How do technology and innovation change operations and competitiveness?
The role of technology in operations; automation, robotics and information technology; research and development and innovation; product and process innovation; the costs, benefits and risks of adopting new technology; and the link to productivity and competitiveness.
A focused answer to the Eduqas A-Level Business statement on technology and innovation in operations. Covers the role of technology, automation, robotics and IT, research and development, product and process innovation, the costs, benefits and risks of new technology, and the link to productivity and competitiveness, with a worked productivity calculation.
Reviewed by: AI editorial process; not yet individually human-reviewed
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What this theme is asking
Eduqas wants you to understand the role of technology in operations, the forms it takes (automation, robotics, IT), research and development and innovation, the difference between product and process innovation, and the costs, benefits and risks of adopting new technology, all linked to productivity and competitiveness. Technology and innovation are major drivers of operational performance and a frequent source of evaluation.
The role of technology in operations
Research and development and innovation
R&D and innovation can deliver first-mover advantage, differentiation, premium prices and lower costs, but R&D is expensive, slow and uncertain (many projects fail), so firms must judge how much to invest and accept the risk.
Product and process innovation
Costs, benefits and risks of new technology
The benefits of new technology are higher productivity, quality, speed and consistency, lower long-run cost, and the ability to innovate and compete. The costs and risks are the heavy upfront investment (which must be recovered), reduced flexibility (machines are costly to reconfigure), the impact on staff (redundancies, demotivation, the need for retraining and good industrial relations), dependence on the technology (a breakdown can halt production), and the risk of obsolescence if technology moves on quickly. Adopting technology is therefore a judgement, not an automatic gain.
Technology, productivity and competitiveness
Technology and innovation are central to competitiveness. Process innovation and automation raise productivity and cut unit cost, letting a firm compete on price or earn higher margins; product innovation lets it compete on differentiation and command a premium. Firms that fail to adopt useful technology or to innovate risk falling behind rivals that do. But the gain depends on adopting the right technology at the right time, recovering the investment, and managing the effects on flexibility and the workforce.
Examples in context
A car plant uses robotics (process innovation) for consistent, high-volume production. A consumer-electronics firm relies on R&D and product innovation to launch new models. A retailer uses IT and data analytics to manage stock and personalise marketing. A logistics firm uses automation in its warehouses to raise productivity, while managing the effect on jobs.
Try this
Q1. Define process innovation. [2 marks]
- Cue. A new or better way of producing or delivering a product (for example automation or a new method), which usually cuts cost and raises quality or speed.
Q2. A team of produces units a week after automation. Calculate the labour productivity per worker. [2 marks]
- Cue. units per worker.
Exam-style practice questions
Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Eduqas 20204 marksExplain the difference between product innovation and process innovation, using an example of each. (4)Show worked answer →
A short-answer question rewarding the distinction and an applied example of each.
Product innovation is creating a new or improved product for customers, such as a smartphone with a new feature, which can win sales and command a premium.
Process innovation is finding a new or better way of producing or delivering, such as introducing robotics or a new production method, which usually cuts cost and raises quality or speed.
Markers reward the distinction (a new product for customers versus a new way of producing) and a valid example of each. Confusing the two limits the marks.
Eduqas 202210 marksEvaluate whether investing in automation is always beneficial for a manufacturer. (10)Show worked answer →
A levels-of-response evaluation. Benefits of automation: it raises productivity and output, improves consistency and quality, runs continuously, cuts long-run labour costs, and frees staff from dull or dangerous tasks, improving competitiveness. Drawbacks and risks: it needs heavy upfront investment that must be recovered, it reduces flexibility (machines are costly to reconfigure), it can cause redundancies and demotivation and damage industrial relations, and a breakdown or rapid technology change can leave the investment stranded. Evaluation: automation is often beneficial where output is high and steady enough to recover the investment and where consistency and cost matter, but not always: the benefit depends on demand, the cost of the technology, the need for flexibility and the impact on the workforce; for low or variable volumes, or where flexibility and craft matter, it may not pay. The top band judges and applies.
Related dot points
- Methods of production (job, batch, flow and cell); the choice of production method; productivity and efficiency; labour and capital intensity; economies and diseconomies of scale; and the link between operations and competitiveness.
A focused answer to the Eduqas A-Level Business statement on production methods and productivity. Covers job, batch, flow and cell production, the choice of method, productivity and efficiency, labour and capital intensity, economies and diseconomies of scale, and the link to competitiveness, with a worked productivity calculation.
- Capacity and capacity utilisation; ways of managing capacity; stock control and the stock-control chart; just-in-time and just-in-case; lean production and waste reduction; and the link between operations control and cost.
A focused answer to the Eduqas A-Level Business statement on capacity and stock control. Covers capacity and capacity utilisation, managing capacity, stock control and the stock-control chart, just-in-time versus just-in-case, lean production and waste reduction, and the link to cost, with a worked capacity-utilisation calculation.
- The importance of quality; quality control versus quality assurance; total quality management and continuous improvement (kaizen); quality standards and benchmarking; the costs and benefits of improving quality; and the link between quality and competitiveness.
A focused answer to the Eduqas A-Level Business statement on quality management. Covers the importance of quality, quality control versus quality assurance, total quality management and kaizen, quality standards and benchmarking, the costs and benefits of improving quality, and the link to competitiveness.
- Operational objectives such as cost, quality, speed, dependability and flexibility; supply-chain management and choosing suppliers; outsourcing and make-or-buy decisions; the link between operations strategy and corporate objectives; and operational decision-making.
A focused answer to the Eduqas A-Level Business statement on operational objectives and strategy. Covers operational objectives (cost, quality, speed, dependability, flexibility), supply-chain management and choosing suppliers, outsourcing and make-or-buy decisions, the link to corporate objectives, and operational decision-making.
- Business objectives and growth; organic versus external growth (mergers, takeovers, franchising); Ansoff's matrix; strategic analysis using SWOT; decision-making techniques including decision trees; and the link between strategy and corporate objectives.
A focused answer to the Eduqas A-Level Business statement on business growth and strategy. Covers business objectives and growth, organic versus external growth, Ansoff's matrix, SWOT analysis, decision-making techniques including decision trees, and the link between strategy and corporate objectives, with a worked decision-tree calculation.
Sources & how we know this
- Eduqas A Level Business Specification (A510) — Eduqas (2015)