SECTION 10- TECHNOLOGY AND THE GLOBAL BUSINESS

ENVIRONMENT

Business Technology
Business technology refers to the application of science, data, engineering and
information for business purposes, such as the achievement of economic and
organizational goals. The main element of technology is the idea of change and
how it can affect businesses and society. Technology gives rise to new techniques
and ideas that can be used to make business processes simpler, faster, more
accurate and more cost effective in a variety of ways. For example, at the
household level, people can use household gadgets to open their garage doors,
record messages on their phone, control the temperature of the air conditioning
system.

Role of information and communications technology (ICT) in business

ICT consist of all uses of digital technology that exist to help individuals,
businesses and organizations to use information. It is therefore concerned with
the storage, retrieval, manipulation, transmission and receipt of digital data.
 Storage of data: before ICT, a business needed to hold a Avast amount of
records on paper, usually stored in filing cabinets. Today, most of this can
be stored in a central digital database or a set of Word files.

 Retrieval of data : employees often need to retrieve records to find key

information ,such as the customer address or whether a bill has been paid
on time
 Manipulation of data: this involves adding to data or changing it so that it
is better organized and easier to read. Records can be added to or altered
quickly by making a few simple entries on a keyboard.
  Transmission or receipt of data: ICT makes it very easy to send and receive
data, such as emails.

Ways in which technology has influenced banking and

commerce
Technology has significantly changed the way people interact with banks as well
as the way they purchase goods and services. This is illustrated in the following
examples:
 The introduction of Automatic Teller Machines (ATMs) and Automatic
Banking Machines (ABMs) has made it easier to deposit and withdraw
funds as well as to access other services without having to go into the bank.
These are normally located in hotels, petrol stations, supermarkets increase
the convenience for customers.

 The practice of online banking enables customers to access their accounts

from home and other locations using personal computers and mobile
devices. This facility allows customers to check their balances and make
easy and convenient payment towards utility and other bills, transfer funds
from account to another and carry out banking operations from a
convenient location.

 Technology has influenced buying and selling through electronic

commerce (e-commerce).Individuals and businesses are now able to make
business transactions via the internet without having to visit a physical
store location. Ecommerce has given rise to many online stores , which
allow customers to browse for products and pay for them electronically.
Types of ICT used in business
 Traditional ICT tools
Productivity tools
1. Microsoft word –this is a word processing tool that enables the
creation of documents such as
letters, orders, invoices, pamphlets
etc.
2. Microsoft Excel (spreadsheet) - this shows a table of numbers that is
set out in rows and columns. The data can be inputted, displayed and
manipulated .This data can then be used to convert into diagrams
and also to make financial calculations.
3. Microsoft Access- is a database program that helps a business to
store information for reference purposes and to create reports and
analyze the data in the database. It allows the user to analyze large
amounts of information.
4. Microsoft PowerPoint- this allows users to make virtual slideshow
presentation displaying text, images and videos. Sound can also be
inserted into presentations .Slides can be easily edited, added to and
deleted.
5. Graphics software- this enables the user to create, alter and manage
two dimensional images on a computer. Examples of graphics
software include Microsoft Paint, adobe Photoshop. Using photo
shop, the user can alter digital images , lighten a picture ,reduce or
increase its size to fit onto a page.
Specialist operations
These are specialist applications that are very helpful to businesses. These
include:
1. Accounting (QuickBooks) – this is the most widely used software for small
and medium sized companies .This can be used to record payments and
sales and producing sets of accounts. Additionally the package will accept
business payments and manage and pay bills and keep payroll accounts of
employees.
2. Computer Aided Design- this feature enables designers and engineers to
design new products using various interface tools with their computer such
as an electronic drawing pad. It allows very accurate design and drawing
since measurements are automatically calculated by the computer. Images
can be rotated so that products can be viewed from different angles. CAD is
frequently linked to computer aided manufacturing (CAM), which means
that once designs are created, they can be programmed into a machine
that automatically creates the products using instructions from the CAD
program.
3. Management Information Systems (MIS) – This is a computer based
system that helps managers to manage their departments more efficiently.
Managers of a company need to have detailed, relevant and up to date
information on a number of topics in order to manage a company
efficiently. The information may include production figures, wages of
employees, sales figures, etc.
 Digital Communication technology (DCTs)
DCTs are digital tools that make it possible for two or more people to
communicate with each other. Communications can be verbal, visual or in
writing and are often sent via satellite and fiber-optic transmission. The
main vehicles for digital communication technology are the internet and
mobile communications.

