Key Issues in Digital Environment

The growth of improvement in technologies affects the environment on how business operates. While technology could improve the business efficiency and reduce unnecessary costs, any digital business and e-commerce strategy should be to analyze the environment beforehand, for example the marketplace in which a business operates.

Generally, a business or an organization has two (2) environments which is:

• Macro-Environment: like elements outside of the organization that indirectly influence in operations.
• Micro-Environment: like internal factors that directly influence the organization, such as suppliers, competitors, intermediaries, and customers.

In this chapter we concentrate on the role of the macro-environmental forces, we analyze by using SLEPT framework which is widely used when analyzing the business. The SLEPT factors are, Social Factors, Legal and Ethical Factors, Economic Factors, Political Factors, and Technological Factors.

Social Factors

These include the influence of consumers perceptions in determining usage of the technologies for different activities. Every region or country has people with different attitudes and opinions to certain ideas, products or services and communication. Some of the key elements include:

• Culture
• Demographics such as gender and age
• Social Lifestyles
• Domestic Structures
• Affluence or Wealth
• Religion

Example: In the region A, the people loves to buy their goods by purchasing it directly from the store. If a small business tried to digitalize their work, it is possible that the platform wouldn’t be popular and widely used.

Legal and Ethical Factors

These determine the method by which products can be promoted and sold online. Governments, on behalf of society, seek to safeguard the individuals’ rights to privacy. Legislative changes can usually affect the business environment, like it took Spotify a number of years to launch in Canada because of the country’s royalty and copyright laws. While some of the key legal factors to consider are:

• Data protection and privacy law (particularly regarding email), which has been replaced by General Data Protection Regulation (GDPR) – implemented 25 May 2018
• Disability and Discrimination law
• Brand and Trademark protection
• Intellectual property rights
• Contract law
• Online advertising law.

Example: It is against the law to use a picture or sound in our advertisement without the agreement or consent from the creator(s) or the artist(s).

Economic Factors

The variations in economic performance in different countries and regions affect spending patterns and international trade. These relate to the elements of an economy and it’s condition like:

• Market condition
• Inflation rate
• Interest rates
• Monetary or Fiscal policies
• Foreign exchange rate.

Example: An exclusive brand won’t bother to launch cheap products, because they know their buyer is coming from wealthy family or individuals that seek products which could satisfied their lifestyle.

Political Factors

National governments and transnational organizations have an important role in determining the future adoption and control over the Internet and the rules by which it is governed. An organization needs to consider the political situation of a country and the world in relation to that country. Areas to consider includes:

• Government or Leadership
• Policies
• Tax Laws
• Internet Governance.

Example: Some companies more likely would support politician that they could tied on rather than someone that might clean up their dirty business.

Technology Factors

Changes in technology offer new opportunities for the way products can be marketed. New technology is changing the way that people (and businesses) do things, from connecting with others to purchasing products and services. Improvements in both hardware and software are the key factors in this change, like:

• The availability of technology
• Knowledge of the technology

Example: A business wants to go full digital in a region, but the region is lacking in technology infrastructure that could support their digital business.

Other Factors

Cultural Factors

This factor is pretty much connected to other factors like social, economy, and technology. Cultural factors could affect a business in how they operate and sell their products. For example, you can’t advertise something that is against the culture of the region.

Privacy and Trust Factors

These are the most important things to keep your costumers stay, an organization needs to make the customers believe that their privacy is protected from anything that could harm them. Businesses also need to build trusts in their customers to improve the customer base and keep them loyal. For example, there’s a leak on customer data in a company, this leads into trust issue within the public and their customer.

Sources: Mostly from the textbook, some from own wording.