How The Technological Environment Affects Business: Examples & Effects

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  • 0:04 Technology Defined
  • 0:46 Technological Change
  • 2:19 Advantages of Change
  • 3:05 Creative Destruction
  • 3:53 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Technology affects all of us. Technology can catapult a business to success or destroy it. In this lesson, you'll learn about technology, technological change, and creative destruction. A short quiz follows.

Technology Defined

Meet Barney. He has a problem. He's the president of a news magazine company, but subscriptions are in the toilet, and newsstand sales are even worse. He doesn't know if the company can survive another year. Barney has identified the problem as well as a possible solution.

Ironically, the problem and solution are the same thing: technology. Technology is a much more broader concept than many people today think it is. It is the application of knowledge to the world that allows people to affect their environment by controlling or changing it.

Technological Change

Technological change is improvement in the 'art' of making products or developing processes. Barney's biggest threat is new technological products and processes that are destroying the traditional print industry. A technological product is just something that man created using the application of knowledge to improve a person's life, environment or society.

In Barney's case, the new technological products wreaking havoc with his business are e-readers and computer tablets. Every year, more and more consumers are ditching the printed word for digital.

A technological process is a means to make and improve products and services. For example, the traditional manner of 'printing' magazines involved a mechanical printing press. Now, a new technological process has been developed to digitize the magazine to be transmitted and stored electronically.

Barney figures if he can't beat technological change, then his company must embrace it. He has decided to turn his print magazine into a digital one that will be readable on all major e-readers and computer tablets. He may also have to adopt or develop new technological processes for the production and distribution of his new e-magazine.

Advantages of Change

Technological change can bring about advantages and opportunities for businesses. Obviously, new technology can create new products and services, thereby creating entire new markets for a business. Moreover, improvements in technological products and processes can increase productivity and reduce costs.

For example, Barney will not have to purchase paper and ink for printing if he takes his magazine completely digital. He saves on space that is no longer needed for an industrial printing press and warehouse space for temporary storage of the magazines. Barney also won't have to pay a distributor to deliver paper copies to retailers.

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