PRINCIPLES OF BUSINESS

SECTION 10- TECHNOLOGY AND THE GLOBAL BUSINESS

ENVIRONMENT

NAME__________________________________________________________
GRADE_________________________________________________________

OBJECTIVES

i. explain the concept of business technology

ii. explain the role of Information Communication Technology (ICT) in business

iii. describe the types of ICT used in business

iv. distinguish between E-commerce and E-business

v. identify ways in which ICT can be used to improve efficiency of business operations

vi. discuss the ethical implications of the use of ICT in business

vii. outline the factors that determine a country’s standard of living and its quality of life;

viii. explain national income and its variations: gross national product, gross domestic
product, per capita income

ix. describe the role of education in economic growth and development

x. outline the reasons for international trade

xi. identify the functions of major economic institutions and systems

xii. explain how economic institutions or trade agreements impact the Caribbean;

xiii. identify major economic problems of the Caribbean

xiv. outline appropriate solutions to the major economic problems of the Caribbean

xv. explain the role, benefits and impact of foreign investment.

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 TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT

10.1 THE CONCEPT OF BUSINESS TECHNOLOGY

• Business technology is comprised of a wide range of hardware components and
software applications which keep a business running to ensure efficiency and
smooth operation of daily business activities.

10.2 THE ROLE OF INFORMATION COMMUNICATION TECHNOLOGY (ICT) IN

BUSINESS

Role of Technology in Business

• ICT is considered to be all the uses of digital technology that exist to help individuals,
businesses and organizations use information. It is concerned with the storage,
retrieval, and manipulation of digital data.

Ways in which Technology has Influenced Banking and Commerce

(i) Automatic Teller Machines (ATMs) and Automated Banking Machines

(ABMs)

• Automatic Teller Machines (ATMs) and Automated Banking Machines (ABMs) are
used for deposits , withdrawal of funds and checking balances without having to go
into a bank to access teller services.

(ii) On Line Banking

• This facility enables a customer to check their balances from the comfort of their
homes, pay utility bills and transfer funds from one account to another using their
personal computer.

(iii) E-commerce (electronic commerce)

• E-commerce is the process of buying, selling, and paying for the goods and services
on line without having to visit a physical brick and mortar store.

10.3 TYPES OF TECHNOLOGY USED IN BUSINESS

The types of ICT technology used in business are:

(i) Productivity tools

✓ microsoft word
✓ microsoft excel
✓ microsoft access
✓ power-point and prezi
✓ adobe Photoshop

(ii) Specialist applications

✓ accounting QuickBooks
✓ computer Aided Design (CAD),
✓ management Information Systems (MIS)
✓ digital communication technologies e.g. internet and mobile

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 Micro Soft Word

• Microsoft word is a word processing software that is used to create various types of
official documents (letters, business cards, ebooks etc.) that you can print and
publish.

Microsoft Excel

• Microsoft Excel application is based on an electronic spreadsheet in which a firm can

use various mathematical and logical formulas. E.g. conduct calculations

Microsoft Access

• Microsoft Access is used to analyze large amounts of information and manage data
more efficiently than Microsoft Excel or other spreadsheet applications.

Micro Soft PowerPoint

• PowerPoint is used to make interesting and dynamic presentations that are created in
a series of powerpoint slides where users can import audio, video or graphics.

Prezi

• Prezi is a story- telling software for presenting ideas on a large, blank page (canvas)
instead of traditional slides.
• It allows the user to zoom in and out of their presentation giving them more flexibility
when presenting ideas.

Adobe Photoshop

• Photoshop is a photo editing software that allows users to crop, resize, correct the
color on digital photos.
• It is popular among professional photographers and graphic designers.

Accounting QuickBooks

• Accounting QuickBooks is a small business software use to manage sales and

expenses and keep track of bills, create invoices and create reports in a business.

Computer Aided Design [CAD]

• Computer aided design [CAD] consists of a wide range of computer- based tools that
assist engineers and design professionals to design their work.
• CAD can be used to design patterns in the garment industry. Whereas in the past
people were employed to do pattern designing manually, this is now done by a
computer software.

Management Information System (MIS)

• MIS involves collecting, processing, storing and retrieving data which is then used by
management to assist in making decisions.

