Economic and Business Resources
The Internet is a mass medium that is rapidly transforming global business and society. The Internet gives users the ability to send and receive information from all parts of the world, instantaneously, and has completely changed the way that business is done internationally. Global business information is available at the desktop of anyone who has access to the Internet.
There are many different kinds of websites that have emerged to improve and assist business processes around the world. Websites allow users to buy and sell products and merchandise, keep up with stock quotes, research different stocks, find international trade data, locate tax information, and access accounting resources. Users can easily find both large and small businesses, search for news events, find patent and trademark information, make travel arrangements, and much more. There is a vast amount of information available for all types of business and personal interests on the Internet.
The Internet has lead to an emerging global economy. E-business is occurring almost everywhere around the world. The Internet is reshaping the way that companies do business. The extent to which a countrys business environment is conducive to Internet-based commercial opportunities is described as e-readiness. E-readiness is vital to the geography of the global marketplace.
A recent study done by the Economist Intelligence Unit called "E-readiness rankings, July 2002," found that Western economies are leading the world in e-readiness. The research covers the worlds l60 largest markets. North America and Western Europe have the top ten places in the rankings, with Australia following close behind. These countries are leading because both consumers and businesses have embraced the Internet. Their economic and political stability and openness to foreign investment make them available and ready for e-business. Other countries have not developed e-business as rapidly or efficiently.
There are numerous factors that affect the e-readiness rankings and ability of a specific country to succeed in the e-business environment. Business culture is very important. The Internet must be embedded into commercial culture in order for e-business to be successful. The strength of the economy, political stability, regulatory environment, and openness to trade and investment can all affect e-readiness. Infrastructure also plays a large role because customers demand fast, cheap, secure, and reliable Internet connectivity. Broad accessibility and affordability of the Internet is important. Literacy and some degree of education are also imperative. People must be educated enough to read, use, decipher through, and need the information available on the Internet.
Governments also have a great deal of influence. E-business requires a strong legal framework that encourages entrepreneurship, protects private property, and has legislation that is Internet specific. Connectivity and technology infrastructure measures the access that individuals and businesses have to basic telephony services, personal computers, and the Internet. Determinants of connectivity include affordability, reliability, and the quality of services.
The Internet has changed the way that transnational corporations operate because it eliminates the concern of geography and physical location. The Internet allows transnational corporations to communicate with business contacts and customers all over the world, instantaneously. Information technology has an enormous impact on companies everywhere and continues to evolve rapidly. Information and communication technologies have and will continue to transform the business world.
The article "Introduction to the symposium e-commerce and global business: The impact of the information and communication technology revolution on the conduct of international business" by Jose de la Torre and Richard W. Moxon, found in the "Journal of International Business Studies," says that ICT advances will transform the business world. Through the Internet, companies can deliver services immediately to customers from all parts of the globe. Companies also have the ability to combine extensive databases on customer preferences, allowing niche marketing and targeting specific audiences. Products and services can be tailored to different cultures or nations. Corporate boundaries are redefined. Conglomerates and multinational firms are reconfigured in to virtual corporations and networks of alliances. Some companies are able to avoid the process of building of international network of affiliates and personnel, because the Internet allows them to be "born global."
The Internet has made it possible to develop and build a brand strictly by using the Web. Some of the most popular brands on the Internet began marketing solely on the Web such as Amazon.com, eBay, and Yahoo.com. The use of pop-up advertising allows companies such as these, and others such as X10.com and Classmates.com to reach their audiences thought the Web.
The Internet has created a world marketplace. Companies and business from all over the world allow their products to be found easily on the web. Consumers can shop and search for products, services, or information from all over the world, from the comfort of their own homes. Companies and corporations can trade and communicate instantaneously, making international trade and business much easier.
Electronic Commerce
Electronic Commerce (EC) is the process of conducting business electronically among various entities in order to satisfy an organizational or individual objective. EC applies to the sale of goods, such as consumer goods or industrial products, and service delivery. It allows the dissemination and exchange of digital data, electronic funds transfers, electronic stock exchange activities, commercial auctions, design and engineering, electronic bidding, and direct customer sales. EC has also created digital products and services such as books, periodicals, compact discs, software, stock services, and banking services.
