LECTURE 2.

7:

BUSI 1695 International Business

Environment

TECHNOLOGY AND LABOUR 1

 LEARNING OUTCOMES

01 02 03 04
Understand Appreciate the Explore changing Understand the
technology and the changing business models – the implications
link to business technological rise of e-businesses in technology has on the
strategies environment and its the UK labour market
impact on businesses

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WHAT IS TECHNOLOGY?

 Broad concept, widely used but least defined.

 Application in all business sectors, affects all forms and
activities (e.g. materials, processes and products).
 Has shaped strategies, structures, processes and individual
behaviour
 As a result, many (e.g. Woodward, 1965) sees technology as
a determinant.
BUT others argue (Hickson et al., 1969)
 It is also a product of individual behaviour and choice.
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BASED ON NEEDLE, 2019

  Determinant view:
 Tech viewed as an environmental
constraint

DETERMINANT  Firms operate within certain technological

imperatives  tech shape
products/processes/organization
structure/relations with with ppl
 Activities of firm results from the
OR CHOICE? interrelationship of external enviro i.e.
tech/competitors/state  contingency
approach i.e. no choice but to adapt or fail

BASED ON NEEDLE, 2019 4

  Choice view:
 Organization size can be a more influential factor, as
the firm gets larger i.e. market share increases,
technology becomes less important
 Technology viewed as a product of the way businesses
DETERMINANT respond to environmental factors i.e. business shapes
OR CHOICE? the technology.
 Technology is a strategic choice; it is seen as a
strategic competitive advance i.e. not everyone can
have it

BASED ON NEEDLE, 2019 5

TECHNOLOGY AS A COMPETITIVE ADVANTAGE

 Has helped to shape the strategy of businesses in terms bringing about a

competitive advantage
 Brought about radical change in many levels of the business context

• Created new products, processes and business opportunities.

• Reduced costs in business functions
• Increased flexibility
• Increased speed of operation and delivery.
• Source of core competence – patented product and process.
• Improved operations, customer service, communication (social media)
• Improved organizational coordination and control.
• Created new industries e.g. ecommerce. 6

BASED ON NEEDLE, 2019

 7

TECHNOLOGY AS A SOURCE OF
CONTROL

 Links the work of departments and of individuals – e.g. globally

linked production systems i.e. factories/supply chains. – all made
possible by tech linking people together to work in real time

 Assisted in the standardization of operations

 Managers have greater control of the workforce -- a source of

employee control and surveillance

BASED ON NEEDLE, 2019

IMPACT OF TECHNOLOGY ON BUSINESS
New forms of
communication -
whatsapp, zoom, email
Ability to adapt operations
to respond changing
market demands quickly
cross-border collaboration.
BASED ON NEEDLE, 2019
Remote controlled
Changes in banking –
machines impact on
cashless society
productivity and quality
Increased global
competition with impact New forms of organization
on the need for cost structure and flexible ways
reduction and increased of working.
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IMPACT ON BUSINESSES –
STAKEHOLDER PERSPECTIVE

 Management – cost reduction and increase

competitiveness as an respond instantly to the
operating environment
 Workforce – Increase job satisfaction and career
development
 Consumer – better quality goods at competitive prices
 Suppliers – closer long term relationship with clients

BASED ON NEEDLE, 2019

 “Today’s business interest sit on a fault
line of the greatest seismic shift since the
invention of the printing press...E-
business. We are embarking on a
THE RISE OF journey of such magnitude that it has the
E-COMMERCE capacity to change the course of our
entire social order.”

(PricewaterhouseCoopers, 1999)

BASED ON NEEDLE, 2019 10

E-BUSINESSES

 Made possible because of the INTERNET

 An electronic exchange of information at any stage
in the supply chain. E.g. B2B, B2C, C2C, M-
commerce
 The electronic trading of goods, services and
information.
 Selling goods and services at an international scale
 E-commerce
 Growth of internet companies e.g. Amazon –
pioneer of electronic retailing

BASED ON NEEDLE, 2015 11

CLAIMED ADVANTAGES OF E-COMMERCE AND E-BUSINESS

• Reduced transaction costs

• Enables small firms to compete
• Access to more information
• Access to global markets and global collaborators
• Consumer access to a wider range of products
• Consumer access to cheaper products via increased competition
• More effective supply chain management
• Facilitates global working 12

• Facilitates the virtual organization

LIMITATIONS OF E-COMMERCE AND E-BUSINESS

 Access to the internet is highly variable across the world

 Many are reluctant to do business using the internet
 Many prefer personalized shopping
 Technology failings
 Set-up costs are high
 Privacy and security issues
 Difficulties with legal regulation
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 E-COMMERCE SHARE OF RETAIL SALES REVENUE IN THE
UNITED KINGDOM (UK) FROM 2015 TO 2018