The Internet
This is the most widely used for communication purposes in modern
businesses. The key uses of the Internet for business include the following:
1. Buying and selling goods: the internet enables a business to buy
virtually anything online.
2. Collecting marketing data: when a business sells goods online, it is able
to access a lot of information about its customers, such as where they
live, how frequently they make a purchase. This information can then
help a business to plan ahead for example
3. Promotion the business and its products : an online website enables the
business to send carefully designed messages to potential
customers .Business can also promote themselves and their products
through social media for example, by creating their own Facebook page.

Mobile technology
M-commerce refers to the buying and selling of goods using mobile
technology, typically in the form of cellphones. The key to the development
of mobile commerce in a country is the existence of good mobile
connections and safe payment systems to prevent online fraud.
Distinguish between e-commerce and e-business
In both cases of ecommerce and e-business, the ‘e’ stands for
electronic networks and describes the application of electronic network
technology (including the internet and electronic data).
Ecommerce covers outward facing processes that touch consumers, suppliers
and external partners. These processes include sales, marketing, order taking,
delivery, customer service, and the purchasing of raw materials and supplies. It
involves new business models and the potential to gain new revenue or lose
existing revenue to new competitors
Electronic data interchange (EDI) applies to the exchange of information between
businesses (outward-facing processes), as well as the exchange of information
within a business (inward-facing processes), whereby information is converted
into a form that enables it to be transmitted electronically. This can be illustrated
by taking an example from e-commerce, where one business purchases goods
from another business using electronic communications.

E-business includes e-commerce, but it also covers internal processes such as

the following:
 Production – linking machinery to sophisticated computers that control
production operations .For example, in a bottling factory, an electronic
device can check that the required quantity of liquid is in a bottle , before
an automatic machine puts a top onto the bottle.
 Inventory management- inventory management software is used to track
inventory levels, orders, sales and deliveries .It can also order new
inventories when stock falls below a pre-specific level.
 Product development- designs for new products can be created
electronically using a computer and an electronic drawing pad .These can
 then be transformed into prototypes (working models of products for
testing)
 Risk management- all companies need to ensure that the amount of risk
they take is in line with how much risk is acceptable to the owners and
stakeholders in the company .For every risks that a business takes, there is
a likelihood that the business will incur a loss. Some risks can be estimated
mathematically while others are obligatory(health and safety laws)

 Finance –Most aspects of finance are handled electronically including the

purchase and sales ledgers ,invoicing ,payments and the creation of
statements such income statement and balance sheet.

