Introduction and Assessment
Currently, information collection and management have become very critical aspects of innovation and developing strategy for many business organizations. Management of information has become necessary primarily because of the emerging novel concept of ‘big data.’ One of the biggest reasons the concept of big data has emerged is the degree to which information can be produced and made available. Specifically, the process of digitization or the process through which analog information is converted into discrete, machine-readable format has triggered the concern about how this information can be stored and managed effectively. More than three decades ago, most offices had to grapple with the problem of managing paper files and organizing them into a form that can enhance easy accessibility, but currently, most organizations have embraced technology and can store such huge volumes of information on computers. The advantage now is that organizations need less room for storage and that the information can be retrieved easily just by simply typing specific keywords.
However, the availability of vast volumes of information on computer space has also raised the concern of how to manage it properly, and even use it to the advantage of the respective business organizations. The massive chunk of information is what is popularly referred to as big data, and it is what business analysts are trying to explore opportunities therein. Out of the big data concept, there has emerged the concept of cloud computing, which are essentially storage platforms for the enormous data of various business organizations. Ideally, cloud computing is akin to the outsourcing of storage space for big data. Companies that offer cloud computing services, especially a company like Google, have developed systems that ensure that their clients’ data is safe, secure, and can be retrieved with convenience. The increased popularity of cloud computing demonstrates that most companies are only focusing on how to store their data; they recognize that their systems could have loopholes, which unscrupulous individuals could exploit, and perhaps interfere with their operations. Secondly, most organizations also only seem to care about freeing up space on their systems to collect more information, and then subsequently, outsource more storage space from cloud computing companies.
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One of the opportunities most business organizations are missing from is that this huge volume of data can be put to good use in the aspects of analysis, prediction, and, ultimately, the development of essential solutions. The maxim that information is power needs to apply to the use of big data. For a long time, most business organizations have relied on humans to analyze data, interpret it, and make crucial decisions. Companies have also incurred large sums of money to train employees or even hire employees with the necessary skills to gather information in order for businesses to develop strategies. On the same note, some businesses or companies send their employees overseas to learn about the trends of consumers or potential clients in the foreign countries, and it is quite common currently to hear about the importance of understanding the diverse cultures around the globe, as well as buying habits of people from the diverse cultures. However, most of these aspects can be learned using computer algorithms, developed and interpreted by Artificial Intelligence (AI) systems. To be precise, the AI systems can make various inferences from the big data, which most business organizations are ignoring or depending on third parties to manage.
AI is a novel concept that refers to automated technological systems, which are used in diverse aspects to make operations easier, as well as to improve the outcomes of various processes. In this context, the analysis will only focus on the use of AI systems in the management of the massive volume of information generated currently in the business environment to foster innovation and develop a strategy. Although human beings are still important in the operation of businesses, and it is also not expected that AI systems will replace humans entirely, the volume of information generated in the modern business environment cannot be managed and interpreted by human beings easily (Soni et al., 2019 p.11). Therefore, the use of AI systems will make the interpretation of this information easier, and consequently facilitate the innovation and strategy development process.
Analysis
Definition
According to De Mauro (2015), artificial intelligence refers to “the ability of a machine to learn from experience and perform tasks normally attributed to human intelligence, for example, problem-solving, reasoning, and understanding natural language” (98). In the context of business information, the application of AI would refer to the ability of these machines to perceive the big data, analyze this data, and make specific inferences from it.
PESTEL Analysis
This section mainly describes the various factors that may affect the adoption of artificial intelligence in the management of information and the development of strategy in business by a business. Conventionally, PESTEL illuminates political, Economic, Social, Technological, Environmental, and Legal factors that may affect the operation of a business. In this context, these factors focus on how AI technologies may be affected in business.
Political factors
The political factors that may affect the adoption of AI systems are quite diverse. The first factor concerns the level of political stability. Before a company decides to invest in a particular country, they need to ensure that the environment is conducive for business operations. If a company cannot operate or set up business in a particular region of the globe, it means that the development of AI systems will not be realized. Since this essay focuses on the opportunities offered by the development and use of various AI tools in business, an unstable political environment implies that the tools could not be used altogether. A politically unstable market or country also affects the collection of information. When people are displaced or do not have predictive buying patterns, then such a group of people forms an unreliable market, and it is a waste of time for a business to focus its resources on such a market. Closely related to political stability is the integrity of politicians, and their likelihood to engage in acts of corruption. The consequences could be possible impeachments or resignations of high-level government employees who may be quite skillful. If such employees resign and could be knowledgeable in the implementation of various AI systems, then their penetration could be derailed.
