UNIT 10: Technology and the Global Business Environment

Business technology refers to applications of science, data, engineering, and information for
business purposes, such as the achievement of economic and organisational goals. The main
element of technology is the idea of change, and how it can affect business and society.

Role of technology in business:

Information Communication Technology (ICT) is considered to be all uses of digital
technology that exist to help individuals, businesses and organisations use information.
So ICT is concerned with the storage, retrieval, manipulation, transmission or receipt of digital
data. Importantly, it is also concerned with the way these different uses can work with each
other.

Ways in which technology has influenced banking and commerce:

(i) Through the introduction of Automatic Teller Machines (ATMs) and Automated
Banking Machines (ABMs) which facilitate the deposit and withdrawal of funds, as
well as other services without having to go into a bank to access teller services. The
location of ATM machines in hotels, petrol stations, malls and supermarkets adds to the
convenience of customers who can transact business without having to wait in line at a
bank.

(ii) The practice of on-line banking which enables customers to access their accounts from
home and other locations using personal computers. This facility enables customers to
check their balances from the comfort of their homes and permits easy and convenient
payment of utility and other bills. Customers with more than one account can also use
this facility to transfer funds from one account to another.

(iii) Through electronic commerce (ecommerce). Using the internet, individuals and
businesses are now able to make business transactions via the World-wide web, without
having to visit a physical brick and mortar store. E-commerce has given rise to many
on-line stores which permit customers to browse for products and pay for them
electronically.

Types of technology
1. Traditional

a) Productivity tools, for example:

- Word
- Excel
- Database software: Access
- Presentation software: PowerPoint, Prezi;
- Graphics software: Adobe Photoshop.
b) Specialist applications:
- Accounting: QuickBooks.
- Computer Aided Design (CAD).
- Management Information Systems.
2. Digital communication technologies:

a) internet

b) mobile

Distinguish between E-commerce and E-business

E-commerce covers outward-facing processes that touch customers, suppliers and external
partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw
materials and supplies for production and procurement of indirect operating-expense items, such
as office supplies.

E-business covers internal processes such as production, inventory management, product

development, risk management, finance, knowledge management and human resources.

Ways in which technology can improve business:

(i) Speed and time

(ii) Easier storage

(iii) Improved sharing of information

(iv) Automation

Benefits of technology to business:

(i) reach more potential customers, develop a business relationship with potential
customers
(ii) streamline operations, reduce costs, improve efficiency, maximise profit, minimise
waste, devote talent to core business instead of overhead
(iii) provide better service to customers
(iv) support better relationships with key partners
(v) allow customers to better guide the business

Consequences of unethical use of ICT:

(i) Security;
(ii) Privacy;
(iii) Intellectual property infringement;
(iv)Impact on humans;
(v) Distraction.

Standard of Living: This is the level of material well-being of an individual or nation. It may
also be known as the quality of life which the people of a country have.
The main difference between standard of living and quality of life is that Standard of living
factors such as gross domestic product, poverty rate and environmental quality, can all be
measured and defined with numbers, while quality of life factors like equal protection of the law,
freedom from discrimination and freedom of religion, are more difficult to measure and are
particularly qualitative.

Factors that determine a country’s standard of living and its quality of life:
(a) Indicators of a country’s standard of living (SOL):
(i) Level of consumption of goods and services;

(ii) Average disposable income of the population; the size, health and skill level of the
labour force can affect output as well as standard of living. Poor health, education and
skills will lead to poor output and hence standard of living.

(iii) Level of national ownership of capital equipment;

(iv) Access to modern technology; as technology improves/increases and there is better

equipment, commerce can increase.

(v) Level of investment in research and technology.

(b) Indicators of quality of life (QOL):

(i) Extent of security enjoyed (level of crime);

(ii) Availability of health, educational and recreational facilities;

(iii) Diet and nutrition;

(iv) Life expectancy; as this rises due to factors such as improved health facilities, sanitation
etc.

(v) Rate of infant mortality; as more children are surviving pass the age of two, the
likelihood of the labour force being larger in the future will increase. As the labour force
increases, so should output. Infant mortality will also be reduced due to better health
services, both prenatal and antenatal.

(vi)Access to public utilities, such as, electricity, potable water and technology.

National Income and Its Variants

National income is the total output of a country for a given period of time, measured in terms of
the money value of total production of goods and services. Its variants include
• Gross Domestic Product (GDP)
GDP measures the total output within a country regardless of whether the factors of
production are owned locally or not.
• Gross National Product (GNP)
The GNP is the value of output created by nationally owned factors of production
whether at home or abroad.
• Net National Product (NNP)
This is GNP minus depreciation of capital goods
• Disposable Income (DI)
This is PI minus personal taxes
• Per Capita Income (PI)
This is National Income (NI) minus taxes, profits, social security contributions and
transfer payment.
The national income of a country divided by its population. The higher the value, the higher the
standard of living.

