How Technology Affects the Business Environment Essay Example for Free

How Technology Affects the Business Environment Essay During the last century, the world has been through a technological revolution. We have in few years moved from being a world where it could take months to receive a message, to being a world where it takes microseconds. Within most industries, technology is a very important factor to succeed. Especially in certain industries, like energy, transport and financial services, technological innovations have been vital to make those industries develop into what they are today. Companies are always struggling to acquire better technology, so that they in a more efficient way can produce their products or carry out their services. It is therefore important for companies to keep an eye on new technological innovations. The technological elements of the external environment are a part of the LoNGPEST analysis, which is being used to scan a firms environment, so it in a best possible way can adopt to it. In this essay, I will attempt to explain how technology has been a vital reason for the globalization, and how it has made the world more efficient. There is no doubt that the development of information and communications technology is one of the causes for globalization. The table below shows the reduction in communicating and travelling prices. According to the table, the price of a 3 minutes phone call have been reduced by 98,6%. The reduction in air transport costs per mile is 74%. There is no doubt that such reductions encourage companies to expand geographically. In addition, the rapid growth of the internet has made it possible to share information with the rest of the world in microseconds. Eric Samuels states that one of the industries that has grown because of information technology is the financial service industry. He states that â€Å"delivery of services has become more efficient because of the application of technology.† What he is saying, is that the financial services provided are being done more effective and at a lower cost than before. By using the internet, companies can reach out to the whole world without spending a pound. In addition to claim that the financial service industry has grown due to the information technology, Dr. Nicolas Pologeorgis also states that the industry, since 1998, has gon e through a rapid geographic expansion. This especially applies to wealthy nations, like countries from Europe and USA. He claims that â€Å"customers previously served by local financial institutions are now targeted at a global level.† Dr. Pologeorgis believes that one of the reasons for this, besides deregulation and more trading between countries, is the information technology. Services like ATMs and websites is being used to develop a more efficient relationship between long distance customers and suppliers. A study about globalization of the banking industry, states that improvements in technology â€Å"have facilitated greater geographic reach by allowing institutions to manage larger information flows from more locations and to evaluate and manage risks at lower cost without being geographically close to the customer.† One example of a company from this industry that expanded geographically in the 90’s is Goldman Sachs (GS). I 1990, Robert Ruding and Stephen Friedman decided to focus on GS global operations. During the 1990’s, GS went through a rapid geographical expansion. Today, GS has offices located in all major financial centres around the world. I have made a comparison between the growth in the financial service sector and the use of internet worldwide. It was in the 90’s that the internet use exploded. In 1995, 16 million people were connected to the internet (0,4 of world population). The table below shows that the use of internet exploded about the same time that the financial service industry, according to Pologeorgis, really started expanding geographically. However, it is not only the improvements in communication and information technology that has contributed to a more efficient and globalized world. Another industry that has been affected by improvements in technology the last century is the oil and gas industry. An article made by naturalgas states that â€Å"new innovations have reshaped the industry into a technological leader9.