Technological Change - BUSS4 2015 SUMMARY - Mindmap in A Level and IB Business Studies

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Created on: 15-04-15 22:09

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Technological Change
- DRIVING FACTORS
  - Need for significant boost in efficiency, safety and resource substainability
    - Manu. firms across the world rely on efficiency of operations to remain competitive
      - Tech change can be source of competitiveness (R&D + innovation) but also a threat
        Especially for complacent market leaders who don't keep up with the tech advancements
        
        May not be a competitive advantage if competitors exploit the same tech
        
        Rapid tech change can challenge all competitors
        
        technology creating advantage e.g.
        new process = produce faster, at lower cost/better quality e.g. online video streaming
        
        solve a complex problem = do something competitors find hard to master e.g. google search enginge
        
        new product = first product to market e.g iPad & iPhone
        
        protect a valuable idea = have something only others can sell if they pay for a licence e.g. Pfizer's Viagra
        
        rewrite the rules = completely new approach which makes other products/markets redundant e.g. smartphones
    - Efficiency if important as manu. is capital intensive & has relatively low ROCE
    - Factors increasing need for energy & resource efficiency:
      - Rising demand for raw materials (incl. energy)
      - Uncertainties over energy supply (incl. political instability)
      - Increasingly stringent env legislation
      - Customer requirement for sustainability
    - e.g. Rolls-Royce - world class engine innovation but also rationalization to maintain efficiency
  - Rising labor costs pushing greater automation
    - e.g China
  - Digital factory modelling is reducing product design errors and speeding up "time to market"
    - e.g. JLR - showroom technology
    - e.g. 3D printing (reduces cost of prototyping & enabling print-on-demand for high-cost components)
      - e.g BAE - high investment in R&D and effective use of 3D print to reduce component costs
      - 3D PRINTING: process for making a physical object from a 3D model, typically by laying down man successive thin layers of materials
      - BENEFITS: Allows bus. to make things at low costs, so costs will decrease. Products finished to higher quality. Less chance of human error.
      - THREATS: Jobs aren't satisfying. Patents will expire protecting product/ideas from being copied.
  - Machinery & tools need to have greater flexibility
  - Increased processing power & sophisticated software
- KEY TERMS:
  - PRODUCTIVITY: effectiveness of productive effort as measured in terms of rate of output per unit of input
  - AUTOMATION: Use/introduction of automatic equipment in a manufacturing or other process or facility:
  - MASS CUSTOMIZATION: products are adapted to meet a customers individual needs, so no two items are the same.
    - e.g. JAGUAR - 'create the jaguar that's the perfect fit with your lifestyle, driving style and personal tastes" - creates unique SP & attract customers
    - creates advantage - ideal for niche segments
  - COMPUTER AIDED MANUFACTURING
  - ROBOTICS
- YELLOW = key terms PALE RED = company eg.
- OVER TIME:
  - Inevitable change over the years to meet increased demands (quality, quantity etc)
    - Automation over human labor - reduces human error. Human used in quality assurance.
    - e.g. FORD - first automotive company to use mass production in UK & first moving assembly line
  - tech shortening product life cycles of established products
  - investment in R&D
    - UK falling behind other countries in terms of R&D investment and automation
      - Can UK manu, expect to compete without heavy investment in tech?
        1997 - investment in manu. worth £21.6 billion (22% total investment by bus)
        
        2012 - manu. worth £13.8 billion (11% total bus investment)
    - financing tech change?
      - Gov incentives for UK manu. to invest more in tech.
        e.g. HIGH VALUE-ADDED MANUFACTURING CATAPULT CENTRE
        e.g. of Gov policy encouraging tech innovation
        
        Catapult project
        
        over £140 million of government investment planned over a six-year period, and investment matched by private industry.
        
        develop manufacturing echnologies, which can span from raw materials to finished assembly processes
        
        bridges gap between early innovation (UK trad, strong) + industrial-scale manufacturing, which UK needs to grow to support a healthy and balanced economy.
    - e.g. GSK/ AstraZeneca - highest UK investors in R&D = global pharmaceutical sucess
      - only 2 UK firms to feature in worlds top 100 R&D investors
    - R&D investment in UK concentrated on few key sectors - is this enough?
      - Pharmaceutical & biotech = 35%
      - Aerospace & defence = 7%
      - Software & computer services = 6%
      - Automobile & parts = 6%
      - Banks = 6%
      - Other = 40%
- LINKS:
  - Porters five forces: (potential impact of tech)
    - Barriers to entry (IMPACTS OF TECH)
      - may reduce econmoies of scale - encouraging new entrants (e.g. digital publishing)
      - some cases - barriers may rise as products become more complex & processes more difficult to copy
    - Substitutes (IMPACTS OF TECH)
      - new products may displace old - e.g online streaming for DVD which in turn replaced videotape.
      - tech in other markets may 'steal' customer spending from other markets - e.g. more spending on smartphone apps may reduce spending on PC software
    - Power of customers & suppliers (IMPACTS OF TECH)
      - tech may free bus from a single source of supply - e.g. cloud-based applications v microsoft
        e.g. using google docs (free) rather than spending out on microsoft?
    - Competitive rivalry (IMPACTS OF TECH)
      - rivalry diminished if tech successfully patented & licensed
    - EVALUATION: has tech made markets more competitive
- OPPORTUNITY FOR BETTER BUS MODEL
  - Product being sold
    - e.g. materials/production process used
    - e.g. method of delivery (physical or online)
      - e.g. games - rather than physical copies people can now get codes online instantly.
    - e,g, extent of customisation
  - how product being sold
    - e,g, what distribution channel is used (direct v intermediaries)
    - e,g, the pricing model (subscription v free)
  - how a bus organises its activities to generate income (revenue) and incur costs

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Technological Change - BUSS4 2015 SUMMARY

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