Developments in Technology Systems
These key drivers for changing technology systems are usually about making the business more money but this could be achieved by attracting more customers, reducing costs or speeding up the processes.
In this lesson we will learn how developing technology systems can allow a business to:
- Gain competitive advantage over other business’ to attract more customers.
- Reduce costs to help raise profits.
- Improve performance to make the business more efficient.
1. Competitive Advantage
Businesses always want to gain an edge over their competitors. This might be to improve production speed and reduce costs, or it might be to add new advanced features or improve the performance of the actual product or service being offered to customers.
One of the best ways to do this in the modern business world is by developing a new technology system.
Retail businesses and coffee shops often innovate with new payment methods in order to gain an advantage over their rivals. They might do this by adding self-service tills or even the ability to scan while you’re shopping, or they might implement contactless payment methods and mobile payment methods like Apple Pay and Google Wallet.
The goal behind these is to make it quicker for customers to shop in their stores, so they are more likely to return rather than go to a rival.
Further Thought
What other ways can you think of that businesses might gain a competitive advantage?
Have you seen something new in a shop that you thought was a good idea and made you consider returning rather than going to a competitor in future?
2. Reduced Costs
A business can reduce how much it costs to run its business by using new technology systems. This reduction in costs could be achieved by needing less staff to run or by making it quicker to develop or deliver the products and services.
If a business can reduce its costs, then this would obviously be of great benefit to a business as it can be used to increase the business’ profits or to reduce the prices of its products and services to help gain an advantage over its competitors.
Examples of how businesses use technology to reduce costs can be seen everywhere. If we go back to the example of retail stores like supermarkets, many of these have implemented self-service tills and scan-as-you-shop systems which means they need less staff to perform the checkout process. Because they need less staff working tills to check out customers, the business has reduced its costs by paying less in staff wages.
Other examples could include businesses installing satellite navigation systems in all of their delivery lorries to help reduce the time it takes to deliver their products. This can make savings in fuel as well as needing less delivery staff.
Further Thought
If a business can reduce its staff by implementing a new technology system, but the technology system would cost more than its staff’s wages to implement, would it do it?
Think of the pros and cons of the business doing so.
3. Improved Performance
A new technology system can make a business more efficient. By this, we mean that the business can perform its daily activities quicker and more easily. When a business becomes more efficient, we say they are improving its performance.
Improving the business’ performance can support the other two key drivers by giving them an advantage over competitors (by making it easier and quicker for customers to buy their products or use their services), and it can reduce costs (by needing less staff due to faster processes).
There are other benefits though, such as improved staff morale, as if it is easier for them to do their job they will be happier.
Many businesses have implemented technology systems to make it quicker and easier for staff to communicate. This could be having an email system for staff to contact each other or using video conferencing software so that staff don’t need to travel long distances to take part in meetings.
A retail example is the implementation of touchscreen tills. These are used heavily at fast food restaurants, where it makes it far quicker and easier for staff to select the meal item the customer orders.
Further Thought
What other ways might a business improve its performance?
Try searching online for examples of where businesses have used technology to make themselves more efficient.
Lesson Summary
So to summarise what we’ve learnt in this lesson:
- Technology systems are regularly changed and improved.
- Gaining a competitive advantage is one of the reasons for doing so.
- An example of this would be shops implementing mobile payment methods earlier than their rivals to make it easier for customers to pay.
- Reducing costs is another reason for implementing new technology systems.
- For example, retail stores implemented self-service tills so they needed less checkout staff and so they saved money on staff wages.
- Improved performance is the final reason for implementing a new technology system.
- An example of this is the use of touch screen tills in fast food restaurants which makes it easier for staff to input customer orders.