Reading: Lesson 6 - Technology and Business Strategy

6.6.A - Technology and Business Strategy

1. TECHNOLOGY'S IMPACT ON STRATEGY

1. One of the roles of a manager is to develop and implement strategic plans for the company, division, or product. A key component of developing strategy is to collect information on customers, competition, and the business environment. Information used in strategic planning comes from internal or external sources. Internal information can be pulled from the company’s databases or digital dashboards. External information can be collected from a variety of online sources. Just as you use the Internet to gather information for a school project or report, managers use the Internet for research. Much of the information on the Internet is free, provided by government agencies, colleges and universities, libraries, and even private businesses. Other information that businesses need can be purchased from professional associations, trade groups, publishers, and companies specializing in research. For example, Dun & Bradstreet and their subsidiary Hoover’s provide specialized research reports, information, and publications for businesses. They provide both industry and company data.
   
2. Have you ever had a website suggest products or provide advertisements that seem to be directly related to your interests? This is the result of businesses gathering and analyzing user information. Businesses can serve current and prospective customers better when they can link online activities to individuals. Social networking sites have rich data that can be used to develop user profiles. Data collected from online behavior are placed into databases where data mining techniques are used to create information. Data mining is the process of using data in databases to find relationships between individuals and their behavior or preferences. For example, when an individual purchases a product with a credit card or a debit card, a track is created back to the purchaser. A record of an individual’s purchases can be matched to any other information a company has about the individual. Companies use this type of information for a number of decisions. For example, decisions about inventory for a new store can be made based on customer profiles in a region. New products that match customers’ needs can be introduced rapidly.
   
3. When companies sell products, they often encourage purchasers to complete a product registration online. Mining the data can identify not only who purchases or is interested in which products, but it can also identify relationships to others who may share the same product interest or purchase intentions. Customers who regularly use the Internet are more likely to complete a product registration online than if there is the need to fill in a registration card by hand and mail it. The registration process allows the company to collect important customer profile information, including address, telephone number, and email address. Also, the company can gather information on where the product was purchased, the price, reasons for purchasing the product, and other related products the consumer currently owns or plans to purchase. Whenever an individual provides information, a business should include a place where the prospective customer can request information about products or services, be placed on an email or mailing list, or obtain answers to specific questions. This allows the company to develop a list of prospective customers and determine their interests. The information collected can be used for future communications and promotions.
   
4. Data is added to a company’s database when an individual engages in actual or potential purchase behavior on a website. Websites can track clicks on links to an individual computer or to a registered user. This can show areas of interest to the individual. For example, many retailers use customer searches and purchases to suggest other products or services that match those interests. Registration allows for more in-depth analysis of a customer’s preferences because searches or purchases are linked to one individual and not just all users of the device. The privacy policies of many companies specifically state how they use customer data. Product coupons may also be offered through electronic means. Product coupon websites link registration to product interests. These sites can track customer profiles to requested coupons. Information collected by the coupon companies allows for targeted coupons to customers, and the coupon companies can sell the information they collect to manufacturers. The manufacturers can add the customer profile information to their databases to aid in future decision making.
   
5. Social networking sites such as Facebook, Instagram, and Pinterest are now common uses of the Internet. A social network is a virtual community that allows users to post information about themselves and share that information with others. Individuals who use social networks provide personal information about their activities, interests, and opinions. Social networking sites can match advertisements and product offerings to these lifestyle factors. When a user chooses a relationship status, indicates a like or dislike, selects a group or association, or specifies a hobby or interest, the social networking site captures key terms. These key terms are used to develop customer profiles that allow for targeted advertisements. Advertisements for golf clubs and vacation cruises that a retiree might see when logging into a social media website do not appear when a twenty-year-old college student goes to his personal profile. Social network sites were expected to earn $36 billion in advertising revenue worldwide in 2017, up more than 10,000 percent from $350 million in 2006.
   
6. Companies with publicly traded stock will often post their annual reports to stockholders and various other corporate information online. Companies that offer products for sale online will post product descriptions, prices, credit terms, distribution policies, and the types of customer services offered. Some websites provide information on product tests, offer reviews of products, and even have places for consumers to discuss their experiences with a company and its products. Privately held businesses and those that do not sell online will often have less information open to the public. However, the Internet does allow for easy searches on companies by looking at news releases and other sources of industry information.
   