• MIS saves time as the information is easily available. E.g. a hospital keeps record of a
patient’s record in files [manually or electronically) that can be retrieved quickly.

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 The Internet

• The internet and email can help a business to communicate more efficiently with
customers and helps to reduce business expenses.
• The internet is a powerful tool that can make your business more productive and
profitable.

Mobile Phones

• Mobile phones can increase productivity, improve customer service and allow the
business to remain in contact with their customers and suppliers.

10.4 DISTINGUISH BETWEEN E-COMMERCE AND E-BUSINESS

• In both cases, the ‘e ‘stands for "electronic networks" and describes the application of
electronic network technology, including internet and electronic data.

Differences Between E-commerce and E-business

E-commerce
Uses the internet to connect with the rest of
the world
Confined to buying, selling, ordering and
paying for the goods and services on line
E-business
Uses the internet, intranet and extranet to
conduct business
Not confined to buying and selling of goods
but also include other activities e.g. supply
chain management

10.5 WAYS IN WHICH ICT CAN BE USED TO IMPROVE EFFICIENCY OF

BUSINESS OPERATIONS

(a) Ways in which technology can improve business

(i) Provides greater speed

(ii) Provides easier storage
(iii) Provides improved sharing of information
(iv) Provides increased automation.

(b) Benefits of technology to business

(i) It can reach more potential customers

(ii) It improves customer service
(iii) It improves efficiency and reduce cost
(iv) It maximizes profit and minimize waste

10.6 UNETHICAL USES OF ICT

• Ethical issues are laws and regulations that guide the decisions of an entrepreneur. On
the other hand, unethical practices refer to activities which are illegal.

Security

• ICT security and ethics refers to setting guidelines to ensure confidentiality of its data.

• The most popular security concerns in business include data loss, security breaches and
malicious attacks, such as hacking and viruses.

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Intellectual Property Infringement

• An intellectual property infringement is the violation of an intellectual property right.

There are several types of intellectual property rights, such as: copyrights, patents,
and trademarks.

• Copy right products cannot be reproduced for commercial use without permission from
the owner. A copyright infringement is using someone’s else product protected by
copyright law without their permission.

Impact on Humans

• Humans have become highly dependent on IT and have become so absorbed with it that
it has affected the organization negatively in the following ways:

✓ Employees have become less sociable and more self- centered

✓ Employees may carry flash drives to work, so they can transfer critical business
information and use it for their own personal gains.
✓ An increase in cyberbullying that is using electronic communication to bully a
person by sending an intimidating message via email, social media or a cell
phone.

Distractions
• Workers have become distracted due to the use of social media networks which can
affect the productivity of employees.

10.7 FACTORS THAT DETERMINES A COUNTRY’S STANDARD OF LIVING

(SOL) AND QUALITY OF LIFE

Standard of Living

• Standard of living refers to the quality of life or the level of material prosperity
enjoyed by individuals in a country.

(a) Indicators of a Country’s Standard of Living (SOL)

(i) Level of consumption of goods and services- depending on the quantity of

consumer goods and services enjoyed by the consumer, the standard of living in a
country may increase or decrease. The higher the consumption the greater the
standard of living.

(ii) Average disposable income of the population - the increase in the availability of
average disposable income [i.e. income received by a person after deduction of taxes
and other compulsory payment] may result in higher living standard for the people in
a country.

(iii) Level of national ownership of capital equipment- a country that spends more on
machinery can greatly increase its material wealth thus increasing its standard of
living.

(iv) Access to modern technology - having access to modern technology will improve
technology, increase output, and ultimately result in higher living standards for the
people of a country.

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 (v) Levels of investment in research and technology – an increase in investment in
research and technology will lead to an increase in new products that consumers
want to buy resulting in an increase in standard of living.

(b) Indicators of quality of life (QOL)

(i) Extent of Security Involved [level of crime]

• Individuals who live free without the fear of crime tend to enjoy a better quality of
life, compared to the individual who lives in a volatile community, the fear of
crime increases people stress level and makes them less happy.

(ii) The Availability of Health, Education and Recreational Facility

• An individual who is able to visit a doctor when ill or have easy access to
education without any challenges will experience a higher quality of life
compared to a person who may not have easy access to such facilities.

(iii) Diet and Nutrition

• An individual who gets a high income will be able to buy more food with better
nutritional value will experience a higher quality of life compared to a person
with a lower income.