EC is carried out by a variety of enterprises, governments, and individual customers. Advertisement and distribution of goods and services over the Internet has increased dramatically. The Internet exceeds spatial distance. It also has the potential to reduce actual transaction time and processing time of business while simultaneously making information, goods, and services available globally.
The article "The Economic Geography of the Internet Age" by Michael Storper found in the "Journal of International Business Studies," describes the impact of the Internet on international business. Storper argues that the Internet-based EC has become a means to reduce operational cost and a high potential means for generating revenue. "EC provides new channels for the global marketing of tangible goods. It also presents opportunities to create new businesses providing information and other knowledge-based intangible products." The Internet-based electronic marketplace will improve the productivity and competitiveness of participating companies at a significant and rapid pace. The on-line global marketplace operates 24 hours a day and has millions of products, services, buyers, and sellers. Companies are provided new, cost effective, time-efficient means for working with customers, suppliers, and development partners.
Storper lists many advantages to EC. Companies will be able to shorten procurement cycles through the use of on-line catalogues, ordering, and payment options. Companies can cut costs on both stock and manufactured parts through competitive bidding. Collaborative engineering, product, and process design will reduce development cycles and accelerate time-to-market, regardless of the location of participants. Consumers can access worldwide markets at a fraction of traditional costs. EC also ensures that products, marketing information, and prices are always up to date. It significantly increases the speed of communication, especially international communication.
EC causes purchasing and production cycles to be drastically reduced. The cost of communications is reduced because E-mail and EDI save on postage. The ability to send messages instantly across the globe can reduce inventory and related inventory and purchasing costs. EC also promotes a closer relationship with customers and suppliers and provides a quick and easy way of exchanging information about a company and its products, internally and externally. Companies also have the opportunity to take advantage of alternative sales channels and tap new markets or markets niches.
The article found in Intelligence Enterprise, entitled "Mind Your Own Web-Business," by Laurie Windham says that the business-to-business EC market is very complex and potentially lucrative. Business strategies must be based on a sound business model and a focus on the right customer needs. IT, marketing, and sales professionals all play an important role. IT professionals begin by researching products online before buying. They begin the product selection process with online research of product specifications before purchasing. They download software products and troubleshoot technical performance problems online.
Marketing professionals use the Internet to study competitors. They can research competitors new product prices, poll customers to collect feedback before initiating new offers, and can locate online vendors for new marketing projects. Salespeople use the Internet to track their own companies product offerings and price changes. They can arrange appointments with new prospects, answer questions on line, and keep in contact with customers through regular e-mails. Purchasing professionals use the Internet to initiate new vendor relationships, submit requests-for-proposals, and find new sources for products.
There are some problems and negative aspects of EC. The article "Internet Standards Cant be Written by Tech Firms Alone," found in "The Economist" journal says that multiple identities are becoming a serious drawback for EC. Knowing who a user is has traditionally been left to individual websites or software applications. Consumers and company employees tend to have many different identities through the use of passwords and user names. Multiple identities are a problem because consumers forget their passwords and turn to offline options. Identity services are recently being promoted. The holy grail is one example of technology that allows businesses to manage identities. An industry group called Liberty Alliance recently announced specifications for how to manage "digital identities." They suggest one basic way to unify digital identities, known as single sign-on. These services allow users to move from one website to the next without having to retype a password. So far, customers have not been very enthusiastic about identity services. Most customers prefer to stay anonymous to protect their identity, money, and privacy.
Another problem that arises with non-store buying is returning unwanted products. The article "E-tailors woo customers, promising personal shopping experience found in "Traffic World," estimated that product returns in the catalogue and Internet retail industries can total between 5% and 25% of sales, depending on the type of products that are sold. The process of returning a product that was purchased online can be very confusing and discouraging for everyone involved.
The ability of a business to find and keep customers is a basic challenge. Repeat customers spend more than first-timers. It costs more to acquire a new customer that is does to keep the existing ones. Many companies are now emphasizing building strategies that will keep customers coming back again. Advertising and specific marketing techniques allow companies to reach specific audiences.
