6 Technological Environment

Monica Bansal

1. Learning Outcome:

After completing this module the students will be able to: Understand the concepts of technological environment. Understand the Impact of Technology on Business.

Describe the various Technology Policy Statement and its objectives. Understand the concept of Science and Technology.

Understand the factors affecting Technological Environment.

2. Introduction

Technology in today’s world is considered to be one of the most significant factors of any business environment.

In the words of William F Glueck “The single most important factor that has dramatically affected both the society and the business is the factory system of production which is popularly known as the ‘Industrial Revolution’.” An important aspect of technological changes is the development of science. The revolutionary changes have also brought dynamic changes in the attitudes of the people.

Technological factors sometimes cause problems. A firm which is unable to cope with the technological advancement may not survive. Further, the difference in technologies of different areas or countries may call for product modifications. For example, in India electrical appliances require a voltage of 240 volts, whereas in USA, 110 volts are required for those appliances. The introduction of new LCD, LED and the internet system has badly affected the Cinema Theatres. Introduction of TV, Fridge with inbuilt stabilizers has adversely affected the market of stabilizers. That is why the government, in its resolutions of industrial policy, industrial licensing resolutions, MRTP and FERA regulations, and even in liberalization policies, has given more importance to sophisticated technology and technology transfer. Foreign investment upto 100 per cent is allowed in industries with sophisticated technology. Late Prime Minister Rajiv Gandhi’s vision of a modern India was of a technology based nation. Similarly the present Prime Minister Narender Modi has also the same vision of technology based India or the digital India. Technology imports and foreign technical collaboration were allowed for this purpose.

Philip Kotler, the famous Marketing Professor in his recent book “The New Competition” predicts that as we move towards the next century, besides the newly industrialized nations viz. South Korea, Taiwan, Hong Kong and Singapore and other Asian countries particularly China, India, Indonesia, Thailand, Malaysia and the Philippines- will evolve highly competitive approaches to winning sizeable shares of key global markets. The trend towards an increasing share of the world’s gross national income product orientating in this part of the world is also seen by some observers.

Impact of Technology on Business

Impact of technological factors on the business is very vast. It can be understood with the help of following figure:

These points are discussed below:

Ø Demand for Traditional Capital: With the advancement of technology there would be more requirement of traditional capital. More modernized equipments can be purchased for the growth and development of the business.

Ø Increase in Quality of Products: There is an improvement in the quality of the goods and services because of the improvement in the technology. The quality products have increased the standard of living of the people. The customers are ready to spend more on the good quality of the products.

Ø Rise in Productivity: The productivity of the goods can be increased. With the help of improved technology more modernized equipments are purchased for manufacturing the quality products. Moreover, new advanced methods of production and new techniques are also used in the modern business. Capital intensive technology is used to produce the modernized products instead of labour intensive technology.

Ø More Emphasis on R&D: The entrepreneurs are more concentrating on in-house research and development and indigenous research and development in specific areas where India is already ahead and where a quantum jump over developed countries is possible. In these areas it should be possible for India to export technology. Reinventing the wheels in other areas is wasteful of both talent and expenditure, especially where India can easily borrow technology. In all such cases import of technological know-how should be resorted to.

Ø Obsolescence: Some of the products have become obsolete with the advancement of technology e.g., transistors, scooters, picture tube Televisions etc. Mobile phones have replaced the old land lines phones, watches, alarm clocks, calculators etc.

Ø Demand for Skilled Labour: In today’s world more skilled labour is required to operate the technical gadgets. It has increased the demand for skilled labour. It has created the employment opportunities in India. There is a golden chance for the young generation to become highly skilled through technology.

Ø Organization Structure becomes Techno Structure: Most of the organizational structures have become techno structures with wifi campus, computerized system instead of manual systems, electronic gadgets, CCTV camera system to maintain a check on the labour and subordinates.

Ø Quality Management: It is all the more necessary to borrow state of the art technology. The talk of appropriate technology is valid only if we are confining ourselves to indigenous markets and work in isolation from the rest of the world.

Ø Social Change: The tastes, habits and preferences of the people change with the passage of time. We have seen rapid changes in the society in the last few decades. The people have become more techno based. Everyone has mobile phones, laptops and the internet facility. The eating habits have also changed.

Ø Change in Business Combination: There is a lot of variation in the business combinations. The need for a rapid application of modern technologies is illustrated by Japan after World War II. Experience elsewhere in Germany and USA shows that, in the long run technological change has had the effect of increasing growth and prosperity.

Ø Expectation of Customers: Customers are considered to be the king in the market place.