(iv) Life Expectancy

• Life expectancy is the number of years a baby born in a country can expect to live
• Factors such as wars, disease, and famine may result in a low life expectancy
which will have a negative impact on an individual’s quality of life.

(v) Rate of Infant Mortality

• A high infant mortality [ infant deaths one year or under] indicates poor
health services reflecting a low quality of life for the population

(vi) Access to Public Utilities

• Regular access to electricity, clean water supply, effective drainage, all
contribute to a better quality of life for the individuals of a country.

10.8 (a) NATIONAL INCOME (NI) AND ITS VARIANTS

(i) National Income (NI)

• A nation is able to calculate its national income from goods and services produced
by private individuals, government or foreigners.

• National Income [NI] is the value of a country’s income from goods and services
produced within a country.

NATIONAL INCOME VARIANTS:

(ii) Gross Domestic Product [GDP]

• GDP measures the total value of all goods and services produced by a country
within a year.

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 (iii) Gross National Product [GNP]

• GNP measures total value of goods and services produced by a country and
income from foreign investments.

(iv) Per Capita Income

• Per capita income is the national income divided by the total population whether
man, woman or child.

• Per capita income = National income

Total population

(b) Economic Growth and Development and its Impact on Standard of Living and
Quality of Life

Economic Growth [EG]

• EG refers to an increase in the production of goods and services over a period of
time . Examples - an increase in sugar production, an increase in the construction
of roads and the building of schools etc.
• EG is quantitative and refers to an increase in GDP.
• EG is important because it measures an increase in the standard of living of a
country.

Economic Development [ED]

• ED is the process of improving the quality of life of a nation, region or
community. It usually implies a reduction in poverty.
• ED is qualitative and refers to an improvement in a number of factors such as;
✓ Education - where the population have access to educational institutions
to gain knowledge and skills
✓ Safety - where the population feels secure because they are living in a safe
and stable environment
✓ Health and wellness - where the population have access to hospitals and
wellness programs

10.9 ROLE OF EDUCATION IN ECONOMIC GROWTH AND DEVELOPMENT

• Education plays a very important role in the economic growth and development of
a nation. The quality of a country’s workforce depends on the quality of education
it has received.

Ways in which education have contributed to EG and ED

✓ It facilitates a better educated workforce with the ability to operate the

latest technology

✓ it provides a productive workforce

✓ it provides skilled personnel required by employers

✓ it fosters the development of an innovative workforce

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10.10 INTERNATIONAL TRADE

• International trade or foreign trade is trade between countries to increase

their total revenue or profits.

Reasons Why Countries Trade With Each Other

• One country may not have the resources such as land, labour, and capital to
produce the goods that they need

• A country may not have the climate to grow certain foods and have to depend on
trade to get it

• It helps to get rid of surplus goods. If a country produces more than it can
locally consume it can export the excess or surplus to other countries

• A country export goods to obtain foreign exchange or income which is used to

finance development projects such as building roads, schools and hospitals.

• Goods may be imported because they can be produced more cheaply elsewhere
than producing an item locally.

10.11 FUNCTIONS OF MAJOR ECONOMIC INSTITUTIONS

• Economic institutions are formed by groups of countries working together to have a
better chance of developing at a faster pace by sharing their expertise and resources in
areas of health, education and technology.

Caribbean Community [Caricom]

• Caricom was established by the treaty of Chaguarmas August 1, 1973
• It consists of 15 member states including Jamaica, Guyana, Trinidad and Tobago

Functions
• Members do not restrict the quantities of goods traded among themselves
• Members are encouraged to use the raw materials of the region
• Members charge a common rate at which duty should be charged on imports

The Caribbean Single Market and Economy [CSME]

• CSME was agreed at a heads of government CARICOM conference in 1992
• It is designed to create among all member states a large economic union within which
goods, services and people can move without restrictions

Functions
• It facilitates free movement of goods and services
• It facilitates free movement of labour
• It facilitates free movement of capital resulting in no exchange controls among
member states

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Caribbean Development Bank [CDB]
• An agreement signed by Caribbean nations in January 1970
• CDB funding comes from international organizations such as the World Bank and the
Inter-American Development Bank [IDB]

Functions
• It reduces poverty and contribute to economic growth and development of
member states
• It provides loans at low interest rates called ‘soft loans’ to member states