2. E-BUSINESS PLANNING

1. Managers must decide how e-business will fit into their company’s strategic planning. E-business uses communication technology to support business operations. Many customers use the Internet as the first tool to learn about a business. They visit a company’s website to research a company and its products and services. They might also visit competitors’ websites. Large businesses invest millions of dollars in creating and managing their Internet operations. Managers of small businesses can compete by creating attractive, professional-looking websites using readily available Web authoring software. Whether businesses create the websites themselves or hire professional designers to do so, managers must still carefully plan the design and content of their site and update it regularly to keep customers coming back. Managers must evaluate the three major parts of an e-business strategy: business planning, technology development, and site promotion. These strategic issues are important for businesses that sell to individual customers as well as businesses that sell to other businesses.
   
2. When developing the business planning component of the e-business strategy, managers must be intentional. A predefined plan helps the managers identify precisely what the website is expected to do for the business and consumers. Steps in this part of the e-business strategy include determining the purpose, knowing the customers and their needs, mapping the intended functions for both the business and consumers, and determining how the technology needed for the Web presence will be operated.
   
3. The first step in business planning for a website is to determine the purpose. Managers need to decide if the business will operate online only or the website will be just one part of the business. A manager needs to be able to answer the question, “What will users be able to do when they visit the site?” Some businesses operate only online. Shoe retailer Zappos is an example. It has no stores; it sells shoes, boots, and clothing through its website only. For a company that has its entire business exclusively online, the purpose is clear. The website needs to provide information, allow interaction with customers, and integrate with all aspects of the business. As part of the process of identifying the purpose of the website, managers should study the sites of similar businesses and talk to experts. Some businesses opt to start using the Internet for a limited set of activities and then progress toward full integration, while others develop a plan to start with a fully integrated site. Limiting the goals for their site might be a good option for some businesses.
   
4. The second strategic step in business planning for a website is to study the business’s customers, their needs, and the online experience. To develop a website that customers will use, managers must identify their customers, know what their customers want, and understand their customers’ level of interest for doing business online. Managers need to know whether their customers use the Internet primarily for information gathering or for purchasing products. They need to know which products customers typically buy online and which ones they are more likely to buy from a bricks-and-mortar business. When managers understand their customers, they can ensure their website is designed to be inviting and give customers confidence in developing a relationship with the business.
   
5. The third step is to plan the design aspects of the e-business website. Based on the strategic analysis, the manager will need to determine how the website should be configured as information-only, interactive, or integrated. A website can inform customers about a business and its products, close the sale for products, and provide links to service. Good design allows business owners and consumers to effectively perform the intended tasks on the business’s website. This process involves deciding on overall design themes, which specific products and services (if any) will be available online, and how users will be able to purchase products and services. For most businesses that are not entirely online, the manager must determine where and how the brick-and-mortar part of the business will fit strategically with the online part of the business.
   
6. The fourth step is to decide how the e-business will manage the online presence. Managers must decide if the business will develop and host the website or outsource some components to another company. For example, there are businesses that can facilitate online processes including hosting a site, managing inventory, handling credit card transactions, and coordinating shipping with companies such as FedEx or UPS. The fees charged by these e-business facilitators depend upon the services used. 
   
7. An e-business relies on technology for operations. Information sent over the Internet requires access to a web server—a computer that contains the software and stores the data for networks. A web server is the backbone of an e-business. In addition to the server, the website must be easily accessible to a large number of customers at the same time, at any time. If customers cannot access a business’s website, they may not return to the business. Managers of new and small businesses often find that they do not have adequate network technology or the necessary technical skills to build and manage a website. In this case, the managers may decide to use a web-hosting service. A web-hosting service is a private business that maintains the websites of individuals and organizations on its web servers for a fee. The web-hosting service often provides design services, the hardware and software needed to maintain websites, and the technical personnel to make sure the sites operate effectively. Web servers are accessed by an IP address, much like a phone number. This is linked to a domain name, such as Microsoft.com or USA.gov. A domain name is a website owner’s unique name that identifies the site. Most business Internet addresses use the format www.businessname.com. Yahoo.com is a domain name, but it has multiple Internet domains or server addresses (mirrored sites) to handle high usage. Before a business can use a domain name, it must register with one of several companies that maintain the domain names used throughout the world.
   
