Entrepreneurship

Key Unit Competency:To be able to describe the role of technology and its impact on businesses.

Introduction

We are living in the 21st century and the word “Technology” is not new for many people. It has greatly changed the way our forefathers used to live. It affects our lifestyle in many ways, like choosing between modes of travelling to ways of shopping, it helps us to make informed decisions in different kinds of situations. When we are short of time, we choose to travel by air mostly and when we don`t have cash in hand, we prefer shopping from shopping center, supermarket, points of selling terminals, etc. that offer credit card facilities.

While technology has made a huge impact on our living style, in this 21st century, technology has changed the way people conduct business especially in the flow of information, production methods used, sales and distribution of goods and services. No matter the size of your enterprise, the use of technology in business operations plays a vital role for the success of any business.

It has both tangible and intangible benefits that will help you make money and produce your customers demand. Technological infrastructure affects the culture, efficiency and relationships of a business. It also affects the security of confidential information and trade advantages. It helps the businesses to communicate with clients through websites, email and social media and this saves time for both parties involved.

Since the use of technology in business activities plays a tremendous role in developing a country, the government of Rwanda has taken several strides in developing policies on ICT in all sectors of the economy to make it an ICT based economy by 2020.

In this century, the question isn’t how much can technology improve your business but is it possible to conduct business without relying heavily on technology? Therefore, this unit is designed to equip you with knowledge, skills, attitudes and values to: Appreciate the importance of technology in the business world, differentiate types of technology and how they are used, select appropriate technology for any given business and identify technological limitations.

Introductory activity

Analyze the Photos below and answer the questions that follow.

Questions

i. Looking at picture 1 and 2, which production technique do you think is faster and yields more output?

ii. Pictures 3 and 4, which production method will bring quality output and employs few people?

iii. Explain the advantages and disadvantages of using the above techniques in the production of goods and services.

iv. Distinguish between labor intensive technology and capital-intensive technology.

v. Which type of technology is suitable for your school business club and give reasons to justify your answer.

vi. Identify various ICT tools used in the business world today.vii. Discuss the various business opportunities that can be started basing on ICT.

viii. Examine the impact of using technology in businesses today.From the above observations, we realize that all these production methods are good in one way or another and this brings us to our topic of Technology in business.

6.1. Meaning of technology in business.

Activity 6.1

a. Refer to your school and describe how technology has helped in the efficiency of the school for both students and the school itself.

b. Look around in your community and find a feasible project that you may start. Which type of technology will you use in your business?

c. Why would you use this type of technology?d. How would you define the term technology as used in business?

Technology means the use of knowledge, tools, techniques or specific methods to solve a problem or serve a purpose. It is a term referring to whatever can be said at any particular historical period, concerning the state of the art in the whole general field of practical know-how and tool use. It therefore encompasses all that can be said about arts, crafts, professions, applied sciences and skills.

Information technology involves the use of electronic means to help to transmit and interpret information internally and externally. Examples of the use of the information and technology include word processor, spread sheet, data base, bar code scanners, and internet. Managers who have good access to information will benefit from being informed and making better decision than their rivals.

Appropriate technology is the method of production that is relevant and suitable for the condition of an enterprise and properly fits into the level of the development of the country. In other words, it is a production technique which matches with the country’s level of growth and development.

Appropriate technology is also designed with special consideration to the environmental, ethical, cultural, social, political, and economical aspects of the community it is intended for. Appropriate technology can be capital intensive, labor intensive or intermediate technology.

6.2. Types of Technology.

Activity 6.2.

Referring to the types of technology you mentioned in activity 1 above, discuss why it is important to use more machines than labor in production process.

From the above activity, we learn that using more machines than labor in the production process is what we call Capital-intensive technology and the use of more labor than machines is called labor intensive technology.

6.2.1 Capital Intensive Technology

Capital intensive technology is a production method which uses more capital or machines than labor. It is also known as labor saving technology that is, we save more labor to use machines.

Many heavy industries are capital intensive industries for example construction, mining, textile and communications industries.

A business is considered capital intensive if the ratio of the unit’s capital required is greater than units of labor used. The use of tools and machines makes labor more effective hence pushing up labor productivity. Capital intensive societies tend to have a higher standard of living over the long run.

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 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 a shortest period of time and are less exhausted than using manual labor to perform a given task.

•Increases a country’s assets which can be used as collateral security to acquire loans.

•Promotes specialization which 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 form of wages bills and other fringe benefits.

