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UNIT 4: TECHNOLOGY IN BUSINESSES
Key Unit Competence: To be aware of how new technologies can affect
business activities.
Introductory activity
Analyze the Photos below and answer the questions that follow.
a) Looking at picture 1,2,3and 4, explain the advantages and disadvantages
of using the above techniques in the production of goods and services.
b) Which production technique is suitable for your school business club?Give reasons to justify your answer?
4.1. Types of technology in business
Activity 4.1
1.a) Suppose you wish to start up a feasible business in your community.
Which type of technology will you use in your business and why?
b) How would you define the term technology as used in business?
2. Distinguish intermediate technology from capital intensive and laborintensive technologies.
4.1.1. Meaning of technology
Technology refers to methods, systems, and devices which are the result of
scientific knowledge being used for practical purposes.
Technology can also be defined as a human knowledge which involves the use
of tools, materials, and systems to perform an activity.
Many businesses are using technology to stay competitive, they create new
products and services using technology, and they also use technology to deliverthose products and services to their customers on time and within budget.
Technology in business allows organizations to improve both the performance
and overall effectiveness of products, systems and services, which, in turn,
enables businesses to expand quickly and efficiently. Another role of technologyin business is to provide security to a business.
Examples of some tools, systems or devices used by technology in business.
• Desktop Computers and Laptops.
• Software and Productivity Tools.
• Networking of Computers and Printers.• Telephone and Voice Mail Systems.
In Rwanda there are different technologies used to improve the services such as
• Tap and Go: This is One of the biggest technologies that has changed
the face of public transport. It’s a smart transport system that enables
passengers to board public buses without using hard cash but rather
smart cards.
• Zipline’s drone technology: this is a global race for commercial drone
deliveries of small packages. In Rwanda it is used to transport blood to
remote areas where accesses to roads are impassable.
• Irembo services: The burden of walking long distances to seek some
government services has consistently been removed. There are large
numbers of people who do not have to necessarily travel to apply for
a marriage certificate, land transfer, drivers’ related services, birth
certificate, criminal record clearance certificate, and other services.
These few examples show how technology in business comes to enable
businesses to expand quickly and efficiently.
It is important to note that both technologies (Tap and Go & Irembo) aligned
with our country’s policy of promoting our economic growth through CASHLESStransactions.
4.1.2. Types of technology
1. Intermediate technology is one that fits into the level of development of
the host country. It is neither too simple nor advanced. For instance, theuse of ox-ploughs, solar cookers etc.
2. Capital-intensive technology is the production method/ technique where
more machines are used than labor. It is also called labor saving technology
because we save more labor to use machines. It is common in industries,factories, mining etc.
Advantages of Capital -Intensive Technology
• Commodities of high quality are produced, which compete favorably
both in the domestic and international market.
• There is mass production. With the use of machines more output is
produced which stimulates the rate of economic growth in a country.
• Exploitation of idle resources is encouraged since it is efficient which
increases the production of more goods and services.
• Promotes the development of skills. Using machines requires highly
skilled labor therefore encourages people to do research innovations
and inventions.
• Reduces labor unrest for instance demonstrations and strikes. This
increases production of more goods and services therefore it is easy to
control machines than labor.
• It saves time and increases labor productivity because a worker who
uses a machine will do his or her work in the shortest period and are less
exhausted than using manual labor to perform a given task.
• Promotes specialization this leads to production of excess (surplus) at
a low cost. The surplus is exported yielding foreign exchange earnings.
• High profits for the entrepreneur since it minimizes costs in the form
of wages bills and other fringe benefits.
• It promotes industrialization. When capital intensive technology
is adopted, many industries will come up and development of other
infrastructures such as roads, hence promoting the tertiary sector.
• It strengthens good relationships between countries where machines
are exported or imported, hence fostering trade.
Disadvantages of capital-intensive technology.
• It is very expensive to buy machines. Most developing countries
depend on foreign aid and loans to finance their budgets, so if they adopt
the use of machines, they will have too much debts.