Growth verses Development and Their Relationship

Economic growth refers to a quantitative increase in the level of income or output of a country
and is measured by GDP. Negative growth indicates that a country is doing worse than the
previous year. Zero growth indicates that there has been no change from the previous year.

However, economic development refers to changes in the economy and improvements in the
quality of life. It includes the provision of facilities that enable growth to take place e.g.
education, machinery, skills, utilities, housing, health facilities etc. Economic development leads
to economic growth e.g. highly developed countries such as USA, Canada, England etc. are
better able to exploit their resources thus resulting in economic growth and better standards of
living.

Role of education in economic growth and development:

How education can improve the workforce leading to increase in output:
● Enriches person’s life
● Raises people productivity and creativity
● Promote entrepreneurship and technological advances
● Help to improve quality of life
● Leads to broad social benefits to individuals and society
● Securing economic and social progress and improve income distribution

International Trade
This is the exchange of goods and services between countries. It includes:
• Visible Trade: Import and export of tangible goods.
• Invisible Trade: Import and export of services e.g. banking

Reasons for international trade

Reasons why countries trade with each other:
(a) One country may not be endowed with certain assets or have the natural resources such as
land, labour, capital or enterprise to produce the goods that they need.

(b) A country may not be able to produce the goods and services they need in the quantities or of
the quality that they require.
(c) A country may not have the climate to grow certain foods and have to depend on trade to get
it for example wheat in United States.

(d) International trade allows for foreign direct investment allowing individuals in one country to
invest money in foreign companies and other assets. It can promote political links between
countries through the signing of trade agreements.
(e) Increase in competition can lead to lowering of prices for the consumers.

Functions of major economic institutions and systems

a) Caribbean Community (CARICOM);

● To assist the borrowing countries to optimise the use of their resources, develop their
economies and expand production and trade.
● To mobilize financial resources from both within and outside the region for devolpment

(b) Caribbean Single Market and Economy (CSME);

● Provide more and better opportunities to sell their goods and services and to attract
investments

(c) Caribbean Development Bank (CDB);

● To assist the borrowing member countries to optimise the use of their resources and
develop their economies and expand.

(d) International Bank for Reconstruction and Development (IBRD);

● Offers loans to middle-income developing countries.

● Provides commercial- grade or concessional financial to sovereign state to fund the
project that seek to improve their country.

(e) World Bank;

● To provide long run capital to member countries for economic reconstruction and
development.
● Promote individual and collective development of member countries through finanacing
economic and social development projects.
● T helps with the implement the objectives of the Inter-American system

(f) International Monetary Fund (IMF);

● To promote international monetary cooperation through a permanent institution which

provides the mechanism for consultation and collaboration on international monetary
problems and to promote exchange stability and to avoid competitive exchange rate
depreciation

(g) World Trade Organisation (WTO)

● To substantially reduce tariff and trade barriers

● To illuminate preferences between the countries that trade
(h) Organisation of American States (OAS).

● to strengthen the peace and security of the continent

● to promote by cooperative action their economic social and cultural development
● to eradicate extreme poverty.

How economic institutions or trade agreements impact the Caribbean

Major economic problems of the Caribbean

1. UNEMPLOYMENT
High levels of unemployment inevitably leads to poverty and a low standard of living by leaving
some people with nothing or very little to live on. Most of them are unable to afford adequate
medical care, education and nutritious food. There are various types of unemployment:
(i) Cyclical unemployment:
This results from changes in the trade cycle e.g. when demand for goods is high, industries will
expand and so will employment. The opposite is true when demand for goods is reduced.
(ii) Seasonal unemployment: Unemployment due to the seasonal nature of the activity
e.g. tourism employment is high from mid-December to mid-April.
(iii) Structural unemployment: This is as a result of changes in the economy e.g. if
consumers change from one product to another (plastic instead of glass), unemployment will
increase.
(iv) Frictional unemployment: This is due to persons being unable to fill vacant positions
because of lack of knowledge of their existence or the distance away from home.
(v) Technical unemployment: Unemployment which is due to the introduction of
automation.
(vi) Voluntary unemployment: Situations where persons are not looking for a job.