•It is appropriate where labor is scarce and not applicable for example heavy duty and highly risky jobs like mining are best done by machines.

•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 debt.

•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 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.

•It may promote over exploitation of natural resources, leading to their quick depletion.

•It requires infrastructures like power, transport etc. which may not be adequate in developing countries.

•It also leads to social costs like noise, air and land pollution.

6.2.2. Labour Intensive Technology

Activity 6.3

                      

Questions.

a. Which economic activity is taking place in figure 6.2?

b. What is meant by the term capital saving technology?

c. Why do most economies in Africa employ labor intensive technology in their production process?

Labor Intensive Technology

Labor intensive technology is the production method/technique which uses more labor than machines to produce its goods or services. It is also called capital saving technology meaning we save capital to use more labor. Examples where labor-intensive production is common are hotels, restaurants, small scale farming, fishing, mining etc.

In Rwanda, the largest part of the population is employed in the primary sector, which uses more labor than machines. Most labor is employed in agriculture, fishing, mining, and the service sector. Labor intensive technology has many advantages and that’s why it employs a bigger percentage in our economy. Although, it is associated with very many challenges like, being very expensive to maintain through medical insurance, wage bills, low and poor-quality output, strikes and labor gets tired and exhausted easily, unlike the use of machines.

The question of the day should we continue to use this type of technology? Despite its challenges and short comings it has the following advantages,

•It generates more employment opportunities: for nationals due to investments in various sectors. This leads to even distribution of income in country since they are many people involved.

•It reduces costs of production since in most countries it 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 poverty 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 with in industries that require human judgment. 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 consumers demands.

•It helps to improving the standards 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 acting 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 most services cannot be done with the use of machines for instance hair dressing.

Disadvantages of labor intensive production

•It is relatively expensive in the long-term when compared to machinery: Because it is associated with other labor costs. For example, housing, insurance, medical bills 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 output. Economic Growth remains low in a country with the use labor intensive technique 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 this 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.

•Difficulty in getting skilled man power: It is easy to get machines than skilled labor in a given field and this hampers the production of goods and services.

•Problems in personal life: could easily affect the performance at work and lead to inconsistence in the production process.

•Industrial disputes: such as strikes may be destructive and time wasting which may retard/delay production yet with the use of machines this cannot happen.

•Labor intensive technique may not be appropriate: in unpleasant, heavy and high risky activities like mining.

Application activity 6.3

Justify why the government of Rwanda is encouraging businesses to use capital intensive technology.

6.2.3. Intermediate Technology and Appropriate Technology.

Activity 6.4

Analyze the photo below and answer the questions that follow.

Questions:

a. What economic activity is taking place in the picture above?

b. Which type of technology are they using?

c. Do you think this type of production method is the most suitable for this activity? Justify your arguments.

6.2.4. Intermediate Technology

Intermediate technology is the technology which is between the high intensive technologies and the local indigenous techniques and usually relying on the use of local materials and skills e.g. ox-ploughs.It involves the use of both labor and capital in almost equal proportions. It is neither too advanced nor simple.

Characteristics /features of intermediate technology

4. Figure 6 1: Capital intensive technology in a construction company Work places of intermediate techniques are established in villages and towns, not in urban centers.

5. The workplaces involve more workers, costs are low and minimum inputs particularly in the case of capital.

6. There are simple methods of production process so that the demand of highly skilled labor is reduced.

7. The Production process should largely be based upon using local raw materials and local domestic labor.

8. There must be facility of repair at door step.

Role of intermediate technology

•It provides employment opportunities to the available skilled man power and this solves the economic problem of unemployment in a country leading to improved standards of living.

•There is efficient utilization of local resources which increases productivity in the economy hence promoting economic growth.

•It leads to rural development since intermediate technology makes it possible to be developed in rural areas hence solving problems that would arise due to rural- urban migration.

•It reduces income inequalities through job creation, as many people get employed and earn income.

•It helps to reduce foreign dependence since it can easily be developed within the country.

•It enables workers gain more new skills as they use this type of technology.

•It reduces brain drain in the country since most people will be employed hence saving foreign exchange that would be used to import labor.

•It promotes linkages among sectors which controls wastage of resources.

•It promotes the development of craftsmanship in the country. This helps to meet the consumers demand of quality, creativity and authenticity.

•It encourages industrialization especially in the agro-processing industries hence fostering development of a country.

•It encourages export promotion since resources are efficiently utilized hence increase in exports.

6.2.5 Appropriate Technology

Appropriate technology is the type of technology which matches with the existing conditions in the host country. It thus fits in the conditions existing and responds to the needs of the society at that time.

