Technological and environmental factors |Business environment |FBT ACCA

Technological and environmental factors |Business environment |FBT ACCA

In this post we will cover “Technological and environmental factors” Which is an important chapter for FTB exam.

Technological and environmental factors

As communication networks have improved and performance monitoring systems have advanced, organization structures have updated in tandem with technological advances, resulting in fewer managerial levels and one manager overseeing a bigger number of employees.
This has ensured that organizations are more flexible and can adapt to changes better.

Technological effects on organization structure

1 Downsizing: In simple words, downsizing is reducing the size of the workforce. This might be due to technological causes, as automation would limit the number of people employed and increase the productivity of those that remained. For example, a computer software capable of keeping ledgers would limit the amount of personnel in the Accounts department because the system would automatically post entries from day books to ledgers. Because part of the system would be automated, it would also boost the amount of entries processed per day by the remaining staff.

May occur disadvantages such as Labor costs are lower or a dissatisfied workforce may have a detrimental impact on the company’s reputation.

2 Delayering: To make an organization more efficient, delayering refers to minimizing the number of managerial layers. Because of enhanced communication and monitoring mechanisms throughout the firm, fewer managerial levels are required, and one manager can supervise a larger number of employees. ABC Company, for example, has five levels of management, with one supervisory level overseeing three people. ABC has invested in integrated software that allows all employees and supervisors to communicate with one another, even if the managers work from home. At the conclusion of each day, the system creates hourly and error reports for managers to evaluate and follow up on.

3 Outsourcing: Outsourcing is the practice of outsourcing out corporate work to specialized companies. There are three primary motivations for a company to outsource one of its functions:

  • It will save money.
  • It will allow the company to focus on its core competencies (offering goods or services)
  • The outside party will be able to perform and deliver the function more effectively. As a result, the business can benefit from the expertise of professionals.
Advantages of outsourcing
SpecialistOutsourced firms will have more competencies than the corporation itself, resulting in improved performance quality.
Fixed of free contractIt’s possible that the outsourced firm is operating on a fixed fee contract to reduce cost uncertainty.
Business flexibilityThe outsourcing firm would only be hired when it was absolutely necessary. An in-house department would be a continual cost and would demand constant work; this is avoided with outsourcing, which allows the company to undertake projects only when they are needed.
EfficiencySpecialist skills and fixed-term contracts would merge to improve task efficiency, resulting in cost savings.
Impact of IT on business process
ProductConsumers now have access to many more features in products than they did previously. As more organizations adopt IT, product creation has grown faster, and competition from similar items has increased.  Banks have introduced new goods for businesses, such as internet banking services.
Production processAutomation has changed manufacturing operations, reducing errors and waste while increasing efficiency. The end product quality has increased as a result of better process monitoring. Standardization of product design and quality has also been achieved.
Marketing processIT has offered a slew of new options for businesses to promote their products, including social network ads and Google AdWords.
Organizations have used technology to improve the way they distribute items. Businesses have both online and physical retail operations.
Companies may reach out to a larger number of customers by leveraging customer databases.
Companies have websites where customers may view their items and compare them to other products based on price and quality.
Information technology has essentially increased the variety of detail customers have about an item before making a purchase choice.
Human ResourcesIT has aided in the upkeep of employee records, minimizing payroll calculation confusion and errors.
Biometric attendance technologies have decreased the requirement for ongoing employee monitoring.

Environmental factors

Impact of environment on businessImpact of business on environment
DiversityDepletion of natural resources
Renewable and nonrenewable resourcesDeforestation
Geographical factorsPollution
Natural HazardsGlobal worming

Environmental impacts can be reduced by:

  • Recycling
  • Going paperless
  • Waste treatment
  • Research and development
  • Eco labelling


Sustainable economic development is a pattern of resource use (for social and economic growth) that attempts to meet current human demands while not threatening future generations’ ability to meet their own.

The “Technological and environmental factors” chapter is also an important chapter which examiner can test, so must prepare for this chapter.

We will post practice questions for “Technological and environmental factors” and for other chapters as well very soon.

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Naveen Rajput