Learning Objectives

By the end of this chapter, you will be able to:

  • Identify and describe the three main categories of business pressures.
  • Explain how globalization and powerful customers create market pressure.
  • Describe how technological innovation and information overload act as technology pressures.
  • Understand the impact of social responsibility and government regulation as societal pressures.

The Forces Shaping Modern Business

In today’s dynamic environment, organizations are constantly subjected to a variety of pressures that force them to adapt and evolve. These business pressures are the drivers that make information systems so critical for survival and success. They can be categorized into three main types: Market Pressures, Technology Pressures, and Societal/Political/Legal Pressures.

Business pressures force organizations to adapt Figure 1: Business Pressures in the Modern Economy

mindmap
  root((Business\nPressures))
    Market
      Globalization
      Powerful Customers
      Changing Workforce
      Competition
    Technology
      Rapid Innovation
      Obsolescence
      Information Overload
      Digital Disruption
    Societal/Legal
      Regulations
      Privacy Laws
      Social Responsibility
      Sustainability

Figure 2: The Three Categories of Business Pressures

1. Market Pressures

Market pressures stem from changes in the economic landscape and the competitive environment.

  • Globalization: The integration of economies worldwide has led to a significant increase in competition. Organizations now compete with companies from all over the globe, forcing them to operate more efficiently and effectively to survive. The internet and e-commerce have leveled the playing field, allowing even small companies to have a global reach.

  • Changing Nature of the Workforce: The workforce is becoming more diverse in terms of gender, age, and ethnicity. Additionally, there is a growing trend towards telecommuting and remote work. These changes require organizations to implement new policies and leverage information systems to manage and support a distributed and diverse workforce.

  • Powerful Customers: Thanks to the internet, customers are more informed and have more choices than ever before. They can easily compare prices, read reviews, and share their experiences on social media. This has led to increased customer power, with high expectations for product quality, customer service, and personalized experiences. Organizations must use systems like Customer Relationship Management (CRM) to effectively manage their customer interactions.

2. Technology Pressures

Technology itself is a major source of pressure, as it is constantly changing and evolving.

  • Technological Innovation and Obsolescence: New technologies are developed at a rapid pace, and existing technologies quickly become obsolete. This puts pressure on organizations to keep up with the latest advancements to avoid being left behind by competitors. For example, the rise of mobile computing forced many companies to develop mobile-friendly websites and applications.

  • Information Overload: The amount of data being generated is growing exponentially. While this data can be a valuable asset, it also creates a significant challenge. Organizations are under pressure to implement systems that can effectively collect, store, process, and analyze this data to filter out the noise and find meaningful insights.

3. Societal / Political / Legal Pressures

These pressures relate to social expectations, government policies, and legal requirements.

  • Social Responsibility: There is increasing pressure on organizations to act in a socially and environmentally responsible manner. This includes initiatives related to sustainability (“green IT”), ethical business practices, and community involvement. Companies are expected to be transparent about their social impact.

  • Government Regulation and Compliance: Organizations face a complex web of government regulations across various areas, such as data privacy (e.g., GDPR in Europe), financial reporting (e.g., Sarbanes-Oxley in the US), and environmental protection. They must implement information systems to ensure they are compliant with these regulations, often at a significant cost.

  • Security and Ethical Issues: The threat of cyberattacks is a constant pressure, forcing organizations to invest heavily in security measures to protect their information assets. Additionally, there are growing ethical concerns about the use of information systems, such as data privacy, algorithmic bias, and the impact of automation on employment.

Summary

Modern organizations operate in a complex environment shaped by powerful business pressures. Market pressures like globalization and demanding customers, technology pressures from rapid innovation, and societal pressures related to ethics and regulation all force businesses to be more agile, efficient, and responsive. Information Systems are the primary tool that organizations use to navigate and respond to these challenges, making the study of IS essential for understanding modern business strategy.

Key Takeaways

  • Businesses face three main types of pressures: Market, Technology, and Societal/Legal.
  • Globalization has increased competition, while the internet has empowered customers.
  • Rapid technological change creates a constant pressure to innovate and adapt.
  • Social responsibility and government regulations are increasingly important drivers of business strategy.

Discussion Questions

  1. Which of the three types of business pressures do you think is the most challenging for a large, established company to deal with? Why?
  2. How has the pressure from “powerful customers” changed the way companies market their products?
  3. Provide an example of a company that failed because it did not adapt to a technology pressure.