The Internet and Its Impact on Business - Essay Example

The internet and its impact on business The internet and its impact on business: Since its inception the internet has undeniably revolutionized modern way of living and our approach in all spheres of life. The ability of this tool to bridge massive distances has shrunken the world into a global village in which any person, no matter where he/she is on the globe, is only a click away. This capacity of the internet to connect people with such ease is precisely the reason behind it becoming such an integral part of our lives and the internet revolution can be evidenced from the fact that currently almost two billion people around the globe have access to it. The internet has changed the global landscape and continues to permeate further into our lives especially in the economics of business. The influence of internet on business is phenomenal as entrepreneurs, investors and established corporations all continue to realize its potential to expose them to a huge market while at the same time reduce costs, increase efficiency and thus maximize profits. (Matthieu Pélissié du Rausas, May 2011) As time is progressing businesses around the globe are adopting the use of internet as it has transformed the previously followed fundamentals of doing business. The concept of size and the place of setting an industry or business have become quite obsolete as the internet evens out the field for all from giant corporations to small scale businesses. There are no barriers or international boundaries now known to any business which use the internet as communication not only becomes faster but almost free. At the same time the internet provides an extremely viable segmentation of consumers to businesses i.e. one to one marketing, minimizing the role of middle men in obtaining and supplying goods. Due to these drastic changes brought about during the past decade it is becoming imperative for all sorts of business to assume the use of internet or otherwise they will succumb to their competition and perish. (Broadnax, Feb 1999) One of the most important advantages of the internet to companies is that it allows the latter to reduce costs significantly. Companies can reduce costs in several ways via the internet. Most businesses now have a linked up system within their departments which not only decreases costs but also enhances efficiency in work. This linking can be achieved by setting up a local area network (LAN) which is connected to the internet and acts as an intranet for inter office communication. This system allows employees to access any required information from the LAN only while at the same time companies can keep classified files secured by limiting access to them. Such a system makes the circulation of memos manually redundant and thus brings down expenses. The internet also allows large firms to outsource their workload to areas with cheap labour since the internet knows no international boundaries. Outsourcing is becoming increasingly viable for firms as skilled labour becomes more and more expensive in developed countries and now such firms tend to distribute their work in developing countries e.g. India as skilled labour is much cheaper in the latter. The internet has also given rise to better inter-business transactions throughout the world due to business networking and internet marketing. Networking is one of the most effective ways to find clients for any consulting or professional services business and the internet multiples the enormous opportunities of growth for businesses through networking. Companies are now able to find, on the internet, any commodity they require, be it a raw material, finished product or even services, at the most suitable rate for them. The internet’s ability to achieve this has become so massive that finding the best possible rates for large companies has become a business in itself and now increasing number of small-scale businesses also carries out international indentation for larger firms. In the present business scenario it is essential for businesses to adopt internet marketing. This is because more and more consumers use the internet to shop for goods instead of the traditional way of looking up the yellow pages. If a company is not on the internet it will lose valuable customers even if they have a better product as consumers would not be aware of it and opt for the ones advertised on the internet. At the same time online advertising is cheaper than other modes e.g. print or television channels. By creating a website companies can provide a wealth of information to their existing as well as potential clients thus minimizing the need for consumers to call and ask questions. A web site also allows a company to consolidate their clientele by making them subscribe for latest packages and promotions. Marketing products on the internet has huge potential to boost sales and thus profits. In a paper released by the Southern Association of Information Systems Conference in 2005 it was noted that online shopping has increased tremendously and is expected to grow much further underscoring the need of companies to take online marketing seriously. The paper reported that 60.3% of the three hundred consumers included in the survey checked the product online before going to traditional stores to buy them while 54.3% of them were able to find the exact product they wanted. Although the trend of online shopping is growing considerably it is important for businesses to escalate above their competition; this can be achieved by subscribing web sites to more widely used search engines, mailing regular newsletters to clients and sponsoring key words in search engines. Apart from the above mentioned points online marketing also contributes to cost reduction in many ways, an advantage many companies rely on for their functioning for e.g. Amazon. Amazon is a pioneer in online marketing and has used this tool commendably to expand to a level which would be impossible even to fathom if internet had not been commercialized in the 90’s. By marketing its books online Amazon is able to provide its whole catalogue to consumers while diminishing its cost of storage considerably. The process of searching for online products of Amazon is so well stream lined and relies so heavily on the internet that it would be safe to say that if there had been no internet there would be no Amazon. (Quelch, August 17, 2009) The capacity of the internet to influence the management and manner of