The Technological Environment & Innovations

THE TECHNOLOGICAL ENVIRONMENT & INNOVATIONS The natural environment is the ultimate source and support of everything used in business - raw materials, energy, waste disposal etc. It determines what activities are possible and how institutions function. Resource availability shapes business development in societies. Geographical differences across markets may necessitate marketing mix changes. Geography and ecology also influence industry location industries with high material weight locate near raw material sources. Potential natural disasters like earthquakes affect location decisions and building designs. Climatic conditions influence location of industries like textiles. Weather affects demand - coolers in hot regions, heaters/ACs in extreme climates. It impacts demand for clothing, building materials, food, medicines etc. Product, packaging, storage modifications may be needed. Ecological factors like resource depletion, pollution and ecological imbalance are a major concern nowadays. Environmental regulations increase business responsibilities and costs. Firms must tackle externalities. Technology Technology, encompassing tools, machines and ways of thinking, is key to problem-solving, progress and competitiveness. It includes knowledge for manufacturing, processes and services. It also includes entrepreneurial expertise and professional know-how - a competitive edge, especially for MNCs. Technology is one of eight pillars in the World Economic Forum's global competitiveness index. Their focus on information technology reflects its rising importance. Email enables communication. The Internet facilitates information dissemination. Ecommerce promises huge customer base expansion and marketing cost savings. Competitiveness in these depends on local telecom infrastructure and computer culture. For a thriving internet culture, the population needs computer access and telecom infrastructure. Innovation Innovation provides crucial competitive advantage and determines success. According to Schumpeter, economic progress happens through entrepreneurs exploiting entirely new investment possibilities. Innovation takes various forms - new products, production methods, markets, raw material sources or industry reorientation. Business innovation refers to technical, industrial and commercial steps leading to new manufactured products and commercial use of new processes and equipment. Innovation types:  Radical innovation establishes entirely new functionality.  Incremental innovation improves existing technology's performance, features, quality or cost without changing functionality.  Next generation innovation dramatically enhances performance, features, quality, cost, and applications without altering functionality. Innovations may fail commercially despite technical soundness, if:  The better mousetrap finds no takers: Good but unnecessary products  Me-too products hit competitive brick walls: Imitations face entrenched competition  Competitive one-upmanship: Deficient marketing despite good product  Environmental ignorance: Wrong decisions from ignoring regulations, technology, users, competition  Technological Unmet expectations  Price-value mismatch: Overestimated value and high prices dog products: performance