Technological Environment

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BUSS4
Technological Environment
Strategic Importance of Technology
The key relationship to consider is that between technology and strategic success
Technology may not be a source of competitive advantage
- If competitors exploit it too
Rapid technological change can challenge all competitors in a market
What is a Business Model?
How a business organises its activities to generate income and incur costs
Technological Change Provides an Opportunity to Change Business Models
The product being sold
E.G.
- The materials or production process used
- The method of delivery ( physical v online)
- The extent of customisation
How to product is sold
E.G.
- What distribution channel is used
- The pricing model
Technology Mechanisms
Technology Mechanism How It Potentially Creates an Example
Advantage
A new process Produce faster, at lower cost Online video streaming
or better quality
Solve a complex problem Do something competitors Google search engine
find hard to master
A new product The first product to market iPad and iPhone
Protect a valuable idea Have something others can Dyson
only sell if they pay for a
license
Rewrite the rules A completely new approach Smartphones
which makes other products
and markets redundant
Technology and Porter's Five Forces
Force Examples of Potential Impact of Technology
Barriers to entry May reduce economies of scale ­ encouraging
new entrants
In some case barriers may rise ­ as products
become more complex and processes difficult
to copy

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BUSS4
Substitutes New products may displace old
- E.g. Online streaming for DVD, which in turn
replaced videotape
Technology 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 and Suppliers Technology may free businesses from a single
source of supply
- E.g.…read more

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BUSS4
Demand Factors Affecting Innovation Diffusion
Demand Factor Potential Effect on Technology
Market Awareness How aware is the market of the new
technology?
What promotional activity is required in order
for customers and distributors to support the
technology?
Observability What is the potential for a "band-wagon
effect"?
How easy is it for customers and distributors
to see the technology in action and observe
the benefits that it brings?
Customers Which customers are likely to adopt the
technology first?
What approach is most appropriate for
successful…read more

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