1.5.2 Technology and Business

Question 1

Technology:

Answer 1

the application of knowledge, skills and techniques to improving business performance

Question 2

Different aspects of modern business technology:

Answer 2

• changing use of technology
• social media
• e-commerce
• digital technology
• digital communication
• impact on business

Question 3

What has technological change been like?

Answer 3

• Technological change has been rapid in recent years
• The invention and widespread use of computers and mobile phones has allowed businesses to change the way they operate and communicate
• It has also redefined markets and how businesses conduct buying and selling operations

Question 4

Positives of the changing use of technology:

Answer 4

Has allowed businesses to reduce costs and improve quality, efficiency and competitiveness

Question 5

Negatives of the changing use of technology:

Answer 5

• There are costs in purchasing technology and training staff to use it
• Employees may lose their jobs

Question 6

E-commerce:

Answer 6

the buying and selling of goods and services using the internet

Question 7

M-commerce:

Answer 7

using wireless handheld (mobile) devices, such as smart phones for commercial transactions

Question 8

What has the growth in e-commerce led to?

Answer 8

The growth in e-commerce has led to the development of auction sites such as eBay, specialist internet retailers like Amazon, as well as most high street retailers developing internet sites to sell their products

Question 9

Positives of e-commerce:

Answer 9

• Has allowed businesses to access wider markets and reduce costs through automatic ordering using online applications
• The business can experience sales increases and become more well-known

Question 10

Negatives of e-commerce:

Answer 10

• Costs increase due to investment in computerised systems and staff training
• Distribution costs increase, processing of orders/returns is time consuming
• Personal contact with some customers may be lost

Question 11

What are the uses of social media in businesses?

Answer 11

• Sales and marketing
• Interacting with customers
• Communicating with stakeholders

Question 12

How do businesses use social media to help with sales and marketing?

Answer 12

• Social media is a relatively cheap way to advertise in a visual or written form
• It can be used by both large and small businesses to attract atarget audiencethat is interested in the products and services being promoted or sold
• Business can encourage people tofollowtheir activities and promotions - in this way, businesses can gain loyalty

Question 13

How do businesses use social media to interact with customers?

Answer 13

• Businesses can use social media to see what customers are saying about their products and services
• Additionally, customers can ask questions, or express their views, about the products and services of a business
• These customer interactions need to be handled carefully, as inaccurate or inappropriate responses can be shared quickly and easily, creating badpublicityfor the business

Question 14

How do businesses use social media to contact stakeholders?

Answer 14

• Social media platforms, such as LinkedIn, can be used to make contact with other businesses andnetworkwith relevant people and organisations
• Many businesses now use social media as part of their recruitment process, not just for advertising vacancies but also to gain an insight into any applicants by looking at their social media activity
• Closed (private) social media tools are sometimes used by some businesses for informal orinternal communicationwith staff

Question 15

Positives of social media for businesses:

Answer 15

• Brand awareness- Compelling and relevant content will grab the attention of potential customers and increase brand visibility
• Brand reputation- You can respond instantly to industry developments and be seen as ‘thought leader’ or expert in your field - this can improve how your business is seen by your audience
• Cost effective
  
  • cheaper → as business can reduce costs on other forms of communication → fixed costs may be reduced
  • It can be muchcheaperthan traditional advertising and promotional activities - the costs of maintaining a social media presence are minimal
  • If you choose to invest in paid advertising, you can spend as much or as little as your budget allows
• Customer interaction-
  
  • You can deliver improvedcustomer serviceand respond effectively to feedback
  • Positive feedback is public and can be persuasive to other potential customers
  • Negative feedback highlights areas where you can improve.
• Target audience- Customers can find you through thesocial media
• Most social media sites allow data collection of users

Question 16

Negatives of social media for businesses:

Answer 16

• Resources
  
  • You will need to commit resourcesto managing your social media presence, responding to feedback and producing new content
  • This can include hiring and trainingstaff, investing in paidadvertisingand paying for the costs of creating video or imagecontent
• Evaluation
  
  • While it is easy to quantify the return-on-investment in terms of online sales generated by social media advertising - there are some less tangible benefits
  • It can behard to measureand place a monetary value on the brand awareness and reputation that social media can bring
  • It’s difficult to know how social media effects sales in-store
• Ineffective use
  
  • Social media can beused ineffectively
  • For example, using social mediato push for sales without engaging with customers, or failing to respond tonegative feedback- may damage your reputation

Question 17

Digital technology:

