Analysis of the External Environment of Business

1608 Words Dec 25th, 2005 7 Pages
Analysis of the External Environment of Business The Technological Environment

The external business environment consists of four elements, they are as follows: Political, Economic, Social and technological. It would be impossible to analyse the whole environment in one essay, I have therefore decided to focus my essay on the technological environment. I have chosen this area to focus on because as Palmer and Hartley point out, it is one area that is forcing immense change in the external business environment.
‘The business environment is at present moving through a dynamic and turbulent phase driven by technological change, globalization and increasingly competitive markets' (Palmer and Hartley 2002).
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As Worthington and Britton illustrate: ‘In February 2002 there were an estimated £544.2 million people wired to the internet' (Worthington and Britton 2003)
The size and potential of global markets facilitated by the internet is unrivalled by any single country or market.

As I have illustrated above developments in I.T have had major effects across the business networks. One of the main results of these changes is the emergence of new markets particularly on the internet. For example in the financial sector there is a new market of online providers, such as E-sure, Egg, Capital One etc. They are all able to gain competitive advantages due to the low operational running costs of online businesses.

Product and process innovation is another area of technological change. One of the effects of product innovation has been that expertise in a particular technology is no longer a barrier preventing competitors entering an industry. New entrants in an industry can benefit from the falling costs of technology or may be able to bypass the traditional technology by using some new and alternative technology. Palmer and Hartley provide a number of examples of this type of change: ‘Consider some historical antecedents: Bic produces a disposable plastic razor to rival Gillette and Wilkinson, fountain pen challenged by the ball point pen' (Palmer and Hartley
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