There is concept of customized products in today’s era. These products are highly in demand. The expectation level of the customers has also increased with the advancement of technology.

Ø System Complexity: The acceptance of technological progress by employees and the population as a whole plays an extremely decisive role. India has made its technology policy statement recently. The organizational systems has become complex and there is a lot of data to handle.

Ø Rise or Decline in Products: Some of the products are in its introduction stage and some are in the saturation stage. Technology decides the point of saturation of the old products.

After observing the impact of technology on the business, we can say that management of companies which are thoughtful, innovation and forward looking must take cognizance of the effects of such environment on their business enterprise.

4. Technology Policy Statement

The highlights of this policy statement are provided as follows:

Ø To attain technological self-reliance and competence and to reduce vulnerability basically in strategic and critical areas, making the maximum use of indigenous resources.

Ø To provide maximum gainful and satisfying employment to all strata of society with emphasis on women employment and the employment of weaker sections of society.

Ø To use traditional skills and capabilities by making them commercially competitive.

Ø To ensure the correct mix between mass production technologies and production by the masses.

Ø To ensure the maximum development with minimum capital outlay.

Ø To identify obsolescence of technology in use and make the arrangements for modernization of technology and equipment.

Ø To develop technologies which are internationally competitive, with the main stress on those which have potentials for export of goods and services.

Ø To enhance the production speedily through more efficiency and fuller utilization of existing capabilities and increase the quality and reliability of performance and output.

Ø To reduce demand on energy, particularly energy from non-renewable sources.

Ø To ensure harmony with the ecological environment in the country, to preserve the ecological balance in the environment and enhance the quality of the habitat and To recycle waste materials and make full utilization of by-products.

Strategies to Realize Policy Objectives:

The policy objectives can be achieved with the help of following strategies:

Ø To improve science and technology governance and investments.

Ø Try to build a new India that continues to maintain its strong democratic institutions and traditions.

Ø Maximum utilization of existing competence and infrastructure.

Ø Maintaining international science and technology cooperation.

Ø Improving the infrastructure for science and technology in academic and administrative enterprises.

Ø Creating awareness among public about science and technology.

Ø Finding out new funding bodies and mechanism for basic research.

Ø Management and generation of intellectual property.

Ø Development of human resources.

Ø Management of natural hazards and the development of technologies for mitigation.

Ø Development of technology, diffusion and its transfer.

Ø Optimum use of indigenous resources and traditional knowledge.

Ø Enhancing the new ways to increase innovation.

Ø Making collaborations between scientific laboratories and industries.

5. Science and Technology

It is useful to place the two words-science and technology in their proper perspective. It may be noted that the word science is considered as a systematized body of knowledge and when this knowledge is put into practice, it becomes technology. Science and Technology terms have similarities and dissimilarities. With regard to similarity, it may be stated that the two are inter-dependent. With the advancement in science help develop new technologies while at the same time, the need for new technologies and products provide the drive for new scientific discoveries. Technology is the most dramatic force shaping the destiny of people all over the world. Some of the technological inventions the man feels are wonders, some others are horrors, and yet others have mixed blessings. Automobiles and television, for example, have evoked mixed reactions. Hydrogen bomb and guns have proved to be horrors. Penicillin, open heart surgery and birth control pills are wonders. Whether one is enthralled or appalled by a technological invention depends on one’s attitude towards it.

Features of Technology

Before discussing the factors affecting the technological environment, we will discuss the salient characteristics of technology. The features of technology are discussed as follows:

Ø Technology Relates to its Change: The first feature of technology is its change and then more change with the passage of time. Technology stresses change on people whether they are ready for it or not. In the present era, it has brought so much change that it creates what is called future shock, which means that change comes so fast that it reaches the limits of human tolerance and people lose their ability to cope with it successfully.
Ø Effects of Technology are Widespread: Other important feature of technology is widespread, reaching far beyond the immediate point of technological impact. Basically, technology runs through the society until every community is affected by it. People cannot escape it.
Ø Technology Feeds in itself: Technology is self-reinforcing. This principle implies that technology acts as a multiplier to encourage its own faster development. This acts with other parts of the society so that an invention in one place leads to a sequence of inventions in other places.

Factors Affecting Technological Environment

There are various factors which affect technology and are discussed in detail with the help of following figure:

1. Social Factors: The maximum or the highest effect of technology is on the society. Basically, every area of social life is changed by the developments in technology. The social factors that affect technology are discussed as under:

Ø Social Changes: There is change in social life which results from a change in a technological process. Therefore, an invention may destroy the economic basis of a city, retrench thousands of the workmen, yet the same invention can result in the creation of a new city somewhere else and create even more employment opportunities than it initially destroyed. Thus, technological changes of this type create a continuous and stable turmoil in the society. The way we cook food, wash clothes, communicates with the people and methods of doing work are affected by change in the technology.

