A business environment is the social, technological, economic and political environment in which a business functions. The business environment affects organizational decisions, strategies, processes and performance.
The internal business environment consists of customers, suppliers, employees, board of directors, creditors. The external environment consists of factors and forces which are beyond the control of the organization, such as the economic environment, technical environment, legal environment, political environment and cultural environment.
The application of science and engineering skills and knowledge to solve production and organizational problems is called technology. Technology has now become a part and parcel of our everyday activities. No one can just ignore its necessity in our lives.
Technological environmentTechnological environment hold new technological innovation, new products, the state of technology, the utilization of technology for maximum inputs and outputs, the obsolescence of technology and the dynamic changes that frequently occur in technologies which enable firms to get a competitive advantage.
When planning technological change in an organization some basic questions may be analyzed which are as follows –
What are the company’s overall objectives?
What problems does the company want to solve?
How can technology help meet those goals and solve the problems
What are the company’s priorities both short and long term.
Which technologies meet the company’s requirements?
Will they integrate with the company’s existing systems?
Most dramatic force shaping the marketing environment
New technologies create new markets and opportunities. However every new technology replaces an older technology. Transistors hurt the vacuum-tube industry, the auto hurt the railroads and compact disk hurt phonograph records.
When old industries ignored new technologies their business declined. Thus marketers should watch the technological environment closely. Companies that do not keep up technological change soon will find their products outdebated. They will miss new product and market opportunities.
The marketer should watch for four major trends –
The rapid pace of technological change
High R&D budgets
The concentration by companies on minor products improvement
Increased government regulation
How Technological Environment Effects on Business
For Manufacturing Organizations:
Cost effectiveness – Every firms desired goal is to achieve maximum profit by minimizing it’s production cost. Upgraded technology creates the opportunity to increase the production and decrease the per unit cost.
Time effectiveness – Because of modern technology all kinds of business activities can be done in a shutter speed. For the businessmen time means money. The more time one can save the more money one can make.
Transportation – A great change has come to the transportation system because of modern technology. Goods can now be transported through jet air lines instead of ships. It has made transportation of goods easier and secured.
For Non Manufacturing Organizations:
Manufacturers are not the only businesses benefiting from technology, non-manufacturing firms are also using automation to improve customer service and productivity.
Banks offer services to customers through ATM, via automated telephone system, over the internet.Example: Brac Bank, Standard Chartered Bank, Dutch-Bangla Banks, these banks are providing ATM facilities to their customers.
Retail stores of all kind use point of sale terminals that track inventories, identify items that need to be recorded and tell which products are selling well.Example: Wal-Mart, the leader in retailing automation, has its own satellite system connecting POS terminals directly to its distribution centers and head quarters.
In restaurant business, fast food shops are also maintaining their records, placing orders through technological process.
Telecommunicating & Home based business
Office automation systems also make telecommunicating and home based business possible. An estimated 8 million people work at home, using micro computers and other high-tech equipment to keep in touch with the office. In stead of spending time on the road twice a day, telecommuters work at home two or more days a week.
Office automation system
Today’s office automation system makes good use of the computer networks in most of the companies – both manufacturing and non manufacturing – to improve communications. It assists all levels of employees and enables managers to handle most of their own communication. The key elements include –
Work processing systems for producing written messages
E-mail systems for communicating directly with other employees and customers and transferring computer files
Departmental scheduling systems for planning meetings and other activities
Cellular phones for providing telephone service away from the office, as in cars.
Pagers that notify employees of phone calls
Voice mail systems for recording, storing and forwarding phone messages
Fax system for delivering messages on paper within minutes
Electronic bulletin boards and computer conferencing systems for discussing issues with others who are not present
Increased regulation of technological change
As products become more complex, the public needs to be assured of their safety. Consequently, government agencies’ powers to investigate and ban potentially unsafe products have been expanded. In Bangladesh, the BSTI must approve all drugs before they can be sold. Safety and health regulation have also increased in the areas of food, automobiles, clothing, electrical appliances and construction. Marketers must be aware of these regulations when proposing, developing and launching new products.
all these are happening because technology gives some special features to them like –
Competitive Market – For Homogenous products technology has created a good competitive market. New inventions and development of existing facilities are now quite essential for the organizations for operating their activities.