Characteristics/ features of appropriate technology

1. It should be able to increase production and productivity in the country for economic growth to be attained.

2. It should be able to reduce income imbalances through employment potential.

3. It should produce for an identified market to prevent resources being wasted.

4. It should be able to produce the right quality and quantities of the products needed by the consumers.

5. It should minimize foreign exchange requirements.

6. It should also minimize the use of imported inputs like labor, raw-materials and some capital equipment.

7. It should match with the social-economic standards of the society.

Benefits of appropriate technology

1. It tends to improve the living standards of people in the country through employment opportunities which results in the expansion of agriculture, industries and other services.

2. It does not require heavy investment expenditure for its success.

3. It promotes self-reliance since local resources and skills are being used and production is mainly for the local market. Therefore, the dependence factor of a country on another country is being reduced.

4. It promotes fair income distribution through job creation therefore the income gap is reduced.

5. It encourages the exploitation of idle resources and local raw material this results into increased investments.

6. It increases the volume of goods and services produced especially consumer goods. This controls inflation in the country.

7. It reduces the effect of “brain drain”. many people will be able to work using the technology that matches with the conditions in their country hence reducing man power who are unemployed to search for green pastures.

8. It helps to eradicate poverty since there are many sectors which generate income.

9. Foreign exchange is saved when all commodities are produced locally due to the use of appropriate technology.

10. It encourages specialization which results into large scale production, low prices and fair competition for commodities in the market.

Application activity 6.4

1. Using a local business or a production unit in your locality, explain how intermediate technology is applied.

2. Examine the importance of using this type of technology in that business.

3. Try to find an example of simple and more complicated technology method of production

4. a) From each of the following areas of human activity.

i. If you were to start a business in any of the above human activity area, which technology will you be likely to choose? A simple technology or a more complex technology?

ii. What could be the reasons guiding your choice?

iii. 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 to improve your qualities?

6.3. Factors considered before choosing an appropriate technology.

Activity 6.5

Using examples of businesses near your school or your community employing different types of technologies, investigate to find out the factors considered when choosing an appropriate technology in any business organization of your choice.

From the above discussion, it’s really challenging to decide on the appropriate technology to use but the following factors can be considered before choosing a suitable production method.

Approaches of choosing an appropriate technology

Technology is evolving at an incredible pace. The rapidity of changes challenges any business trying to employ the most appropriate technology for their business model and environment. The following three approaches can help in making the right decision:

i. Balance cost against benefits,

ii. Look for ease of use,

iii. Take it for a test drive.

The factors that should be considered before choosing an appropriate technology include the following:

Social benefit:The technology should have social benefits to the country, in terms of job creation, as well as not having a lot of social costs like pollution (air, water and noise).

Health impact on users: The technology should put into consideration the health of the users as well as the population around. Some technology for example machines and mobile phones make vibrations which affect the health of the people leading them to get cancer related problems.

Ease of use and adaptability: The technology chosen should be simple to use and easy to learn and adopt. It should be able to accommodate the skills of the available labor in a given country.

Productivity and profitability:The technology chosen should be able to yield profits for the business as well as efficient and effective use of resources to produce much output.

Cost effectiveness: The technology chosen should be affordable to the company and should be able to yield more returns for the capital invested.

Institutional needs:The technology should be able to address the needs of the institution or company where it is being used. For example, banks need more capital-intensive technology in form of information communications technology as compared to labor intensive technology.

Environmental friendly: The technology must comply with the environmental laws thus; it should not degrade the environment. This is very common with industries which use capital intensive technology.

Application Activity 6.5

Read the text below and answer the questions that follow.

The Benefits of an Environmentally Friendly Technology in Production

Running an environmentally friendly technology in production of goods and services helps you reduce the negative impacts on the environment and conserve the natural resources. Your business can help the environment in many ways.

For example, you can use products that reduce your reliance on natural resources (e.g. re

You can also use products that are made from recycled material (e.g. office supplies made from recycled plastic, furniture made from recycled rubber). all this helps to reduce the costs of production. Good practices in business attract many customers which sets you apart from your competitors.Reducing the environmental impact of your business will improve the sustainability of your business. If you are less dependent on natural resources than your competitors and have ways to deal with rising costs due to climate change, your business will have a greater chance of long-term success.

Questions:

a. Referring to your community or even from other places in Rwanda, identify any business and describe how its business activities/operations affect the environment due to the technology the business use.

b. Referring to the passage above, your knowledge and life experience, examine the benefits of using an environmentally friendly technology in business?

6.4. Technology in Business

Activity. 6.6

Carry out a 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.

Technology of the twenty-first century has become completely integrated in the business operations. Whether you are running a small start-up business or a worldwide enterprise, technology is vital in all aspects of business operations. it helps workers to communicate with one another easily which is critical to the success of a business. It is also used to protect confidential financial data which may be subject to security threat and vandalism. Fortunately, several technology tools are being used by companies in the day today running of business. Examples include; use of Emails, mobile phones, internet etc.

Activity 6.7

Observe the pictures below and explain the importance’s or uses of each machine, equipment or technology as used in business.

 

From the above pictures, you realize that businesses use various kinds of technology, depending on the type of business, and department. The table below shows the types of technology used in business departments.

Application activity 6.6

Suggest other types of technology that are used in the business world today.

a. Mention the benefits of using such technologies.

b. Explain the challenges of using such technologies in local and small-scale businesses in Rwanda.

6.5. Information Communications Technology (ICT) in Business

Activity 6.7

Read the following passage and answer the questions that follow.

THE RISE OF ICT SECTOR IN RWANDA

Beyond the promotion of the ICT sector, Rwanda has an initiative called Smart Kigali, aimed at modernizing the lifestyle of Kigali City dwellers and visitors through use of ICT for better service delivery. The initiative enabled provision of free broadband Wi-Fi Internet access in public places that include commercial buildings, bus Stations, airport, in public transport buses, cabs and improved internet access.

In socio-economic transformation, the ICT sector has facilitated the development of other sectors as well as provision of services by other agencies. These include, among others the cashless economy, which encourages the public to utilize the multiple payments systems available, including mobile money. In line with improving accountability, efficiency and openness through ICT, Rwanda Online Platform Ltd, a private company was contracted by the government to build and manage a platform to about 100 government services online.

The platform, dubbed “Irembo,” is now offering online registration for provisional and definitive driving tests, paying for the Community-Based Health Insurance (CBHI) commonly known as “Mutuelles de Sante”,application for a birth certificate and application for a criminal record. (editorial@newtimes.co.rw, October 14, 2015)

Questions;

a. What is meant by the term ICT?

b. From the above passage, mention any areas where ICT is used in Rwanda’s business environment today.

c. Why do you think ICT is growing very fast in Rwanda’s business environment today?

d. Mention any ICT tools used in a business.

e. Analyze the role of Information Communication Technology in a business today.

f. Discuss the various problems associated with Information Communication Technology in the business world today.

6.5.1. Meaning of ICT

Information and Communications Technology usually called ICT, is often used as an extended synonym for Information Technology (IT) but is usually a more general term that stresses the role of unified telecommunications and the integration of telecommunications (telephone lines and wireless signals), intelligent building management systems and audio-visual systems in modern information technology.

ICT consists of all technical means used to handle information and aid communication, including computer and network hardware, communication middle waves as well as necessary software. In other words, ICT consists of IT as well as telephony, broadcast media, Electronic Billing Machines (EBM), all types of audio and video processing and transmission and network based control and monitoring functions.

6.5.2. Tools of ICT

Activity 6.9

Identify the various ways or methods used by businesses to communicate with customers, suppliers, government and other stake holders.

Tools of ICT include the following.

•Intranet/Social Intranet.

•Chat rooms, Private and Group Messaging.

•Discussion Forums.

•Ticketing, Issue Tracking and Case Software.

•Internal Blogs, Video and Audio.

•Podcasts.

•Web-Based Communication.

•Social media.

•SMS.

Application activity 6.5.

1. Explain how the above tools are used in today’s businesses?

2. what are the challenges of using the above tools in today’s business environment?

6.5.3 ICT and Business Publicity

Activity 6.10

Many businesses have adopted the use of ICT to promote sales of their business. Social media has played a significant role in marketing of company products, as well as helping businesses to communicate to potential clients in order to increase sales and be more competitive. It has become part and parcel of business life. Discuss other ways apart from social media, how a business can spread information to the public about its products.

ICT has played a significant role in business publicity. These are the various methods used by an enterprise for publicity.

•Telephone systems: Telephones are used to communicate to potential customers about business products as well as innovations and inventions. It makes it cheap and convenient for business to increase its market share.

•Electronic mail: E-mail is one of the ways businesses use to reach its customers. Messages are sent and received between the business and customers which makes communication very fast and convenient.

