How Technology Affects the Business Environment

Topics: Financial services, Goldman Sachs, Nuclear power Pages: 5 (1669 words) Published: February 25, 2013
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 “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 gone through a rapid geographic expansion. This especially applies to wealthy nations, like countries from Europe and USA. He claims that “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 “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...
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