Ø System Complexity: Change in technology has also resulted in increase in complexity. Modern machines and equipments may work better and faster than the manual labour, but if they have some disorder then these require services of some expert persons to repair them. Sometimes, these machines fail because of their complexity. Moreover, all the systems may be inter-dependent. For example, we have Photostat machine, computers, internet system, fax machine but the failure of power can overrule the whole system.

Ø High Demand of Customers: In the present era, youngsters demand more of many things than more of same things. New variety of products and services, improved quality of goods, eco-friendly and organic things which are free from pollution, customized products which are more comfortable and safe are required to be manufactured and supplied to the people. Japanese technology is considered to be the best in fulfilling the high expectations of the customers regarding the product designs, prices of the goods, technical sophistications and proper delivery.

Ø Technology Reaches People through Business: New inventions and discoveries create ideas in the minds of people which lead to change in technology. The economic prosperity of the country depends on technology. More than 50 percent of the economic growth of the developed countries viz. Germany, Japan, UK, USA and France has come from the technical progress gained by them. Even the developing countries have taken a message that technological innovations mean very little to them unless they have competent business units to manufacture for public what science has discovered.

Ø Social Systems: Technology creates a different kind of social system, namely, knowledge society. Transfer and use of information and knowledge, instead of manual skill, dominates work and employs the largest portion of work force in the knowledge society. Moreover, the relationship between organization and knowledge worker will be strange and amorphous, redefining itself all the time. Technology has different levels and each level leaves a distinct influence on work and on the social system.

2. Economic Factors: There are some economic factors which are related with money and finance and influences technology. It is basically a dual effect, technology affects the economy of the country and the economic power of the nation also has an effect on technology. The points are discussed as follows:

Ø Research & Development: There is need to spend more on research and development activities. R&D assumes importance in enterprises as technology advances. Enterprises should allocate resources to R&D. A company’s R&D intensity is a principal means of increasing market share in international competition. Moreover, consistence in resource allocation to R&D across lines of business enhances organizational efficiency by enabling the enterprise to better develop synergies among product lines and business units. Further, technology transfer should also be made which is a process of taking new technology from the laboratory to the market place is equally important.

Ø Increased Productivity: The highest influential impact of technology is increased productivity in terms of both quantity and quality. That is why technology at all levels is adopted. In service industry the objective may be qualitative because the main stress is on satisfying the customers through giving improved services but in a manufacturing industry, the objective may be in quantitative in terms of more production at less cost. Economies of scale can also be achieved through bulk production.

Ø Boundaries Redefined: Technological change is a patent force for redefining the industrial boundaries which may be broadened or narrowed as per requirement. For example, with the advancement of information technology old conceptions of the financial service industry obsolete the banks, insurance companies, brokerage firms and force them to be inter connected to give new financial services. Technological change may have an important impact on the prevailing business definition of individual companies. It is one of the significant factor giving rise to product substitution and product differentiation.

Ø Jobs Become More Intellectual: Jobs have become more intellectual or upgraded with the improvement in the technology. A work which was previously handled by an illiterate or unskilled worker now requires the services of an educated and competent expert person. For example, a clerical post in the administrative office now requires an expert person in computers who has a good knowledge of typing in different languages. Technology has also dislocates some employees unless they have proper training and knowledge about the equipments and new machines. Technology has its impact on human relations also.

Ø Problem of Techno structure: Because of the improvement in technology the structures has also become complex and emphasized on the experts to become highly knowledgeable and professional. A business organization that has adopted latest technology is flooded with the engineers, scientists, college IT graduates and highly skilled employees on its payroll. It has also increased the professional competence among employees. Motivation of such employees is a very difficult task. Hike in salary package is to be given to retain the skilled employees otherwise they will switch over to other companies.

Ø Demand for Capital: Technology demands for huge amount of capital on procuring or inventing of new ideas and their adoption, training, educating and maintaining the managers. It requires proper well settled infrastructure, server rooms, laboratories and highly techno gadgets. All these can be purchased with the massive funds. It is a long term investment which will give fruits for a number of years, but updation and Upgradation of technology is must from time to time with the passage of time.

Ø Products and Organizations: We have seen that there is change in the habits and tastes of the customers with the passage of time and the new products become obsolete and out dated very soon. A new technology may develop a new industry but can ruin an old one. For example, nobody use transistors and radios in the present era. We are living in a robotic environment and everything can be done by pressing a button on the remote. In mobile phone industry the old models become outdated within six months only because of the introduction of new phones in the same segment.

