Business operations - EdexcelThe impact of technology on production

Technology has a big impact on businesses, in terms of both updating existing products and finding new ways of manufacturing products. Technology benefits businesses as it allows them to produce higher quantities, make products more consistent and be more cost-effective.

Businesses try to use technology in a balanced way so that its disadvantages don’t outweigh its many advantages. They need to balance:

• Costs - Technology costs money to purchase, but reduces the cost of producing products. For example, using machinery to complete dangerous tasks means a business no longer has to pay the higher wage costs associated with risky jobs. This both reduces costs and improves employee health.
• Productivity - Using machinery to mechanise or automate parts of the production process leads to an increase in productivity. This means a business can either reduce its prices to remain competitive or increase its profit margins.
• Quality - Businesses need to be consistent in the quality of the products they produce. Mechanising or automating parts of production can help with this.
• Flexibility - Businesses often need to balance technology with human flexibility. Automation is good for mass production but it doesn’t work so well for products that will be personalised to meet individual customers’ preferences. For example, in the luxury car industry, customers have a wide variety of optional extras to choose from, which may need to be hand-finished.