SEMINAR ON

BUSINESS ENVIRONMENT
SUBMITTED TO MS GEETHU S NAIR SUBMITTED BY ANAND VISHNU B NAIR ANAND MP SUGISH S

TECHNOLOGICAL ENVIRONMENT AND ITS IMPLICATIONS TO BUSINESS

NEW TECHNOLOGIES CHOICE OF TECHNOLOGIES APPROPRIATE TECHNOLOGIES

Technology
Among all the segments of macro-environment, technological environment exerts considerable effect on business. It is one of the top determinants of success of a firm as well as the economic and social development of a nation. J.K. Galbraith defined technology as: A systematic application of scientific or other organized knowledge to practical tasks.

Features of Technology:
Technology continuously keeps changing. The time gap between idea and implementation is falling rapidly and the time between introduction and peak production is shortening considerably. Effects of technology are widespread and are reaching beyond the immediate point of technological impact. Technology is self-reinforcing. Technology feeds on itself. Technology makes more technology possible. It acts as a multiplier to its own faster development.

Innovation

Innovation maybe defined as the technical, industrial and commercial steps which lead to the marketing of new manufactured products and to commercial use of new technical process and equipment. Innovation can be classified into: Radical Innovation basic technological innovation that establishes a new functionality Incremental innovation change in an existing technology system that does not alter functionality but incrementally improves performance, features, safety or quality or lowers cost. Next generation technology innovation - change in an existing technology system that does not alter functionality but dramatically improves performance, features, safety or quality or lowers cost and opens up new applications. Usually, the pattern of early innovations in a new technology based industry will be: Product Innovation : Improving the performance and safety of the product Process Innovation: Improving the production process could make the product cheaper and improve the quality of the product

Technology and Competitive advantage: As per Porter, technological change by a firm will lead to sustainable competitive advantage under the following circumstances: The technological change itself lowers cost or enhances differentiation and the firms technological lead is sustainable. The technological change shifts costs or uniqueness drivers in favor of a firm. Pioneering the technological change translates into first mover advantages. The technological change improves overall industry performance

Sources of Technological Dynamics

There are various factors which determine the technological dynamics of a company: Innovation Drive of the Company. Many companies view technology as a driving force of competitiveness and development. Eg: Pharmaceutical Industry. Customer Needs / Expectations: Technological orientation and R & D efforts of a company could also be influenced by the customer needs and expectations. If the consumers are highly demanding, companies would be compelled to innovate. Demand Conditions: Size of the demand influences the choice of the technological scale. Expected future trend could also be important. Suppliers Offerings: Many a time technological changes are encouraged by suppliers. Competitive Dynamics: Competition compels the adoption of the best technology and constant endeavor to innovate. Absence or lack of competition was one of the major reasons for the technological backwardness of Corporate India

Sources of Technological Dynamics (contd.) Substitutes: Emergence of new substitutes or technological improvements of substitutes alter a firms competitive advantage. Social Forces: Certain social forces like protest against environmental pollution or other ecological problems may prompt efforts to technological developments in certain industries. Research Organizations / Technical Facilities: The technological environment of the business is enriched by research organizations. Eg: The technology developed by the CFTRI for making baby food from buffalo milk and its commercialization by Amul was a milestone development.

Governmental Policy: Government is an important actor in the technological environment. Government can contribute to the development of technology by its own direct involvement and by setting up research institutes etc. Eg: A government might favor or disfavor certain types of technologies. Some labor abundant countries have a preference for labor intensive technology. Lack of adequate patent protection in many countries was a serious problem for MNCs. Also, access to global technology can help firms improve their competitiveness. In India the policy bias in favor of small industries has resulted in production units of uneconomic size

Impact of Technology

Technology

Social Implications Economic Implications

Plant Level Changes

Technology reaches People through business

Social Changes

Social Implications

High expectation of customers

System Complexity

Social Implications
Technology reaches people through Business: Business is an institution

through which man expects discoveries to be converted into goods and services. Organizations and business houses spend considerable amount of resources, financial and human on Research and Development. New discoveries would remain mere ideas, sketches on paper but for business institutions. Society depends on business to benefit from new discoveries flowing into useful goods and services for all mankind. New discoveries mean very little unless there are competent business units to produce for people.

