies increasingly need data analysts and programmers for data interpretation and digital information processes.
Change consumer needs and wants.
Why is the technology environment important?
It affects various aspects of business. This can be an opportunity or a threat. And companies cannot control technological factors, but must respond to them. Companies must therefore be able to adapt to new technological developments.
Early adopters of new technology often achieve higher market share and higher returns. Therefore, companies need to look for trends and changes. The goal is to take advantage of opportunities while minimizing threats. The company can thus be competitive.
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