Another political factor relates to the various policies that the government creates in relation to business operations. For example, most countries in the Arab world, or precisely, Muslim countries have policies on the sale and purchase of alcohol. Indeed, companies that deal with the sale of alcohol may not find the use of AI systems to manage and analyze information not very useful in such countries. Perhaps the most prominent political policies that may hinder the penetration and use of AI tools in business are those concerning the penetration of the internet, especially social media. In the current world, many companies have taken advantage of the internet, and social media, in particular, to advertise their products, monitor consumer trends, and predict their purchase trends. However, some oppressive regimes prohibit the use of certain technologies. A good example is a country such as North Korea that does not allow the public to use the internet or to get connected to networks that have a global reach. Therefore, such countries present an impediment to access to information and the use of AI technologies to analyze information.
The proper political aspect that favors the use of AI tools in business is the rapid pace at which many countries are embracing technology. Currently, most developing countries in Africa, Asia, and South America have social media networks, and various leaders do not feel much threatened with people interacting on these sites. On the same note, countries are also investing heavily in the development and proliferation of technology. The objective of such a massive investment is that technology will create efficiency and improve people’s access to critical information. A continent like Africa, which for a long time, has been perceived to be backward currently is involved in efforts to increase internet penetration. According to a study, there are more than 525 million internet users in Africa (Ngesah, 2005, p.11). Such statistics represent crucial information to companies that seek to expand their operations to Africa, for instance.
Through the use of AI data analysis tools, business organizations can analyze the demographic composition of these users, the amount of time they take on the internet, as well as the kind of information these people search on the internet. These people could search for information related to various products. AI tools in business are designed to gather such information (the type of products people such, as well as their preferences). The most important issue here is that as governments throughout the world continue to allow internet penetration and other innovations related to technology spread, AI systems gain much prominence because companies get access to more information as a consequence of the large number of people accessing the internet.
Economic factors
One of the factors that affect the use of AI tools in any country relates to the economic system in operation. For instance, a monopolistic economic system may discourage the use of AI tools in business information management and strategy development. A country like North Korea has the state running almost all businesses. One of the industries most affected is the media industry because the state controls all information that people receive. A company using AI tools in such an industry would have analyzed information such as the number of viewers, as well as, their demographics. Consequently, that information would have been used to innovate and develop a strategy aimed at appealing to the target market. However, in industries that have monopolies, it is challenging to use AI tools to analyze information because entry into the industry is restricted.
Nevertheless, most markets in the current world are liberal, and virtually in almost every venture, there is competition. Competition makes the use of AI tools very necessary because businesses will inevitably try to analyze the market and become innovative to outdo one another. Therefore, the growth of AI tools will be exacerbated by a challenge; stiff competition (Kok et al., 2009 p.1). Businesses will need to analyze important information about consumers in order to take them customer-specific adverts or make products that are tailored towards solving their needs. Additionally, an essential economic factor relates to the GDP of a country, and the measures the economic development of a country. While AI tools seem to be more suitable in developed countries such as the United States, and a majority of those in Europe, developing countries in Africa, Asia, and South America are also expanding their economies, and with the improvement in people’s standards of living, their purchase power also rises. Therefore, AI tools in business will focus on diverse markets throughout the whole world, and the data generated will help decide where to invest and what to invest.
Social factors
According to Noonan and Piatt (2015), the demographics of a population, which means the respective genders and ages of a population, primarily affects the decision whether a product may be marketed to the population. For example, makeup products are mostly targeted to women, and that means people using AI tools to project purchase trends for such products will mainly focus on women. Secondly, the class distribution among a certain population will also be important in developing AI tools that generate information and foster innovation of products, which are directed at the different classes. For example, in the United States, Wal-Mart mainly focuses on the low-income earners, while a retail store such as Costco focuses on the affluent (Marcilla, 2014 p.6). Therefore, in terms of targeting, these two retail stores collect different information using various AI tools. The last crucial social factor is the education level of various consumers. Most educated people have embraced technology and could prefer convenience over other hustles. For example, most educated people live in urban centers, are likely to use Uber car services, may order products online, and have them delivered to their doorsteps.