High expectations of customers: Technology has contributed to the emergence of affluent societies and in todays world consumers demand more of many things than more of same things. The desire is for: new varieties of products, superior in quality, free from pollution, more safe and customer friendly products. Technology has become highly complex and the need is for specialized personnel. Also, there is inter-dependence of systems. A localized problem can escalate into larger issues. Eg : In Rajasthan there was the Gujjar strike which led to an impact on the industries / offices in the Gurgaon region which in turn led to major impact globally
System Complexity:

Social Implications

Social Change: Technology has a considerable impact on the social life. Eg : Impact of BPOs on the Indian economy. It led to increase in jobs in the NCR, lifestyle of families changed, the environment for such families have become 24*7 lifestyle. Status differences are likely to be created by technological advancement in developing countries. Technology flows to developing countries through MNCs. Finally, the way we communicate, use media and work are also affected by technology. New terms continue to emerge as new products are introduced.

Rise and Decline of Products and Organizations Increased Productivity Insatiable Demand for Capital

Need to spend on R & D

Economic Implications

Increased regulation and stiff competition

Multiprofessional Managers Jobs become intellectual

Problem of techno structure

Business Boundaries Redefined


1. 2. 3.

Economic Implications Increased Productivity:

With technological innovations the expectation is of increased productivity in terms of both quality and quantity. With the introduction of Six sigma methodology, the focus is on producing more goods in a short period of time and with minimal defects. Six sigma is a statistical term which means 3.5 errors per million. Productivity improvements lead to rise in real wages and decline in prices of some products. Thus, the beneficial economic effects of technology are throughout the social system.

1.

Need to Spend on R & D: Research and Development assumes considerable

relevance in organizations as technology advances. Organizations need to take decisions on:

2.

3. 4.

Allocation of resources to R & D. India spends only 1% of its GNP on R & D as against the US which spends 2.5% of its GNP. Time factor: Time between innovation and commercialization is getting considerably reduced. Companies can no longer assume that competitors will allow them time to recoup their initial investment. Time to market, is an important consideration as 60% of successful innovations have been imitated within 4 years at 65% of the total cost. As new technology comes in, old becomes redundant. The process of old replaced by new is called technological discontinuity. Organizations need to decide on its own R & D or to outsource technology.

Economic Implications

1. 2.

Jobs to become more intellectual:

The requirement in todays date is of higher skilled people. Introduction of new technology dislocates some workers unless they are uptrained to handle the new technology. Therefore, with technology advancement, there is equal responsibility on the people, organizations and government to provide educational and training facilities to its people.

Problem of Technostructure: Not only do the jobs become more

intellectual, even the people tend to become highly professional and knowledgeable. Though the organization can boast of a progressive and modern outlook of its personnel it also has some negative outcomes like: Motivation for such employees is a difficult task Retaining of such employees is again a mammoth task. Technostructure tries to control the organization through influencing managements decision-making.

1. 2. 3.

Need for Multiprofessional managers: Technocrats, who assume

reigns of administration, need to be qualified in management education in addition to the expertise that they have acquired in their chosen field of specialization.

Economic Implications Increased regulation and stiff competition: A by-product of technological advancement is the ever increasing regulation imposed on business by the Government of the land and stiff competition from the public. Technological advancement is inviting opposition from those who fear that new innovations are a threat to ecology, privacy and the human race. People oppose the construction of high rise buildings, location of industrial plants that eject harmful effluents etc.

