Impact of the Internet on Global Business - Coursework Example

Impact of the Internet on Global Business Introduction Global e-commerce, which has been created by the convergence of information and communication technologies rises above territorial business boundaries while transforming the landscape of the twenty-first century global economy. It is now widely accepted that the revolution of information technology will have a profound impact on the operation of international business. The most significant development that has taken place with respect to global business is the explosion of international marketing activity on the Internet and the concomitant emergence of the global information superhighway. This paper discusses the impact of the Internet on global business at three major levels: (1) credible exchange of information globally, conveniently and instantaneously; (2) building partnerships, creating synergies with suppliers and customers, and developing the ability to foresee new competitive threats and solutions for emerging market needs and product of service efficiencies; and (3) reformulation of the nature of relationships and the establishment of new realities that emerge from cyberspace. The essay discusses these issues by addressing the highs and lows associated with the Internet as pertains to world business. Credible exchange of information globally With the global technological advancements, global e-commerce touches on almost every country, though the usage of the Internet varies widely among the populations of the world. E-commerce is all about speed, connectivity, as well as exchanging goods, service and information (Javalji & Ramsey, 2001, p. 376). Javalji and Ramsey (2001, p. 377) define e-commerce as the sharing of business details, sustaining business relationships, and facilitating business dealings through telecommunication networks. Exchange of information by businesses and their customers over the Internet can be regarded as a rather obvious phenomenon but it is still incredible. This is because the growth of e-commerce relies on an intricate architecture of various types such as information technology, where developed and developing nations are in different stages (Javalji & Ramsey, 2001, p. 376). Hamill (1997, p. 304) discusses four main advantages associated with exchange of business information due to Internet connectivity. These include cost savings by substituting the Internet for other communications channels with vendors, business partners and information providers; performance improvements through the widespread internal use of the Internet to integrate information resources, supporting virtual teams and facilitating distributed decision making and organizational flexibility; market penetration which can be attained from high external connectivity with customers, including public websites and online customer support facilities; product transformation including the development of Internet-based services or products that reenergize the company’s strategic position (Hamill, 1997, p. 304). One of the information highways used by Internet users is portals. According to Shi and Murthy (2003, p. 41), portals can be considered as information gateways for exchange of business information over the Internet. They are meant for conveying the appropriate information to the right user, at the appropriate time, and to the appropriate place to be used for making the right decisions. Portals are packaged pieces of information that have the characteristics of self-servicing, personalization, and delivery in real time. With reference to e-commerce, business information is the set of timed dealings that can be activated by events in business operations (Murthy, 2003, p. 41). Through the Internet, companies are able to advertise to targeted consumer groups, thus cutting on costs as compared to general advertising. Importantly, companies provide a wide array of opportunities for customers such as the ability to chat, hold discussion forums, give feedback on products and services, and facilitate online transactions. Building partnerships, developing synergies with customers and suppliers, and having a competitive advantage It has been argued that the use of the Internet has not reached its peak as the information technology field is a relatively new area in global business (Feher &Towell, 1997, p. 199; Deeter-Schmelz & Kennedy, 2004, p. 188). Feher and Towell (1997, p. 199) note that even though significant growth is expected in terms of the use of the Internet for e-commerce, 85 percent of the firms they surveyed were of the opinion that their customers were not yet online. In a similar perspective, Deeter-Schmelz and Kennedy (2004, p. 188) discuss that data collected from purchasing professionals suggested that traditional information sources, including suppliers’ salespeople were more useful than Internet at the time of the conducting the research. This points back to the level of penetration of the Internet among users as mentioned earlier. Where the use of Internet is prevalent, businesses have utilized the opportunity to build strong relationships. It is no wonder therefore that the Internet has offered a whole new business environment in which partnering even with competitors, has become incredibly attractive. The Internet has offered a natural alliance-building architecture, and has broken down business barriers and caused partnering to flourish. It has even spawned its own brand in terms of affiliate programmes. The Internet is also rapidly becoming the nerve centre of entire information networks that are established by partnering organizations (Jones, 2008, 264-265). Internet technologies are used in countless ways by organisations to build relationships with customers, allow customers to make secure payments