9.4 - Digital Technology

• Digital technology is changing all the time and it is up to businesses to change with it
• If businesses don't embrace digital technology, they risk missing out on great opportunities to grow their business
• Pressure to Update their Digital Technology


  • New digital technology is constantly being developed and businesses must decide which developments will provide them with the greatest return on investment and which will have the greatest impact
  • If 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
  • If 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

  • The research and development department can incorporate up-to-date digital technology in new products - these 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 to keep the business ahead of its competitors. For example, smartphones are always being upgraded to offer better cameras, more powerful processors and a wider variety of features-these small upgrades allow the business to retain its market share
  • The internet allows businesses to monitor updates to digital technology on a global scale. E.g. an 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 - if these products never make it to market then the business has wasted a lot of money
  • 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. E.g. Nintendo brought out the Wii UTM in 2012 but it never really sold very well and was discontinued in 2017
• Digital Technology

  Can make the Production Process more Efficient
• How Digital Technology can improve Production

  1. New technology can lead to changes in the way that products are made

  2. Better quality products

  3. Increased capacity

  4. Increased efficiency
• Businesses implement new digital technology

  Need to weigh up whether the expense is actually going to be profitable in the long-term
• Applying new technology to the production process

  • Can take a long time
  • By the time it's implemented and running efficiently, there may be better technology available
• Using new technology efficiently


  1. Staff often require some specialised skills

  2. Staff will need to be retrained

  3. Efficiency will fall until staff are properly up to speed with the new processes
• Business introduces too much new technology to their production process


  Staff will become overwhelmed and resistant to the changes
• Digital Technology in Production


  • Introduction of 3D printing - allows businesses to produce prototypes quickly and cheaply, easier to tweak aspects of the product
  • Developments in software - easier to keep track of inventory and deliveries from suppliers, production process runs more smoothly and efficiently
  • Introduction of more machines - business shifting away from labour-intensive production, saves money in wages but can have negative impact on reputation and worker morale
• Digital Technology


  Has given businesses New Opportunities
• Gathering big data


  1. Collect it using social media, loyalty cards, etc.

  2. Buy it from other businesses
• Analysing big data


  1. Use computers and specially designed digital software

  2. Spot correlations and trends (data mining)
• Data mining


  Makes sense of big data and supplies 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
• 1. commerce becoming the primary way for some businesses to trade


  1. Businesses don't need to invest as much money in stores

  2. Reach a much bigger customer base through a website
• Growth of e-commerce


  1. Businesses can translate their website into different languages

  2. Offer worldwide delivery

  3. Expand their markets
• Manufacturers selling directly to consumers


  1. Use their own website or online market places

  2. Keep all of the revenue for themselves
• Companies tracking online order history


  Make personal recommendations to customers
• Businesses interacting with customers through social media

  Regularly update customers about improvements to their goods and services
• Businesses dealing with customer complaints


  1. Switch from telephone services to live online assistance

  2. Service assistant can deal with many customers at once
• Customers have access to technology
• 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
• How ERP can benefit departments


  • HR department can track work rates of staff
  • Finance department can use data from previous infrastructure changes to budget for upcoming changes
  • Marketing department can keep track of how well their promotional products are selling
  • Operations department can track stock levels, distribution networks and productivity