Insatiable demand for Capital: Technology necessitates massive investment of money on R & D, educating and training of managers. Business organizations should not only raise huge funds, but the mobilized funds are to be used judiciously.
Rise and decline of Products and Organizations: Technological changes is a norm and not an exception. Schumpeter has defined technology as a force for Creative Destruction. Products like mortals have life-cycles : Introduction, growth, maturity, decline and abandonment

Economic Implications
1.

2.

3. 4. 5.

Business Boundaries Re-defined: Technological change is a potent force in the reconfiguration of industry boundaries. It may broaden or narrow generally accepted industry boundaries. Technological change can have a significant impact on the definition of individual companies. Companies may find themselves in a different business due to technological changes that they or others have effected. Technological change gives rise to product substitution or product differentiation. Technological change can also bring about process change Technological change may have multiple impact and can either create new synergies across businesses or make obsolete existing ones.

Technology and Organization Structure

Total Quality Management

Fear of Risk

Plant Level Changes

Flexible Manufacturing Systems

Resistance to Change

Business Process Reengineering

Plant Level Implications

Organization Structure: Companies with fast changing technology usually have a matrix structure. Along with technology, history and background of a company, personalities of people also have an impact on the organization structure. In case of specialized processes decision making gets decentralized and delegated.
Any technological advancement could result in: Expanded availability of a range of products and services Substitution of capital for labour leading to higher productivity and lower costs Increase in sales or power for the innovating organization Initiation of changes in behavior of customer, suppliers, employees Side effects on the quality of physical environment

Plant Level Implications

1. 2.

Resistant to change: Resistance to change is purely psychological and stems

from: Psychological and social commitments to existing products, processes and organizations. Sizable capital investments Complacent top management Lack of successful entrepreneurial models to emulate Powerful labor resistance

3.
4. 5.

Total Quality Management: This refers to deep commitment of an

organization to quality wherein each step of the Companys processes is subjected to intense and regular scrutiny. Managers are required continuously to search for process improvements. TQM requires that the company maintain the quality standard in all aspects of the organization. Principles of TQM are: Meet the customers requirements on time, the first time 100% of the time Strive to do error free work Manage by prevention and not correction Measure the cost of quality. In short do it right the first time.

1. 2. 3. 4. 5.

Plant Level Implications

Business Process Reengineering (BPRE): This involves
considering how things would be done if the organization were to start all over from scratch. The key to BPRE is for organizations to look at their business processes from a "clean slate" perspective and determine how they can best construct these processes to improve how they conduct business. It is the radical redesign of an organisations processes.

TQM and BPRE have identical objectives of Search for Excellence in serving customers. TQM seeks to improve what is good but BPRE seeks to reject what is irrelevant and start afresh. TQM is a bottom-up approach while BPRE is a top-down approach.
Flexible Manufacturing Systems (FMS): Under FMS, machines are designed to produce batches of different products. Thus, the machines can produce low volume products at a lesser cost and on reprogramming of the same machine aid in producing a different product. With flexible manufacturing, when management wants to produce a new product, it does not change machines it needs to change the computer programming. For such processes, highly skilled workers are required and there should be decentralization of authority

Constraints of Technological Growth:

Pollution: Pollution is an unavoidable consequence of industrial production. Smoke, smell, noise effluents and dust are generated by industrial establishments. A critical issue today is societys capability to raise the standard of living without causing irreparable damage to the earths biosphere. Industrial resource base: This comprises of minerals, different forms of energy, water supplies, skilled labor force etc. The same is fast depleting However, technology does have the potential to discover new materials, substitutes for existing ones. Social Institutions: Social values and institutions may be inconsistent with the full productive potential that is present in technology.