The article "E-commerce: Where will the Axe Fall," written by Lou Hirsh in E-Commerce Times, found that many companies have already failed in the EC sector. Online stock and mutual fund brokerages have been the hardest hit. There are currently not enough people trading and buying stock online to make all of the available brokers profitable. The computer-sales market has also been hit hard. Computers have been the best-selling product online for a long time. As mergers, such as the HP-Compaq deal occur; rivals like Gateway and Apple cannot fully compete. Online and mail-order vendors of PCs and peripherals are also facing possible consolidation which will inhibit profitability of smaller vendors. Players such as PC Connection, CDW, and MicroWarehouse dominate the market.
Traffic on websites designed for travel has dropped dramatically since the September 11 terrorist attacks on the United States. This has greatly affected online travel sites such as Travelocity.com and Priceline.com. Expedia.com is the most successful and profitable of these sites.
The article "As business online experience grows, some common themes emerge: E-commerce: the plot thickens," by Michael Drapkin found in the "Information Week" journal outlines some EC fundamentals that will help and improve e-business. Strategy first is the idea that success on the Internet demands that managers plan before building. Business mangers must be connected to a technology expert when deciding what to attempt online. They must avoid making incorrect assumptions about the time, cost, and difficulty of doing business online.
Flat organizational structures lead to successful web-shops and technology organizations. The collaboration of different disciplines and the cross-functional nature of Web teams tend to undermine hierarchical organizations. Channel Harmony can also directly affect the success of the business.
Although the Web is a sophisticated worldwide communications network, the next generation of commerce, and a variety of other relatively new ideas, EC is ultimately direct selling and direct marketing. One of the most important fundamentals of EC is the concept of disintermediation. This is the process of reducing to zero the number of intermediaries between the business and its customers. The Web creates a direct link for selling, marketing, and supporting. Performance measures are imperative in order for a company to measure their success, improvement, or failure. Product value is obviously extremely important. Businesses must make customers lives easier, save or make them money.
By eliminating the concern of geography and physical location, EC allows the immediate delivery of service to customers all around the globe. The ICT revolution will transform business processes, customer relationship management, supplier and procurement systems, the structure of industries, and the very nature of companies and firms.
Regulations and Legal Issues
The Internet belongs to all nations around the world, making regulations virtually impossible. Courts and corporations around the world are attempting to regulate and control information on the Internet. Despite the fact that the Internet transcends international boundaries, participants in the online marketplace must still abide by the laws of their own country. Online commerce does not always dissolve international boundaries and concerns. Some products suitable for one society of culture may not be for another. Companies and consumers must make an effort to understand cultural differences among the countries with whose citizens they do business over the Internet.
EC is inhibited by different rules and regulations regarding taxation, privacy, payment methods, and user freedom. Many different restrictions regarding content on the Internet have been implemented. Regulations regarding content have addressed a broad range of issues from pornography, libel, slander, cyber-crime, and other regulatory and legal issues. Although not all of these issues relate to EC, companies and corporations conducting international business must be aware of the differences between regulations within countries.
Privacy rules are important to e-business and e-commerce and can vary from country to country. In the United States, the Online Personal Privacy Act will require businesses to think about the privacy rights of customers, employees, and other constituents. Companies are likely to begin feeling increasing pressure to treat personal information as something other than a commodity. Efforts to crack down on cyber-crime are inhibited by discussions about personal rights to privacy.
Translating Web site data from one language to another may create problems and for buyers. To solve this problem, many online vendors are adding support for as many languages as possible.
Companies that conduct business over the Internet must become savvier. They must accommodate differences among countries in shipping, taxation, payment, cultures, languages, and fraud restrictions. There are relatively few global companies that have addressed all of these issues and details.
Role of Web Portals
Web portals are becoming increasingly popular and offer a broad range of resources and services such as email, forums, search engines, and online shopping. Portals are main guides that include a search engine, or meta search engine, and additional content. The content varies depending on the purpose of a specific portal. Many portals began as online services, such as AOL, that provided access to the web. Now many traditional search engines have developed into portals in order to appeal to and keep audiences.
Web portals give employees and companys access to business information and news sources, as well as an e-mail facility and Internet access. Portals are either internally facing intranets or externally facing extranets, depending on the needs and desires of the customer. They bring together and organize content, applications, and services. Some examples of well-known portals are Yahoo!, Netscapes Netcenter, CNN, and AOL.