Looking at the opportunities of the various social factors, it is important to start with a demographic factor such as age. Young people seem to have embraced technology more compared to adults, and for developing countries, especially in Africa, young people form the majority of the population. Since young people are more technology-savvy, this shows the potential of the use of AI tools to analyze this market in the form of consumption trends, attitudes, preferences, and styles (Al-Zahrani and Marghalani, 2018 p.2). Secondly, most people continue to be educated even in the poorest countries, and subsequently, there is a general trend of rural-urban migration. Most people migrate from rural areas to search for better opportunities (education, employment, social amenities) in urban areas. Since people in urban areas are likely to embrace technology, it means that the population using technology is increasing rapidly. These people will need to travel within the urban centers, eat-in cafes or restaurants, purchase home items, and even clothes. Evidently, continued urbanization, and embrace of technology is going to increase the use of AI tools to analyze information about consumers.
Technological factors
It is possible to argue that AI has developed and continues to gain prominence because the rapid advancement of technology. Firstly, it is already mentioned that big data has necessitated businesses or companies to develop AI tools to analyze, interpret, and make certain inferences from the massive chunk of information. Big data has emerged because most information is converted from analog forms to a form that can be stored and interpreted by machines. With the emergence of smartphones, people access a variety of information about products, places, people, among other things. Mobile phone manufacturing companies such as Apple and Microsoft are competing incessantly to make superior models to woe their target customers. Young people are mostly targeted because they are more technology-savvy.
Far from computers and mobile phones, social media companies such as Facebook, YouTube, Twitter, and Instagram have grown, and all these sites have taken advantage of the enormous social media subscriptions to advertise various products. According to Noonan and Piatt (2015), there are more than 3.8 billion social media users in the world. Consequently, many companies continue to explore these channels to advertise their products. These companies not only focus on selling their products but also by developing AI tools, which analyze the number of people that visit their social media pages, the kind of products they search, as well as how long they last on those pages. The analysis of this information is not meant for storage; the companies use it to innovate and develop a strategy. The most important thing is that with increasing population and the penetration of technology across communities all over the world, the number of social media users will increase, and apart from using the sites for advertising, companies will need to develop strategies using analysis of various AI tools.
Environmental factors
Climate change currently is a significant concern throughout the world. The media has become more vocal on the issue, and consequently, more people are becoming conscious about their environment. The increased awareness poses a significant challenge, especially to businesses that do not observe various environmental conservation measures. Even when such businesses use AI tools to try and appeal to the target market, consumers may be influenced by activists to boycott the products of companies that do not adhere to the stipulated measures. A company such as Volkswagen was forced to withdraw thousands of cars from the global market because of excessive emission of fumes, and that resulted in the loss of millions of dollars (Glikson et al., 2019 p.223). Various environmental conservation organizations have toughened regulations on production processes, and such stringent policies may affect how organizations conduct business, and subsequently use various AI tools.
The various environmental concerns and regulations imply that businesses, which adhere to the stipulated measures and are conscious of their production and operations may witness high customer traffic, which will consequently necessitate the use of AI tools to gather important information and develop strategies that address their needs. However, there is also competition among companies to try and meet various environmental conservation obligations to get access to this environmentally conscious market. To be able to develop various strategies of adhering to the environmental conservation stipulations, businesses need to collect information about various environmental trends using AI tools, and that means that with increased awareness, businesses will have to change their strategies continuously.
Legal factors
The first legal aspect that continues to shape the use of AI tools in business is the creation and enforcement of intellectual property laws. Various companies develop various AI tools, and business organizations need to purchase them or seek permission before using them. On the other hand, various business organizations need to hire individuals with the necessary knowledge and skills to develop the AI tools needed to manage information and develop a strategy. Therefore, it is evident that the breach of the stipulated laws concerning patents, copyrights, and other forms of intellectual property can be very costly for businesses in terms of financial penalties, as well as the time lost in legal battles. Most of the time, businesses involved in the technology sector have been having legal tussles over copyright issues, especially companies such as Microsoft and Apple.
