On-line stores
Information technology (IT) can bring many advantages to businesses. With the Internet people can do business anywhere and anytime. Unlike the physical structure required to do business in the past, with IT business can be done on line. For example, people can do banking and not depend on the location of the bank. They can open an account online to any bank, deposit, and withdraw money from ATM machine anywhere in the world. With on-line stores, people can buy almost anything without have to leave their home. With on-line schools, students can access lectures via their laptops or mobile phones etc.
In the industrial age, most businesses operate in local market; only very large companies can expand into global market. In the information age, any business can operate in the global market, regardless of their size or what they sell. Today online businesses are growing quickly and valued at trillion dollars. The simple reason is the global markets are several times larger than domestic markets. By moving on-line, businesses have more customers, sell more products with less cost and make more profits. In other word, globalization is a process where local economy get integrated with the rest of the world and doing business globally is getting easier for anyone who know how to utilize the power of IT.
Today anybody can sell their products in the global markets or buy things they need via on-line stores. In the past these business transactions took the form of exports and imports with a lot of bureaucracy and expensive. Today online stores is easier, with less restriction and as transportation is becoming cheaper and faster, businesses could operate anywhere in the world. Basically, IT has helped increase the volumes of international trade by hundreds times in the past few years.
As more businesses are utilizing IT, more technical skilled workers are needed. As automation and machinery can take over labor jobs in factories, labor workers will be at a disadvantage. As more robots are used, less manual labor will be needed and fewer jobs will be created. It is predicted that within the next five years, countries that depend on manufacturing economy will see a significant declining in revenue, high unemployment where many labor job-seekers are going after a few jobs available.
From the economic view, on-line business or e-commerce leads to higher profits and higher availability of goods and services to people of the world. Global competition can also lead to higher efficiencies and higher levels of quality due to more competition. However with globalization, farmers in developing countries will find that they cannot compete with agricultural imports from developed countries. These countries have better technology and agriculture practices that produce better produces with higher yields and lower price. Local small businesses will find that they cannot compete with powerful large global companies from developed countries that have strong management and better capital. However, labor and manufacturing workers from developed countries will also find that they cannot compete with lower cost labor workers from developing countries. With special tax incentives, ease of restrictions, many factories are moving to developing countries. These shifts are creating significant social and economic issues during this transition time and it could destabilize the economy of many countries as well as governments. We are witnessing the economic collapsing of several European countries such as Portugal, Greek, and Spain with higher unemployment as their factories are closing and moving elsewhere. This trend will spread all over Europe then the world in the next few years and the effects can be much bigger and more devastating than some economists had predicted. An economist lamented: “We have been talking about the effect of globalization and the transition for a long time but some people are still surprised by it. It seems they are not prepared and now suffer the consequences.”
From the business view, globalization and information systems have opened many new opportunities and also risks. With on-line business, the impact will be significant as it will affect every company because competitors are now on a global scale. There is no protection in a globalized market. That means company structures must change and be flexible to adapt for the diversity of markets. It also requires management to change their thinking, practices and strategy. They must know how to decentralize to react to market change faster and “flatting out” the structure to reduce the number of management levels so decision can be made quicker and more effective.
Globalization is the integration of people, information technology, and finance across national boundaries into a global arena. While global trade has existed a long time but it is the emergences of information technologies that have shrink the world into a single "village." Some companies have found that by utilizing IT they could expand their markets, sell more, get more customers and reduce costs to achieve better profits. As these companies get stronger and bigger they will create more pressures, more competition, and be able to eliminate competitors and business that are not prepared. Few years ago, people have to buy local products at low quality and high prices but with on-line business, they can buy product at better quality and lower prices at the “click of their mouse”. Few years ago, they have to go to the store, sometime to several stores to get what they need but with on-line business, they can have everything delivered to their home with a “click of their mouse”. Few years ago, business have to pay rent to open stores in the market or at good locations but with on-line business, they can have a “virtual stores” to sell everything at a fraction of the cost and they can have more customers from all over the world rather than just local people.
Twenty years ago, Amazon was an “unknown” small bookstore in Seattle. The owner, Jeff Bezos saw the potential of the internet and on-line business so he started to sell books on-line. At that time only students who knew how to use computer would buy books on-line. To attract more students, Jeff also sold music CDs and movies DVDs. As more people liked the convenience of on-line business, Jeff closed his bookstore and devoted to sell everything on-line. Today Amazon is one of the largest on-line stores in the world with annual revenue of several billion dollars and makes him one of the richest people in the world. (Jeff Bezos is ranked number 6, after Bill Gates of Microsoft, Larry Ellison of Oracles, Sergey Brin and Larry Page of Google, Mark Zuckerberg of Facebook). Today Amazon sells many things and has many websites in different languages to attract global customers.
One of the people who brought textbooks from Amazon is Pony Ma, a student in China. Twenty years ago, it was difficult to buy English books in China, especially computer textbooks. Pony was so impressed with the idea of an on-line store so he started his own in China. Together with three of his classmates in ShenzhenUniversity, they started a small on-line store to sell books to students called Tencent. Today Tencent is the largest and most profitable on-line store in China with annual sales of more than $3 Billion dollars. Similar to Amazon, Tencent now sell over 700,000 items on-line and has expanded into several businesses. Pony Ma becomes one of the richest young people in China and often considered as the “Bill Gates” of China.
Akumah is another African IT student who brought music CDs from Amazon and impressed with the concept of on-line store but instead of selling books, he wanted to sell fashion clothing and shoes. He started his on-line store in S. Africa than expanded to neighbor countries. His online store Zando is a big success in S. Africa and Sabunta is the biggest fashion store in Nigeria. These on-line stores have the largest selection of top fashion brands than any store in Africa. Many African may not have computer and internet access but many have mobile phones so these stores have concentrated on mobile shopping or m-commerce and have been very successful.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
