3.9.4

Question 1

Digital technology includes

Answer 1

a range of technologies that affect all functions of a business and can used to develop the strategic direction of a business.

Question 2

What is e-commerce?

Answer 2

Continues to grow as delivery networks and collection lockers become more effective and accessible.

Question 3

Benefits of e-commerce

Answer 3

• The growth of mobile devices means online purchasing can happen anywhere and at any time.
• Prices are transparent.
• There is greater access to suppliers.
• Start-up costs are low.

Question 4

Drawbacks of e-commerce

Answer 4

• It is not suitable for all products where customers need to touch and experience the product.
• Delivery costs can be expensive.
• Lots of fraud is committed through e-commerce.

Question 5

What is Big data?

Answer 5

Closely linked to data mining, big data refers to the vast quantities of information that businesses are now able to
collect through sources such as GPS data, bar code readers and social media. These huge datasets give businesses vast amounts of information to help them make decisions.

Question 6

What is data mining?

Answer 6

Data mining is a process of analysing business data to identify patterns and relationships between a number of variables. For example, demographics and buying behaviour in supermarkets

Question 7

Benefits of data mining

Answer 7

• Businesses are able to profile customers and better understand their needs.
• It uses analytics to effectively target customers with offers and products that they will want.
• It accurately forecasts sales numbers based on a wide variety of data, including economic and social trends.

Question 8

Drawbacks of data mining

Answer 8

• It may only be valuable to large firms where a large quantity of data is available.
• Correlation of data does not necessarily mean there is a relationship.

Question 9

What is enterprise resource planning?

Answer 9

Enterprise resource planning is the data management software that links the functional areas of a business together such as stock ordering, customer relationship management, human resource management and financial management.

Question 10

Benefits of ERP

Answer 10

• ERP improves flexibility and efficiency by coordinating the functions of a business.
• It provides managers and employees with useful information on a number of business processes.
• ERP improves customer service.

Question 11

Drawbacks of ERP

Answer 11

• There is the cost of developing the system for businesses’ specific needs (not an ‘off-the-shelf’ package).
• There has to be investment in training staff to effectively use the system.

Question 12

When used effectively, digital technology can improve the competitiveness of a business: benefits of digital technology

Answer 12

• faster access to information
• better communication between employees and functions
• knowledge management systems can replace the need for a moderate level of expertise - e.g. computer diagnosis of illnesses
• offers new ways of doing business (paperless transactions, crowdfunding, virtual reality)

Question 13

Pressures from digital technology

Answer 13

• Technology can remove barriers to entry increasing the level of competition in markets.
• Technology creates transparency in markets - customers can easily compare prices and find online reviews.
• Constant change - the pace of technology is extremely fast and it can be very difficult for businesses to keep up with these advancements.
• Disruptive technology - disruptive technology is a threat for many businesses should their current technologies become obsolete.

Question 14

Impact of digital technology on marketing

Answer 14

Big data gives businesses access to vast amounts of information on their customers. Effective use of this information in order to understand customer needs can improve products and customer service.

Question 15

Impact of digital technology on finance

Answer 15

Digital technology provides businesses with the ability to monitor financial transactions and closely monitor business costs. Thus, leading to greater efficiency and control over budgets.

Question 16

Impact of digital technology on operations

Answer 16

ERP systems can integrate all aspects of production, leading to greater efficiency and reduced waste. For example, just-in-time stock control systems will reduce inventory levels and free up cash.

Question 17

Impact of digital technology on HR

Answer 17

A modern day workforce must be computer literate and have the skills to work with data management software. Technology can also replace some of the decision-making processes formerly made by humans.