Business Commercial Environment Essay
The internet has appropriately been referred to as a part of the superhighway of digital communications (Lymer, Nayak, Johnson, and Spaul 1999). In the United Kingdom, use of the internet has been growing rapidly especially in the last four years. This report presents the value of this part of data superhighway. The focus is on business and the commercial environment. The report provides a view on the impact this technology has on business, exploring its usefulness as well as the limitations it presents.
It attempts to give realistic indicators that should guide rational prospects of business change while at the same time giving emphasis to the necessity to encourage small and medium sized enterprises or the SMEs to come up with appropriate plans and strategies for effective use of the internet technology. 1. 0 Introduction Globalization is fast becoming a force to contend with in the contemporary world. Everything from education down to communication is entering a global market.
Modern businesses have not escaped the influence of the same and their operations have increasingly fallen victim to the presence various types of information and communications technologies. The prospective of improving the management of commercial information and distribution presents the opportunity for business
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In business the internet is responsible for creating an unrestricted flow of information inside and across not just organizations but also their supply chain partners. Commercial use of the internet and the web has skyrocketed. There are more eight million web-sites now and the number keeps growing. There are debates on the benefits of the internet to the commercial sector. Nevertheless, there is evidence of positive impact pf the internet on profitability and competitiveness in business. This is why it was necessary to examine the impacts of the internet on business especially small and medium sizes enterprises in the United Kingdom.
2. 0 The internet and the Web The media has been drawn to the Web since the 90s. In addition, many companies and organizations have been trying out the commercial potential of the Web. Consequently, the new technology has become a major concern. It is the Web that is responsible for permanently opening the internet to commerce (Lymer, Johnson and Baldwin 1996b). 2. 1 Business organizations Lymer, Johnson and Baldwin (1996b) posit that the economies of most countries are largely influenced by SMEs. These businesses are a source of income for a maximum of only 250 people.
They are major employment providers and provide commercial innovation. Above all, they contribute significantly to national economy. SMEs in the United Kingdom create a half of all employment opportunities. They make about 2. 4 million individual enterprises. The accounting functions of these enterprises are handled by using computers. In recent times though, the use of computers has shifted to the increase of productivity through communications-oriented information technology. In addition, it has been drawn on to reduce costs as well as ease flexibility in the businesses. 2.
3 Use of the internet and Web in business Businesses seek to grow. In future, it is likely that the success of businesses will be measured by such features as use of exports to generate turnover, operation in recess markets, exploitation of advanced IT, strong affiliations and strategic pacts. Among these features, Information Technology might be key for the reason that it could be the means through which all the other features are attained. Businesses have increasingly resorted to computers to expand their range. This enables the businesses to benefit from global information.
The Web has smoothed the progress of global trading in business (Lymer, Johnson and Baldwin 1996b). Businesses primarily use the Web for: 1) marketing and advertising 2) service and support 3) creation of new markets and distribution channels 3. 0 Electronic commerce in the United Kingdom Till writes in the article ‘Electronic commerce in Europe’ that Europe is behind the rest of the world in its development in the information society. The internet has been introduced in business operations and Europe no doubt is actively involved in developing electronic commerce (Till).
Most of the European countries that include France, Sweden, Netherlands and the United Kingdome are now using electronic commerce. Electronic commerce is being encouraged by a user body which is called the Electronic Commerce Europe (ECE). In addition, the European Commission has become involved and is unifying its actions in a cooperative. It is encouraging serious execution schemes under ESPIRIT. The United Kingdom is famous for great business operations. Business organizations adopt new technologies to aid in the growth of business.
The World Wide Web is one of those technologies. Before embracing the Web though, the business organizations carried out research on the information that related to the population and the diverse groups who shopped through the internet. The findings were that this information was in conflict with normal customers. There were few people with this sort of lifestyle and the number with credit cards was even less. Shoppers Universe was born out of these findings. The site contained a variety of items and was accessible to the busy population who did not have time for manual shopping.