NEW TECHNOLOGY

Impact of New Technology on Businesses

New technology is not always beneficial for businesses. For some of them, new technology can mean the beginning of the end for their entire business since it can make them obsolete. Let's take into consideration newspapers and magazines. Because of the Internet and free news sources, it gets harder for traditional media to keep their audience. It becomes harder for them to attract new customers and stay ahead of news sources online that practically brings the news to the masses in real time. The biggest impact of new technology on businesses is probably the fact that the clients and customers of businesses now have a bigger voice in the development of products and services since communication and faster and more efficient. Businesses are now listening to their customers more than ever because competition has suddenly become worldwide, thanks to new technology that crosses borders in breakneck speeds. In this manner, the advantages of new technology for businesses are also advantages for the consumers.

Impact of New Technology on Businesses (Contd.)

For example, American Airlines started using a computerized flight booking system, and Bank of America took on an automated check-processing system. Obviously, now, most business is conducted over personal computers or communication devices. Computers offer companies a way to organize dense databases, personal schedules and various other forms of essential information. As information travels faster and faster and more reliably, barriers of distance disappear, and businesses are realizing how easy it is to outsource jobs overseas. Outsourcing refers to the practice of hiring employees who work outside the company or remotely -- and even halfway across the world. Companies can outsource duties such as computer programming and telephone customer service. Another technology that's starting to revolutionize business is actually not very new -- it's just cheaper these days. Radio frequency identification (RFID) technology is infiltrating and changing business significantly in a few ways. Microchips that store information (such as a number equivalent of a barcode and even an up-todate history of the chip's travels) can be attached to product, and this helps companies keep track of their inventory. Handheld devices like BlackBerries have become wildly popular for businesses because they let users check and send email from anywhere, and browse the Internet.

Top Emerging Technologies with Social Business Impact in 2012

Smart mobility: Oncoming rapidly however are technologies such as near-field
communications or NFC, which will make location-context, payments, gamification, etc. much easier, more physical, immediate, and tactile. In terms of social media, NFC is going to make check-ins on location-based social networks like FourSquare even simpler, enable single-gesture product comparisons in stores, and even make friending each other less of a hassle by simply tapping smart devices together. 2012 will likely be a breakout year, with an estimated 100 million devices getting NFC capabilities, including perhaps the iPhone 5. On the leading edge, immersive user experiences such as Google Goggles and WordLens are proving that sensor-based context and augmented reality can be functionally useful. The spatial reality that can be represented within new mobile devices allows informational displays and visualizing of information, including our social media user experiences (best example: Localscope), that can dramatically improve how we consume and participate.

Big data: Big data made a correspondingly big splash in 2011. 2012 will be a year of learning
and capability development for most organizations but the short list of technologies is clear: NoSQL, Hadoop (which just reached version 1.0 as a finished product and is one of the most influential big data tools), supervised and unsupervised machine learning such as Mahout , and insight engines, which are tools which will enable us to autonomously tease vital epiphanies from our mountains of digital knowledge. For social business, big data is leading directly to social business intelligence services which will enable organizations to spot trends, identify opportunities, and operationalize social media in general.

Cloud: The cloud has always been standard fare for social media, given that the vast majority
of the entire ecosystem runs on cloud services such as Facebook, Twitter, LinkedIn, Google+, and so on. Even many enterprise social networking offerings are cloud hosted or have cloud hosting options. Even so, organizations are just now starting to consider cloud strategically. Software-asa-service is already here for many companies, but the next major step is public cloud, which means moving existing infrastructure out into the cloud environment instead of just using whats already there.

Shifts in digital distribution: User experiences, mobile, social, and otherwise, are increasingly
coming from a new place: App stores. In their most disruptive form, these are consumer app stores that workers use to acquire software that they then put enterprise data into, including social applications. The usage numbers are staggering and demonstrate how fast the shift to these new digital distribution channels has been: Apple and Google have likely crossed a cumulative 20 billion app downloads this month. 2012 will be a year enterprises put them on their roadmap and kick the tires, and Jives new social app store will be closely watched as a barometer of how social business and app stores intersect. The trend to watch: Policybased app selection instead of non-scalable hand-picking of app catalogs.

