TECHNOLOGICAL FACTORS

Technological factors
} Technological

changes can affect a firm in many different ways. } Organisational, e.g. teleworking } Product development, e.g. CD players mp3 players } Production changes, e.g. computercontrolled machinery } Marketing, e.g. using the internet to sell the product

Impact of technological change on organisational structure

} }

Some administrative and managerial roles have been replaced by more effective IT systems. Some production roles have been replaced by the use of robots and automated production lines. This has also reduce the need for as many supervisors. Improved communications (email, secure intranet, wireless networks) allowing more flexible work arrangements

=> downsizing, delayering, outsourcing

Impact of technological change on organisational structure

} Downsizing } Term

used for reducing the number of employees in an organisation without necessarily reducing the work or the output } Downsizing has been a feature of the 1980s and 1990s. } Many organisations (large and small) believe that they have become leaner and fitter as a result

Impact of technological change on organisational structure

}

Delayering } Process of removing layers of management } Often linked to downsizing } Change organisation from one with a rigid hierarchical framework with numerous layers of supervisory grades into flatter organisation with minimal layers of management } Emphasis on team work, with people taking on different roles in different teams

Impact of technological change on organisational structure

}

Outsourcing } Means contracting-out aspects of the work of the organisation, previously done inhouse, to specialist providers } In some cases suppliers are given access to the firms records so they can review production schedules and stock records to ensure that supplies are delivered before they run out. } E.g. Walmart makes its sales data immediately available to its suppliers, through the internet

Types of outsourcing
Classification Ad-hoc Comment ST requirement for increased IS/IT skills. E.g. employing programmers on a ST contract The development & installation of a particular IS/IT project. E.g. a new accounting system Some IT/IS. E.g. hardware maintenance or ongoing website management An external supplier provides the vast majority of IS/IT services. E.g. 3rd party is responsible for IT equipment, software & staff.

Project management Partial

Total

The tasks might be outsourced:

firm payroll, administer wages & salaries for the companys work force. } Building services cleaning & security } Producer of cars component parts } IT requirements specialist IT firms } Office administration tasks record keeping & word processing
} Accountancy

Advantages & Disadvantages of Outsourcing

Advantages Remove uncertainty about cost fixed price based on the LT contract Encourage planning for the future Economies of scale Disadvantages Lack of control information is at the heart of management Confidential information Loss of competitive advantage new technology/application available to competitors Locked in to an unsatisfactory contract Discourage awareness of the potential costs & benefits

Able to retain skills and knowledge for a specialist organisation Share staff with specific expertise between several clients without cost of recruiting & retraining existing staff Flexibility

Impact of technological change on products

} }

Products become increasingly more sophisticated, e.g. mobile phones Emergence of substitutes, e.g. cinema industry went into decline in early 1980s as a result of the emergence of the video Business model of some industries has been completely transformed, e.g. supermarkets moving into online banking Customer support is often provided by call centres in low-wage countries. Some have reinstated call centres into their home countries after concerns over customer care.

Impact of technological change on production processes

} }

Use of robots and automated production lines Also IT systems have been used for more efficient scheduling and monitoring of production, resulting in lower inventory levels, higher quality, elimination of bottlenecks and lower costs E.g. 2 specific applications of IT production } Manufacturing resource planning (MRP) } Enterprise resource planning (ERP

Impact of technological change on production processes

}

MRP: push-based system, pushing work through production. Focus of the computer based technology is to draw together the appropriate resources to meet demand. Functions include: } Identifying firm orders and forecasting future orders with confidence } Translating these into capacity requirements } Determining the timing of material requirements } Calculating purchase orders based on stock levels } Automatically placing purchase orders } Scheduling labour and materials for future production Benefits of MRP: reduced stock holding, improved ability to meet orders, reliable quotations of delivery times, improved facilities utilisation, less time spent on emergency orders, better supplier relationships

MRP

Impact of technological change on production processes

} ERP

(Enterprise resource planning): } Management system that integrates all aspects of the business into a single computer-based system to meet the needs of all organisational users.
} Scope:

HR application, logistics, sales, marketing, management accounting as well as Extranet to co-ordinate those outside of the organisation

ERP

Impact of technological change on marketing

}

Pricing many retailers monitor competitors prices to ensure that they are not being undercut. Most price watch schemes are ITbased. Promotion use of websites but also promotional methods such as viral and banner advertisements Distribution internet has created a huge opportunity for many firms to sell direct to a wider range of potential customers Market research, e.g. customer database

Impact of technological change on society as a whole

} } }

Society is becoming more dependent upon computer and communications technology Move from industrial age to information age Key issues } E-commerce (www advertising, www ordering of products, www financial transactions, Electronic data interchange) } Home shopping, Home banking, Home learning, Home entertainment, Teleworking/telecommuting Some industries may disappear, but new ones are emerging. Employment patterns will change.

Chapter Summary
}Technological
-

factors

- Organisational structure (downsizing, delayering, outsourcing) Product (more sophisticated, replaced, change in business model) Production (robotics, automation, scheduling, planning) Marketing (price watch, internet selling, Websites, viral, banner ads)