† A report made by the U.S. Department of energy in 1999 shows that if technology had stagnated in 1985, America would have needed twice as many wells to produce the same amount of oil and gas. However, because of technological improvement, we only need half as many wells to produce the same amount in 1999. In 1999, the America used 22 000 less wells to produce the same amount as they did in 1985. A statistical review of world energy made by BP illustrates how much oil and natural gas that has been produced in each country and worldwide from 1965-2010. Worldwide, the total development of oil has increased from 31,806,000 barrels daily in 1965, to 82,095,000 barrels daily in 2010. The development of oil has increased from 96,9 billion cubic feet daily in 1970, to 309 billion cubic feet daily in 2010. The main reason to the increase in production is off course the growing demand, but according to naturalgas it would have been impossible without the improvement in our technology. Consumption of oil increased from 30,783,000 daily in 1965 to 87,382,000 barrels daily in 2010 and consumption of gas increased from 63 billion cubic feet daily in 1965 to 306,6 billion cubic feet daily in 2010. Another industry that has developed because of new technology is the nuclear industry. Numbers taken from NEI shows that 13,5 of the world’s electricity production IN 2010, was provided by nuclear power. Furthermore, NEI states that â€Å"in total, 15 countries relied on nuclear energy to supply at least one-quarter of their total electricity†. According to NEI, one example of a country that is dependent of nuclear energy is France. 74,1 percent of the energy produced in France was generated through nuclear energy. The statistical review published by BP, shows that the consumption of electricity generated from nuclear power has increased tremendously since 1965. In 1965 the global consumption of terra hours has increased from 25,7 in 1965 to 2767,2 terra hours in 2010. FINN UT OM DAILY In this essay, I have tried to show how technology has been a vital part of both the globalization and the development of a more efficient world. I have found that information and communication technology has been important for globalization. Lower costs of travelling and communicating overseas encourage people to expand geographically. In addition, the fact that use of internet has developed into a common thing, especially in developed countries, makes customers able to do services that they could not do before. My essay also shows how the oil and gas industry have become more efficient, and how the nuclear industry has grown due to technological improvements. Reference list: Department for Business Enterprise Regulatory Reform (2008) Globalisation and the changing UK economy, page 3 [online]. Available from: http://www.bis.gov.uk/files/file44332.pdf accessed at 22.11.2011. British Petroleum (2011) Historical data [online]. Available from: http://www.bp.com/sectionbodycopy.do?categoryId=7500contentId=7068481 (then click on historical data) Accessed at 23.11.2011. U.S. Department of energy (1999) Environmental benefits of advance oil and exploration and production technology [online]. Available from: http://www.fe.doe.gov/programs/oilgas/publications/environ_benefits/4envben.pdf Accessed at 22.11.2011. U.S. Department of Energy http://www.fe.doe.gov/programs/oilgas/publications/environ_benefits/3innov.pdf Funding Universe, The Goldman Sachs group INC [online]. Available from: http://www.fundinguniverse.com/company-histories/The-Goldman-Sachs-Group-Inc-Company-History.html Accessed at 22.11.2011. Goldman Sachs (2011), who we are – at a glance [online]. Available from: http://www2.goldmansachs.com/who-we-are/at-a-glance/index.html Accessed at 22.11.2011. Internet World Stats (2008), internet growth statistics [online]. Available from: http://www.internetworldstats.com/emarketing.htm Accessed at 21.11.2011. Internet World Stats (March 31, 2011), internet usage statistics [online]. Available from: http://www.internetworldstats.com/stats.htm Accessed at 21.11.2011. Dr. Nicolas Pologeorgis (2009), The Globalization of Financial Services [online]. Available from: http://www.investopedia.com/articles/financial-theory/09/risk-free-rate-return.asp#ixzz1eNeBhksO Accessed at 20.11.2011. Eric Samuels (2011), Marketing of Financial Services [online]. Available from: http://www.measurethat.com/?cat=5 Accessed at 20.11.2011. Natural Gas (2010), Natural Gas and Technology [online]. Available from: http://www.naturalgas.org/environment/technology.asp Accessed at 22.11.2011. Nuclear Energy Institute (2011), world statistics, nuclear energy around the world [online]. Available from: http://www.nei.org/resourcesandstats/nuclear_statistics/worldstatistics/ Accessed at 22.11.2011. Wall Street Journal (2010), A Brief History of Goldman Sachs [online]. Available from: http://online.wsj.com/article/SB10001424052748704671904575193780425970078.html Accessed at 21.11.2011 Allen N. Berger, Qinglei Dai, Steven Ongen, David C. Smith (2002) To What Extent Will the Banking Industry be Globalized?A Study of Bank Nationality and Reach in 20 European Nations, page 3 [online] Available from: http://siteresources.worldbank.org/INTFR/Resources/banking_industry_globalization.pdf Accessed at 22.11.2011.