SECTION 10: TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT

1. Explain the concept of business technology

Business technology refers to applications of science, data, engineering, and information

for business purposes, such as the achievement of economic and organizational goals.
The main element of technology is the idea of change, and how it can affect business and
society.

2. Explain the role of Information Communication Technology (ICT) in business;

(a) Role of technology in business:

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 (paper records stored in filing cabinets now stored in a central
digital database of Word files), retrieval, manipulation, transmission or receipt of
digital data. Importantly, it is also concerned with the way these different uses
can work with each other (integrated process).

(b) 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 (e-commerce). 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.

3. Describe the types of ICT used in business;

(a) Traditional
 Industry Medical Construction Accounting Fashion

Earlier Eyeglasses, Hammer, drills Ledger books, Sketches, sewing

stethoscope invoice books, machines
calculators

Modern Advanced CT Cranes, Accounting Computer aided

scanners, conveyors, software, Manufacturing
advanced Computer Inventory (CAM),
MRI Aided Design Management temperature
machines (CAD) Systems (IMS) regulating
materials

(i) Productivity tools, for example, Microsoft Word - word-processing tool

(to create reports, pamphlets, invoices, letters), Excel – spreadsheet tool
(calculations, diagrams, budgets, financial statements), Access - database
software (Queries, Reports, fields, records and files, Mail merge with
Microsoft Word, store customer information) , PowerPoint -presentation
software (slideshows with text, images and videos, sounds, create
handouts and projector transparencies), Prezi (Large canvas), and
graphics software – Adobe Photoshop (CorelDRAW, Microsoft Pain,
Picasa) (create, alter and manage two-dimensional images) .

(ii) Specialist applications (programs that have been developed to perform

specific or highly
specialized tasks within certain businesses with some written specifically
for individual organisations to meet their very specific requirements.)

(1) Accounting: QuickBooks (varieties created for different types of

companies – wholesalers, retailers, manufacturers, not-for-profit
businesses) – the program records payments and sales, calculates
sales tax and applies this to invoices, produces accounts and
reports (cash flows, profits, balance sheet), accepts payments,
creates estimates and quotes, manage and pay bills and keep
payroll accounts of employees

Advantages of QuickBooks Disadvantages of QuickBooks

Simple data entry, as data needs to be The cost of the package is more expensive
entered only once than a paper-based system
The processes are fast Set-up support can be an additional cost.
Yearly maintenance and support may be
needed

The automation of tasks and reports There may be technical difficulties, such as
reduces the amount of labour required power outages, computer malfunctions and
hackers

It reduces the possibility of errors Training in the use of QuickBook will be

needed

It is easily integrated with other Loss of jobs due to the automated tasks
systems, like online banking

Information is shared with an external Depends on the accuracy of the information

accountant entered

(2) Computer Aided Design (CAD) – involves the use of technology

(computer systems, an electronic drawing pad and software) in
creating and modifying two-dimensional (2D) and three-
dimensional (3D) designs using. It is used in many industries for
the design of products (machinery, buildings, roadways, electronic
gadgets, computer animations, advertisements, cars, airplanes and
interior designs). A designer can use simulations to see how the
product design will operate in the real world.

Benefits of CAD Limitations of CAD

Allows better visualization of the product Training in CAD software is required

and its sub-components by the designers which may be expensive and time
as images can be rotated consuming

Increases productivity as the design CAD requires a lot of computer

process is faster and simpler and designs processing power in the form of high
can be easily shared with the design team quality computers which can be expensive
for their input

Improves product quality as issues and Most popular CAD software is high
errors can be identified through CAD and priced
corrected

Offers a high level of accuracy which is As new versions of CAD software are
not possible through manual designs created, designers must update their skills
 Benefits of CAD Limitations of CAD

Lowers product development costs, as Design process becomes prone to

the product is first designed virtually technical issues, such as power outages,
computer malfunctions and hackers

It enables accurate design and drawing as

measurements are calculated on the
computer

(3) Computer Aided Manufacturing (CAM) – uses technology

(computer controlled machinery and software) in order to automate
the manufacturing process such as cutting, grinding, bending,
punching, placing, spinning and gluing. CAD and Cam are related:
CAD helps in producing product designs whereas CAM helps in
manufacturing the products.

