Globalization and E-commerce

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Globalization and E-Commerce

Arnaldy D. FortinSt. Paul University PhilippinesSchool of Graduate StudiesDoctor in Information Technology

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Introduction

The main objective of all nations is development, passion, along with providing security and relief for its citizens. However, it is apparent that no nation is capable to maintain all of these development plans, correspondingly nations tend to conduct business with other nations.

Kanchan (2016) defined this concept as Globalization which means the dismantling of trade barriers between nations and the integration of the nations economies through financial flow, trade in goods and services, and corporate investments between nations.

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Introduction

Furthermore, Kraemer et.al. (2002) claimed that the process of globalization creates new challenges and opportunities for firms. Globalization challenges firms to become more streamlined and efficient while simultaneously extending the geographic reach of their operations. Challenges arise when foreign competitors enter the firms’ domestic markets and compete with domestic competitors. Foreign competitors have several options to take in order to attract the market (customers) such as offering lower cost of products through global sourcing, move production offshore or gain economies of scale when they expand into new markets.

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Introduction

And once the challenges have been hurdled, then opportunities sets in, which include access to new markets that were previously closed due to cost, regulation, or indirect barriers, the ability to tap resources such as labor, capital, and knowledge on a worldwide basis, and the opportunity to participate in global production networks that are becoming prevalent in many industries such as automotive, electronics, toys and textiles

Considering that globalization has its own special processes, nowadays in the competition field, those companies and countries are successful through the use the Internet specifically E-commerce.

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Introduction

Since 1990, E-Commerce has increased the company’s efficiency, dynamism, and speed in the process of export and by minimizing the processes of work, make it simple and cost-effective. It also consists of the exchange of data between four types of E-commerce business models over the Internet to facilitate the financing and payments. These models are B2C which stands for Business-to-Consumer, B2B which stands for Business-to-Business model, C2C which stands for Consumer-to-Consumer, and B2G which stands for Business-to-Government.

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Introduction

E-commerce encompasses any commercial activity that takes place directly between a business, its partners or its customers through a combination of computing and communications technologies. It takes into account sales, marketing, communications, service, and workflow.

In 2000, World Trade Organization (WTO) Director General Mike Moore in his speech at the E-Commerce Conference; he emphasized on the development dimension of the Internet. The growth of the Internet can also increase the marginalization of the world's poor, unless we take steps to ensure they get access to the Internet too.

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Introduction

In addition, he stated that one of the purposes of the WTO's work programme is to ensure that developing countries can derive maximum benefit from the technology and are not left behind by the speed of developments. To participate effectively in e-commerce three things are needed.

• The first is access to computers and the other hardware at world prices, which means, among other things, removing excessive import duties on it.

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Introduction

• The second is to have efficient, low-cost telecommunications, which normally means reform and liberalization of national monopolies. The WTO's Information Technology and Basic Telecoms agreements, both signed in 1997, help promote e-commerce by eliminating duties on computer hardware and liberalizing the telecoms services on which the Internet depends. Further telecoms liberalization is being negotiated in the services negotiations that are now under way. I hope that a second Information Technology agreement that extends the range of hardware that is traded duty-free can be concluded soon.

• The third requirement is to have trained personnel, where the WTO unfortunately can do little to help, but where governments and private industry can do a great deal.

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One of the most beneficial aspects of globalization for businesses is that companies can now take skills and knowledge from across the globe and widen their horizon which leads to increased collaboration and breakthrough innovations.

Communication and information transfer around the world allows companies focus on their main core competencies which leads to better collaboration and innovation. Consequently, companies are now able to outsource and offshore sectors of their corporation or merge with companies from different corners of the globe and are now able to communicate and transfer knowledge efficiently and timely. Additionally, there is a limitless talent pool available, ready and waiting to be utilized; corporations now have the ability to use this talent pool.

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Globalization has led companies to leverage on outsourcing and offshoring as part of their business strategies to lower costs and increase efficiency in their business functions.

“Outsourcing” means taking a specific business function that your company was doing in-house and having another company perform that exact same function for you. Companies outsource to take advantage of specialized skills, cost efficiencies and labor flexibility.

While “Offshoring”, is when a company takes one of its factories that is located locally and moving the whole factory off shore. Benefits of offshoring are usually lower costs, better availability of skilled people, and getting work done faster through a global talent pool.

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Either outsourcing or offshoring, a company can either increase efficiency by taking advantages of areas that specialize in manufacturing that product or lower manufacturing costs by finding the least expensive labor and resource costs and setting up an industrial unit there.