Eventually, a lot of people resorted to online shopping (Till). 3. 1 Example TESCO is a big supermarket chain in the UK. One of the stores is in Osterley in West London. People who live within a certain radius of the store can make their orders from the Shoppers Universe Internet site for a fee and their goods are delivered to their doorstep soon after. This is just one of the examples of stores that conduct business online and it shows the enormous potential impact that the Internet could have on the business environment (Till). 4. 0 Impact of the Internet and the Web on business
4. 1 Case study 1 (Virtual and real communities) Gallina Blanca deals with the production and commercialization of ready foodstuffs. It is in Spain and has a Web site called Avecrem. This site has grown over time as one of Blanca’s products. Avecrem was created to promote the products of Blanca. Its initial plan was the provision of recipes for cooking. They had a program called ‘What could I make today? ’ In addition, they had a section for questions and answers dealing with the subject of cooking. This section received a lot of publicity and drew quite a number of interested fans.
After some time, there appeared to be an interest in some people to answer the questions posed for these promoters. This was the beginning of growth. More sections were created under the same Web. ‘Share your best ideas’ and ‘What are you in the mood for? ’ were launched. This saw an increase in the number of people who visited the site. To attract even more people, the promoters launched a cybersoap in addition to debate sections. The company has grown in leaps and bounds. Though it would have only intended to share ideas, it has also gotten itself hundreds of clients and this is a basis for business success.
Even in sharing information on the subject of cooking, they still think of the profits they will make from the interactions on the Web (Avecrem). This example is proof of what the Internet can do to business. According to research done by Lymer, Johnson and Baldwin, the areas that are likely to be affected by the Internet in business include management, culture of organizations, streams of decision-making, education, costs of products, shift and cutting back on personnel, workforce, environment, devolution and information network.
Andy Grove in The Economist argues that in the next five years, all organizations will have turned into Internet companies. If they are not, then they will not be in existence. Andy might be right since the Information technology industry has become arrogant. The Internet has assisted organizations in cutting down costs across the demand and supply chains. It has also enabled altering customer service to better standards besides creating new markets and more streams of revenue. Business relationships have been redefined.
In correspondence with Andy Grove’s postulation the Economist Intelligence Unit and Booz Allen and Hamilton carried out a survey of about five hundred companies in the world and found out that a 90% of the companies’ managers trusted that the Internet would impact greatly on global business in a few years (The Economist). A consultancy called Forrester Research endorses this information. It says that Britain and Germany are expected to fall in step with the rapidly growing electronic business soon after America. France, Italy and Japan might lag two years behind. 4. 2 The Internet Impact Model
Lymer, Johnson and Baldwin have come up with a model that explains the level of impact of the Internet on business and especially SMEs. The model is called the Internet Impact Model (Lymer, Johnson and Baldwin 1996b). The model tries to illustrate the impact of the Internet technology at various levels of organizations. It also looks at peripheral factors. 4. 2. 1Associates According to Lymer’s model, this includes all external persons and companies that are linked to the business. Such persons are clients, suppliers, banks, rivals and agencies. Internet has an effect on the relationship between these contacts.
Customers, for instance, are in a position to view the profile of a business through the Web. They can also relate with the business through electronic mail. For their purchases, online operations offer the solution while payment can be made electronically without any burden. This has enabled the companies to enlarge Their geographical boundaries and has made it possible for clients to acquire products from companies they would otherwise not have been able to reach. 4. 2. 2 The organization The model looks at the impact of the Internet technology to the entire organization.
Unlike the associates’ impact, the organizational impacts are internal to a company without affecting the commercial setting. The impacts to the organization are also palpable. Labor for instance is one of the main areas of a company that suffers a blow. There are obvious changes to the workforce. The Internet provides an alternative for manual operations. It makes work easier for clients as well as the organization. In this case, changes in labor are likely to arise. There could be a cut down on employees and this means that organizations will employ fewer workforces.
On the other hand, the roles and operations of management have changed. In the same way the workforce changes, management have acquired some different responsibilities that include running the Web sites and the Internet operations (Lymer, Johnson and Baldwin 1996b). Earlier, communication was carried out through such channels as agents, newspapers and magazines or telephones. The Internet has altered the flow of communication. With information about entire organization operations on the Web, there is little need for manual communications that were obviously cumbersome.
It is now possible to reach out to a larger number of customers as long as they have access to the technology. The costs of communication have inevitably reduced. Additionally, the environment for the physical operations has variably changed. These organizational impacts have made great changes to the business world. 4. 2. 3 Responsibilities These are otherwise referred to as tasks in this model (Lymer. Johnson & Baldwin 1996b). Tasks are the individual processes in any organization. The model assesses the daily impacts of the Internet on workers and the manner in which in which they carry out their responsibilities.
