Unit 2.5

Understanding Business Pressures in the Modern Economy

IT 233: Business Information Systems

Learning Objectives

By the end of this chapter, you will be able to understand the key forces that drive the need for Information Systems in modern organizations.

✅ 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 Three Forces Shaping Modern Business

Organizations don't operate in a vacuum. They are constantly influenced by powerful external forces. These business pressures are the primary drivers for implementing and evolving Information Systems.

📊 Market Pressures

The economic and competitive landscape.

⚡ Technology Pressures

The pace of innovation and data growth.

⚖️ Societal / Legal Pressures

Social expectations and government rules.

Activity: What Type of Pressure?

Read each scenario and classify it into the correct pressure category.

Scenario 1 of 6

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1. Market Pressures: The Competitive Arena

Globalization

Competition is no longer just local; it's global.
The internet levels the playing field for small and large companies.
Requires extreme efficiency and effectiveness to survive.

Powerful Customers

The internet provides customers with endless information and choice.
Customers can easily compare prices, read reviews, and share feedback.
This leads to high expectations for quality, service, and personalization.

Key Tool: Customer Relationship Management (CRM) systems are essential for managing empowered customers.

Quiz: Market Pressures

Test your understanding — choose the best answer for each question.

Question 1 of 4

🎸 Real Case: "United Breaks Guitars" (2009)

Canadian musician Dave Carroll saw baggage handlers throw his guitar on a United Airlines flight. It arrived broken.
For about 9 months, United refused to pay for the repair.
He wrote a song about it and posted it on YouTube in July 2009. It was viewed millions of times within weeks and made world news.
United became a textbook example of a company caught out by a single customer with a camera and an internet connection.

Powerful customers: one person can now reach a global audience. Companies need systems to hear and fix complaints before they go viral.

🎬 Watch: "Over a Million in 3 Days"

Market Pressures: The Changing Workforce

The nature of who works and how they work is transforming business operations.

Increasing Diversity: Workforce is more varied in gender, age, and ethnicity.
Telecommuting & Remote Work: A growing trend accelerated by technology and global events.
IS Response: Organizations need systems to manage, support, and collaborate with a distributed and diverse workforce (e.g., Slack, Zoom, HRIS).

2. Technology Pressures: Innovate or Disappear ⚡

Technological Innovation & Obsolescence

New technologies emerge at a rapid pace (e.g., AI, IoT, Blockchain).
Existing technologies quickly become outdated.
Pressure to constantly adapt and invest to avoid being left behind.

Information Overload

The amount of data generated is growing exponentially.
Challenge: How to store, process, and analyze this data effectively?
Pressure to find meaningful insights ("signal") from the "noise."

Case Study: Responding to Tech Pressure

🔍 Example: The Innovator's Dilemma

Many successful companies have failed by not adapting to technology pressures.

Kodak: Invented the digital camera but failed to embrace it, clinging to its film business. They missed the shift in technology and market demand.
Blockbuster: Saw Netflix (DVD-by-mail, then streaming) as a niche market and failed to adapt its business model, leading to bankruptcy.

Lesson: Ignoring technology pressures is a critical strategic error.

Activity: Innovation Pressure or Information Overload?

Each scenario represents one of the two technology pressures. Which one is it?

Scenario 1 of 6

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📈 Information Overload in Numbers

IDC estimated that the world's data was about 33 zettabytes in 2018, and forecast 175 zettabytes by 2025.
1 zettabyte = 1 billion terabytes.

Quick calculation: 175 ZB shared among about 8 billion people is how much each?

175 × 10²¹ bytes ÷ 8 × 10⁹ ≈ 2.2 × 10¹³ bytes ≈ 22 TB per person, more than a dozen typical laptop drives each.

No human can read this. Organizations need databases, analytics and AI just to find the "signal".

🎬 Watch: An Avalanche of Information

3. Societal / Political / Legal Pressures

Businesses are expected to be good citizens and comply with the law.

Social Responsibility

Sustainability ("Green IT")
Ethical business practices
Community involvement
Corporate transparency

Government Regulation

Data Privacy (e.g., GDPR)
Financial Reporting (e.g., Sarbanes-Oxley)
Environmental Protection
Compliance is mandatory and often costly.

Security & Ethics

Constant threat of cyberattacks
Protecting intellectual property & customer data
Ethical use of AI and data
Algorithmic bias concerns

Activity: Which Societal Pressure Sub-type?

Each item belongs to one of the three societal pressure sub-categories. Click to classify.

Item 1 of 6

⚖️ Real Case: Regulation With Teeth

Europe: GDPR

In May 2023, Ireland's Data Protection Commission fined Meta €1.2 billion for transferring EU users' data to the US without adequate protection. It was the largest GDPR fine so far.

Nepal

The Electronic Transactions Act 2063 (2008) covers digital records and cybercrime. The Privacy Act 2075 (2018) protects personal information. NRB adds IT directives for banks.

Compliance needs IT: data maps, access logs, encryption and audit trails. You cannot prove you obey a data law without information systems.

European Commission, Brussels

🌱 Social Responsibility: Patagonia and Green IT

On Black Friday 2011, outdoor clothing brand Patagonia ran a full-page New York Times advert: "Don't Buy This Jacket", asking customers to buy less and repair more.
Customers and investors increasingly reward firms they see as responsible.
IT has its own footprint: the IEA estimates data centres use roughly 1–1.5% of the world's electricity.

Green IT responses include cloud consolidation, efficient cooling, renewable power, and e-waste recycling.

🎬 Watch: The Electricity Behind the Cloud

Practical Application: Business Pressures in Nepal 🇳🇵

These global pressures have a distinct local impact.

Market Pressure: The rise of digital payment gateways like eSewa and Khalti forces traditional brick-and-mortar stores to adopt digital payments to stay competitive and meet customer expectations.
Technology Pressure: Restaurants and cafes must have a strong social media presence and often partner with delivery platforms like Foodmandu to handle the information overload of online orders and reviews.
Societal/Legal Pressure: All banks and financial institutions in Nepal must comply with Nepal Rastra Bank (NRB) directives on cybersecurity and data protection, a significant legal pressure requiring robust IT systems.

Quiz: Business Pressures in Nepal

Apply what you have learned to real Nepali business scenarios.