• It leads to technological unemployment since more machines are
used than labor in the production process therefore most labor will be
unemployed, which is an economic problem.
• It widens the income inequality gap where a few skilled labor will be
engaged in the production process to run machines and the unskilled
will remain unemployed hence widening the gap.
• High costs as a result of maintenance, repairs when broken down and
depreciation. therefore, it is expensive because it requires a lot of foreign
exchange to import spare parts and other machines.
• It encourages rural- urban migration since most machines are used
in urban centres this leads to development of shanty towns or slums in
cities.
• It is not helpful in the eradication of poverty since there are very few
people employed in the production of goods and services.
• It is inappropriate technique in some activities that require human
judgement, such as picking flowers and tea, sorting printed papers. In
this instance machines may not be applicable at all stages of production.
etc.
3. Labor Intensive Technology is the production method /technique
where more labor is used than machines. It is also called capital saving
technology meaning we save capital and use more labor. It’s commonlyused in hotels, restaurants etc.
Advantages of labor-intensive Technology
• It generates more employment opportunities for nationals due to
investments in various sectors. This leads to an even distribution of
income in the country since they are many people involved.
• It reduces costs of production since in most countries labour is cheap
and abundant.
• It helps to reduce rural-urban migration (RUM) since it can easily
be established in the rural areas where labor is abundant. This leads to
rural transformation hence reduction in RUM, poverty is also reduced and
crime rate levels.
• It increases effective demand, many people are employed which
increases their chances of investing in an economy.
• Monopoly control, it minimizes monopoly tendencies in the industry
since the economic power cannot easily be concentrated in a few hands.
• Labor is more mobile than capital technology. It’s easy to move
workers from one town to another compared to moving machinery or
capital assets.
• It does not require a lot of skills and is suitable to work in industries
that require human judgement. For instance, picking flowers, picking tea
leaves.
• Labor can provide feedback and craftsmanship in the production
process, this provides ideas for continuous improvement hence workers
can also adapt to introduce innovative ideas in hand crafts.
• It encourages decentralization as it allows industries to be established
in various parts of the country. That is to say, the rural areas and small
towns.
• It minimizes the dependency on technology which might be complex
and very expensive, hence increasing self-reliance.
• It is flexible. Unlike machinery, it can be used to meet the changing levels
of consumer’s demands.
• It helps to increase the standard of living. When labor intensive
techniques are adopted, many people in families will get jobs and earn
income hence increasing their standards of living.
• It encourages infant industries, which act as training grounds for man
power and this helps in the acquisition of skills. These also play a vital
role in the economic development of a country.
• Personal touch, people can interact properly with customers and mostservices cannot be done with the use of machines for instance hairdressing.
Disadvantages of labor-intensive technology
• It is relatively expensive in the long-term when compared to
machinery, because it is associated with other labor benefits. For
example, housing, insurance, medical bills, trainings,... which increases
cost of production.
• Inferior quality products are produced, when labor intensive
techniques are adopted, many people produce products without carrying
research thus poor-quality products.
• Limited hours of work. Machines can work day and night hence produce
high quantity output. Economic Growth remains low in a country with the
use labor intensive techniques of production.
• It requires a lot of supervision which leads to under utilization of
resources and increased costs.
• Lack of uniformity in production, with the use of labor- intensive
techniques of production there are most likely to produce products that
are not uniform which makes them not competitive to the market.
• Specialization is not promoted in the production process which may
slow down the production process.
• Managerial complexity arises. It is not easy to manage people since
they have individual differences especially when a business grows this
may further lead to bureaucracy in decision making.
• It is difficult to get skilled manpower it is easy to get machines than
skilled labor in a given field and this hampers the production of goods andservices. Etc.
Application Activity 4.1
1. Justify why the government of Rwanda is encouraging businesses to
use capital intensive technology.
2. Refer to your school and describe how technology has helped in theefficiency of the school for both students and the school itself.