Source:
https://www.statista.com/statistics/ 14
285978/e-commerce-share-of-retai
l-sales-in-the-united-kingdom-uk
/
 RETAIL E-COMMERCE SALES AS SHARE OF RETAIL TRADE
IN SELECTED COUNTRIES FROM 2014 TO 2017

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SOURCE:
HTTPS://WWW.STATISTA.COM
/STATISTICS/281241/ONLINE-S
HARE-OF-RETAIL-TRADE-IN-
TECHNOLOGICAL
IMPACT ON LABOUR

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 IMPACT ON JOB CONTENT

To understand the impact of technology of labour need to appreciate the 3 different

perspectives:

1. Pessimistic – views technology as a deskilling agent, reduces the amount of control a

person has over their job. Increase management control over the work processes and
the employee. Job cuts, increase unemployment. No more manual jobs.

2. Optimistic view I – tech creates new opportunities, new types of jobs, existing
workers learn new skills. Boost productivity, creates wealth, increase spending
power. More money = more demand = more jobs.

3. Optimistic view II – Upskilling, New jobs with greater opportunities for

satisfaction. Unpleasant, monotonous and dangerous work can be eliminated.
BASED ON NEEDLE, 201 9 17
  Structural change – eradication of middle management

 Centralization of service industries – one global regions

focuses on one task e.g. re-routing calls to a central centre

IMPACT OF  Changing power and politics – google, facebook, amazon

TECHNOLOGY ON
 Location less important - WFH
THE LABOUR
MARKET WITHIN  The virtual organization? – no customer service centre?
ORGANIZATIONS

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EMPLOYMENT TRENDS
 Pessimistic view:
• Job losses are result of technological change – replaced with part time work
• Manufacturing (automation) and service sectors experienced job losses e.g. ATM
online banking

 Optimistic view:
• Growth in job involved in computing, losses in manual work (upskilling)
• Rise in jobs as a result of economic changes i.e. territory sector job/service sector 
education  high skilled jobs
• Rise in jobs as a result of demographic changes  aging population  automation
• Reduction in manufacturing jobs also due to overseas competition i.e outsourcing to
EEs

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CHANGING
JOB MARKET

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 GLOBALIZATION EMPLOYMENT TRENDS
• Economic structure changes - movement of workers from primary (agriculture and mining) /manufacturing
sectors/ to the service sector.
• Developed economies focus on high skill manufacturing and services (secondary and tertiary sector) gains
• Movement of low skilled jobs (primary sector) to developing economies
Globalisation of labour:
• Manufacturing shift to developing countries (cheap labour)
• Poor working conditions are accepted.
• Lower cost

• What if no upskill?
• Reduced dependence on human resources and replacement by technology.
• Migration of labour but labour itself is relatively immobile -- unemployment
• Temporary contracts, relatively low paid and often lower working conditions.
• Polarisation of the labour market. The growth of ‘graduate calibre’ and skilled jobs and the decline of 21

unskilled or semi-skilled work.

AUTOMATION

 Technological change in manufacturing and service industry

 High investment but automated systems can reduce costs –
lower prices – increase demand
 Job losses in firms not employing tech and losing competitive
edge and market share
 Automation can create jobs but do not currently match the skills
of the current workforce
 Largest decline will be in roles with low productivity e.g basic
admin, cashiers, low level construction
 Job creation will be high end skilled professions e.g digital
technology, data scientist, finance

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UNEMPLOYMENT IN SELECTED COUNTRIES

BASED ON NEEDLE, 2019 23

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THE GIG ECONOMY

 McKinsey categorized as: Free agents (prefer over FT), Casual earners
(supplement earnings), Reluctants (no FT job atm), Financially strapped
(no alternative)
 Flexibility on working hours – people agree to be available to work as
and when is required
 Zero-hours contract – employer not obligated to provide minimum hours
of work
 Estimated 20-30% of labour force in EU and USA are gig workers
 Key characteristic – self-employed, paid by the task, not linked to
contracted hours, short-term relationship with client
 Uber drivers, Amazon, Deliveroo, Airbnb, free-lance workers bloggers
BASED ON NEEDLE, 2015
THE RESULT OF ALL
THESE CHANGES

 Greater employee flexibility.

Increase in part-time work, fixed
term contracts, second and third
careers etc. – gig economy
 High hidden unemployment. In
the UK around 5 to 6 million
people of working age are not in
employment and draw State
benefits. Likely to increase.
 Regional differences in
employment levels. High
unemployment in former
manufacturing areas.

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VIDEO ON AUTOMATION

https://www.youtube.com/watch?v=WSKi8HfcxEk

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  Reading: Needle, Chapter 4

 Extra reading: World Without Mind by

Franklin Foer, 2017
READINGS
 Case study for next week’s tutorial:
Autonomous cars

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