Ø Government Regulations: The government has the power to ban or investigate the goods and services which are harmful for the society or hurt the sentiments of a particular segment of the society. Import of animals has been banned by Indian government keeping in mind the feelings of Hindu community. Some people who are more eco-friendly can oppose the construction of high buildings; oppose the industries which are harmful for the environment and location of a factory. Government from time to time makes amendments in the science and technology policy of India keeping in mind the feelings of the people and the ecological environment.

3. Organizational Factors: Technology has a significant impact on the organizational structure, span of control and length of the line of commands of the chief executive and the top line managers. These factors are explained as under:

Ø Risk Factor: Technology always creates a fear of risk. The existing and outdated companies cannot survive the competitive environment. For example the handloom industry has adversely affected with the power looms and the modern machines. The big fish will eat the small one, similarly, the big business organizations with improved technology has vanished the small scale enterprises.

Ø E-Commerce and E-Business: In the present era, technology has given birth to internet and World Wide Web which has made electronic commerce possible and viable. E-business has contributed to a growing number of transactions within a country and across the world. Now people can purchase the products while sitting at home from any part of the world. Money can also be transferred from one account to another by just click of a button. Banks and financial institutions make online transitions of money.

Ø Organizational Structure: Different kind of structures is used in the business organizations by the managers. Where companies use technology which is fast changing, matrix structures are more common. Small batch technology structure, production technology structure and continuous process technology structures are used in different types of organizations.
Ø Resistance to Change: It is a human nature. People resist changing. A typical businessman himself is opposed to new technology. Reasons are not totally psychological but practical also because adopting new technology is expensive and risky. An entrepreneur needs not to worry if he has sufficient money to buy new technology but if there is shortage of funds then he cannot cope up with the change.
Ø Total Quality Management (TQM): TQM means providing the products and services at a very good quality by an organization to the public. It may increase the cost of production of the enterprise but will increase the satisfaction of the customers and they will demand more good quality products which may result into improved sales. Quality can be improved by periodical inspection and it is the job of quality control personnel. TQM has been adopted by almost all the business enterprises.
Ø Manufacturing Systems: It is considered to be one of the another by product of Different kinds of machines are designed to produce various variety of the products. For example we can take the printouts of so many papers by a single command. Under this manufacturing system highly skilled and trained employees are required and there is job rotation for increasing the overall efficiency of the employees.

Summary

Technology is a costly, uncertain and high risk activity. Import of technology is also not easy because developed countries are not interest in lending it out. Actually, these countries seek India as an opportunity for investment. In this module, we have discussed the meaning of technology, its features and difference between science and technology. The meaning of technological environment is described. Moreover, impact of technology on business environment and the factors affecting technology are discussed in detail. India has entered modern world in a state of economic backwardness and poverty of a large section of its people. It is obvious that technology must attend to the basic problems of food, clothing, health and housing of people living in the country. For this purpose the government has made a science and technology policy for maintaining a sustainable technological environment.

Learn More

Few important sources to learn more about the technological environment are:

Shaikh Saleem (2009). Business Environment. New Delhi-110017: Pearson Education.
Bagchi Amaresh (2011). Readings in Public Finance. New Delhi-110020. Oxford University Press.
Jha Praveen (2011). Progressive Fiscal Policy in India. New Delhi-110044. SAGE Publications India India Pvt. Ltd.
Kapila Uma (2007). India’s Economic Development Since 1947. New Delhi-110002. Academic Foundations.
Datt & Sundharam (2011). Indian Economy. New Delhi-110055. S. Chand & Company Ltd.
Agrawal A.N. (2007). Indian Economy-Problems of Development and Planning. New Delhi-110002. New Age International (P) Limited.
Paul Justin (2009). Business Environment-Text and Cases. New Delhi-110008. Tata McGraw Hill Education Private Limited.
Agrawal Raj (2006). Business Environment. New Delhi-110028. Excel Books.
study.com/…/technological-factors-in-business-definition-lesson-quiz.ht.
business.svtuition.org/2009/…/what-is-technological-environment-and.ht.
www.openlearningworld.com/…/Technological%20Environment.html
https://learningebusinessinitiative.wordpress.com/…/technological-factors.

Points to Ponder

Technology in today’s world is considered to be one of the most significant factors of any business environment.
Technological factors sometimes cause problems. A firm which is unable to cope with the technological advancement may not survive.

It is useful to place the two words-science and technology in their proper perspective.

Feature of technology is its change and then more change with the passage of time. Technology stresses change on people whether they are ready for it or not.