How can technological change have an impact on the operating environment of a global business - Essay Example

The multinational organisations should work and invest on the research and development activities in order to come up with different innovative ideas to create competitive edge over other competitors in the industry (Amable, Barre, & Boyer, 1997). Operating Environment of a Global Business: The operating environment of a global business can be classified as internal business environment and external business environment. It is important for the organisations to carefully analyse and evaluate the overall operating environment and come up with strategies which facilitate the organisations in the process of enhancing and improving their internal environment and competencies on the basis of the changes in the external environment.

There are different strategic tools and methods used for the evaluation and analysis of the internal and external environment of the organisation (Freeman, 2010). For instance the internal environment is analysed with the help of the VRIO framework and resource based view. This framework allows the organisation to identify the internal competencies and skills which can be converted into competitive advantage (Freeman, 2010). On the other hand the external environment is analysed with the help of the PESTEL framework and Porter’s five forces. . factors can act either on national level or international level, at the same time the influence of each of these factors is directly dependent on the nature of the market (Freeman, 2010).

Hence, it is important for the multinational organisations to carefully plan and execute the strategies on the basis of the external environment factors. On the other hand Porter’s five forces try to evaluate the impact of competitors and other important forces in the organisation including suppliers’ power, customers’ power, competitive forces, substitutes, and potential entrants (Freeman, 2010). Hence, it can be said that the strategic choices of the organisations are dependent on the environmental factors along with the availability of the resources and internal competencies.

These elements allow the organisation to evaluate the technological changes and the resulting innovations. Along with this the bases of competitive advantage allows the organisation to decide that whether they will be innovation leader or innovation follower. The choices regarding the sustaining competitive advantages allow the organisations to manage the overall process of innovation along with the issues of the globalisation and intellectual property rights. Lastly, there are decisions related to the competition and collaboration (Freeman, 2010).

Technological Changes and Innovations: Out of the all macro environmental factors the impact of the technological changes and innovations on the operating environment of the organisations is being increasingly discussed. The technological changes and innovations have been forcing the organisations to continuously change and enhance the products and processes (Christensen, 1997). There are several reasons behind the technological changes, for instance it can be