online, automate the ordering process, speed up processes and significantly reduce the cost of doing business. There are five ways in which firms can ensure that they create a firm relationship with their customers through their websites: (1) using the website to highlight product information only; (2) using the website as a minor channel for selling directly to customers; (3) using the website as one of the key distribution channels to access customers; (4) using the website as the basic distribution channel to reach customers; and (5) utilising the website as the exclusive channel to make transactions with customers (Kazmi, 2008, p. 203). Whatever form an organisation chooses to use the Internet, it can leverage the Internet capabilities for its corporate-level strategies. Importantly it is noteworthy to highlight some of the benefits that accrue when firms choose to use the Internet for their operations. Notably, doing so creates new means of generating synergies, enhances revenue among elements of diverse firms, and links the sources of supply more efficiently, hence increasing the organisations’ effectiveness. Additionally, the use of the Internet streamlines distribution and ensures that organisations deal with their suppliers more efficiently (Kazmi, 2008, p. 203). Another key area in which the Internet has impacted global business is competitive intelligence. Firms can easily access information (which was not available in the past) regarding competitive intelligence as a result of using the Internet (Decker, Wagner & Scholz, 2005, p. 192). According to Blenkhorn (2005, p.118), small and medium sized firms the world over can now have access to competitive information that was once only available to giant multinational corporations with considerable budgets. For instance, a person in Japan can easily log on to Canadian local news websites to gather pertinent local information. As well, representatives of one firm cam log into a competitor’s website to have a glimpse of upcoming job openings, which may signal the competitor’s future product direction or corporate strategy. Some of this information can however be misleading since it is not regulated (Blenkhorn, 2005, p. 118). Reformulation of the nature of relationships and the establishment of new realities that emerge from cyberspace A detailed survey of 1,042 small and medium-sized enterprises (SMEs) in the United Kingdom contained in the Durlacher Quarterly Report (1998) showed that Internet access penetration was at 54 percent for medium-sized companies and 33 percent for small firms (Ritchie & Brindley, 2000, p. 576). That was ten years ago but the same trend or lower could be reflected in the developing countries. The key point is that organisations, large and small have realised the need to integrate the use of the Internet in their activities. The evolution of new Internet-based agencies that offer services to both personal and business clients is thus expected to grow rapidly and transform the existing principles and practices that govern commercial partnerships and relationships (Ritchie & Brindley, 2000, p. 576). Changes in the business environment due to the advent of the Internet in operation of global business have led to significant changes in regulations governing the relationship between firms, consumers and government. For instance, in Europe there new directives on copyright, electronic money transfer, distance selling of financial services, online disputes and settlement procedures for e-business, contractual law consumer protection and data protection (Ritchie & Brindley, 2000, p. 576). Conclusion The Internet has transformed global business in a number of ways, including enabling faster information exchange between companies and other companies as well as their clients, creating new relationships and partnerships which come as a result of its usage, and reformulation of the nature of relationships and establishment of new realities that arise from cyberspace. There are benefits of this transformation, given that it is easy for customers to access company information, do online transactions, and give their feedback about products to the firms. This basically affirms the nature of relationships that are created among players in the business world. Nevertheless, the fact that information is easily available may be disadvantageous as companies can use this opportunity to exercise unfair competition. Further, such information is not always reliable. References Blenkhorn, D. L. 2005, Competitive Intelligence and Global Business, Greenwood Publishing Group, New York. Decker, R., Wagner, R. & Scholz, S.W.2005, “An Internet-based approach to environmental scanning in marketing planning,” Marketing Intelligence & Planning, Vol. 23, No. 2, pp. 189-199. Deeter-Schmelzand, D.R. & Kennedy, K. N.2004, “Buyer-seller relationships and information sources in an e-commerce world,” Journal of Business & Industrial Marketing, Vol. 19, No. 3, pp. 188-196. Hamill, J. 1997, “The Internet and international marketing,” International Marketing Review, Vol. 14, No. 5, pp. 300-323. Javalji, R. & Ramsey, R. 2001, “Strategic issues of e-commerce: An alternative global distribution system,” International Marketing Review, Vo. 18, No. 4, pp. 376-391. Jones, S. K. 2008, Business-to-Business Internet Marketing: Seven Proven Strategies for Increasing Profits through Internet Direct Marketing (5th edition) Maximum Press, New York. Kazmi, 2008, Strategic Management and Business Policy (3rd edition), Tata McGraw-Hill, London. Ritchie, B. & Brindley, 2000, C.Disintermediation, disintegration and risk in the SME global supply chain,” Management Decision, Vol. 38, No. 8, pp. 575-583 Shi, N. & Murthy, V. K. 2003, Architectural Issues of Web-enabled Electronic Business, Idea Group Inc (IGI), New York. Read More