The internet impacts significantly on employees and their capability to assume their job-specific responsibilities. Consequently, workers can now diversify on their tasks. They can perform tasks which would otherwise have been impossible to carry out. Through the Web, the development will be long-lasting. The two-dimensional matrix model also includes some five classes of Internet impacts (Lymer, Johnson and Baldwin 1996b). 4. 2. 4 Communication Key to all the operations of any business or deal is communication. It is the same that enables daily activities anywhere in the human world.
This area has undeniably been affected by the new technology. The impact encompasses a huge number of communication facilities. Most of the current facilities are less expensive than others and work more efficiently. It is inevitable therefore for companies to notice the impact the new technology has on this area of business operations. Huber (1990) draws particular emphasis on communication, saying that when communication is mediated by a computer, its impact is felt in the design and structure of a company, the intelligence and process of making decisions.
4. 2. 5 Retrieval of information Businesses need bulky storage of information concerning all the operations that have been carried out over the years. Computers have made storage easier as it uses less space to store loads of information. The Internet also provides the means through which large amounts of data can be retrieved on almost any area of the business. Retrieval of information is credited for the improvement of organizations as it adds considerable value to the latter. 4. 2. 6 Management of knowledge
Commercial success in any organization relies on the ability of that organization to manage corporate knowledge. The Internet has proved useful in development of expertise and providing an environment for learning. The technology has extended the worth of Information Technology for the purpose of knowledge management. 4. 2. 7 Organization’s productivity Productivity here is mentioned in reference to the efficiency and effectiveness impacts in an organization. IT has been relied on by most of the existing organizations to sustain productivity as well remain competitive forces on the global scene.
Information and Technology is useful in improving the use of knowledge in business and expertise in the field. Lymer’s Impact model integrates impacts on productivity of organizations as one of the output variables. It is evident from research that organizations have approved of the ability of the Internet to help in undertaking activities more easily, with more speed and at minimized costs. 4. 2. 8 The business environment The Internet and the Web have impacted on both the internal and external environments of the business industry’s Information and Technology in the United Kingdom.
Though the issues on environment are not easy to put on a quantity scale, they are usually apparent when the processes of an organization are changed by the Internet technology. The environmental factors that have bee affected include the office layout, organizational culture, strategies of business operations, technical orientation and the workforce relationships. Lymer and associates say that the impacts presented by the Internet Impact model can be controlled. Understanding the impacts depends on the context in which an organization is operating.
They give an example of the business contextual factors as the industry in which a particular business is operating. The regulatory bodies in that industry as well as the professional establishments will be in a position to correspond, publicize and retrieve information only from those associates of that industry that are available online. The internet has aided in the development of close electronic links between partners in business and has also been used as a device in facilitation of the business industry’s extensive set of objectives (Lymer, Johnson and Baldwin 1996b).
The business world has also resorted to use of incentives in order to promote joint business enterprises with competitors. This has altered the system of business operations whereby instead of competing in business, operators now have developed mutual strategies. 4. 2. 9 Case study 2 (Lymer, Johnson and Spaul 1999) In Leamington Spa of the United Kingdom’s West Midlands is a confectionary shop. Sweet Seductions is of high quality and takes on a workforce of three to fifteen staff every season. It is managed by the owner. The shop retails chocolate through mail order since 1993. a) Information technology and the impacts
The shop has created Web pages which make it easy for purchases to be made through the Internet. This has enabled secure payments to be made electronically too. While the mail order still operates, the Web page also enables trade over the Internet. b) Communication Sweet Seductions has made it possible for Web users to look at pictures of their available products and also read about those products. They are able to do their shopping by browsing online and make their payments electronically using credit cards. When orders are made, the shop goes through the set procedures in order to ensure delivery is made and payment collected.
This has been convenient, efficient and time-saving for the business as the company can easily communicate with their Web-based clients and provider of the Web site at any time. The manager is also able to get back to the clients through e-mail to enhance the service quality and encourage clients to make more orders. c) Retrieval of information The Web-based customers of Sweet Seduction are able to retrieve the history of the company and information on the products through the Internet and the Web. The shop also possesses a mailing list. In addition, it takes part in newsgroups that are related to chocolate.