SOLUTIONS TO UNEMPLOYMENT
(i) Encourage self-employment (entrepreneurship) which can lead to further
employment as the business grows.
(ii) Have early retirement plans to increase jobs.
(iii) Provide better training and development of skills to meet the needs of
employers. Individuals can gain certificates in various subjects and skills which
would make them more marketable.
(iv)Control the high birth rate which in the long term will reduce the size of the
labour force, therefore reducing unemployment.
(v) The creation of new industries by government.
(vi)Expanding current sectors such as agriculture by improving infrastructure, proper
marketing, tax relief, subsidies etc.
(vii) Processing local materials instead of exporting them in their raw state.
(viii) Regional cooperation- (e.g. CSME). This opens up and increases the size
of one’s market for products and services. This increase in demand could mean an
increase in workers needed. There is now a larger area or number of countries
from which to choose a job instead of just one’s own country.
(ix)Set up unemployment offices which act as “go between”, matching jobs with
suitable applicants

2. POPULATION DENSITY
This is the average amount of people living in a given unit area of land. Barbados has a high
population density because there are too many people in the country, given the total amount of
land available for living. Large populations can put severe pressure on utilities (water &
electricity), health care and education. More people may also lead to increase in crime, pollution
and traffic congestion.
SOLUTIONS TO POPULATION DENSITY
(i) Put measures in place to restrict migration in the country (emigration)
(ii) Long term goal of restricting the rate of natural increase through careful family planning
policies, access to and education of proper contraceptive use.

3. MIGRATION
This is the relatively permanent movement of people from one place to another. It may be due to
factors such as: Better job opportunities
Better education
Family ties
Political unrest/persecution
It is usually the young and more educated persons who tend to leave thus creating a situation
known as ‘brain drain”. If the Caribbean continues to subsidize education and then individuals
move away, the region will not benefit from its investment.

SOLUTIONS TO MIGRATION
(i) Provide jobs at all levels especially professional ones which would encourage
local talent to remain in the region (reduction of ‘brain drain’)
(ii) Improvement to infrastructure and social services (education, hospitals, schools,
utilities, roads etc.)
(iii) Subsidizing local education and training by government.
(iv)Make it mandatory that individuals who receive subsidized local tertiary
education must work within the country or region for a specific time period

4. DEBT BURDEN
All Caribbean governments support their economies/people by using money borrowed
from institutions who are willing to lend, despite the heavy cost of repayment (principal and
interest) in the future. E.g. in Guyana, the debt burden can be as high as 80% of GDP. This
means that in theory, 80% of all income generated in the country goes (or should go) toward
paying off debts. That leaves only 20% to spend on the country. This can have a negative impact
on the development of the country.

SOLUTIONS TO DEBT BURDEN

1. Reduce imports (saving foreign exchange) and increase exports in order to generate income
which can be used either to develop the country or pay off existing debt.
2. Increase taxes and use the funds to repay loans. This is not a popular solution and may only be
used as a last resort.

5. SOURCING CAPITAL & RAW MATERIALS

The Caribbean is a developing region and this can make it difficult to acquire the necessary
capital (money, equipment) and raw materials for the creation of goods and services. This may
be due to the high prices and this can limit production.

SOLUTIONS TO CAPITAL & RAW MATERIALS

(i) Attract outside investment e.g. by selling securities and shares to foreigners
(ii) Use local substitutes where possible

6. ECONOMIC DUALISM
This is the existence of two separate, largely independent economies (sectors) within a
single national economy e.g. agriculture versus tourism. Usually one economy is based on a
modern industry which uses state of the art technology, while the other is based on more
traditional/old-fashioned methods. The developed sector is the one which gets the majority of the
investment dollars. E.g. in Barbados, more is invested in tourism that agriculture. In Trinidad,
more is invested in oil & petrochemicals than agriculture. The modern sector also tends to pay
higher wages and attracts more educated persons. This can crate industrial unrest because those
in the traditional sector may try to get higher wages which cannot be paid by the employers.

SOLUTIONS TO ECONOMIC DUALISM

(i) Develop the traditional sector through the use of technology and training for workers.
(ii) Encourage investment (local & foreign) in the traditional sector which would provide
capital for improvement.
(iii) Increase wages in traditional sector to attract trained/professional personnel.

7. INDUSTRALISATION
This is the development of businesses particularly in manufacturing, to the overall benefit
of the national economy. Industrialization has been hindered by:
• Difficulties in funding
• Industrial pollution
• Inefficient transport and other infrastructure (water, electricity, telecommunication)
• Taxes on imports
• ‘Red Tape’ which holds back trade

SOLUTIONS TO INDUSTRALISATION
i. Reduction of import duties on raw materials and other necessities from abroad
ii. Subsidies on equipment, factory space etc.
iii. Provision of adequate and timely waste disposal systems which would not harm the
environment /citizens
iv. Encourage investment
v. Enact legislation which would make trading easier
N.B. Solution 1&2 for industrialization should help to reduce operation costs and can lead to
lower prices increase competitiveness

The role, benefits and impact of foreign investment.

Foreign Investment: A category of cross-border investment associated with a resident in one
economy having control or a significant degree of influence on the management of an enterprise
that is resident in another economy.
Role: