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TOPIC 10 – TECHNOLOGY AND THE GLOBAL BUSINESS

ENVIRONMENT

• Business Technology – the use of hardware and software and other Information
Technology facilities to enhance the business operations.
• Information Communication Technology (ICT) – refers to the wide range of
technologies for gathering, storing, retrieving and processing technology.

ROLE OF BUSINESS TECHNOLOGY

• Communication: the exchange of information both internally and externally can be done
through the internet such as text messaging, emails and social networking.

• Marketing – the selling of products and services can be online which allows for mare
customers

• Increase in Productivity – the used of Business Technology can increase productivity

because of technological tools.

• Improvement in Customer Service – with the launch of websites, the business and
customers come close together and issues can be sorted.

• Increased communication among colleagues – can be done through video conferencing

and instant messaging.

1. HARDWARE – includes the items that can be readily seen such as : desktop, laptop,
keyboards, printers and cellphones

2. SOFTWARE – the programmes that enable the hardware to do its job

3. INTERNET – the hub through which information is stored and access

TYPES OF ICT TOOLS:

1. Microsoft Word
2. Microsoft Excel
3. PowerPoint
4. Computer – Aided Designs
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E – Commerce – the buying and selling of goods over the internet.

E – Tailers – businesses that provide retail operations over the internet
E – Business – the online presence of the business where almost all of its operations takes place
online.

BENEFITS OF TECHNOLOGY TO THE BUSINESS

1. Consumers will have easier access to goods and services as sales can be done through the
internet. This will increase profits for the business.

2. Increase in Customer Service – the business will now have closer access to their
customers and now be able to serve them which can create a repeat purchase pattern.

3. Increase in Communication – technology will allow the business to communicate with its
customers about upcoming specials. Also customers can give reviews about the business
which will in turn encourage others to purchase.

UNETHICAL USE OF TECHNOLOGY

These are the ways by which technology can be used to harm others.
SECURITY ISSUES
• Some people find ways of abusing technology which can lead to serious problems.
• CYBERCRIME – is criminal activities carried out by means of the computer or the
internet.
• INDUSTRIAL ESPIONAGE – also known as spying can now be done in cyberspace.
• HACKERS – are people who used computers to gained unauthorized access to data

PRIVACY ISSUES
• COOKIES – are simple text files that gather information about individuals. When you
visit a website that uses cookies, a cookie is downloaded unto your computer. This will
give the user information about the individual that visited the site.
• SOCIAL NETWORKS – without careful use of social network sites, users can be
exposed to theft from bank accounts and even blackmail.
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COPYRIGHT INFRINGEMENT
• COPYRIGHT – refers to the right of an author or inventor not to have their work
duplicated until 70 years after their death.
• INFRINGEMENT – refers to the act of breaking the copyright law such as purchasing
CDs that are not original and making copies of textbooks.

IMPACT ON HUMANS
The following are ways by which individuals can be negatively affected by the use of technology.
• Many individuals have become highly dependent on the internet that they become
lazy and less innovative.

• Personal relationships have suffered as social media has removed face to face
communication causing people to become less sociable.

• Rumors tend to be circulated more frequently and individuals tend to share

information quickly.

• As people has the urge to obtain updates on social media frequently this has caused
a main distraction especially in the work place.

• Increase in cyber bulling as people tend to send intimidating or threatening

messages to individuals.

FACTORS THAT DETERMINE A COUNTRY’S STANDARD OF LIVING

• STANDARD OF LIVING - is defined as the level of wealth experienced by a county
which is indicated by the average disposable income of the population, ownership of
capital equipment and the quality and quantity goods and services enjoyed by citizens.

• AVERAGE DISPOSABLE INCOME: per capita GNP reveals the average amount of
earnings of each person in an economy.
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• QUALITY OF LIFE – is the quality of goods and services enjoyed by the citizens of a
country.

INDICATORS OF A COUNTRY’S STANDARD OF LIVING:

The following factors will determine whether the citizens of a country will enjoy a high standard
of living or a low standard of living:

1. Level of consumption of goods and services

2. Access to modern technology
3. Level of investment in technology
4. The cost of living
5. Access to basic needs
6. The level of poverty
7. The level of crime in an economy

INDICATORS OF A COUNTRY’S QUALITY OF LIFE:

The following factors will determine whether the citizens of a country will enjoy a high Quality
of life or a low quality of life:

1. Availability of Health Facilities

2. Availability of Educational Facilities
3. Level of poverty
4. Level of crime
5. State of the economy
6. Death rate
7. Access to public utilities

CALCULATING STANDARD OF LIVING

Per capita GNP
This is calculated by dividing a country’s National Income or Gross National Product by its total
population. That is,
GNP
Total population
Thus if a country’s GNP is $40,000,000 and its total population is 5,000, its per capita GNP
would be $8,000.
40,000,000 = 8,000
5000
Thus each citizen enjoys on an average $8,000 worth of goods and services
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• NATIONAL INCOME
The national income of a country is the total income earned by that country from the production
of goods and the provision of services in a given year.
It therefore measures the level of economic activity of a country within a year.

• Gross Domestic Product (GDP) - is the total money value of all output produced within
a country over a year. The word ‘domestic’ refers to income earned from local
production only.
• Gross National Product (GNP) - the total money value of all output produced by a
country’s residents both locally and internationally.

MEASURES OF CALCULATING NATIONAL INCOME

1. INCOME APPROACH – all incomes from all Factors of Production are added together
2. EXPENDITURE APPROACH – adding together all the expenditure or money spent on
goods and services
3. OUTPUT APPROACH – the total value of goods and services produced locally or
domestically.

Economic Growth and Development

• ECONOMIC GROWTH is the expansion of national income. The rate of expansion is
usually measured from one year to the next. Economic growth can be achieved if
countries increase their capacity to produce.
Economic growth is seen as a Quantitative Measure.
• ECONOMIC DEVELOPMENT is sustained economic growth accompanied by
policies that bring about an increase in the Quality of Life.
Economic Development is seen as a Qualitative Measure.

Factors that will increase Economic Growth and Development:

• Increase Investments – if the government spend on capital to create further wealth both
growth and development will be achieved.
• Investment in Education – by investing in educating the population, individuals would
be able to utilize their skills and expertise to create wealth for the country.
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• Exploitation of Technology – by using technology the most can be obtain from the
resources available thus creating additional wealth for the country.

INTERNATIONAL TRADE
INTERNATIONAL TRADE – the buying and selling of Goods and Services among countries.

Reasons for International Trade

(a) Lack of certain natural resources to produce essential goods. Oil which is important to
economic life must be imported into countries that do not possess that natural resource.
(b)Lack of capital, technology and specialist labour to manufacture certain goods on a large
scale. For example, Caribbean countries import machinery equipment and vehicle.
(c)Differences in climatic conditions, e.g. many tropical countries import grapes and strawberries
as these produce need cool climates to survive.

BENEFITS OF INTERNATIONAL TRADE TO A COUNTRY

• A wider variety of goods and services would be made available to individuals.
• Foreign Currency would be obtained from the sales of goods which will be used to
purchase foreign goods
• GDP and GNP would be increased thus benefiting a country
• Standard of living will be improved
• Employment opportunities in the country will be increased as there will be a market for
goods to be sold.

Economic Institutions And Systems

1. Caribbean Community Common Market (CARICOM)
A common market is an association of countries that have joined together to bring about the
harmonious development, continuous economic expansion and increased stability of the
countries involved.
CARICOM was formed in July 1973 when Barbados, Trinidad and Tobago, Jamaica and
Guyana signed the treaty of Chaguaramas. Since then the following Caribbean countries
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have joined: Antigua and Barbuda, Belize, Dominica, Barbados, Suriname, Grenada, Montserrat,
St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines and Bahamas and Haiti.
Associate members of CARICOM are Anguilla, Bermuda, British Virgin Island and Turk and
Caicos.
Objectives of CARICOM
-Improved standard of living.
-Expansion of trade.
-Joint negotiations internationally.
-Co-ordination on foreign and economic policies.
-Full employment of labour and other factors of production.
-Economic integration.

2. Caribbean Single Market and Economy (CSME)

The CSME was established in 2006. It seeks to transform the common market into a single
market and economy. It was established to deepen the integration among Caribbean states and to
respond effectively to the challenges and opportunities globally.
Objectives of CSME:
-Deepening economic integration.
-Free trade of services.
-Free movement of capital, labour and the freedom to establish business enterprises anywhere
within CARICOM states.
-Widening of membership.
-A common currency/single currency.

3. Caribbean Development Bank

The CDB is a regional financial institution. It finances regional projects that contribute to the
economic growth and development of the region. Sectors financed by the CDB includes:
infrastructure, tourism, mining and refining, agriculture, agriculture, manufacturing, heath and
education.
The objectives of the Caribbean Development Bank are:
-Supporting regional and local financial institutions
-Assisting borrowing member countries to optimize the use of their resources
-To mobilize financial resources regionally and internationally
-To support capital markets
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-Stimulating growth
-Supporting business activities

4. The World Bank

The aim of the World Bank is to reduce poverty worldwide. It therefore assists developing
countries by providing loans for projects such as housing, infrastructure and industry. The World
Bank provides long term loans for developmental purposes. It is used interchangeably with
the International Bank for Reconstruction and Development (IBRD). However, the IBRD is
only one of the five agencies of the World Bank.

