Technology and its influence on business activity

Technology has reshaped almost every business in the last 25 years. AQA expects you to understand both the opportunities — new products, new channels, new efficiency — and the costs, with named real-world examples.

Five technology forces in business

1. E-commerce

Selling goods and services online. Worldwide e-commerce sales hit ~$6 trn in 2024 — about 20 % of all retail.

• Pure-play e-commerce: ASOS, Boohoo, Amazon. No physical shops.
• Multichannel: Tesco, M&S — sell online and in-store.
• B2B: Alibaba.com lets businesses buy from manufacturers globally.

Benefits: 24/7 trading, global reach, lower premises cost, customer data captured at every click. Drawbacks: high tech and logistics costs; fierce price competition; fraud and chargebacks; high return rates (especially fashion ~30 %).

2. Social media

Facebook, Instagram, TikTok, X, YouTube — businesses use them to advertise, build community and sell.

• Targeted advertising — algorithms show ads to specific audiences.
• Influencer marketing — collaborations with creators (Gymshark built itself on Instagram fitness influencers).
• Customer service — fast, public responses; complaints handled in DMs.
• Risks — viral negative posts; "cancel culture"; cost of constant content.

3. Digital communications

Email, video calls (Teams, Zoom), Slack, WhatsApp Business — replace face-to-face and phone.

Benefits: faster decisions, lower travel costs, supports remote/hybrid working. Drawbacks: information overload; security risks; loss of office culture.

4. Payment systems

Card, contactless, Apple Pay, Google Pay, mobile banking, PayPal, BNPL (Klarna), cryptocurrency for a growing minority of firms.

Benefits: faster transactions, lower cash-handling cost, customer convenience, instant fraud detection. Drawbacks: card-processing fees (~1.5–3.5 %), cyber-security investment, technical failures (a card terminal outage can cost a busy retailer thousands per hour).

5. Big data and AI

Cookies, loyalty cards, sensors and apps create huge data sets. Firms use:

• Personalisation — Amazon's recommendations drive ~35 % of sales.
• Demand forecasting — Tesco's Clubcard data predicts demand by store.
• AI customer service — chatbots resolve 60–70 % of basic queries.
• Predictive maintenance — Rolls-Royce uses sensor data on jet engines to schedule maintenance before failure.

Benefits of technology — summary

• Wider reach — sell beyond local market.
• Lower costs — automation, lower premises and travel costs.
• Better customer experience — faster, more personalised.
• Better information — data drives decisions.
• New products and revenue streams — subscription apps, digital downloads.

Drawbacks of technology

• High set-up cost — websites, apps, ERP systems.
• Maintenance and updates — constant cost.
• Cyber-security — UK firms face thousands of attacks daily; data breaches damage trust (TalkTalk 2015 hack cost £77 m).
• Skill gaps — staff training time and cost.
• Customer accessibility — some customers (older, rural) prefer non-digital.
• Disruption — businesses that fail to adapt collapse (Blockbuster vs Netflix).

Real-world examples

• Greggs app — order ahead, loyalty stamps, customer data → personalised marketing.
• Tesco Clubcard — loyalty data shapes own-brand product range and pricing.
• Domino's Pizza — 75 % of UK orders now placed online via app or website.
• Argos in-store — once based on a paper catalogue; now uses tablets, QR codes and same-day delivery.

Examiner tips

For 6+ mark questions, link the technology to a specific business benefit and a cost or risk. "Social media advertising allowed Gymshark to reach a global audience cheaply, but their reliance on influencers means a single negative campaign can damage the brand quickly." Always name a business and a year if you can.