Answer 17

• where businesses use computer based tools, systems, devices and resources to generate, store or process data
• it has many aspects including social media, online multimedia, productivity applications,cloud computing, e-commerce and communication

Question 18

DIgital communication:

Answer 18

• a part of digital technology
• it is in widespread use throughout the world, through the use of devices such as smart phones, tablets, desktops and video conferencing
• it can also occur through social media platforms

Question 19

Different types of digital communication:

Answer 19

• Social media e.g. Facebook, WhatsApp, Instagram, Twitter, Snapchat
• Email
• Webchat – live
• Teleconferencing and video-conferencing
• Texts
• Apps

Question 20

Positives of digital communication for businesses:

Answer 20

• cheap to operate and widely used - messages and data can be transmitted quickly and widely
• data and messages can be stored electronically, saving cost of storage
• possible to produce translated versions using online applications
• teleconferencing, videoconferencing, use of Skype, possibly saving time and money
• high quality advertising and marketing

Question 21

Negatives of digital communication for businesses:

Answer 21

• may be unreliable - no guarantee that messages will be received
• communication overload leading to delays and failures
• equipment may not work and not all places will be connected
• environmental and health concerns over electronic transmission
• training requirements and employees may not be expected to “check in” when not at work

Question 22

How do businesses use e-payments?

Answer 22

• Collecting payments from customers by direct transfer, debit card, credit card or standing order
• Making payment to employees and suppliers through electronic transfer
• Contactless payment and smartphone apps are making e-payment more popular
• E-payments can be linked to accounting software

Question 23

Positives of e-payments:

Answer 23

• E-payments reduce the costs of paying in cash
• Provide quicker receipt of money
• Leads to happy customers who find it more convenient
• There is no need for cash to be kept or used

Question 24

Negatives of e-payments:

Answer 24

• Cost of buying and using payment systems
• Some customers will not wish to use an e-payment system
• Not all customers may have access to the required technology
• There is a risk of fraud

Question 25

How does technology affect business activity?

Answer 25

- Every business can make use of technology - Ignoring technological change is not an option, even if it may be disruptive to a business in the short-term - Competitors that use advanced technology effectively will get more sales and become more efficient compared to a business that does not - Small businesses often lack knowledge, awareness or the finance to capitalise on new technology, which can prove problematic

Question 26

How does technology affect sales?

Answer 26

- E-commerce provides access to a wider market and therefore a larger number of customers, potentially leading to higher sales - Payment systems – more convenient ways to pay for products; this can have a positive impact on the sales process and improve customer service which can lead to more repeat sales. - Digital communication – quicker and better interaction with customers through the use of systems such as live web chat, email and social media - This will help build customer relations increasing new and repeat sales

Question 27

How can technology increase costs?

Answer 27

- Initial investment in technology - Staff training - Recruitment of specialist IT staff if required - Maintenance and repair

Question 28

How can technology decrease costs?

Answer 28

- May replace employees leading to a reduction in staff costs - Improved efficiency, leading to lower costs - Many small businesses operate from home, reducing the need to pay for business premises

Question 29

How does technology affect the product (in marketing mix)?

Answer 29

- nature of the product e.g. fitness trackers, smartphones, apps all based on technology - products can be designed using technology such as CAD systems - some products have become obsolete as a result of technological change

Question 30

How does technology affect the price (in marketing mix)?

Answer 30

- Use of e-commerce has opened up the market and therefore level of competition. Businesses may need to be more price competitive - Price comparison sites allow customers to compare prices of products in specific markets

Question 31

How does technology affect the promotion (in marketing mix)?

Answer 31

- availability of social media provides a cheap and effective way to promote a business - Facebook allows businesses to identify and target specific market segments with their promotions

Question 32

How does technology affect the place (in marketing mix)?

Answer 32

- websites and use of e-commerce allows businesses, including small firms, to target wider markets – local, national and international - the growth of online shopping has meant the need to locate close to customers is now becoming less important

Question 33

Benefits of technology in businesses:

Answer 33

- decreases costs - quality improves - increased communication options - helps marketing and increases markets - improves financial efficiency - easier to recruit and retain employees - technology can change the way employers pay their staff and the way customers pay them - means efficiency will be improved and orders/bookings can be taken online - as a result, costs will fall as less administration and reception staff will be required - revenue will increase, as cheaper prices can be charged - appointments/products will be easier to book/order increasing the footfall of the business - this together with the reduction in costs will lead to a potential increase in profits