Advantages of CAM Disadvantages of CAM

It increases production speeds Expensive systems to set up and support

It reduces wastage of raw materials Technology failure leads to delays in

production

It offers a high degree of precision in Requires skilled programmers and

manufacturing operators

It leads to a consistent quality of It can lead to a loss of jobs, as automation

products may reduce the need for employees

It allows for complex, difficult, It is only as accurate as the Cad information

monotonous and dangerous tasks to be and the instructions inputted into the CAM
completed by machines system

(4) Management Information Systems – is an organizational system

which uses ICT to obtain, store, process and share information
needed by management to facilitate effective decision making and
achievement of organisational goals. It can compare current
performance with past performance as well as current performance
with established goals. Types of MIS include
 Process Control Systems – monitors processes such as food
processing or car assembly
 Sales and marketing System – helps to forecast sales,
manage distribution channels, implement advertising and
 sales promotion and determine how well each product is
selling or not selling at specified outlets
 Inventory Control System – monitors purchases, sales,
returns, and spoilage occurring at the warehouse or retail
locations. It may automatically reorder stock when it
becomes low (Just in Time System (JIT))
 Office Automation System – facilitates communication
flow, using landlines, internet, intranet, email, multimedia
and video conferencing
 Accounting and Finance System – performs accounting
operations (bookkeeping, payroll, tax, budgeting, cash
management) and generates reports.

Benefits of MIS Limitations of MIS

MIS provides reports on the MIS system is only as good as it was

performance of resources, labour, designed
materials and machines

MIS helps to control costs be Untrained persons may not be able to

examining information on idle time, obtain the benefits of the MIS
wastage, spare capacity

MIS compares actual performance to It depends on the accuracy and relevance of

expected performance so actions can be the information (obsolete)
taken accordingly

MIS helps to coordinate activities of It focuses on quantitative rather than

departments by linking them through qualitative information
information networks

(b) Digital communication technologies – DCTs are electronic telecommunication

systems which
allow people to communicate (verbally, visually or in writing). Two main types of
Digital communication tools are:

(i) Internet – a worldwide interconnected network of computers and

electronic devices. The World Wide Web is a collection of websites
which can be accessed using the internet. Businesses use the internet to
conduct research, buy and sell goods, promote business and its products
and communicate instantaneously (chat, message, email, video calls,
videoconferencing) with any stakeholder at a cheap cost.
 (ii) Mobile technology – allows cellular (mobile phone) communications to
take place. It involves the ability to make and receive calls (Smart phones
can Skype, FaceTime), SMS (short message service), MMS (multimedia
messaging service), buy and sell goods, and mobile apps for the
transmission of information. Used to communicate with any stakeholder
but the cost is relatively higher than the cost of the internet use. A country
needs good mobile connections and a safe payment systems to prevent
online fraud.

4. Distinguish between E-commerce and E-business

In both cases, the e stands for "electronic networks" and describes the application of
electronic network technology - including Internet and electronic data.

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. It involves new business models and the
potential to gain new revenue or lose some existing revenue to new competitors.
Electronic Data interchange (EDI) is the computer to computer exchange of business
documents in a standard electronic format between business partners. This improves
coordination and efficiency in supply chains by increasing processing speed, reducing
cost and reducing errors.

E-business includes e-commerce but also covers internal processes such as production
(CAM), inventory management (record, monitor and reorder stock), product development
(CAD), Logistics and Supply chain management (GPS and GIS), risk management
(QuickBooks can assist with forecasting financial risks), finance, knowledge
management (MIS) and human resources (employee records, payments software, online
training courses, job advertisements and job applications). E-business strategy is more
complex, more focused on internal processes, and aimed at cost savings and
improvements in efficiency, productivity and cost savings. E-business can also be used to
describe business organisations such as Amazon, Rakuten and eBay that market their
products and trade primarily online.