World Bank
• The World Bank was established in1944 in USA comprising of two institutions:
✓ International Bank for Reconstruction and Development [IBRD]
✓ International Development Association [IDA]

Functions IBRD and IDA

• To reduce poverty and lend money to less developed countries
• To provide low interest loans and grants to fund projects such as education, health
and agriculture

International Monetary Fund [IMF]

• IMF was established 1944 with 45 government heads in the United States to provide
financial assistance to countries that experience serious financial difficulties

Functions
• To provide short term loans to countries
• To help countries in need and set economic targets for them
• To set stringent guidelines for economic management

World Trade Organization [WTO]

• WTO was established January 1, 1995 with 152 member states and several non-
members

Functions
• To implement and monitor rules governing world trade
• To assist in solving international trade disputes

Organization of American States [OAS]

• Established 1948 to create better relationship between the Caribbean, North America
and South America

Functions
• To forge good relations among member states
• To settle disputes between member states
• To provide training through scholarship programmes

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10.12 HOW ECONOMIC INSTITUTIONS OR TRADE AGREEMENTS IMPACT
THE CARIBBEAN

• To facilitate trade in the region, countries have to agree on trade policies relating to
import and export. Regional trade in the Caribbean is facilitated by CARICOM.

• CARICOM is the institution that allows Caribbean countries to buy their products
from each other such as coffee, banana, sugar, spices oil etc. in order to meet their
needs.

10.13 MAJOR ECONOMIC PROBLEMS IN THE CARIBBEAN

• Some of the major economic problems in the Caribbean are:

✓ Unemployment
✓ Population density
✓ Migration
✓ Debt burden
✓ Sourcing capital and raw material
✓ Economic dualism –an economy is divided into two distinct sections (One with
high technology the other with low technology)

10.14. POSSIBLE SOLUTIONS TO ECONOMIC PROBLEMS

Access to Foreign Direct Investment [FDI]
• Attracting foreign companies to invest will create more jobs for locals, thus
generating more income for citizens.

Development of Human Resources

• Investing in ‘human capital’ through education and training will increase productivity
and allow the country to adapt and invent new technology.

Development of the Manufacturing Sector

• This creates employment and well-paid jobs, this increases exports and reduces the
balance of payment deficit.(i.e. where imports are more than exports)

Development of Technology
• Technology increases efficiency such as the increased use of computer aided design
(CAD) and computer aided manufacture (CAM) have greatly increase productivity.
• New computer software apps have allowed products to be tested and marketed in a
shorter time.

10.15 FOREIGN DIRECT INVESTMENT

• FDI is an injection of funds obtained from overseas that is invested in the local
economy.
• E.g. where a company located in one country makes a physical investment in another
country such as building a factory.

Benefits
• It builds a country’s infrastructure, energy and water supply
• It reduces unemployment rate and creates new employment opportunities

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 • It increases government revenue through taxation
• Locals can benefit from the transfer of technology and learn new skills

Disadvantages
• It hinders domestic companies as the money from FDI is not going into a domestic
company
• It can lead to exploitation as an FDI company may decide to take their money and
leave the country
• FDI may be affected by political instability in a country, that is, the business
environment is not always safe so they may decide to leave the country

Review Question#1
1. (a) List THREE ways in which ICT can be used to improve the efficiency of a
business. (3 marks)

(b) Define the following terms

(i) Computer aided design (2 mark)
(ii) Standard of living (2 marks)

(c ) (i) Differentiate between the terms “economic growth ” and

“economic development”. (4 marks)
(ii) Outline THREE reasons why countries trade with each other. (6 marks)
(d) List THREE major economic problems in Jamaica. (3 marks)
TOTAL 20 MARKS

Review Question #2 [CSEC January 2021]

a) (i) State TWO indicators of a country’s standard of living. (2 marks)

(iii) State TWO indicators of a country’s quality of life. (2 marks)

b) Define EACH of the following terms :

(i) Gross domestic product (2 marks)

(ii) Gross national product (2 marks)

c) Outline THREE ways in which a country could benefit from international trade.

(6marks)

d) Explain ONE negative effect of EACH of the following factors on the economy of a

developing country.

(i) Migration

(ii) Unemployment (6 marks)

TOTAL 20 MARKS

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