3.3.6: Implications of ICT

1. 3.3.6: Implications of ICT Impact of external change

2. The aim of this presentation • Understand how to discuss the impact of external change on: • an organisation • individuals within the organisation • on the systems in use.

3. Introduction • External changes are those changes which organisations have no control over. • Changes might be caused by: • Financial reasons • Research • Competition • Other reasons

4. Financial Reasons • Examples could include: • Changes in tax rates, such as VAT or income tax. • Changes in interest rates which affect loan repayments etc. • Changes in minimum wage. • Changes in exchange rates.

5. Research Reasons • Examples could include: • Changes in production techniques. • Changes in the materials that are used for production. • Different trends may become apparent which means an organisation needs to adjust. • Developments in ICT

6. Competition Reasons • Examples could include: • Changes in production techniques that make competitors more efficient which in turns allows them to lower their prices and produce more. • New products on the market. • Special offers from competitors. • Price of shares for other companies.

7. Other Reasons • Examples could include: • New Governments coming into power and changing policies and funding. • Updates to laws and legislation. • Environmental changes. • Pressure groups, such as Green Peace, can disrupt the running of an organisation. • Transport link changes, including new trains, buses and new roads.

8. Impact of external change • When external changes occur, an organisation must respond in order to adapt to the change successfully. • Responding too late can have negative outcomes for organisations, which might have further repercussions for other organisations! • Examples of this include the film and music industry possibly reacting too slowly to the way people accessed media content on the internet.

9. Impact on organisations • Worst case scenario, the impact on an organisation is that it goes out of business. • Changes in things like income tax can have a massive impact on organisations because it is effectively a charge on earnings and profits. • A slightly worst case scenario could involve redundancies and restructuring within the organisation.

10. Impact on organisations • Its not all doom and gloom though… • Changes in the financial market could result in the cost of borrowing going down. • This could mean that companies are willing to spend more on R&D and come up with new product lines (such as 3D televisions!). • This in turn might result in a growth in employment and, again, some restructuring!

11. Impact on individuals • If a company goes under or is facing financial difficulties then a person may end up losing their job. • If a company is doing well then a person may find themselves in a position to get a better job within the organisation (promotions). • All these things may result in a person needing to be retrained, work different hours (part-time or full-time) or work in a different area of an organisation.

12. Impact on individuals • Some individuals might also get ‘head-hunted’ by external organisations if they believe they would be a valuable asset to their company. • This, of course, has an impact on the organisation that loses their staff member.

13. Impact on individuals • Other external factors might include: • Births • Deaths • Marriages • All these things could result in an individual having to change they way they work. • Part-time or full-time • Flexitime • Working from home

14. Impact on systems • New production methods can influence change. • Change on a system can result from any external change, such as changes in finances or in competition from other organisations. • Systems sometimes need to be changed to deal with these situations, and, in most cases, result in a more streamlined system.

15. Impact on systems • The change to a system could be in the form of: • A system which has increased efficiency but requires the same number of operators. • A larger system to cope with extra requirements. • A smaller system which requires less operators.

16. Activities • Read through the example scenarios on pages 201-203. • Complete the activities on page 203. • Answer the questions on page 203.

17. Example Exam Questions • Explain the impact of new competition on an organisation. [6 marks] • Describe the impact that a downturn in the economy can have on individuals within an organisation. [4 marks]