•Websites: A website is a collection of web pages. Web pages may contain text, images or videos. Businesses use websites to provide information to customers.

•Chatting: Chatting online involves two or more people exchanging short messages across computer network. This can be used for immediate inquiries about prices, quality of the products, color as well as knowing the latest products on the market.

•Blogs: A blog is a kind of website. It’s used for regular information that someone wants to communicate. When an author posts a blog, visitors to the website who see that blog can comment and share such comments with other people that visit the website. Blogs contain text, pictures and links to other web pages.

•SMS: (short message service). This is a form of text messaging communication on a fixed phone and mobile phones. Such messages can be stored on the receiver’s phone for future reference. SMS can be sent as a reminder to customers, to announce new products and other purposes. SMS is cheap and easily accessible on mobile phones.

•Social networking: Social networks such as WhatsApp, twitter, Facebook, Google, Instagram, yammer are useful tools to keep in touch with customers, suppliers and the general public. Businesses create accounts on such networks and use their accounts to communicate with business partners and customers.

Activity 6.11.

Read the text below and answer the question that follow.

THE INTERNET HAS BECOME A VITAL TOOL FOR THE SUCCESS OF BUSINESSES.

It is very difficult to imagine how business could operate during this time without the use of the internet. The development of the internet has significantly altered the day to day operations of a business; including how they communicate with each other and their audience. Information can be easily transmitted to any destination in a matter of seconds.

The internet has become an essential tool for marketing and advertising. A business can present itself to customers with the use of a website or online advertisements. Many businesses now use the internet as a means of making customers aware of their current promotions. This can be very beneficial to businesses that are targeting a younger audience.

Creating the right image is very important to any business wishing to be a success. The internet can aid a business in achieving the perfect image. By having an effective website, they can create the perfect web existence. Many businesses now also use social networking as a means of making themselves known to their target audience.

Communication and interaction with customers is vital to any business. The internet has ensured that this can be easily achieved. Businesses are able to communicate and interact with customers via email or instant messaging. Internet telephony such as Skype is now a popular method of communication and is used frequently by businesses in order to conduct virtual meetings with both customers and other businesses. The use of the internet also makes it easier for businesses to deliver messages to people working within the organization.

The internet has simplified the way in which businesses collects and records information. They are able to conduct effective research by searching on the web or by using online databases. An electronic record can then be made from the information gathered. Important information such as the state of the stock exchange can also be obtained.

In addition, businesses that have an international presence are able to use the internet to conduct operations and communicate with people in offices that are based in different locations around the world. Transactions and payments can now also be made online which has simplified and sped up the payment process.

Question.

•Discuss several ways how internet plays a vital role in today’s publicity of the company’s products.

6.5.4 ICT and Business in Financial Management.

Activity 6.5.5

Research work

Visit a nearby financial department such as a school accountant (Bursar) office, a bank, school canteen, or a shop near school. Observe how this department uses ICT equipment or tools.Explain the importance of using ICT in financial management.

Information Communication Technology plays a key role in book keeping and financial management of an enterprise. There are specialized accounting programs like quick books, Tally accounting, sage pastel among others, which can handle almost all financial need of an enterprise.

The role of ICT in financial management of a business includes the following;

1. Secure information: Important information can be backed up on external servers making information more secure than keeping paper files and documents.

2. Easy mobility of information: It’s easy to move information from one department to another or outside the business by use of emails and fax machines

3. Book keeping: Computers can balance the business books much more quickly and accurately than using manual system. This involves use of software like Tally, Sage, quick books, etc.

4. Security: ICT ensures security through computerized access systems like computer operated safes and money counters.

5. Filing of documents: Business documents are filed electronically which is cheaper and safer.

6. Easy retrieval of files: Valuable information can be retrieved faster by searching in the computer system, which makes work easily accessed.

7. Access to funds: ICT enables easy access to funds through use of ATM cards, such as debit cards, credit cards, and electronic money transfer etc.

Application Activity 6.6

1. To what extent is the introduction of ICT in business a priority?

2. Identify some of the businesses that can be started basing on ICT.

6.6. Role of ICT in Business.

Activity 6.12

a. Identify one business you are familiar with and discuss how it applies information communication technology.

b. Explain the advantages and disadvantages of using ICT in this kind of business identified in (a) above.

From the above discussion, you realize that technology has a significant role in every business department.

6.6. ICT in Business

Modern business requires modern technology. Any business that expects to thrive today must have at least a basic understanding of the various innovations, programs and devices as well as the knowledge of how to apply these technologies. The many tools and powers that technology made available to the business owner and employees can help the business succeed in its goals after understanding how to use them properly.