The adoption of Information and Communications Technology (ICT) such as the Internet makes it cheaper and easier for firms to extend their markets, manage their operations and coordinate value chains across borders. And with the speeding up of information flows along with the intensifying of these flows, companies can now let consumers take control and decide on products and services that they feel are customized just for them.

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E-commerce offers businesses to empower the consumers. Consumers are now capable to find the products that fit them best, as products are now coming from countries all over the world. The ability to communicate has grown easier and the transportation of goods has become quicker; accordingly consumers can find any type, size, price, customization of the product they choose. And due to increased digital infrastructure, new wireless capabilities and changing integration of worldwide economic policies barriers to global competition have nearly disappeared.

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eCommerce Next Wave: Productivity and Innovation

On the next slide, it shows the statistics presented by Julie Meringer, Group Director at Forrester Research Ltd.; during the seminar on Revenue Implications Of E-commerce in April 22, 2002, held at Geneva, Switzerland.

The graph shows that there was an exponential increase in revenues from E-commerce by the different categories of business industries; from 2002 to 2007.

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% of revenue from eCommerce

Base: executives at G3,500 companies0% 5% 10% 15% 20% 25% 30%

Total

Electricity, gas,and sanitation

Insurance

Finished goods mfg.

Retail

Financial(noninsurance)

Primary productionand supply

Distribution

Services

Chemicals andpetroleum

Technologyand telecom

2002In 5 years

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A new wave of productivity

On the next slide, it shows the graph on the new wave of productivity presented by Julie Meringer and focuses on the following agenda:

1. IT productivity wave - B2B technology slashes the costs of working with business partners through integration technologies like XML and collaborative apps from firms like BIOS Group and Tilion. As shown on the graph, these capabilities make it easier to coordinate across multiple tiers of partners -- helping firms like General Electric realize immediate profit gains.

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2000 2012

IT productivity wave:

eBusiness productivity wave:Externally focused investments in technologies like supply chain and CRMyield efficiency gains in three key areas:

1. Lower transaction costs2. Improved market information3. Intensified new competition

1990

Productivity:(% change in

output perunit of

labor input)

Internally focusedoperational efficienciesfrom hardware, services,and ERP investments

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On the previous slide, it also present the graph on eBusiness productivity wave and has the following agenda:

2. By using online tools for channel management and demand forecasting, firms can gain insight that helps fine-tune operations. Using supply chain execution software from PipeChain, for example, one Ericsson plant has trimmed inventory stocks by 40%.

3. By delivering standards and simplifying access to global trading partners, eBusiness technologies introduce more competition -- and more efficiency -- into markets. Firms like Seagram are using tools from ClearCross to cut regulatory compliance costs -- helping the beverage firm more effectively enter and compete in new markets..

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The X Internet refers to two “Xs”

An executable Internet that supplants today’s

WebAn extended Internet that connects to the

real world

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X Internet refers to two X’s: an executable Internet that supplants today’s Web and an extended Internet that connects to the real world.The next revolution isn’t one wave of innovation, it’s two.


The "executable Internet,“ builds conversations between you and the server. And offers several important advantages over the Web:

3) X Internet will be far more peer-to-peer -- unlike the server-centric Web.

1) It rides Moore's Law -- the wide availability of cheap, powerful, low real-estate processing;

2) It leverages ever dear bandwidth -- once the connection is made, a small number of bits will be exchanged, unlike the Web where lots of pages are shuttled out to the client; and

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• The other is the “extended Internet”, in which Internet connectivity is pushed into many different devices beyond the PC.


The extended Internet will connect the physical entities in the world to the digital world of information via Radio Frequency Identification (RFID), sensors and wireless networks.

• The RFID tags are used to identify product location. • Wireless sensors detect and send condition information of the

surroundings.• Biometrics help to identify trusted individuals.

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The concept of the extended Internet is that a wire will be created that connects every manufacturer to the products that they make in the next few years. The implication is that vehicles, home appliances, medical instruments and all other nontrivial things in the universe, can have some type of link to the Internet.

For example in Associated Food Stores in Farr West, Utah (near Salt Lake) supplies over 600 grocery stores in 8 states. They do this with a million square foot warehouse in a one square mile distribution center. The logistics associated with getting trucks in and out of this facility are complex -- and costly. AFS has bought electronic tags and sensors from WhereNet which allow wireless real-time tracking of every truck and load in the facility within 10 feet. These Internet-connected sensors feed systems back at the AFS control center.

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The world has now become a global village. Borders and barriers are going to be vanished. In order to operate effectively in an environment of borderless markets, global multinational corporations have to manage their corporate philosophy in order to sustain in this environment of globalization and information technology.

