Technological Environment of Business

Table of Contents:-

  • Meaning of Technological Environment
  • Features of Technological Environment
  • Factors Influencing Technological Environment
  • Classification of Technology

Meaning of Technological Environment

The technological environment is the macro environment, which includes factors like machines, materials, and knowledge for producing various goods and services. These factors have a profound impact on the functioning of the business organisations.

The technological environment encompasses the advancements in technology used to create innovative products and improve operational methods that impact businesses. Recent technological developments include mobile phones, computers, laptops, metros, automobiles, and other production techniques, etc.

These developments also aim to deliver new and distinct products and services through enhanced production techniques. It is not just responsible for economic growth but also affects the production policy of different organisations. To remain competitive in the market, marketers adapt their products and production strategies to align with the technological landscape. For example, technological factors enabled the transformation of typewriting machines into keyboards and computers.

In India, technology has changed the face of urban areas and is yet to set its impact across rural areas. The Green Revolution played a role in introducing it to rural regions. This has enhanced the productivity of farms using a mix of high-yielding varieties, tractors, fertilizers and better irrigation facilities. Recently, the introduction of the White Revolution in India has launched new technologies for animal husbandry and institutionalised diary activities through cooperatives, which has led to a considerable increase in the production and availability of milk.

Features of Technological Environment

We list below the key characteristics of the technological environment.

1) Far-Reaching Effects

A person, firm, industry or nation cannot avoid changes in technology as it has far-reaching effects.

2) Different from Science

Even though technology and science are interdependent, both of them are distinct from one another. Science implies a uniform and standardised body of knowledge, while the application of that knowledge is termed technology. Continuous advancements in science drive the constant evolution of new technologies.

3) Change

The most significant characteristic of the technological environment is change. Technology compels people to change, regardless of their willingness to embrace it. These changes create a future shock due to several changes occurring in the modern technological environment. A future shock refers to a change that furiously approaches human beings and proceeds towards the limits of human tolerance or patience levels. Eventually, people are unable to face or deal with the change.

4) Self-Reinforcing

Another salient feature of the technological environment is self-reinforcing. The concept of self-reinforcing indicates that technology undertakes the role of a multiplier to promote its rapid development. It acts in between different parts of society in a way that any invention occurring at one location creates a sequence of inventions in other locations. For example, the invention of the wheel has led to the fast development of a lot of other applications. Such applications consecutively influenced other parts of the system and directed many more inventions that correspondingly affected society as a whole.

5) Constituent of Macro Environment

Similar to other environments such as economic, social, political environment etc., the technological environment is also a constituent of indirect action or macro environment.

6) Prevalent

The effects of the technological environment are pre-dominant, wide-ranging and beyond the adjacent point of technological impact. Technology influences every community as it spreads throughout society. As the shock waves of these changes barge into even the most distanced places, no individual can avoid it.

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Factors Influencing Technological Environment

The factors influencing technological environment are as follows:

1) Level of Technology

An organization can use technology to varying degrees, either relying on labor-based or capital-based approaches. Both of the technologies can have a lot of implications for organisations under such situations where they are best suitable. We will now explain each of these in detail.

i) Capital-Based Technology: Capital-based technology requires the utilisation of machinery. It mainly comprises automation, utilisation of computers, robotics, etc.

ii) Labour-Based Technology: Human workers and machines are the primary agents for performing operations with this technology.

2) Pace of Technological Change

Technology is dynamic as it brings about a change in a much-accelerated manner. Factors such as invention, innovation, and diffusion drive the introduction of these changes. Technology change has the following impact on organisations:

i) It can obsolete existing industries.

ii) It can breathe new life into industries through product launches and cost cuts.

iii) It can lead to the birth of new industries.

iv) It can increase government intervention in the form of new rules and regulations.

3) Research and Development

Innovation requires a robust R&D base. With the increase in globalization, customers are now becoming more demanding and their expectations for quality and improvements are constantly increasing. Therefore, organisations need to invest in research and development to fulfil such demands and expectations. The organisations also need to collaborate successfully with the Government and industry networks to effectively utilise the latest technology.

4) Technological Transfer

There are varied sources of technology. They can exist within an organisation, country or in other foreign nations. Technology transfer involves the transfer of technology from technologically advanced countries or organizations. The rapidity of technology transfer and adoption holds immense importance, as significant delays can render technology obsolete.

Classification of Technology

Technology can be classified as follows:

1) Emerging Technology

Any technology which is not yet totally commercialised, but tends to commercialise within five years is termed as emerging technology. It is anticipated to grow appreciably despite its restricted use in the present scenario. Internet, nanotechnology, superconductivity and genetic engineering are a few examples of emerging technology. Emerging technologies have the potential to obsolete current industries and create new ones. They have the capability of provoking substantial changes in institutions as well as in society.

2) New Technology

Any recently presented or executed technology having a distinct effect on how a firm manufactures products or provides services is called a new technology. For example, new computer software launched to develop engineering drawings replaced manual drafting and drawing. It is not necessary that the technology must be new to the world, but it should essentially be novel only to the company. The technology is classified as new and original whenever introduced under a new circumstance, although it has evolved many years ago. New and innovative technology has a radical effect on boosting productivity and supporting the competitiveness of a firm.

3) High Technology

Advanced or sophisticated technologies are referred to as high technology or high-tech. A vast range of industries having distinct features make use of high technology. The description of high technology is as follows:

i) Technology used here is rapidly changing as compared to other industries.

ii) Highly educated and skilled personnel are associated with this technology wherein a major portion of them are engineers, scientists, etc.

iii) It has the power to compete with technological innovation.

iv) It has the required ability essential for utilising technology to ensure fast growth and development.

v) It usually has high levels of R&D expenditure.

4) Low Technology

Technologies that have been spread through large sections of human societies are referred to as low technology. A large range of industries make use of low technologies which have the following features:

i) They use manual or semi-automatic operations.

ii) The technology base is uniform with minute changes.

iii) People with low levels of education and skills are employed for its utilisation.

iv) Products offered by such firms include food, clothing, shelter and other fundamental human services that fulfil the basic requirements of society.

v) It has low levels of R&D expenditures, usually, lower than the industry standard.

5) Appropriate Technology

Appropriate technology signifies a good match between employed technology and essential resources for its optimum use. This technology can possess any level whether low, medium or high. For example, use of high technology where skilled labour or infrastructure is easily available. Several developing nations are being challenged by situations where they are willing to transfer technology used in more industrialised nations. There are two main advantages of using the appropriate level of technology namely; increased production efficiency and optimal use of labour resources.

6) Codified versus Tacit Technology

Non-articulated knowledge is termed tacit technology. There is an absolute variation in the manner in which tacit technology is expressed or suggested to a big group of people. This kind of technology is normally experience-based and hence, persists in the minds of its creator. All the technology-related knowledge and techniques are possessed by such technology developers. The process of transmitting tacit knowledge involves either observation or demonstration, followed by assimilation through those persons who seek to acquire related know-how, Codified technology enables individuals to understand how technology operates but not necessarily why it functions in a specific manner.

7) Medium Technology

Medium technology refers to a large set of technologies falling between low and high technologies. It elaborates on mature technologies that are more compliant with to transfer of technology than others. Industries manufacturing consumer products and automotive industries are a few examples of industries utilising medium technology.

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