 Human resources- there are many IT applications that can support a human
resources department, such as databases of employee records ,payment
software and online training courses.
Ways in which ICT can be used to improve the efficiency of
business operations
A business is able to become more efficient and therefore gain advantages over
its competitors when it uses ICT for the following reasons:
 Speed and time – operations can be carried out much quicker using ICT. For
example, an order can be processed and sent to a supplier very quickly.
Customer records can be accessed simply by typing the name of the
customer into the database.
 Easier storage- very large quantities of data can be stored on a computer in
its memory or in external storage. Files and folders can be created which
makes retrieval easier and faster. Information can be stored on external
storage devices, local servers which can be accessed from other computers,
or a cloud server for a price charged by the cloud server provider.
 Improved sharing of information – Information can be shared rapidly by
many people. One example is viral marketing which is a marketing
technique where ICT users pass on marketing messages to other users and
websites and make the message more visible.
 Automation- this term refers to using automatic systems to operate or
control processes, methods and systems, with very little or no human
intervention .For example, in an automated car plant, cars are assembled
on a moving production line operated by factory robots. In the Caribbean,
automation is seen in the form of food processing industries, bottling
operations, mining and oil refining.
Benefits of technology to business
There are a number of benefits to businesses from the use of technology:
 Reach more potential customers- a firm marketing and sales efforts will
allow it to reach a wider geographical spread of customers. The internet
provides a number of opportunities to extend a business’ target market.
This is one of the main drivers of globalization.
 Provide better service to customers- technology makes it possible to
improve customer experience, as businesses can interact directly and
immediately with customers, answering queries and complaints. There is
also the emergence of online payment systems and suggestion boxes to get
customer feedback.
 Support better relationships with key partners- key partners are the
organizations that develop important relationships with a business. These
include other businesses, government agencies and non-consumer groups,
partners in a joint venture. Businesses build partnerships in order to access
more and better resources, work collaboratively on a larger scale and to
work more efficiently.
 Allow customers to better guide the business- the development of
technology has given customers the power to determine how business
works. When buying goods and services today, many customers research
online to look for best buys and are more concerned about finding the
companies that best fulfil their needs.
Consequences of unethical use of ICT
Ethics are sets of moral principles regarding what is right or wrong behavior.
Ethical issues concerning ICT include:
 Security – information stored in databases, in social media communication
channels and in company intranet systems is never 100 percent safe.
Company information can be leaked from within the company by workers
or can be accessed by outsiders through hacking of the computer
system .Hacking may result in important information leaking into the hands
of unwanted individuals.
 Privacy- the records of organization’s members and customers have
traditionally been stored on paper files. However, today most of these
records are held electronically. This information must be kept away from
the public as part of the policy of privacy.
 Intellectual property infringement- There is a large volume of information
on the internet (images, films, music, books) where the copyright belongs
to the person or business which created that material. To use that
information requires the permission of the copyright owner.
 Impact on humans- Some fraudsters use the internet to con money out of
people .Unethical businesses can invade people’s privacy with unwanted
advertising .The Internet can also be used to encourage people to spend
money ion things they don’t really need or cannot afford such as gambling
websites.
 Distraction- A business has to set out clear policies and guidelines in
relation to the use of ICT at work in order to avoid workers engaging in
activities that does not contribute to the efficiency of the business( for
example texting on his/her cellphone or shopping online instead of
working)
Standard of living
Standard of living is a measure of wealth, basic needs and material comfort that a
citizen has the ability to buy and be able to enjoy some level of material comfort.
For example, consider Susie, a matron at the General Hospital located in capital
city. The combined salaries of her husband and herself allow them to purchase
groceries, pay the rent, pay for extracurricular activities for their children and
occasionally takes the family on an outing to dinner and the movies.

Indicators of a country’s standard of living

1. Level of consumption of goods and services
Many persons judge the performance of a country based on the
consumption levels. The consumption of most goods will increase as
people’s living standards rise. Consumption is normally concerned with
spending on food, clothing, footwear, housing, health, communication etc.
People at different income levels will spend differing proportions of their
income on various goods and services.

2. Disposable income of the population

Disposable income is the amount of money that households have available
for spending and saving after taxes and other statutory payments have
been made. Higher standard of living can lead to higher disposable
incomes, which households can then spend on higher quality and/or
quantity of goods and services.

3. Level of state ownership of resources

The level of state ownership of industries can also be an indicator of living
standards in an economy. For example, it is typical to find state ownership
of firms which provide water, electricity and public transportation. The
 Caribbean region consists of mainly mixed economy that are characterized
by strong private and public sectors. The strong role of the government in
many of the industries such as utility companies and telecommunications
may lead to national development being at the forefront of the decision
making process. This may result in more employment of local labour and
profits are kept locally. This is in contrast to a situation where the main
industries are owned by foreign firms that may lead to more foreigners
gaining employment and the majority of profits being sent overseas.