5. Inter-American Development Bank (IADB)

The IADB was established in 1959 for the purpose of assisting Latin American and Caribbean
countries. It offers loans, lines of credit and technical assistance to member governments for
social and economic development. Areas of assistance include: agriculture, industry, mining
health, tourism and infrastructure.

6. The Organization of Eastern Caribbean States (OECS)

OECS was formed in 1981 for the purpose of promoting cooperation among member
states. These countries include Montserrat, Anguilla, Antigua, Dominica, Grenada, St. Kitts and
Nevis, St. Lucia and St. Vincent, Anguilla and the British Virgin Islands are associate members.

7. Organization of American States (OAS)

The OAS was established for the main purpose of increasing interdependence and solidarity, and
promoting regional co-operation and the peaceful settlement of disputes among the member
countries. These countries include: North and South America, Canada and the Caribbean.

8. World Trade Organization (WTO)

The WTO is an international organization that monitors and regulates trade among the nations of
the world based on trade agreements by member states. The WTO replaces the General
Agreement of Tariffs and Trade (GATT).
Their main aim is to encourage the free flow of trade among nations.
Their objectives include:
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-discouraging unfair trading practices e.g. export subsidies and selling products below cost to
gain market share
-settling disputes among members
-environmental protection
-monitoring and reviewing the trade policies
-reducing trade

ECONOMIC AND SOCIAL PROBLEMS IN THE CARIBBEAN

1. Unemployment
A high level of unemployment among the young people of the Caribbean may results in various
social problems, as survival may depend on illegal activities.
Reasons for unemployment
-firms e.g. multinationals closing down
-lack of investment to create new businesses
-lack of skills training

2. Population density
Population density Refers to the average number of people living on every square kilo meter in a
country. The formula used for calculating population density is:
Density of population
= Total population
Area (sq. km.)
Very high population densities can indicate overpopulation. This occurs when the facilities in a
location, are not able to serve the number of persons in that location. This will cause heavy
competition for jobs, schools, health facilities etc.

3. Migration
Caribbean people migrate to first world countries in search of opportunities such as employment
and education. When skilled and professional workers migrate, Caribbean countries may
experience shortages in critical areas such as health care. Loss of skilled workers from industry
will also retard growth and development. Social problems may arise when children are left in the
care of grandparents and other relatives who have challenges to discipline them.
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4. Debt burden
Many Caribbean countries have high debt- to-GDP ratios. This ratio is the amount of national
debt of a country as a percentage of its Gross Domestic Product. High debt-to-GDP can stifle an
economy as a large portion of its GDP is consumed in debt payment and very little is left for
investment in the economy. A very low debt- to- GDP ratio is desirable for economic growth and
development.

5. Sourcing Capital and raw materials

While the Caribbean might be rich in certain natural resources such as bauxite, oil and gold the
region lacks other very important resources such as capital and entrepreneurial skills. Capital is
important as it increases production through the use of machinery, equipment and money
invested. The spirit of entrepreneurship is necessary for the creation of new business ideas and
entrepreneurship skills are important for the successful running of the businesses.

6. Economic dualism in the region

Economic dualism occurs in countries where there exist two opposite economic sectors. One
sector is characterized by development, capital intensive industries, large scale farming and
technological advancement, and the other sector is characterized by subsistence farming, labour
intensive industries, handicraft industries and simple trading means of survival.

POSSIBLE SOLUTIONS TO ECONOMIC AND SOCIAL PROBLEMS

1. Access to Foreign Direct Investment (FDI)
Foreign Direct Investments refers to capital investments into factories, machinery and equipment
by a foreign company or an individual. FDI is important for the development of Caribbean
economies as they are challenged by their high debt- to-GDP ratios and increased global
competition for export earnings. Attracting foreign direct investment is a way for Caribbean
countries to obtain capital for growth and development.
Benefits of FDI include:
-Employment for nationals
-Increased access to global markets
-Introduction of advanced technologies and processes
-Improvement in human resource skills
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2. Development of human resource

Investment in human resources is imperative for Caribbean economies to compete
globally. Improving the value of human resources through education and training will increase
the productive capacity of Caribbean countries.

3.Development of manufacturing sector

The manufacturing sector creates value added products which increases export earnings for
Caribbean economies. Developing the manufacturing sector therefore will impact on the
potential economic growth of a country.
Methods of developing the manufacturing sector:
-Encouraging Foreign Direct Investment
-Retooling
-Research and development
-Technological advancement