The rise of the next Web: The trusty classical Web that has given rise to the social Web is undergoing
some major changes of its own. HTML 5 is here and it almost makes the Web competitive with the current crop of proprietary mobile platforms (read: iOS, Android, Blackberry OS) by adding much of what is missing from the browser (and not native mobile apps) such as location, local storage, video and audio streaming, high-capability touch user experience, and more.

CHOICE OF TECHNOLOGY

Utility: Is the technology actually useful?

The electric can opener is a small example that clarifies what this criterion means. Unless you have arthritis or some other debilitating disease, the oldfashioned wall-mounted, handcranked can opener is just as easy to use as an electric can opener. In fact, the electric can opener is a nuisance because it takes up shelf space, and one manufacturer marketed a wallmounted electric can opener which it said would free consumers from this problem a problem they never would have had if they had stuck with their old hand-cranked can openers. Though it is more expensive and has no more utility (maybe even less utility), the electric can opener has replaced the hand-cranked can opener almost completely in American kitchens

Environment: Does the technology create costs for unwilling third parties?

The biggest example of this principle is our overuse of fossil fuels, which has released so much carbon dioxide into the atmosphere that global warming will impose huge costs on future generations. Most of Americas electricity is generated by burning coal, which emits twice as much carbon dioxide as natural gas. Solar electric power costs about twice as much as power generated using fossil-fuels, but it emits no carbon dioxide. If we took into account all costs, including future environmental costs, we would shift to solar power, even at its current price; after it became widespread, its price would go down.

Autonomy: Does the technology make people passive and powerless, or does it help them to do more for themselves?

For example, television reduces autonomy by turning people into passive consumers of entertainment. Microcomputers can increase autonomy by letting people join on-line discussion groups, produce publications, record and produce music, and do other productive activities on their own.

Quality: Is the technolog y an artificial substitute that is drastically inferior to the real thing?

During much of the twentieth century, the big bread manufacturers promoted white bread, because its long shelf life allows large-scale production and distribution. It has a long shelf life because it has so little nutritional value that it cannot support the growth of most microorganisms. The bread manufacturers add artificial vitamins and minerals, but these make up for only a small fraction of what they remove. For example, whole wheat bread naturally has over twenty B vitamins; white bread has a few B vitamins added, which are cheap to manufacture. Whole wheat bread is high in fiber; white bread does nothing to make up for the lost fiber. The artificial nutrients that are added are not a real substitute for the natural nutrients that are lost.

APPROPRIATE TECHNOLOGY

What is appropriate technology?

Appropriate technology has been used to cover a wide

range of both technologies and lifestyles including sustainable living, alternative fuels, and ethical technology transfers.
A technology is considered appropriate if it solves a

social problem without many adverse negative effects.

Every new technology has consequences for society. A

technology is appropriate when its intended positive consequences outweigh its unintended negative consequences

How do we evaluate appropriateness?

There are three ways of evaluating appropriateness:

technical, cultural, and economic. Technical--considering the technical knowledge and background of the people who will be using this technology. Culturalthe relationship of the technology to the critical social systems in the society including family systems, religious beliefs, division of labor in a society, and levels of education and training. Economic--a technology's effect on income levels and income distribution in a society and income disparity between different socio-economic groups.

Factors for the assessment of an appropriate technology

Various factors for assessment of appropriateness would include the

following1:
What is the need? Is there an adequate business environment in place for this technology? What is the best technical option for the transfer? (Some issues include

the requirements for operating the technology, repair facilities for the technology, scope of the technology) What are the possible unintended negative effects of the technology? What are the broader cultural, political and/or social effects of the technology?

Examples of appropriate technologies

Renewable Energy
Smart Growth

Green Buildings

CONCLUSION

We can see that technology can influence the business environment directly. Today in this modern era market is beyond national boundaries as the whole world converged into a single market. This invites a tough competition leading to new innovations, thus technology is the most essential tool to cope up all these challenges by sensing the need or demand of consumer world.