4. Access to modern technology

Access to modern technology impact both the private and the public sector.
Improvements in the field of technology through the introduction of
robotics, automation and improved materials being used to produce
machines has had an overall positive impact on the lives of the citizens of
any particular country. Some governments have ever been able to invest
and install closed circuit television along major routes to capture any
criminal behavior. Improved technology in factories can increase
productivity and output and ultimately standards of living

5. Level of Investment in Research and Development

As the profit level of businesses increases, so does the allocation of
resources towards research. Existing products and services are developed
and improved and new ones produced which improve the lives of
consumers. By also investing in and upgrading production facilities, there is
a greater possibility for companies to boost their export potential, thereby
increasing the levels of foreign currency flow for the country.
INDICATORS OF A COUNTRY’S QUALITY OF LIFE
Quality of life refers to the general wellbeing of citizens and their ability to
enjoy the wealth of the country by living in a clean environment with high
levels of employment, healthcare, education and security. Indicators
include:
1. Level of crime and sense of security enjoyed
There are many risks that citizens may face in their daily lives which
affect their sense of security. A person’s job security, their level of
health, the effects of aging or even the stability of the economy can all
affect their sense of security. There is also the fear of crime and violence
which may lead individuals to improve their personal safety by using
security bars and alarm system in their homes.

2. Availability of health, educational and recreational facilities

Access to high quality and free health care in the form of hospitals,
health centers, ambulances, medication and trained health care workers
impacts on our quality of life. These facilities is very important in adding
economic value to a country.

3. Diet and nutrition

As people earn higher incomes, they are able to access a wider variety of
nutritious food, including fresh vegetables and local fruits and sources of
protein in the form of fish and meats. However, there has also been a
tendency towards increased fast food consumption due to a fast paced
urban lifestyle. This increased consumption of fatty foods has led to an
increase in obesity and non-communicable diseases and a fall in life
expectancy.
4. Life Expectancy
Life expectancy is used widely when discussing quality of life .It
measures the likely length of life a person in a country at birth. The life
expectancy of the Caribbean people has improved through the years
due to better nutrition, reduction in infectious diseases and government
spending on healthcare, changes in lifestyle and education. The
emergence of various lifestyle diseases (cancer, heart disease, diabetes)
have significant impact on future life expectancy.

5. Infant mortality
The infant mortality rate measures the number of deaths of infants
under 1 year of age for every 1000 births. This reflects the health status
of the population and the effectiveness of the health care sector of the
economy

6. Access to Electricity and Clean Water

Access to electricity affects all areas of our lives. Many businesses
cannot function without electricity since they are used in refrigeration
and many other appliances critical to the production process. Clean
water supply is critical since it prevents waterborne diseases and
ultimately death in children in some countries.
 NATIONAL INCOME
This is an account prepared to provide decision makers with detailed information
that can be used to track the performance of the economy. This is then used to
determine the level of economic growth and the level of economic development.
It includes the total monetary value of all the products and services produced
within an economy over a given time period with an adjustment made for
depreciation. It can be used to compare a country’s performance in comparison
to previous years and to compare the performance between similar countries.

Gross Domestic Product (GDP)

This refers to the total value of goods and services produced within a country
over a period of one year. This is the most commonly used form of measurement
that countries use to assess the size of their economies and to compare their
economy with that of other countries. Rises in GDP indicate that the value of
goods being produced is increasing ( and that people’s income are rising ).

Gross National Product (GNP)

This represents the total monetary value of goods and services produced by
nationals of that country (locally or abroad). This includes the value of goods and
services produced locally as well as net property income from abroad. This is the
difference between the net income earned abroad from property and
entrepreneurship and the net retained earnings of resident companies abroad.

Per Capita Income

This is the GDP per head of population (i.e. per person).This is calculated by
dividing the GDP in a given year by the size of the population.
Per capital income = National income/Population
How national income relates to growth and development
Most definitions of development relates to the ongoing raising of living standards
(what most persons can afford to buy), and the improved ability of a country,
through its own efforts, to produce more goods and services over time.
Definitions usually include improving medical and education services.
For a country to be experiencing development and growth as measured by the
standard of living, we might expect to see rising levels of GDP, GNP and GDP per
capita. Quality of life is just as important as Standard of living since improving
quality of life usually results in:
 rising GDP per capita
 falling infant mortality rates
 increased life expectancy
 increased access to clean water ,electricity, telecommunications, etc.
 better educational opportunities
 improvements to the natural environment
 falling crime rates