8. An e-business that wants to process orders and collect payments online will need special software. An electronic shopping cart is a program that keeps track of shoppers’ selections as they shop, provides an order form for them to complete, and submits the form to the company through the Internet. A business needs a secure server to accept credit card payments while protecting customers’ personal data from theft. In addition, credit card transactions must be processed through a credit card clearinghouse. These companies help to ensure that credit cards and purchases are not fraudulent by checking against credit card company databases. Customers expect online orders to be processed and delivered quickly and accurately. Managers need to make sure customers have a positive shopping experience. This includes the online experience as well as after-purchase services such as providing tracking numbers, accepting returns, and replacing damaged products. 
   
9. This step in developing an online business may seem to be out of order. Many managers want to design the website as the first step. However, until the plan is completed, managers will not know what needs to go on the website. To be successful, websites must be attractive and easy to use. If customers cannot find the information they need, if the site takes a long time to load, or if ordering instructions are confusing, prospective customers will leave and go to a competitor. Websites should use a design with easy-to-understand buttons and links. If customers can purchase products through the website, the shopping and ordering procedures should be obvious and simple. Shoppers should be assured of security and customer service. 
   
10. Unless managers promote their e-business, prospective customers will not be aware of it. In addition, current customers can be lost to competitors. Two steps will help managers promote their e-business. First, the e-business should register with the major search engines, such as Bing, Google, and Yahoo! Each search engine has an electronic means for collecting site addresses and categorizing them by keywords so that searches can find them. However, a manager can make sure search engines include the website under appropriate keywords by registering the site with the search engines directly. Registration information is available at each search engine’s website. It is also important to place advertising for a business in other online locations where prospective customers are likely to search for information related to the products and services sold. The business may want to sponsor sites that are popular with customers who may have an interest in the business or its products. Managers need to ensure their web address is provided in all materials the business distributes, including advertising. The second step is to advertise and promote the e-business offline. Although being on a search engine can be useful, it will not necessarily drive viewers to a website. The business may be one of thousands in the search engine database. If the website doesn’t make it to the first or second search page, it may never be viewed. The domain name should be placed on all company materials such as business cards, brochures, and correspondence. Traditional media can create an interest in a site. Then individuals may search for your company’s name or go directly to the website.
    
11. After careful planning and testing, a website is ready to open for business. Once the website is up and running, managers have many responsibilities. Managers are responsible for ensuring that the website is maintained properly and updated regularly. They also need to keep in contact with customers to get feedback about their shopping and purchasing experiences. Visiting other websites allows managers to learn about products and services offered by competitors and to see how other businesses communicate with their customers online. Managers need to keep up with the latest technology and online business procedures to help ensure their business becomes successful.
    

3. TECHNOLOGY'S IMPACT ON WORK AND WORKERS

1. Computers, the Internet, and other forms of technology devices affect people’s lives as consumers and as workers. The work of employees has changed because of new technological devices and because firms have restructured their operations. Over the last several decades, computers have changed the ways individuals perform work tasks. This has resulted in large gains in workplace productivity and job flexibility. At the same time, technology change has caused anxiety in people related to how electronic devices may affect their health, job security, and their ability to cope with new technology.
   
2. Managers need to address health problems faced by employees in any work environment. In some factory settings, employees face danger because of the work they do or the machinery they use. While jobs that use technology may not use equipment that is inherently dangerous, long hours spent doing repetitive tasks on a keyboard, looking at a computer screen, or sitting can result in injuries. Certain complaints arise among workers who spend most of their work time using computers and other automated equipment. Employees may complain about eyestrain, backaches, and hand weakness and pain. Eyestrain is likely to occur when computer operators view computer screens for long periods. To reduce or eliminate eyestrain, employers can suggest adjusting light intensity on screens, shading screens from glare, wearing glare-reducing glasses, and taking breaks every few hours. For some employees, sitting for long periods can cause back and hand problems. Managers can help by ensuring employees have proper workspaces and furniture so that keyboards and chairs are at the proper height for safety and comfort. Proper chair design with good back support can help prevent or alleviate discomfort. Breaks from being seated for long periods are also helpful. 
   