4.2. Characteristics/ features of appropriate technology
Activity 4.2
Referring to the types of technology you mentioned above, which type
of technology, is appropriate in;
a) Northern province
b) Eastern province
c) Southern provinced) Western province
Developing countries face challenges of how to utilize resources fully. The
dilemma is that labor is so abundant and capital is scarce, therefore they have
to choose which technology is appropriate. The following are some of the
characteristics of appropriate technology.
1. It should be simple to use without requiring special skills.
2. It should also be effective in order to increase productivity in the country for
economic growth to be attained.
3. It should also be readily available not complex to get.
4. It should be durable and meets the needs of the community.
5. It should also be cost effective and not very expensive.
6. It should be able to reduce income imbalances through employment potential.
7. It should produce for an identified market to prevent resources being wasted.
8. It should be able to produce efficiently the right quality and quantities of the
products needed by the consumers.
9. It should also minimize the use of imported inputs like labor, raw-materials
and some capital equipment.10. It should be flexible/ easy to use and require locally available resources.
Application Activity 4.2
1. Try to find an example of simple and more complicated technique ofproduction from each of the following areas of human activity.
2. If you were to start a business in any of the above human activity
areas, which technology will you likely choose? A simple technology
or a more complex technology?
3. What could be the reasons guiding your choice?
4. Now that you have identified possible businesses from these areas
of activities, which technology do you think will be more effective
in order to improve the productivity of the specific businesses or toimprove your qualities?
4.3. Importance of technology in business
Activity 4.3
Debate “The use of technology in business has done more good than
harm”
Technology is an essential tool in the day today business operations; no matter
the size of the business, technology has both tangible and intangible benefits.
These include the following:
1. The use of ICT through internet helps entrepreneurs to carry out market
research. This helps it to grow and acquire more opportunities across the
globe, hence widening the market by use of E-commerce sites like eBay,Amazon, Jumia, etc.
2. Technology helps to increase productivity of the labor through collaborating
with each other hence speeding up the work.
3. It helps to keep track of records for instance with the use of the accounting
software.
4. Technology can be used for security purposes thus reducing threats of losing
financial data and vandalism to unknown persons. For example, by using
passwords on computers.
5. Technology improves the efficiency of businesses. The use of mobile phones,
printers and E-commerce, eases the work in business.
6. ICT enables easy access to funds through the use of ATM cards, such as debit
cards, credit cards, and electronic money transfers etc.
7. It also enables better decision making as entrepreneurs can get information
at the right time.
8. Technology helps businesses grow with the use of artificial intelligence. This
gives the business a competitive edge over other businesses.
9. Advanced technology helps to produce better quality products that may fetch
a lot of money for the enterprise thus increasing customer satisfaction.
10. Technology helps to perform complicated tasks with ease and faster. For
example, use of computerized accounting software like quick books, sage
and pastel helps in doing accounting with ease.
11. ICT helps firms to monitor the buying habits of their customers and be able
to stock the right products in the right quantities at the right time. Speed
Governors help to keep track drivers from over speeding hence reducing the
number of accidents.
12. Computers can perform a lot of work in the shortest time possible which
would require a lot of time if done manually. Examples include preparation
of control accounts, financial statements and preparing payrolls etc.
13. Technology also helps to cut down costs. For example, the costs incurred
while transporting and delivery of goods can all be done using computersand the internet.
APPLICATION ACTIVITY 4.3
Carry out research and identify the various technologies that are being
used in businesses be it in your school or other business enterprises.
Suggest their importance in terms of communication, management,accounting and transport.
4.4. Technological tools used in business
Activity 4.4
Observe the pictures below and explain the importance or uses of eachmachine, equipment or technology as used in business.
From the above pictures, you realize that businesses use various technological
tools, depending on the type of business, and department. The table belowshows the common technology tools used in business departments.
Importance of the technological tools in figure 4.4 above as used in
business
Electronic mail: It is one of the ways businesses can use to reach its clients.
