Factors affecting international business – Technological environment

  • Technological factors can affect the international business decisions remarkably and to a large extent. Technological changes can involve any of the following:
  1. New Process of Production: This refers to the news ways of doing things involved in the production such that the new method/way increases the productivity of the factors involved.
  2. New Product: Technological changes and advancements give rise to creating demand of different products altogether. This is the result of innovations, inventions and discoveries made in the field of technology.

  • Technological factors sometimes pose problems.  A firm, which is unable to cope with the technological changes, may not survive.
  • Further, the differing technological environment of different markets or countries may call for product modifications.For example, many appliances and instruments in the U.S.A. are designed for 110 volts but this needs to be converted into 240 volts in countries which have that power system.
  • Technological developments may increase the demand for some existing products whereas the same technological advancements may result in making some existing products obsolete.
  • The advancements in technologies have a significant effect on employment and job creation. The technological changes have the potential to create as well as destroy the jobs altogether.
  • The fast changes in technologies also create problems for enterprises as they render plants and products obsolete quickly.
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