Unit 9:

• Digital Technology


  Has given businesses New Opportunities
• Improvements in digital technology


  • Allowed businesses to gather big data
  • Collect it using social media, loyalty cards, etc. or buy it from other businesses
• Data mining


  1. Analyse big data using computers and specially designed digital software

  2. Spot correlations and trends

  3. Supply useful information on customers and competitors to the functional areas of the business
• How data mining can be used


  • R&D department can use it to develop new products
  • Marketing department can use it to inform decisions about the marketing mix
  • Finance department can use it when making cash-flow forecasts
• 1. commerce


  Provides lots of new opportunities for businesses
• Improvements in digital technology

  • Resulted in e-commerce becoming the primary way for some businesses to trade goods and services
  • Businesses don't need to invest as much money in stores as they can reach a much bigger customer base through a website
• Growth of e-commerce


  • Given businesses greater access to international markets
  • Businesses can translate their website into different languages and offer worldwide delivery in order to expand their markets
• Manufacturers


  • Can use their own website or online market places to sell directly to consumers rather than selling through an agent or retailer
  • Allows them to keep all of the revenue for themselves
• Companies like Amazon


  • Keep track of the online order history of their customers
  • Allow them to make personal recommendations to customers that they know will be interested
• Businesses


  • Able to interact more directly with their customers through social media
  • Can regularly update customers about improvements to their goods and services
• Businesses


  • Able to deal with customer complaints more efficiently by switching from telephone services to live online assistance
  • A customer service assistant can deal with many customers at once
• Customers have access to technology


  • Able to look up reviews of a product and find prices of similar products within seconds
  • Means that the products and prices a business offers have to be genuinely competitive
• Enterprise Resource Planning (ERP)


  Business management software that allows a business to monitor activities in every department through the collection and interpretation of data
• ERP


  • Can help the HR department to track the work rates of staff to see who needs extra training or when productivity drops
  • Finance department might use data from previous infrastructure changes to budget for upcoming changes
  • Helps the marketing department to keep track of how well their promotional products are selling and to compare sales before and after promotion
  • Can be used to track stock levels, distribution networks and productivity in order to see how well the operations department is functioning and if any improvements are needed
• Businesses face Pressure to Update their Digital Technology


  • New digital technology is constantly being developed
  • Businesses must decide which developments will provide them with the greatest return on investment
  • Businesses must decide which developments will have the greatest impact
• Businesses make the correct decisions and adopt the right technology at the right time


  They can grow rapidly and gain the upper hand on competitors
• Businesses make the wrong decisions or they are too late to take up new technology


  They may lose ground to their competitors and might never be able to gain that market share back
• Digital Technology can lead to Innovative New Products


  • Research and development department can incorporate up-to-date digital technology in new products
  • Innovative products have a chance to revolutionise the market and make the business a lot of money
• Digital technology can offer small upgrades to existing products


  • Allows the business to retain its market share
• The internet allows businesses to monitor updates to digital technology on a global scale


  R&D department in the UK might see an invention in Japan and find a way of incorporating it in their own product
• Disadvantages of Digital Technology for Innovation


  • It is often very expensive to develop new products that are based on new digital technology
  • New technology hasn't always been fully tested, so if a business chooses to use it in their product they are running the risk of their product having lots of bugs and not working properly
  • Problems with digital technology can be difficult to diagnose, customers can get frustrated with a company if they can't get products to work properly
  • Businesses run the risk of the new technology not catching on
• Digital Technology can make the Production Process more Efficient


  • New technology can lead to better quality products, increased capacity, and increased efficiency
  • Businesses need to weigh up whether the expense of implementing new digital technology in the production process is actually going to be profitable in the long-term
  • It can take a long time to apply new technology to the process
  • Staff often require some specialised skills and need to be retrained
  • If a business introduces too much new technology to their production process, staff will become overwhelmed and resistant to the changes
• Examples of Digital Technology in Production


  • Introduction of 3D printing
  • Developments in software to keep track of inventory and deliveries
  • Introduction of more machines resulting in a shift away from labour-intensive production
• Shift away from labour-intensive production


  Saves the business a lot of money in wages but can have a negative impact on the company's reputation and the workers morale
• Management of Different Functions

  Becomes more Complex
• When a company becomes a multinational


  • Its functional areas will need to change
  • They may be spread across different locations
  • Increase in size
  • Adapt to new challenges facing the business
• Finance


  1. Staff adapt to work with different currencies

  2. Ensure different branches have healthy cash flow

  3. Comply with trade laws of different countries

  4. Understand tax laws in different countries

  5. Provide detailed analysis of expansion opportunities

  6. Point out risks of planned expansions

  7. Financial functions might be spread across different locations
• Trade laws


  Limit the amount of money that multinationals can take out of a country's economy
• Due to the complexity of multinationals


  Financial functions might be spread across different locations
• Marketing


  1. Adapt campaigns and strategies to promote different products

  2. Adapt promotional message to appeal to different markets

  3. Adapt to different advertisement laws in a country
• If the business is producing standardised global products


  The different manufacturing facilities will need to be coordinated
• If the products are being adapted for the different local markets


  It's less important that the manufacturing facilities are coordinated, it's more important that each one runs efficiently
• IT functions


  1. Carried out at each branch to manage day-to-day IT problems

  2. Create, manage and update several different websites if adapting to local markets
• Multinationals will face culture clashes and language barriers across the whole business
• If the business structure is centralised


  They will need to think about how decisions will affect and be communicated to all the branches of the business
• Multinationals


  Complex businesses where different parts are subject to the laws, culture, economy and markets of the countries they operate in
• Multinationals only operate in countries with similar laws, cultures and market conditions

  They may be able to take a centralised approach to management
• Multinationals operate across countries with very different laws, cultures and market conditions

  They may have to take a decentralised approach to management
• Bartlett and Ghoshal's four international business strategies

  • Depend on the level of pressure for local responsiveness and the level of pressure to reduce costs through global coordination
• International Strategy

  If the demands of markets in other countries are similar to the home market and pressure to reduce costs is low, the business structure remains centralised with most decisions made at head office