ROLE OF EDUCATION IN ECONOMIC GROWTH AND DEVELOPMENT

Education is a key factor in determining the opportunities that people have in
society, as well as determining how productive a society is. Access to good quality
education enables people to advance themselves and to get better jobs that
require skills and knowledge. As people become more skilled and knowledgeable,
they are able to help firms to produce more output.
The higher the standard of living in a country, the more the country can spend on
education. The more a country spends on education, the more capable then
country will be at using its resources efficiently and producing higher levels of
output.
The key reasons why education leads to better economic performance include
the following:
 People can be seen as a form of human capital. Education improves the
skills and abilities of the workforce, which in turn raises productivity.
 Education improves innovation ,because educated people are more likely
to come up with new ideas and technologies
 Education enables the spread of knowledge in society

INTERNATIONAL TRADE
This refers to the buying and selling of goods and services across international
frontiers/boundaries.

Reasons for international trade

 A country may not have certain assets or natural resources to produce the
goods and services it needs. It therefore will have to import from another
country. For example, countries that doesn’t have oil will have to import
from another country.
 A country may not be able to produce the goods and services it needs in
the quantities or quality required. For example, Barbados, Jamaica and
Antigua are the main producers of Sea Island cotton. Other countries are
not able to compete with the quality these countries produce so will
therefore import Sea Island cotton from these three countries.
 A country may not have the climate to grow certain foods, so has to
depend on trade to acquire these foods. For example, some European
countries are too cold to grown tropical fruits such as bananas, pineapples
and mangoes.
 International trade allows for foreign direct investment, allowing
individuals in one country to invest money in foreign countries.
 Functions of major economic institutions in the caribbean

1. CARICOM
This is a community of 15 member states and associates which enables
economic cooperation and integration between members. Member states
include Dominica, SVG, Belize, Montserrat, Jamaica, St. Kitts and Nevis,
Bahamas, Haiti, Guyana, St. Lucia, Antigua and Barbuda, Trinidad and
Tobago, Barbados, Grenada and Suriname.
CARICOM also seeks to coordinate the foreign policy of members, achieve
full employment in all aspects of production and to create special projects
for poorer states within the community. It has defined its countries as
belonging to one of two groups:
 Less developed countries such as Haiti and St. Lucia
 More developed countries such as Barbados and Jamaica

2. CARICOM Single Market and Economy

This is a free trade area where there are no tariff barriers between
countries. For example, this means that when Jamaican goods are exported
to another Caribbean country, there are no import (or export) taxes to be
paid on these goods. The key elements of CSME include the following:

 Free movement of goods and services

 The right of establishment which allows CARICOM based businesses
to set up in other member states without restrictions (for example
allowing a Dominican business to set up in Jamaica).
 A common external tariff which is a common import tax on imported
products from non-member states (outside CARICOM).
 Free movement of capital and the convertibility of one currency into
another.
 The harmonization of business laws (bringing them together)
 Free movement (within CARICOM) of agreed categories of people
such as nurses and doctors
3. Caribbean Development Bank
This is a regional development bank whose purpose is to encourage and
enable development within the Caribbean area by providing funds for
development projects.

4. International Bank for Reconstruction and Development

This organization is part of the World Bank, and is an international financial
institution that provides funds for development. The IBRD will finance
projects such as education, healthcare and strive to eradicate poverty

5. World Bank
The World Bank has a membership of 189 countries, and currently has two
major objectives:
 To end extreme poverty by reducing the share of global population
 To increase the incomes of the poorest 40 percent of people in every
country.
 Offer loans and grants at very low rates of interest to the world’s
poorest nations
 Resolve disputes involving international investors
 Provides insurance to investors and lenders who invest in developing
countries
 Provide financial advisory services to encourage private sector
investment in developing countries.

6. International Monetary Fund (IMF)

This was set up to provide supervision for the world’s banking system. One
of the functions is to lend money to governments in times of financial crisis,
when investors have lost confidence in the banking systems of those
countries.
7. Organisation of American States (OAS)
The aims of the OAS are to strengthen the peace and security of the
Western Hemisphere, to promote the peaceful settlement of disputes
between its member states, and to encourage cooperation in economic,
social and cultural matters.

