Technological Impact on Business

What is technology?
Technology is the way in which work is done i.e. the equipment used and the way work is
organised. Improvements in technology often lead to new products and processes.

Firms need to use and adapt to technology because companies compete and the market is both
global and highly sensitive to most products and services.

There are some areas that are affected by technological change:

Communication: Firms interface with suppliers and customers largely through the computer
with the help of Internet. There is a rapid growth in the use of modern IT (Information
Technology) for communicating with and selling to consumers.
Product technology: It can have a great impact on the design (CAD-Computer aided design) or
manufacture (CAM-Computer aided manufacture). It frequently determines the speed and nature of production flow in the line, the quality of product and the disposal of waste.

Cost of production: Technology is complex and expensive. It raises the fixed costs and thus
creates the needs for a very large market in order to spread out the fixed costs over
increased output.

Human Resources:

Technology has led to;

Redundancies, as technology has changed methods and replaced people throughout industry and at all levels in organisation.
Increased unemployment among those with computer and technology related skills.
Deskilling due to not performing old tasks.

The market:
Technology has revolutionized the distribution of products. Internet is used for this
purpose by firms.
Pricing has also changed. Technology creates new products and they are expensive in the
beginning but then they become a throw-away price for customers.
It has also increased the range of products and services.

But, there are also negative effects of technology.
Firstly, it has created the need for data protection. Human relations have also weakened
since some workers need to be made redundant due to introduction of technology.
Firms also need to borrow capital from institutions in order to finance introduction or
development of technology.