ICT has increasingly been identified as a major contributor to the process of business development and improvement. It drives improved efficiency, effectiveness, better services and products across the entirety of the private and the public sectors.

6.6.2. Role of information communication technology in business.

The following are some of the roles of information communication technology in business.

1. Makes work easier: Technology simplifies work in all aspects. Work becomes so interesting, less stressing, enjoyable and fast.

2. Quality products: Advanced technology is very accurate and tends to produce better quality products that fetch a lot of money for the enterprise.

3. Complicated tasks: Technology helps to perform complicated tasks faster and with ease. For example, use of computerized accounting software like quick books, sage and pastel helps in accounting with ease.

4. Global marketing: Technology helps companies to sell around the world. People are able to buy and sell products online and receive payments electronically. This is possible through the use of E-commerce sites like E-Bay, Amazon, Jumia, etc. and payments can be made using Credit cards and visa electronics cards.

5. Monitor buying habits: 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 track drivers which supports a positive public image of employees who realize they can’t get away with poor behavior.

6. Ability to process high volumes of information and at a high speed: Computers can perform a lot of work in the shortest time possible which would require a lot time if done manually. Examples include preparation of control accounts, financial statements and preparing payrolls etc.

7. Increases customer satisfaction: The use of ICT helps producers to produce goods and services which are of good quality and a variety. This therefore increases the customers demand and satisfaction of the commodities.

8. Communication: ICT enables businesses to communicate both nationally and internationally with clients and business partners. It also helps to improve communication within a company which helps managers to make good decisions.

9. Production and distribution of products: Technology plays a key role in the production and distribution of products by use of machines and transport means.

10. Technology has made it easy: for companies to handle large numbers of employee profiles as well as client profiles.

11. Technology cuts costs: For example, the costs incurred while transporting and delivery of goods can all be done using computers and the internet.

12. Advertising: Information Communication technology introduced new methods of advertising particularly through the Internet which helps businesses to be known and sell worldwide hence increasing producer’s income.

13. ICT improves stock control: The use of barcode scanners and point of sale terminals within shops, enables firms to know immediately what their stock levels are, reducing the need for many manual checks.

14. Advertising: Information Communication technology introduced new methods of advertising particularly through the Internet which helps businesses to be known and sell worldwide hence increasing producer’s income.

15. Security: Information stored on computers is considered to be safer. This is because access to information can be restricted by using passwords. Also, in some accounting software which allows multi-users, it is easy to trace which user has performed a given transaction. This reduces the risk of fraud. For example, in banks.

16. Research tools: ICT helps businesses to carry out research easily about their competitors which helps them to survive. The Internet allows a business to virtually travel into new markets without the cost of an air ticket or the risks of creating a factory abroad. By doing this, businesses grow and acquire new opportunities.

17. Reduces the worker’s costs: An individual can be used to perform a given task which can be done by many people by using a computer. Therefore, there is reduction of costs in terms of salaries and other fringe benefits that would be incurred.

Application Activity 6.7.

Organize a debate; “Information communications technology in business has done more good than harm”

6.7. Problems/ limitations associated with ICT.

Activity 6.13

a. Discuss the problems associated with the use ICT in business.

b. Give reasons why some people don’t use technology in their businesses.

Much as ICT has many advantages, it also has many disadvantages in business. These challenges include the following.

1. ICT needs staff training: With the various updates in technology, it will require the business to incur costs of training, either on-the-job, off-the-job or induction training.

2. Difficult to implement in some systems: Systems made by different companies may be incompatible and fail to work together, limiting the firm to use the latest technology.

3. Sometimes the users of technology may not be able to interpret the generated information and as a result, fail to use the information for proper decision making.

4. Technological unemployment: ICT automates so many processes and as a result, may result in mass unemployment of people.

5. Through the use of ICT, and the internet, customers search cheaper and better sources of products, which increases competition in businesses leading to some businesses being outcompeted.

6. Sometimes the users of technology may not be able to interpret the generated information and as a result fail to use information for proper decision making.

7. ICT heavily depends on regular and sufficient power supply which is still a challenge in developing countries

8. The internet provides consumers with the ability to rapidly search for alternative goods and prices which is likely to lower a firm’s profit margin.

9. It does not put into consideration the use of body language which may lead people to miss-interpret messages because of the use of instant messaging, voice calls.

Application activity 6.8

Read the text below and answer the questions below.