3. Repetitive motion such as using a computer keyboard can lead to a specific type of injury. Carpal tunnel syndrome (CTS) occurs when the median nerve, which runs through a tunnel in the wrist, is compressed or irritated. This can result in tingling and numbness in the fingers and hand, pain in the wrist and arm, and weakness that can limit the ability to grasp and hold items. The probability of developing CTS can be reduced by proper posture when using a computer, using a wrist rest or an ergonomic keyboard, and limiting repetitive motion involving the wrist. Treatment for CTS usually starts with rest, icing, medication, and immobilization of the wrist. Surgery may be required in severe cases. 
   
4. To help combat the problems outlined above, managers can adopt a number of strategies. One strategy is to embrace ergonomic designs. Ergonomics is the science of adapting equipment to the work and health needs of people. Ergonomic experts study the relationships between people and machines. In recent years, ergonomic experts have focused on making electronic devices, software, furniture, and lights adjustable, practical, and comfortable. For example, they work with industrial designers and engineers to develop chairs that can be adjusted to provide comfort and proper back support. Another practice for managers is encouraging workers to take breaks, exercise, and rotate tasks. 
   
5. A major role of today’s managers is to manage change. The rapid rate at which changes occur can be disruptive. To survive, businesses must be adaptable and employees must change to meet the needs of employers. Nearly all jobs have been restructured in recent years, and new types of work are evolving. Large numbers of employees use computers to complete tasks that were once done manually. Auto mechanics use computers to diagnose engine trouble, physicians manipulate digital x-ray images to diagnose disease, and lawyers research cases using massive legal databases. In addition to learning technology for their current jobs, some workers are seeing their jobs, and even their titles, change dramatically. For example, most secretaries have had title changes and have seen their jobs grow to include higher-level tasks and more responsibility. As administrative assistants, these workers may take on leadership roles, serve as members of work teams, coordinate projects, and train employees on how to use electronic devices and software.
   
6. Managers may take advantage of technology changes to re-engineer, or redesign, the workflow process. The general result of careful process redesign has been improved quality with fewer workers, far greater customer satisfaction, higher ranking among competitors, and improved employee morale. Computerization and new technology have reduced the need for some skills and increased the need for others. Today’s employees must have technical skills as well as interpersonal skills. For example, employees who work at computer help desks assist others who have computer problems. Help desk employees must have interpersonal skills, such as a friendly personality and a willingness to help others. They must also have technical knowledge about hardware and software along with problem-solving skills.
   
7. In addition to changing the nature of some jobs, technology creates new jobs. Examples include computer programmers, network administrators, systems analysts, software trainers, website designers, and computer repair technicians. Technology is also changing when and where people work. Telecommuting allows employees to work remotely using computers, the Internet, and wire- less communication to complete their job assignments. Technology even allows entrepreneurs to start and run their own businesses from home. Many popular Internet businesses were started from the homes of entrepreneurs.
   
8. Managers must always align their strategic planning to a changing environment. Over the last decade, changes in technology have been a major driver and will continue to force change. High-speed networks allow larger quantities of information to move faster around the world. Cellular-based Internet access allows workers and customers access to company and product information. Technology is also allowing information and communication to flow across national borders. The question for managers is, should they take the risk of leading change with technology or should they take the risk of being too late to adapt? Some of the major technological trends facing managers in the next few years are outlined below.
   
   • Data mining as more information is collected, data mining will become more valuable in understanding customers’ needs, allowing for more targeted products and communication. For example, grocery stores use scanner data to determine which product mix is purchased by customers in a market profile. 
   
   • Social shopping this emerging trend allows customers to use social networks to shop together or businesses to use voucher-based websites, such as Groupon and Living Social, to gather shoppers together. Businesses use these sites to promote special shopping opportunities in stores and restaurants.
   
   • Biometric security to enhance security, biometric systems such as voice recognition and retinal scans are being used to identify individuals to allow access to rooms, buildings, computers, and point-of-service terminals.
   
   • Wireless technology wireless systems can communicate not only with computers but also with almost any other electronic device over an Internet connection. These systems can be used to control home heating and cooling, lighting, and security systems.
   
   • Cell phone technology applications (apps) allow smartphones to act as information hubs, which allow users to input data directly to a central location. For example, nurses in hospitals use cell phones and tablets to enter medical reports and receive information to help meet patients’ needs.