The Impact Of Ict On Business Activity aqa

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Exam code:8132

An introduction to ICT and business activity

ICT systems include computers and communications technologies that are used widely in businesses
Examples include:
- Details of customers held in databases
- Employee record-keeping
- Computer-based product design (CAD systems)
- Video-conferencing systems
- Storage of business documents
- Planning and scheduling software
- Computer-controlled manufacturing (CAM systems)
The technology available for businesses to improve efficiency, flexibility and productivity is growing all the time
- In recent years, advances in technology have been instrumental in
  - Enabling employees to work remotely
    - While employees require IT equipment to work from home, businesses can enjoy significantly reduced operating costs
  - Making internal business communication quicker and more secure
    - Important files can be encrypted and distributed, with several individuals contributing to the same file at any one time
  - Automating design and production processes
    - Products can developed quickly, allowing them to reach the market before those of rivals
  - Communicating with customers in interactive ways
    - Social media allows businesses to share content such as images, videos and hyperlinks
  - Collecting and organising vast amounts of data
    - The internet of things and the large amount of data from online interactions can be used to inform product development and marketing decisions

E-commerce

E-commerce is the trade of goods and services over the internet
A wide range of goods and services can be purchased online
- Goods, include tangible items such as clothing, household goods, toys and even vehicles
- Services, include non tangible items such as insurance, entertainment and study materials

Businesses can trade through their own websites
- Top UK companies for e-commerce sales include Argos, Next, Dunelm and Screwfix
  - Argos’s website receives more than 42 million visits each month
Online platforms offer small businesses the chance to sell their products online
- E.g. Amazon is a third-party logistics provider (3PLs) which provides a trusted platform for other businesses to generate sales
- It provides infrastructure and an online marketplace
  - This allows small businesses to reach a wide audience and increase sales without having to invest in their own distribution infrastructure
The proportion of retail sales made using e-commerce has been increasing steadily since the mid-2010s
- Its growth accelerated during the COVID-19 pandemic, as consumers were unable to access most of their favourite high street stores

UK E-commerce revenue (£bn) 2015 to 2021

Horizontal bar chart showing revenue in billion pounds from 2015 to 2021, with 2021 reaching approximately 120 billion pounds. — **E-commerce revenue has grown significantly since 2015, boosted by the Covid-19 pandemic in 2020 Source: Office for National Statistics**

E-commerce can make purchasing convenient for customers and is a source of competitive advantage for businesses

Evaluation of e-commerce for businesses and consumers

	Advantages	Disadvantages
Businesses	Websites offer a direct, cheap promotional method Businesses can easily make online purchases of supplies from other businesses An easy-to-use website can encourage customers to buy more E.g. Automation suggests complimentary products often purchased at the same time Dynamic pricing techniques can be implemented so profit can be maximised during periods of high demand	Competition increases and customers can easily switch brands Large warehouses and efficient stock control systems are needed to fulfil online orders E-commerce is less suitable for businesses selling personal services The lack of face-to-face contact with consumers means businesses miss out on instant feedback
Consumers	Competition drives prices down and allows customers to easily ‘shop around’ and compare prices Electronic payment using credit and debit cards is relatively easy E.g. Using ‘one-click’ platforms such as Apple Pay E-commerce is convenient as it allows customers to shop from anywhere in the world E.g. when travelling, 24 hours, on many different devices Customers can buy from worldwide retailers so have increased choice E.g. Chinese online retailers Shein and Temu are increasingly popular in the UK	Poor connections or technical difficulties can deter customers from using a website to make purchases Customers in low-income countries may not be able to access the products due to poor infrastructure, limiting potential market size Many consumers are concerned about identity theft or fraudulent use of credit cards if they buy goods online Products cannot be handled or tried out before purchase, which means customers frequently return them because they are unsuitable

Digital communication

Digital communication refers to the use of electronic devices to transfer information
- Devices include desktop and laptop computers, tablets and smartphones
- Applications that enable digital communications include:
  - Email
  - Instant messaging, e.g. WhatsApp
  - Chatbots
  - Videoconferencing, e.g. Google Meet or FaceTime
  - Social media apps, e.g. Instagram, LinkedIn, or Facebook
  - Webchat apps, e.g. Slack
  - Shared drives, e.g. Google Drive or Dropbox
These digital communication tools have helped businesses improve communications with their stakeholders

Digital communication and stakeholders

Stakeholder	How digital tools improve communication
Customers	Chatbots provide prompt customer service assistance, such as dealing with complaints, issuing refunds and replacements and tracking deliveries This reduces the need to employ call centre staff, potentially reducing wage costs significantly Social media profiles are used to share product information and promotional activity Customers’ interactions can be a useful source of market research data
Suppliers	Email and online ordering systems speed up the purchasing process Problems with orders can be raised with suppliers immediately and a record of communication is created for future reference This can reduce lead times, improve efficiency and lead to better relationships with suppliers
Employees	Shared drives allow employees to work collaboratively with colleagues across different locations Videoconferencing allows meetings with remotely-employed workers, reducing the need for workers to commute Webchat apps allow real-time communication between staff, creating, to some degree, a face-to-face workplace environment
Shareholders	Key documents can be shared quickly and securely via encrypted emails and intranet systems Shareholder meetings can be held online, which often boosts attendance

Examiner Tips and Tricks

Exam papers often ask candidates to recommend whether a development in technology or an alterative improvement should be implemented by a business.

These 12-mark questions need a thorough, fully-developed conclusion that:

Makes a clear recommendation with strong justifications for the choice
Offers some balance, drawing together the key arguments you made in your analysis
Identifies factors upon which the decision depends
Is fully rooted in the business context

Business GCSE AQA