INFORMATION COMMUNICATION TECHNOLOGY IN BUSINESS

Information technology has changed the way businesses do things. Correspondence that once took weeks to get from one organization to another is now delivered instantly with the push of a button. Advances in telecommunication allow associates from all point of the globe to confer in a virtual environment, minimizing the need for business travel. Although the benefits of integrating information technology in business are many, there are also disadvantages to its use.Every business must consider startup costs when implementing any type of information technology system. In addition to the cost of hardware and software, some technology vendors require businesses to purchase user licenses for each employee that will be operating the system. Businesses must examine the cost of training employees in unfamiliar technology. Although basic information technology systems may be user friendly, advanced programs still require formal instruction by an expert consultant. In addition to the startup expenses, information technology systems are expensive to maintain. Systems malfunction, and when they do, businesses must engage skilled technicians to troubleshoot and make the necessary repairs. These expenses present a major disadvantage of information technology in business, particularly to businesses that are entering the technology era for the first time.

Implementing information technology into business operations can save a great deal of time during the completion of daily tasks. Paperwork is processed immediately, and financial transactions are automatically calculated. Although businesses may view this expediency as a boon, there are untoward effects to such levels of automation. As technology improves, tasks that were formerly performed by human employees are now carried out by computer systems. For example, automated telephone answering systems have replaced live receptionists in many organizations. This leads to the elimination of jobs and, in some cases, alienation of clients. Unemployed specialists and once-loyal employees may have difficulty securing future employment.

The ability to store information in an electronic database facilitates quicker, more efficient communication. In the past, an individual would sift through stacks of paper records to retrieve data. With properly implemented technology, information can be recovered at the touch of a button. Although information technology systems allow business to be conducted at a faster pace, they are not without their flaws. Information technology systems are vulnerable to security breaches, particularly when they are accessible via the Internet. If appropriate measures are not in place, unauthorized individuals may access confidential data. Information may be altered, permanently destroyed or used for unsavory purposes.

Questions

1. From the text above, mention some of the challenges or problems of using ICT in business.

2. Mention some of the solutions to these problems of ICT in business.

6.8. E-Commerce or Online Business

Activity 6.14

Using the internet, books or knowledge from the community around you, Discuss the following.

a. What is meant by e-commerce?

b. Mention any 3 types of e-businesses in Rwanda today.

c. Examine the advantages and disadvantages of e-commerce to businesses and to the consumers.

From the above discussion, we learn the following;

ICT has opened new commercial activities like e-commerce. E-commerce means Electronic Commerce. In some years back, buying and selling of goods involved movement from one place to another (e.g. to the shop or market) and physically meeting between the seller and the buyer.

Today, ICT has extended the scope of buying and selling goods within and outside a country. For example, goods can now be sold across continents via the internet. Activities such as advertising, customer care and delivery of goods can be done electronically.

An e-business is supported by internet services within as well as without organizations, countries and continents. With the use of ICT, such businesses can be done, and it allows businesses to transact without geographical limitations. Ordinarily, this may not have been possible, or it could have been possible but at a very high cost.

6.8.1. History of e-commerce

E-Commerce started way back in the 1960s, this is when businesses started using Electronic Data Interchange (EDI) to share business documents with other businesses. In 1990’s, World Wide Web (www) on the internet came into existence. It is used for disseminating and publishing information. It became cheaper to do businesses. Consumers can now purchase variety of items online, examples of e-commerce businesses in Rwanda include; - Jumia, Irembo, mobile money services, electronic banking services and the international e-commence include; Amazon, eBay, etc.

6.8.2. Advantages and Disadvantages of e-commerce

Advantages of e-commerce

•It is easy to start and manage an online business.

•A business can reduce the costs of handling sales inquiries, providing price quotes, and determining products availability by using electronic commerce. This means that the operational costs are low and better quality services.

•It helps consumers to buy products anywhere in the world.

•Electronic payments of tax refunds, public retirement, and welfare support cost less to issue and arrive securely and quickly when transmitted over the internet.

•Electronic payments can be easier to audit and monitor than payments made by cheque, providing protection against fraud and theft losses.

•Electronic commerce can also make products and services available in remote areas.

•Electronic commerce is faster in buying and selling of goods and services. This helps to avoid long queues if their where many buyers.

•Low operational costs and better quality of services.

•There is no need of physical company set-ups in terms of buildings.

•Buying and selling is done 24/7. This means buying and selling can be done twenty-four hours in seven days.

•It is cheaper. Sellers and buyers reach each other without the physical movement of the buyers to the shop.

