Technologic Industry External Analysis

Technologic Industry External Analysis

Changes in the Macroenvironment

The macroenvironment in the technology industry is gradually changing due to technological advancements, the entry of new competitors into the market, and regulation changes. One of the changes that could have a negative impact on the technology industry is the changes in government policies. Governments in different countries enact various policies and regulations to protect their citizens from disruptive technologies. These regulations may negatively affect the technological industry, especially when they limit their operations and introduce additional requirements, such as the need to implement modern technology to improve privacy. However, the technology industry may develop due to changes such as trade liberalization, allowing companies to venture into new markets, thus increasing customer base and profitability. Trade liberalization also facilitates the exchange of supplies and ideas across countries, thus enabling companies such as Blackberry to access the latest technology and implement it to improve the quality of its products and services.

Factors That May Be Most Important To the Technology Industry

The most important factors in the technology industry are economic and technological factors. According to Perera (2017), economic factors include the features dictating the health of a particular economy. The technology industry could be affected by the efficiency of financial markets. Efficient financial markets allow companies within the industry to access liquidity in the equity market, thus managing the costs incurred to run the business and expand into other markets. Exchange rates also significantly affect the technology industry by dictating investment plans both in the long term and short term. Another economic factor that could affect the technology industry is the income levels of people in a specific market. Income levels influence consumer spending due to the amount of available disposable income. Marijs & Hulleman (2019) argue that a favorable economic environment includes income stability and less societal inequality. Trade liberalization is also an important economic factor that could enhance the growth of companies in the technology sector due to the increasing global demand for technological products and services.

Technological factors influence the rate of technological advancements in the technology industry. For instance, the dissemination and development of mobile technology may transform what customers expect from companies in the technology sector, thus prompting companies to be innovative to meet customer expectations. Technological advancements could also affect supply chains in the technology industry by offering greater access to information to the supply chain partners and other technology industry players. The rise of 5G technology may also significantly influence the technology industry by prompting technology companies to enhance their devices to accommodate 5G connectivity to increase access and speed. Technological advancements have also shortened product life cycles, thus promoting technological companies to adopt an innovation culture to remain competitive. The advancements have also lowered servicing and production costs, requiring technology companies to restructure their supply chains to enhance flexibility to meet cist structures and customers’ needs.

Nature of Competition in the Technology Industry

According to Golding & Tennant (2011), the technology industry is characterized by stiff competition for customers and raw materials. However, there is limited competition in the manufacturing sector due to the high costs incurred in developing hardware systems. Manufacturing also requires adopting the latest technology, which further increases production costs. The market in the technology industry is also characterized by a high risk of replacement because of the many companies in the industry specializing in similar products and services. Suppliers may also have high negotiating power if they have manufacturing expertise and high-quality products. Competition in the technology industry is driven by large multinational companies that have established a strong brand image and widespread brand awareness, thus making it hard for small technological firms to grow. This has increased mergers and acquisitions, especially in developing countries.

Strategic Groups

One of the strategic groups that might exist in the technological industry is the software development sector. This group specializes in developing software to run technological equipment such as phones and computers. The second strategic group is the hardware development group. The group specializes in manufacturing hardware or components assembled to create hardware. There is intense competition in the software development strategic group because software manufacturing is not expensive and mainly requires skills and expertise in information technology. The high cost incurred in purchasing the raw materials needed to manufacture hardware in the technology sector reduces competition in the hardware manufacturing strategic group because many companies do not have the capital to develop hardware that meets customer demands.

The Dynamic Nature of the Technology Industry

The technology industry is highly dynamic because it is influenced by technological advancements (Kemerer, 2012). The industry’s structure as an ecosystem of unregulated and licensed companies is reshaping competition in the industry. For instance, the increase in the number of entities in the sector results in technological advancements as every company tries to gain a competitive advantage. The advancements have led to the rise of new competition dimensions. Technological advancements have also created issues for competition and regulatory authorities because applying a conventional one-sided mindset to two-sided marketplaces may lead to inaccurate judgment because digital platforms apply two directions, implying that platforms must entice developers and customers for technological applications to work (Meena & Geng, 2022). Stiff competition in the industry has also made companies focus on their strengths to create a competitive advantage. For instance, Blackberry shifted from manufacturing software and hardware to only outsourcing hardware to reduce rivalry from competitors in the software manufacturing sector.

References

Golding, P. A., & Tennant, V. M. (2011). The taste of LIME: Competitive dynamics and strategies in the telecommunications industry.

Kemerer, C. F. (2012). Information technology and industrial competitiveness: How IT shapes competition. Springer Science & Business Media.

Marijs, A. J., & Hulleman, W. (2019). Economics and the business environment. Routledge.

Meena, M. E., & Geng, J. (2022). Dynamic competition in telecommunications: A systematic literature review. SAGE Open, 12(2), 215824402210946. https://doi.org/10.1177/21582440221094609

Perera, R. (2017). The PESTLE analysis. Nerdynaut.

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For this module, answer the following questions:
1. Are any changes taking place in the macroenvironment that might have a positive or negative impact on the industry in which your company is based? Apply the PESTEL framework to identify which factors may be the most important in your industry. What will be the effect on your industry?

Technologic Industry External Analysis

2. Apply the five forces model to your industry. What does this model tell you about the nature of competition in the industry?
3. Identify any strategic groups that might exist in the industry. How does the intensity of competition differ across the strategic groups you have identified?
4. How dynamic is the industry in which your company is based? Is there evidence that industry structure is reshaping competition, or has it done so in the recent past?

Paper Details:
Submit the assignment in Microsoft Office format.
Format the assignment using APA formatting and writing style.

General Expectations for All Written Assignments:
Papers should follow current APA guidelines in terms of type, margins, and citations and address the following areas:
1. The actual assignment topic. Consult the instructor for additional information or clarity on assignment instructions.
2. Cover the assignment topic in sufficient detail and depth with scholarly sources to support claims.
3. The content should reflect ample use of required readings and other course materials.