The term portal can also be used to describe meta search engines that allow users to combine results of several search engines. Shopper.com provides access to many online hardware shops. Users can find a variety of helpful information about which shops have a specific item, if that item is in stock, and comparative prices. Addall.com is a search engine for books, which provides access to information about the location, availability, and prices for specific books.
Portals exist for many different topics. On the Internet, users can find portals for archive research documents, encyclopedias, journals, finance news and information, stock quotes, new and media, shareware sites, sports, entertainment, shopping, and travel. Many general search engines have developed into portals such as integrated meta-engines, combined meta-search engines, linked engines, and large engines. Portals can be found from countries all over the world and in many different languages.
Portals are a new type of web site because they offer a broad range of services for free. They serve as entryways and starting points to the Internet. The article "The New Megasites: All-In-One Web Supersites" found in PC World Magazine says that the eight major portal contenders are: AltaVista, Excite, Infoseek, Lycos, Microsofts Internet Start, Netscapess Netcenter, Snap, and Yahoo. Excite and Yahoo deliver the best and broadest range of useful services. They have clear presentation, unique customization, and are easily navigable.
The article found in Yahoo.com, "Opening Web Portals to Attract Corporates," describes the process of creating web portals for corporations. In March 2000, Yahoo! began creating corporate portals in the US. They began offering the same system to European companies in October 2000. Web directory Yahoo! was created in response to the decrease in online advertising by developing corporate intranet and extranet portals for multinational corporations. Yahoo! is focusing on getting large corporations because they offer long-term partnerships and relationships with businesses. Large firms also have various intranets located around the world that provide very different information. A portal is an easy way to centralize and organize the content so that it can be easy to access and decipher. Web portals also attempt to make the broad range of tedious content seem more interesting and valuable.
Companies can hire software from Yahoo! This software provides a range of valuable functions such as email, Internet access, access to business and economic information, and news outlets. Using the personalization software, employees can design their own homepage or "entrance page." The content that is provided for corporations is very much the same, with the exception of the personalized "entrance page."
Yahoo! has created portals for over 22 corporations. Some of these include McDonalds, Honeywell electronic firm, Merck Sharp Dohme and Bayer pharmaceuticals, Alcatel electronics, and Bayer. The demand for these portals continues to increase. Other companies, such as IBM, Plumtree, and other small start-ups have also begun creating portals for corporations.
How Media Industries Use the Web
In response to the growing popularity of the Internet, media industries have started to develop and reorganize ways to provide media and news services to the online population. News outlets and media industries from all over the world disseminate information via the Web. Radio stations, television stations, magazines, newspapers, and movie producers have all begun to make their content and products available online.
Some media industries have created websites where their specific newspaper or magazine can be obtained online, usually for a small fee. Other industries have created products designed specifically for the Internet.
Newspapers from all over the world are available online. Readers can go to a website to find todays paper, archived papers, and specific articles from past papers. Most sites provide a search engine in which users can search for articles on specific subjects or from certain dates. There are a broad range of newspapers such as local papers, college papers, niche papers, and the most popular and widely read papers such as USA Today and The New York Times.
Broadcast or television news outlets have also developed websites. These are very helpful to news seekers because they are so customized. Most websites provide todays most important stories and headlines on the homepage. Links are available to stories for all kinds of interests, languages, countries, cultures, and regions. Archived stories are available, as well as search engines to help users find the information they need. Broadcast news stories are usually extremely brief because of lack of time, so the websites provide an easy way for audiences to find the whole story or learn more about an issue.
Many magazines have emerged on the Internet. Online magazines tend to have very specific and niche audiences. Some require a small fee, while others are available for free. There is a broad range of magazines for all types of regions, languages, trades, hobbies, concerns, and interests.
Web Radio has also become very popular, although it faces serious problems. PC World.com estimated that there are currently 50,000 radio stations online today, and about 10,000 of those are commercial. In 1998, The Digital Millennium Copyright Act gave performance royalties for recording artists and music labels. This greatly affected the web radio industry. By October 20, 2002, thousands of web casters will be forced to pay millions of dollars back in royalties for songs that were played online. In most cases, these fees exceed annual revenues and the web radio stations will go out of business. The Librarian of Congress and Copyright office set the rates.
Media industries continue to develop creative and simple ways for audiences all over the world to access a variety of different news and media sources.