•Virtual goods like music, electronic books can be delivered instantly.

Disadvantages of e-commerce

•There is no guarantee of product quality.

•It requires internet connection and yet not everyone can be connected.

•Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money.

•It is costly in terms of delivery and ICT equipment.

•Mechanical failures can cause unpredictable effects on the total processes.

•There are many hackers who look for opportunities, and thus an e-commerce site, service, payment gateways, all are always prone to attack.

•Return-on-investment is difficult to calculate.

•Many firms have had trouble recruiting and retaining employees with the technological, design, and business process skills needed to create an effective electronic commerce presence.

•Difficulty of integrating existing databases and transaction-processing software designed for traditional commerce into the software that enables electronic commerce.

•There is no consideration of loyal customers since there is no physical contact with customers while carrying out business transactions.

Application activity 6.9

a. Carry out a research on the procedures of starting an e-commence business.

b. Design a plan on how to sell products of your business club online.

c. Give examples of companies in Rwanda that sell their products online.

6.9. ICT as a source of business opportunities

Activity 6.15

Identify various areas where ICT is used and how it has contributed to creation of business opportunities.

The use of ICT and technology has affected every aspect of business, transforming not only the way that business is conducted but also creating new business opportunities, sectors and jobs. The creation of companies like Google, Yahoo, MTN – AirTel - Rwanda, internet cafes, companies selling, repairing or charging mobile telephones, selling air time, money transfer and e-commerce which did not exist in the country before but are now major players in society, country and World Over is due to ICT.

Information Communication Technology itself offers numerous business opportunities. The following are some of the businesses that can be started basing on ICT.

1. Develop and design websites for individuals, organizations and companies.

2. Selling ICT equipment’s like computers, phones, network cables, tablets, laptops etc.

3. Repair ICT equipment’s like laptops, computers, and mobile phones.

4. Starting and managing online shops.

5. Developing software for different organizations

6. Starting training programs for people who want to use computers and such technology in their business enterprises.

7. SMS service providers. Sending SMS on behalf of clients. This is also a business opportunity that is cheap to start.

8. Operating a call center.

9. Manage databases for different companies

10. Providing delivery services to other online retailers.

11. Develop games

12. Create companies that train people about information technology

13. Develop mobile applications

14. Computer forensic investigator. These detect computer crimes

15. Multimedia publishing

16. Computer networking

17. Graphics designs

18. Manufacturing or product designs

Application activity 6.10

Although ICT has led to technological unemployment in some parts, there could be many benefits to entrepreneurs.

a. Mention some businesses you know, which came up as a result of ICT which operate in Rwanda.

b. How have these businesses boosted economic development in Rwanda?

Skills Lab Activity 6.11.

1. Describe different ICT tools you will use in your business club or the business you want to start at home.

2. Explain how you will use the ICT tools identified above in your business activities or business you want to start back at home.

End of Unit 6 Assessment.

Justify the statement “Technology is something to be welcomed rather than feared”.

Case study

Mugwaneza has a peanut butter making business. Last week she announced the purchase of new equipment’s and modern technology that would make a radical change in the production process. The investment would lead to some employees lose their jobs. Mugwaneza explained to them but there was no doubt, it was in the best interests of the company as a whole.

Employees were not consulted because it would slow up the process and Mugwaneza felt that it was the best decision to make.

In the long run, the modern technology and equipment’s will increase the businesses’ competitiveness and also produce quality products and in large quantities. The working practices will obviously be changed, and employees will have to learn new skills of using them. The employees where 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, Mugwaneza admitted that the issue was not handled very well but would not reconsider the decision.

Questions

1. What factors may have made Mugwaneza decide to invest in modern technology?

2. Do you think the employees were right in taking industrial action? Give reasons for your arguments.

3. Analyze the factors that Mugwaneza might have taken into account before acquiring the modern technology.

4. Mugwaneza admitted that the issue was not well handled. In your opinion, how should she have handled it?

5. a. Distinguish between capital saving technology and labor-saving technology.

    b. Explain any 5 advantages and 5 disadvantages of using capital intensive technology.

6. a. What is meant by the term “technology”b. Discuss the pros and cons of labor intensive technology.

7. 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 in Rwanda he can contact for advice.

ii. Explain the merits and demerits of using e-commerce in a business like that of Peter.

8. Explain how ICT can be of great importance in financial management.

9. ‘The key to better performance is better management rather than more technology.’ Critically assess this view.

10. Examine the challenges of using Information Communication Technology tools in business.