5. Identify ways in which ICT can be used to improve efficiency of business

operations;

(a) Ways in which technology can improve business:

(i) speed and time – Computerised systems can be used to perform many
tasks faster, cheaper and more accurately than human effort. They can also
run all day and night, this has reduced waste, production lead times and
costs and improved product quality, e.g., access customer records
instantaneously, send documents to multiple groups)
(ii) easier storage – ICT allows all forms of information to be stored quickly
and easily in digital form on computer storage devices (such as hard
 drives, discs and memory cards) and also on internet servers “cloud”. This
has greatly reduced the need for physical storage space and filing cabinets,
as well as printing and paper costs. It facilitates information searches and
retrieval. Storage is portable. Organize folders into files and folders
(iii) improved sharing of information - ICT has allowed for instantaneous
communication to be possible with anyone worldwide. Email and instant
messaging allow messages and documents of various file formats (Text,
images, audio and video) to be sent. Teleconferencing and
videoconferencing allow for verbal conservations, enabling discussions
and meetings with people in different geographical locations. Businesses
can share information via their websites and social media to reach many
customers. Viral marketing is a form of marketing whereby customers are
encouraged to share information about a company and its products over
the internet, e.g., through social media.
(iv) automation – this allows repetitive tasks and complex tasks to be done by
computer-controlled machines, leading to consistent quality output and
less wastage (assembly lines in car, food processing, bottling, mining and
oil industries ). Machines do not get tired therefore longer production time
leading to increase in total output. Automation lowers the risks for injury
for employees (dangerous tools, hazardous chemicals, heavy lifting).
Specialist tools reduces number of employees needed, i.e. lower labour
costs. CAD and CAM makes design and manufacturing easier.

(b) Benefits of technology to business:

(i) reach more potential customers, develop a business relationship with

potential customers – locally, regionally and internationally through e-
commerce and online marketing. Using customer databases and browsing
history, businesses are able to send targeted messages with specials and
deals in line with their preferences periodically, to keep them informed
and interested.
(ii) streamline operations, reduce costs, improve efficiency, maximise
profit, minimize waste, devote talent to core business instead of
overhead – this means to simplify operations by removing unnecessary
steps. Videoconferencing meetings eliminates the need for persons to
travel to a physical location for a meeting. This significantly reduces
travel-related expenses. ICT through e-commerce can lead to increased
revenue as new customers may be reached. ICT can lead to improved
efficiency in production which can lower costs. Using ICT and other
technologies to automate business functions has reduced ‘overheads’ (e.g.
office and warehouse staff). This has meant businesses have been able to
redeploy workers to other tasks, boosting output and generating revenues.
(iii) provide better service to customers – customer service is the support
and assistance given to customers before, during and after the customer
buys and uses the product or service. Customers prefer fast, reliable
service. This is possible with adequate information on websites, prompt
 email and live chat responses to questions and queries, and customer
databases.
(iv) support better relationships with key partners (suppliers and key
distribution firms like wholesalers, retailers, e-tailers) Supplier and
distributor databases, inventory control systems and even specialist
software allow for updated stock information to be available to those in
the supply chain network.
(v) allow customers to better guide the business – ICT provides more
avenues for buyer-seller interaction, via online surveys, websites – social
media, emails, instant messaging. Comments, queries, reviews, likes and
shares are useful information. As such greater opportunities exist for
receiving customer feedback and guiding operations by that.

6. Discuss the ethical implications of the use of ICT in business;

Consequences of unethical use of ICT:

(a) security;
(b) privacy;
(c) intellectual property infringement;
(d) impact on humans; and,
(e) distraction.