3.9.4 Assessing Greater Use of Digital Technology

Question 1

what is digital technology?

Answer 1

Digital technology is the use of computers to find, store, analyse, manipulate and communicate digital information

Question 2

what are some key pressures on businesses to adopt digital technology?

Answer 2

1- to keep up with the market
2- to respond to digital innovation by competitors
3- to keep costs down
4-t to serve existing customers better
5- to reach new customers in new segments & locations
6- to offer new ways of delivering products and services using digital technology
7- to reduce costs by integrating digital technology into operations
8- to access, analyse and action data that provides key insights into customer needs and business performance

Question 3

what does digital technology include?

Answer 3

E-commerce
Big data
Data mining
Enterprise resource planning (ERP)

Question 4

what is E-commerce?

Answer 4

E-commerce involves digitally enabled commercial transactions between and among organisations and individuals

Question 5

what are 3 examples of commercial transactions?

Answer 5

B2B- transactions between businesses
B2C- transactions between a business and a consumer
C2C- transactions between consumers

Question 6

what are some benefits of E-commerce?

Answer 6

• Improved internet speed
• Millennial generation
• Convenience
• Competitive advantage
• Safer payment
• Increased confidence

Question 7

what are some advantages of e-commerce?

Answer 7

-Access to markets worldwide, 24 hours a day
-New way for customers to shop.- in store, click and collect, online delivery
-Cheap start-up costs compared to establishing a high-street presence across the country.
So businesses can:
compete in markets quickly
enter markets that might not have been possible in the past
-Greater access to suppliers and greater ease of comparing prices

Question 8

what are some disadvantages of e-commerce?

Answer 8

-May bring additional costs:
Spending on warehouses
Operating costs of the delivery system (if the business produces physical products)

-Online sales may not enhance sales from retail outlets
Barriers to e-commerce growth from buying products online:
*Customer’s inability to touch products
*Having to wait for delivery
*Delivery costs
*Worries about how to return products
*Worries about the use of data and the security of buying online.

Question 9

how has e-commerce significantly reduced barriers to entry? (porter’s five forces)

Answer 9

• widespread availability of smartphones+ has created new ways of delivering existing products and services
• global e-commerce platforms have made it much easier for small businesses to access their target customer base
• e-commerce has made it much easier to expand into international markets
• technological change has shortened product life cycles and enabled new market entrants to challenge established market leader

Question 10

what is big data?

Answer 10

big data is the process of collecting and analysing large large data sets from traditional and digital sources to identify trends and patterns that can e used in decision- making

Question 11

what are some reasons for the exponential growth of big data?

Answer 11

• retail e-commerce databases
• User interactions with websites and mobile apps
• Usage of logistics, transportation systems, financial and health care
• Social media data
• Location data (e.g. GPS-generated)
• Internet of Things data generated (IoT - connecting any device to the Internet and other connected devices.)
• New forms of scientific data

Question 12

what are some key business applications of big data?

Answer 12

• Tracking and monitoring the performance, safety and reliability of operational equipment
• Generating marketing insights into the needs and wants of customers, based on the transactions, feedback, comments. Big data is revolutionising traditional market research.
• Improved decision-making - for example analysing the real-time impact of pricing changes or other elements of the marketing mix (the use of big data to drivedynamic pricingis a great example of this. Dynamic pricing is setting flexible prices for products or services based on current market demands.)
• Better security of business systems: big data can be analysed to identify unusual activity
• More efficient management of capacity: the increasing use of big data to inform decision-making about capacity management

Question 13

what is data mining?

Answer 13

Data mining is the process of analysing data from different perspectives and summarising it into useful information, including discovery of previously unknown interestingpatterns, unusual records or dependencies

Question 14

what are some examples of how big data can help a business improve competitiveness?

Answer 14

• sales forecast
• database marketing
• market segmentation
• e-commerce basket analysis-using mined data to predict future customer behavior by past performance, including purchases and preferences

Question 15

what are some potential business benefits form effective data mining?

Answer 15

• Identify previously unseen relationships between business data sets
• Better predict future trends & behaviours
• Extract value (e.g. performance insights) from big data sets
• Generate business actions built on data insights

Question 16

what is enterprise resource planning?

Answer 16

ERP is a software system that helps businesses integrate and manage their financial, supply chain, manufacturing, operations, reporting, and human resource systems

Question 17

what are some potential benefits of enterprise resource planning?

Answer 17

• Financial management: better control over assets, cash flow, and accounting
• Supply chain and operations management: streamlined purchasing, manufacturing, inventory, and sales order processing
• Customer relationship management: improved customer service, and opportunities to cross-sell
• Project management: complex projects better managed and to lower cost
• Human resources management: may help attract and retain good employees
• Business intelligence: improved management reporting, analysis, and business analytics
• International business: helps coordinate multi-location business management

Question 18

what are some potential drawbacks of using enterprise resource planning?

Answer 18

Cost: significant investment, both in software and supporting systems & infrastructure
Significant training requirement

Question 19

what impact does digital technology have on human resources?

Answer 19

+ Changes to skills required may be needed:
-more IT skills
-ability to analyse and ask the right questions of data
+Nature of jobs may change
-Focusing more on data (rather than intuition)
-Some jobs will be affected more such as traditional print advertising or publishing

Question 20

what impact does digital technology have on a business?

Answer 20

• Improvements in communication and availability of information
• Better management as there is more data and analytical tools to enable better decision making
• Enabling new ways to do business where customers are more closely involved in the operations process
• Changes in HR issues such as more automation

Question 21

what impact does digital technology have on marketing?

Answer 21

• Digital technology enables far more data on customers to be gathered and to be linked to them as individuals
• This can lead to far more personalised and efficient marketing.
• There should be a closer fit between what the business offers and what is wanted by customers.

Question 22

what impact does digital technology have on finances?

Answer 22

-Depends on what aspect of digital is being considered
+For example, going online may lead to cheaper transaction costs than having a retail outlet
+But a distribution network will need to be established which can be expensive

Question 23

what impact does digital technology have on operations?

Answer 23

• Depends on which aspect of digital technology is being considered
• For example, ERP will provide more data on different aspects of the business and should enable greater efficiency, better cash flow and less wastage
• Use of big data should enable operations to be more flexible to demand, and reduce time lost and inventory being wasted.

Question 24

what are some challenges of digital technology?

Answer 24

-Leadership
+Need the right leadership to embrace digital technology

-Culture change
+Need for managers to make decision making based on data rather than `intuition’. What do we know, rather than what do we think?

-Rate of change
+Need to anticipate and react to rapid change in digital technology