Influences on Business: Technology
Technology changes how businesses sell, communicate and take payment, and AQA loves asking how these changes affect costs, sales and workers. This page covers e-commerce, m-commerce, digital communication and payment systems for spec section 3.2, with a real example from JD Sports.
E-commerce and m-commerce
E-commerce means buying and selling online through websites, while m-commerce means trading through mobile phones and apps. Both let a business reach customers far beyond its local area, stay open 24 hours a day and collect data on what shoppers view and buy.
JD Sports shows the scale involved. The retailer runs more than 3,300 stores worldwide, but its website and app are central to a business whose revenue passed £10 billion in its 2023/24 financial year. Online selling lets JD offer a wider range than any single store could hold and target promotions at individual customers.
The drawbacks matter too: websites cost money to build and secure, delivery and returns are expensive, and online markets are fiercely price-competitive because customers can compare rivals in seconds.
Digital communication and payment systems
Businesses now communicate with customers through social media, email, live chat and video calls. These channels are fast and cheap compared with printed adverts, and they allow two-way conversation: a customer can complain publicly on social media, and how quickly a business responds shapes its reputation. Internally, email and video meetings let staff work together across different sites and let some employees work from home.
Payment systems have changed just as fast. Contactless cards, Apple Pay and online checkouts make buying quicker, which shortens queues and reduces abandoned purchases online. Most UK card payments are now contactless. For the business, electronic payments cut cash-handling costs and reduce theft, but they come with transaction fees charged by card providers and the risk of system outages stopping all sales at once.
Costs and benefits of adopting new technology
Weigh both sides in any exam answer:
- Benefits - lower unit costs through automation, access to new markets online, better customer data for marketing decisions, faster communication and improved productivity.
- Costs - buying and installing equipment or software, training staff, ongoing maintenance and subscriptions, and cyber security to protect customer data.
Technology also becomes obsolete quickly, so a business may need to reinvest every few years just to keep up with rivals. There is a human side as well: automation can replace jobs, which may lower morale or trigger resistance from staff, while new skills requirements can make recruitment harder. The strongest answers judge whether the benefits outweigh the costs for the particular business in the question, since a small independent shop faces very different sums from a national chain.
Key terms
Practice questions
State two methods of digital communication a business could use with customers. [2 marks]
Model answer guidance: A business could use social media posts to reach customers. It could also use email newsletters. Live chat on a website is a further method.
Explain one benefit of e-commerce to a small business. [3 marks]
Model answer guidance: E-commerce lets a small business sell to customers anywhere in the country rather than only locally. This increases the number of potential customers without the cost of opening new premises. As a result, revenue can grow faster than it would from one physical location alone.
Analyse one way contactless payment systems can improve the customer experience in a busy shop. [6 marks]
Model answer guidance: Contactless payment takes seconds, so queues move faster at busy times. Shorter queues mean customers are less likely to abandon their purchase and walk out, which protects revenue and leaves shoppers with a positive impression. Over time this convenience encourages repeat visits, because customers choose shops where paying is quick and easy, although the business must accept card fees on each transaction.
Analyse how introducing automation might affect the employees of a manufacturing business. [9 marks]
Model answer guidance: Automation may replace repetitive jobs, so some employees face redundancy, which damages morale and may cause the remaining staff to fear for their own positions. However, other employees may benefit: dull or dangerous tasks disappear, and new, better-paid roles appear in programming, maintaining and supervising the machines. The overall effect depends on how the business manages the change, since retraining existing staff for the new roles softens the impact, while sudden job cuts can lead to conflict, higher staff turnover and a worse reputation as an employer.
A clothing retailer is considering closing some of its stores and moving more of its sales online. Evaluate whether this is a good decision. [12 marks]
Model answer guidance: Moving online cuts rent, wages and other store costs, and lets the retailer reach customers nationwide, as JD Sports does alongside its shops. However, closing stores risks losing customers who want to try clothes on, returns are costly online, and redundancies could harm the brand's reputation. The decision depends on the retailer's customers and finances: if most sales already happen online and stores are loss-making, closures make sense, but if stores drive brand awareness and impulse purchases, a mix of both channels is safer. On balance, a gradual shift that keeps the best-performing stores while investing in the website is the stronger choice, because it captures online growth without abandoning loyal store customers.
Examiner tips
- Always link technology to its effect on costs, revenue or customers rather than just describing the technology itself.
- For analyse questions, build a chain of consequences: technology change, then effect on the business, then effect on profit or customers.
- Remember drawbacks: set-up costs, training, card fees, cyber security and technology going out of date all balance an argument nicely.
In The Business School simulation your students make these exact decisions in a live market against rival firms — every choice mapped to the specification. Free teacher demo, no installs, students join with a PIN.