MAJOR ECONOMIC PROBLEMS OF THE CARIBBEAN

1. Unemployment
People are classified as unemployed when they would like to work and
make themselves available for work but cannot get a job. There are a
number of causes of unemployment such as decline of certain industries
and insufficient demand for products from overseas.

2. Population density
Some areas of the Caribbean are particularly densely populated by
international standards. In densely populated areas, there is a strong
pressure on resources in these places (such as pressure on the supply of
water, electricity and food).

3. Migration
The key issue associated with migration is the brain drain effect, such as the
loss of doctors and nurses to the United States, Canada etc. People migrate
to find better paid jobs and a perceived higher standard of living and quality
of life.
4. Debt Burden
A major issue facing Caribbean island is overseas debt. Debt builds up when
a country has to borrow from an international lender such as the IMF,
which provides financial support when a country is facing financial
difficulties. However, debt mounts up and has to be repaid with interest. A
country therefore has to use current earnings to pay for past debts. The
debt burden severely slows down the growth of an economy because
instead of being able to invest for the future, the country has to pay back
debts built up in the past.

5. Sourcing capital and raw materials

As Caribbean countries are relatively small islands with limited resources, it
is difficult for them to attract capital from overseas investors (or from home
investors).It is also difficult to develop raw materials on a large scale at
home.

6. Economic dualism
The Caribbean is characterized by growth poles (prosperous and dynamic
areas), which sit next to areas with high unemployment and a lack of
opportunities (such as some rural areas and areas of urban
deprivation).Resources tend to move from poorer areas to areas that are
more dynamic.
 Solutions to the major economic problems in the
Caribbean
1. Access to foreign direct investment (FDI)
Foreign direct investment is where one country makes a physical
investment into building operations (e.g. factory or office) in another
country. The emergence of more multinationals have contributed
significantly to increased foreign investment in developing countries.

Advantages of foreign direct investment

i. It increases GDP by adding to total national output
ii. Some of the output produced can be exported which increases the
foreign currency earned by the country
iii. The host country can receive new technology, capital, equipment and
management skills
iv. It contributes to increasing employment for the local workforce
v. The country can generate more taxation revenue from these new
firms which can help to provide more public goods and services for
citizens.
Disadvantages of foreign direct investment
i. The new operations may compete with local businesses and put their
future at risk.
ii. Profits earned by these new companies are often repatriated(sent
back) by the investors to their home country creating a leakage in the
economy
iii. Many of the jobs may be taken by employees from the home country
of the multinationals which means that employment of locals may
not increase as expected.
iv. The new operations may be damaging to the environment
v. Governments might be forced to give tax breaks and grants to these
companies which can worsen the government financial position.
 vi. Foreign companies may not transfer higher level skills to locals but
instead bring senior staff from overseas

2. Development of human resources

The importance of a well-trained and flexible workforce cannot be
overemphasized. If a workforce is lazy, unwilling to adapt to new ideas and
technology, and has low skills, then economic growth is likely to be very
low. All the Caribbean governments are seeking to improve the quality of
human resources by
 Improving school infrastructure and equipment
 Raising teaching and education standards
 Raising the school leaving age
 Increase investment in technical and vocational centers
 Expanding universities and proving access to more students
 Offering more scholarship opportunities to students in a wider
variety of fields relating to modern industry and technology

3. Development of the manufacturing sector

Manufacturing industries use raw materials and other factors of
production, add value to them and sell finished products. This helps to
create employment, increases tax revenue for the government, increase
exports and increase GDP.
The government may seek to increase the development of the
manufacturing sector by:
 Giving grants to encourage businesses to set up
 Implement school education programs focused on the needs of the
manufacturing industry
 Investing in infrastructure such as road, broadband, connections,
airports etc.
 Offer training to upgrade skills of managers
  Reduction in manufacturing costs such as local taxes and the costs of
energy

4. Development of technology to generate economic activity

Technology allows work to be completed more accurately and efficiently.
Through the use of technology, countries are able to produce goods and
services at a faster rate and of an increased quality. This can mean that
countries can actually reach wider markets and earn more foreign
exchange.