The legal environment can also be viewed in a positive light, especially concerning intellectual property. The stringent measures that are meant to protect individuals, businesses, and organizations from third-party unauthorized use of their AI tools for information management ensure that these businesses benefit from their innovations. Therefore, the legal environment has and continues to help the growth of AI systems through the protection of people’s ideas through punishing individuals who steal these ideas and use them for personal gain. With robust legal systems, there is immense opportunity in the development and use of AI tools in business in the management of big data and the development of essential inferences from it.
However, there may also be legal restrictions on the type of data or information business entities collect about their target customers. The United States Congress has variously summoned the management of Facebook over allegations of data breaches. The biggest issue was about the 2016 presidential elections, where Facebook was accused of letting third parties have access to confidential information on their users. The information collected was used to develop targeted campaign messages that were designed to give a particular candidate some leverage in the elections (Fuller, 2019, p.14). Although the sending of targeted messages shows the potential of AI tools in business information management and strategy developed, several ethical issues are also raised. The most prominent ethical issue is that some individuals may use personal information for other intentions far from the business objectives. Some individuals within the business organizations may be malicious and sometimes may collude with third parties to intrude on the privacy of their customers. Therefore, most countries have developed strict laws surrounding the protection of sensitive customer information, and when any breaches occur, business organizations may have to incur high financial penalties. Therefore, it is essential for business organizations to be very cautious on who accesses the information, and what measures they need to put in place to protect the sensitive information.
Recommendations
Amazon was one of the first companies to use AI tools to drive its product recommendations. Therefore, Amazon serves as a model company in analyzing the potential of AI tools, especially in the management of information, and how that information can be used to boost business growth. Firstly, Amazon started purely as a bookselling business but has rapidly grown to include many products, and at the moment, it rivals large retail stores such as Wal-Mart. One interesting thing about Amazon is that its business model is purely online. Customers order various products online, and through the superior delivery system, the company delivers the products to the doorsteps of the customers. Amazon enjoys about 49 percent of the United States’ e-commerce market (Donici et al., 2012, p.1)). Such a share shows that Amazon is the leading online retailer in the United States.
The success of Amazon’s e-commerce sector is mainly because of how the company manages information using various AI tools. According to Donici et al., (2012), Amazon takes data analysis of their customers seriously. For instance, whenever a customer clicks on a product but does not purchase it, such information is collected to establish the reason it was not purchased. Based on such information, the company develops a strategy to make the products more appealing to the customers, and consequently influence them to purchase the products (Donici et al., 2012 p.2). Artificial intelligence tools are also used at Amazon to predict customer behavior and patterns. Whenever a customer clicks on the Amazon application, they are likely to see a list of suggestions of items. This list is usually compiled by the various AI tools based on their previous purchase behaviors, and that makes it easy for the customers to spot products and for the company to influence the customers to purchase their products.
Based on Amazon’s success, various recommendations can be made. Firstly, owing to the potential of AI tools in the business currently and in the future, it is important for business organizations to adopt AI tools that focus on analyzing information and increasing their sales. Crucial information to be collected by such tools should be about consumer preferences and habits. Once these aspects are known, the AI tools can synthesize the information and suggest products to customers that are commensurate with their preferences. Secondly, AI tools in business should be developed with the analysis of demographics in mind. Demographics are essential in understanding population trends and composition. In such a case, the AI tools should be able to generate data about the emerging markets, as well as those which could probably be on the decline. That means AI tools need to help a business avoid certain risks and, at the same time, explore potential markets.
Thirdly, business organizations need to embrace technology more to be able to enjoy the use of various AI tools. Businesses that still have not digitized are missing out on the potential of AI tools in synthesizing information and helping them to develop a strategy. When businesses digitize, they get access to a lot of information. For instance, potential customers will start visiting their sites. When AI tools are embedded in these sites, businesses will learn about the habits of consumers, and consequently, develop products that suit them. Fourthly, it is important for businesses to operate within the existing legal framework to enjoy the benefits of AI tools. While AI tools offer limitless potential in innovation and strategy development, wrong use can also put a business into trouble. It is necessary to avoid confidential data breaches, and that calls for strict data protection measures. The last recommendation is that businesses need to focus on emerging markets with huge populations and high technology penetration. These populations represent potential markets, and since the penetration of technology means that people have acquired various devices such as computers and smartphones, and can access the internet, these are attractive markets for AI tools. The AI tools will analyze various factors, and make certain inferences that will help the specific businesses to develop strategy, innovate, and gain leverage in their respective industries.
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