Conclusion

Telecommunications and transport links flourished by the globalization created a new way of accessing to the new markets through e-commerce. However all the countries and firms couldn't make use of this advantage same way due to their opportunities to access to technology and telecommunications.

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But, telecommunications and technological substructure of developed countries are directly benefited from the globalization process. In this regards developed countries which are into globalization process way before have solid infrastructure of telecommunications and technology.

Conclusion

As a result for these countries e-commerce is more effective on globalization than the opposite case. However in developing countries in which globalization process is rather new and technological infrastructure is poorer the situation is different.

And this was given emphasis at the E-Commerce Conference by WTO DG Mike Moore in his speech ; regarding the development dimension of the Internet. The growth of the Internet can also increase the marginalization of the world's poor, unless we take steps to ensure they get access to the Internet too.

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And as statistics have shown that Globalization and E-commerce are two main drivers that provided the landscape to succeed in doing business in these modern times.

Conclusion

Firms should strategize and invest to maximize the potential of these two drivers in order to provide their goods and services to utmost customer satisfaction.

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The X Internet as an innovation is truly a viable tool to further improve business operations in Internet of Things.

And it has been started by several industries like Caterpillar which is connecting heavy machines; Delta is connecting jet engines and GM is connecting its cars using this technology.

Conclusion

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The 20th Century was the century of Aviation and the century of Globalization. The next century will be the century of Space. Wilson Greatbatch

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Moore, Mike. 31 October 2000. Opening Remarks, E-Commerce conference, ITCRetrieved from: http://www.wto.org/english/news_e/spmm_e/spmm40_e.htm

References

Meringer, Julie. April 22, 2002. E-Commerce Next Wave: Productivity and Innovation. Programme and presentations for the seminar on revenue implications of e-commerce.Retrieved from: http://www.wto.org/english/tratop_e/devel_e/sem05_e/presentation_meringer.ppt#

http://www.wto.org/english/tratop_e/devel_e/sem05_e/presentation_tuthill.ppt#25

Ali Ghorbani, Mohammad Bakhtazmay Bonab (2013). Globalization and the Role of E-Commerce in Its Expansion. J. Basic. Appl. Sci. Res., 3(1)78-82, 2013. © 2013, TextRoad Publication. ISSN 2090-4304 Journal of Basic and Applied Scientific ResearchRetrieved from: https://www.textroad.com/pdf/JBASR/J.%20Basic.%20Appl.%20Sci.%20Res.,%203(1)78-82,%202013.pdf

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Kanchan. (May 17, 2016). Globalization and Its Impact on Indian Economy. International Journal of Business Management and Scientific Research Vol: ISSN: 2394-6636Retrieved from: http://eminencejournal.com/images/pdf/MY9.pdf

References

Kenneth L. Kraemer, Jennifer Gibbs and Jason Dedrick. December 20, 2002. Impacts of Globalization on E-Commerce Adoption and Firm Performance: A Cross-Country Investigation. Center for Research on Information Technology and Organizations. Retrieved from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.86.4367&rep=rep1&type=pdf

Jalil Totonchi, Gholamreza Kakamanshadi (2011). Globalization and E-Commerce. 2nd International Conference on Networking and Information Technology IPCSIT vol.17 (2011) © (2011) IACSIT Press, SingaporeRetrieved from: https://pdfs.semanticscholar.org/000e/97e2129a7190889c854f276b97bd906d5bf4.pdf

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Lawlor, B. R. (2007). The Age of Globalization: Impact of Information Technology on Global Business Strategies. Senior Capstone Project . Malden, MA: Blackwell PublishingRetrieved from: http://www.globalization101.org/uploads/File/Technology/tech.pdf

References

Muhammad Akram Ch., Muhammad Asim Faheem, Muhammad Khyzer Bin Dost, Iqra Abdullah. (December 2011). Globalization and its Impacts on the World Economic Development. International Journal of Business and Social Science Vol. 2 No. 23 [Special Issue – December 2011] Retrieved from: http://ijbssnet.com/journals/Vol_2_No_23_Special_Issue_December_2011/36.pdf

Irfan Ahmed, Akmal Shahzad Qadri, Rana Khurram (2011). Shahzad and Bashir Ahmed Khil. Information Technology - Its Impact on Global Management. World Applied Sciences Journal 12 (7): 1100-1106, 2011 ISSN 1818-4952 © IDOSI Publications, 2011Retrieved from: https://pdfs.semanticscholar.org/0e19/5f5fd292f5d221cfcda416d6e6b9b1b7d92b.pdf

Hyun Min Lee. X-InternetRetrieved from: https://www.google.com.ph/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=extended+and+executable+Internet&*

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THE END...

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