Communication is fast and convenient because you can send messages and
they are received between the customers and the business.
Automated Teller Machines: These machines help customers to deposit,
withdraw at any time. This reduces the queues people would make to get their
money. They are also located in different places which eases access to cash
Cash less public systems: (Tap and go) These help businesses to increase
customer satisfaction. They are also secure and convenient which minimizesfraud cases.
Electronic safes: These machines are used to keep money. These are assets to
the business because they are secure.
Closed Circuit Television (CCTV): These are televisions that can be installed
in your business. They can help you monitor your business operations from
anywhere. They increase safety for the owner, employees and customers. If a
crime occurs, they can be used to provide evidence to catch the criminal.
Metal detectors: These are handheld detectors which are used to identify
metallic objects that may be considered dangerous. They also help provide
security.
Bar codes: They are used to track and store information of goods. This
increases the efficiency of the business instead of the storekeeper entering the
information manually.
Point of sale terminals: A POS solution provide a faster checkout process than
the cash registers. This helps people not to make long lines while paying for the
goods bought. Using this tool can increase efficiency and improves the image of
the business.
Application Activity 4.4
1) Describe how new technologies affect business activities.
2) Explain the challenges of using such technologies in local and small
scale businesses in Rwanda.
Skills lab 4
Use available resources like the internet, textbooks, magazines, resource
persons among others to research, choose the appropriate technology
that would improve the performance (Quality, quantity and efficiency
of work) of the projects your business club is running or plan to run at
the college on each of the following business aspect:
a. Business registration
b. Production of Goods and services
c. Packaging and branding
d. Marketing
e. Selling of the products and / services.
And explain why you have chosen that particular type of technology
and how you will acquire it.
End of unit 4 Assessment
1) Case study
Mugiraneza has a peanut butter making business. Last week she
announced the purchase of new equipment and modern technology that
would make a radical change in the production process. The investment
would make some employees lose their jobs. Mugiraneza explained to
them but there was no doubt, it was in the best interests of the company
in general.
Employees were not consulted because it would slow down the process
and Mugiraneza felt that it was the best decision to make.
In the long run, the modern technology and equipment should increase
the businesses’ competitiveness and produce quality products and in
large quantities. The working practices would obviously be changed, and
employees would have to learn new skills of using them. The employees
were promised to be trained, although it was not a guarantee to employ
all of them if they fail to adapt successfully.
After the announcement, the employees were so furious and considered
taking industrial action. Hearing the rumors of a possibility to strike,
Mugiraneza admitted that the issue was not handled very well but would
not reconsider the decision.
a) What factors may have made Mugiraneza decide to invest in modern
technology?
b) Do you think the employees were right in taking industrial action?
Give reasons for your arguments.
c) Analyze the factors that Mugiraneza might have taken into account
before acquiring the modern technology.
d) Mugiraneza admitted that the issue was not well handled. In your
opinion, how should she have handled it?
2. Peter produces flowers and sells them both in the local and
international markets. He plans to use e-commerce in his business.
(i) Mention any 3 e-shops he can contact for advice.
(ii) How can Peter find other e-shops to sell his products on the
international market?
iii) Explain the merits and demerits of using e-commerce in a
business like that of Peter.
(iii) Write a letter to Peter advising him on how to use e-commerce
for the success of his business.
3. Many people believe that the key to better performance is good
management rather than the use of more technology. As an
entrepreneurship student teacher, critically assess this view.
4. The Government of Rwanda is intensifying the campaign of starting
small and medium enterprises to boost made in Rwanda and to export
made in Rwanda products to the rest of the world. Entrepreneurs in
order to meet the international market standards and demand, they
prefer an investment in automatic and capital intensive technologies,
however this affects the numbers of labour force to be employed as
very few people with the right skills will be retained and many of the
rest with no skills to operate the machines are likely to lose jobs.
Required: With your expert knowledge on technology, advise the
entrepreneurs, government and employees on how technology cancreate a win - win situation for all?