carrying out business is extremely vast and one with endless possibilities. The above mentioned points are only a few important ones amongst them which businesses have adopted over the years to grow to proportions which were unthinkable before the advent of internet. Thus in order to develop a better appreciation of the impact of the internet on businesses and their function it is important to view it effects from a macroscopic level. In a study conducted across the thirteen leading countries (according to their internet usage in the population; which includes all the G8 nations) around the globe it was reported that internet contributes to 3.4 percent of GDP on average in each of these countries which is considerably more than what other better established industries e.g. agriculture and energy contribute to the economy. This percentage was calculated by an expenditure method in which the total spending by all consumers; governmental, public and private, is measured and then presented as fraction of the GDP. The contribution of internet dependent economic activities to the GDP is even more alarming (21 percent) in the last five years which highlights the fact that internet related consumption and expenditure is increasing vigorously in the developed nations and perhaps economic growth of a country in the modern age is highly dependent on the utilization of the internet as a medium for continued business evolution. Another important revelation of this report is that most of the economic growth seen with internet usage lied outside the technological industry and was reported in more traditional industries. There is also increasing misconception in which increased internet dependence of small and medium sized businesses is co related with the more layoffs seen in these firms. This misconception is debunked in the light of this report which shows that, among the forty eight hundred small and medium sized businesses which were assessed, there were 2.6 more employment opportunities created by the internet for every job lost to technological advancement. Looking more in depth of each country included showed that the United States of America was the most dominant participant in worldwide internet ecosystem. The United States alone generated forty percent of the net income from internet related activities and its dominance in this sphere co relates with the high number of people accessing the internet in the country. Hence it is obvious from these facts that in a developed country the internet is vital for a modern and healthy growing economy. (Matthieu Pélissié du Rausas, May 2011) Although it is indisputable that the advent of the internet and its subsequent utilization in business related activities has expanded economies and corporations to new horizons, the impact of the internet on business is not all positive. One cannot ignore the downside brought about by the internet incorporation in business activity. Firstly the internet has made business extremely dependent on computers and thus electricity. In cases of power outages or any other event which cuts off a person or office from power the whole business suffers as all activity is brought to a stand still. At the same time the internet is gradually contributing to inefficiency in work style and environment. Although this might seem contradicting, one cannot argue that the immense number of things to do on the internet inevitably distracts an employee. Employees are often seen spending a lot of time on non-productive activities e.g. internet gaming or social networking e.g. Facebook when they should be working. Thus the internet acts as a double-edged knife where you can kill competition if you use it properly but at the same time hurt your own functionality. The extensive utilization of the internet by all forms of business also increases the chances of fraud which can be extremely detrimental for small and medium sized firms and individuals. Thus working on the internet requires extensive research on the recipient of money in financial transactions. The widespread usage of internet results in a very cut throat business environment which leads to a very capitalistic approach to business without any regard for the human values that need to be incorporated in such a system. Any system that ignores these human values is destined to fail. Keeping in mind this angle of the argument we need to be a bit careful in the widespread use of internet as a tool for further business opportunities. (George J. Avlonitis) These findings suggest that corporate leaders and leaders of the business community should invest in internet as it is a unique tool in expanding business opportunities. It is the nature of t5his business tool that makes it so readily available and accessible to all quarters of the target population. An added benefit of internet use in business is the relatively small input required in monetary as well as human resource terms that makes it such a wonderful avenue for further business expansion. Community leaders whether they are government dignitaries or from the social sector need to increase access to internet and improve its quality if they want their populations to be successful in these tough economic times. Internet use and access has a linear corealtion with increasing business growth and per capita income which further highlights this point. Universities and other educational institutes that produce the leaders of tomorrow need to incorporate an understanding of the cyber aspects of whatever education they are imparting to their students. Internet has gained access into every field of life and every profession so in our modern world if we want to see a secure future for our communities we need to invest heavily in internet access to students. In short there is an increasing reliance on internet in terms of business and education and this reliance seems to be growing day by day. There seems no end point to it. It will not be very farsighted to ignore its importance in our lives. BIBLIOGRAPHY: Broadnax, G. (Feb 1999). Internets impact on business is just beginning to be seen. Houston Business Journal. George J. Avlonitis, D. A. (n.d.). The Impact of Internet Use on Business-to-Business Marketing. Industrial Marketing Management . Matthieu Pélissié du Rausas, J. M. (May 2011). Internet matters: The Net’s sweeping impact on growth, jobs and prosperity. Mckinsey & Company. Quelch, J. (August 17, 2009). Quantifying the Economic Impact of the Internet. Havard Business School. Read More