Q.How does the technological environment affect business?

Technology is one of the fastest-changing components of the macro environment, and its pace can create both opportunity and risk for a firm.

The technological environment consists of the level and pace of scientific advancement, innovation, automation, and the availability of new production, communication, and information technologies in the economy. This component affects business in two directions. On the positive side, a firm that keeps pace with new technology can lower its production costs, improve product quality, speed up communication with customers and suppliers, and create entirely new products that were not previously possible. On the negative side, a firm that ignores technological change risks having its existing products or production methods rendered obsolete by competitors who adopt innovation faster, leading to a loss of market share. Because technological change today happens rapidly, firms across virtually every industry are expected to monitor this component of t …

Students sometimes discuss technology only as a positive force (efficiency, new products) and forget the equally important risk side — that failing to adopt new technology can ma …