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
commerce
Provides lots of new opportunities for businesses
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