Research & Development – A huge amount of money is invested for research and development of new inventions. For example – The United States leads the world in research and development spending. Scientists today are researching a wide range of promising new products and services, ranging from practical solar energy, electric cars and cancer cures to voice-controlled computers and genetically engineered food crops. So organizations are eager to get the result.
Buying Behavior – Nowadays the buying behavior of consumers have changed. They are now very cautious and want to try for new services and products. To capture the consumer’s use of new technology is very important.
International Trade – In case of export and import from knowing the catalog price, order receipt to the end of the deed all are inevitable. Technology gives the business people the opportunity to operate all this activities within a click of the mouse.
Globalization – After achieving success in the local market every business man wants to be successful globally. For global reorganization technological development has now become the most important factor. The one who is detouched from technology can never be successful globally. Technology is the major driver of globalization and it can be considered by analyzing the following questions –
Does technology allow for products and services to be made more cheaply and to a better standard of quality?
Do the technologies offer consumers and businesses more innovative products and services such as internet banking, new generation mobile telephones etc?
How is distribution changed by new technologies such as books via the internet, flight tickets, auction etc?
Does technology offer companies a new way to communicate with consumers e.g. banners, customer relationship management?
Unlimited opportunities for innovation – scientists today are working on a startling range of new technologies that will revolutionize products and production processes. Some of the most exciting work is being done in bio-technology, solid state, electronics, robotics, materials science. Researchers are working on AIDS cure, pain-killers etc. in addition scientists also work on fantasy products; such as – small flying cars, 3D, TV, space colonies. The challenge in each case is not only technical but also commercial – to develop affordable versions of these products. Companies are already harnessing the power of virtual reality, the combination of technologies that allows users to experience 3D, computer generated environment through sound, site and touch. Virtual reality has already been applied to gathering consumers reactions to automobile designs, kitchen lay outs, exterior home designs and other potential offerings.
Technological Environment In Respect of Bangladesh
[*] People’s lifestyle is now changed. They are now more dependent on electronic appliances for even the house hold chores like. Especially the young generation is now more focused to electronic equipments. All these things are quite available because of technology.
[*] Banking sector in Bangladesh has experienced probably the greatest change because of technology. E-banking, ATM, Credit Card, Phone-banking are examples of this.
[*] A great deal of changes has come to the telecommunication system also. Number of users of mobile has increased and demand for land phone has decreased. Internet has become quite available.
[*] Media has now become very powerful. Lots of TV channels are now being broadcast. Even newspapers are now being available in electronic version.
[*] Agricultural production has increased as a result of new inventions and use of machinery.
[*] In manufacturing sector the labour incentive system has now been changed to machine incentive system. In lieu of hand made tools electronic and mechanical tools are being used.
[*] Publication sector also has a great deal of improvement. Computer composing has given the readers more satisfaction.
However some misuse of technology also takes place. Some mischiefs are being made by some of the people with the help of technology. Moreover, substandard or below standard tools sometimes cause death or deadly accidents. But in Bangladesh the use of technology is very important. It can play a significant role in the economical and social development of our country.
Wonders and curses
Technology has released such wonders as antibiotics, organ transplants, laptop and the internet. It also has released such horrors as nuclear missiles, chemical weapons and assault rifles. It has released such mixed blessings as the automobile, television and credit cards. Office automation system has been developed to make the office works easier and faster. But due to computer crimes large companies have to face a loss of thousands of dollars every year. There are several major categories of computer crimes –
Unauthorized access and use of computer systems
Security breaches and unauthorized access
Deliberate damage to information
Our attitude towards technology depends on whether we are more impressed with its wonders or its blunders.
No single business is large or powerful enough to create major changes in the external environment. Thus managers are basically adopter rather than agents of change. Technological environment is basically an uncountable element in the external environment. Any change in the Technological Environment forces the business to reshape, to sustain its growth. If a business fails to adopt the technological changes or opportunities it might collapse. This section examines trends in the business environment that reshapes today’s business landscape.