Through this channel of distribution, repeat orders are made. d) Management of knowledge The company makes use of the Web and mail lists to provide its customers with documents for business contacts. By doing this, there is a possibility of impact on the company through enhanced communication between the company and its rivals, suppliers and clients. The result is that the company has been constantly updated on the state of events in the United Kingdom as well as the rest of the world. e) Business productivity The internet has given customers a different option in making purchases.
This is definitely an achievement for the company. The Web sales have however, attracted a different class of customers. What this means is that the market for Sweet Seductions has grown over the years both financially and in terms of geographical boundaries. Instead of wasting time serving customers over the counter, employees now spend more time hunched over computers in order to ensue the smooth running of business. The electronic orders are followed by printing out the same orders and putting the collected orders in the mail order system where they are processed and delivered to customers.
The implication is that the Web purchases do not create additional tasks for the employees. f) Business environment While it might seem that creating the Web site dug into the finances of the company, this is not the case. The shop possessed much of the required machinery that would enable the online business to be developed. 5. 0 General Internet impacts in the UK One of the impacts of the Web on business is the fact that customers will have more control of the business world. The Internet makes it easier to search for the right price combination, value for their money and the most convenient service.
It is possible for them to serve themselves and in this case keep control of the purchasing process. It is possible for consumers to be overwhelmed by the newfound power. For them, it has become one-stop shopping. They have also become hungry for accurate information and honest advice. For this reason, sellers are not in any position to give unbiased advice. Reduction of the cost of transaction acts as a stimulant for economic activity. The cost of an Internet banking transaction is very cheap in comparison with telephone or even teller machines. Another example is processing of a travel ticket.
A travel agent would charge more than the cost of internet processing (Ham). Previously unexploited commercial possibilities have been created by the speed and choice of accessible information. This has been made possible by the Internet. The internet has created a necessity for infomediaries who link sellers and buyers through the Internet. They collect data, modify it to the most valuable form and then dispense it to those that find it helpful. This is a virtuous cycle as the information the infomediaries dispense attracts more consumers and sellers while also learning from the transactions (Chen and Williams 1993).
Chen and William (1993) add that besides this, there will be new investors in the business market. This will be a threat to already existing markets. The branch networks, product outlets and even trade forces might turn from being assets to being millstones. The established business enterprises already have vested interests in the industry. The same could inhibit the organizations from gripping the opportunities that present themselves through the internet. The eruption of new enterprises has been called the real revolution by The Economist.
Each day seems to produce new enterprises through the internet. Just as there are established businesses already in existence, the ones that are coming up have potential for growth into big organizations too. It is possible for some of these to create a niche for themselves in the present market and eventually become dominant. These are establishments that are able to tap from the opportunities provided by the Internet and the Web. They understand how strategizing can make use of the technology and have great expectations for growth. Amazon. com is an example of a successful Internet enterprise.
The Internet has provided consumers with new and diverse ways of meeting their needs. Since it a link to all the existing business enterprises, the result is new and unanticipated sources of competition. Those who will be at an advantage are those who exploit the new technology. These will be in a position to carry out business operations that include product design, development, distribution and management of customer relationships (Chen and Williams 1993). Since consumers have gained more power over their purchasing ability, their demands have changed.
It is therefore up to the suppliers to respond to this change in demand. Balance of power between consumers and sellers has changed. This might result in extensive wearing down of margins. There are varying effects on suppliers though. For those that deal with software and hardware and telecommunications, the Internet means more profits. On the other hand, several suppliers have found an opportunity to reduce the cost of their produce. Others are fading and could become extinct altogether. The nature of competition and industry is becoming transformed. There has always been competitive advantage.
However, the sort of competitive advantage that existed previously like discrepancy in information that exists between consumers and sellers is becoming less feasible. Transaction costs have reduced and therefore more business activity is traded externally and not among functions in a single organizational pecking order. Competition now comes from any region across the globe. Internet provides the opportunity to have enhanced support for mobile staff. The equipment and better information communication networks enable realistic mobility of offices and organization of activities.
Business enterprises that wish to trade in physical products using this technology need to establish proper delivery services so that they can gain from the technology operation. For them, there is a need for more sophisticated technology that will help to beat the restrictions of a presentation of products that is only two dimensional. Case studies carried out by such researchers as Lymer, Johnson and Nayak (1999) opine that few of the current activities of SMEs will have any significant change from the effect of the new technology in the near future.
In the place of change will be an evolution that involves the adoption of the same for positive impact on business operations. Most of the current users of the Internet who have had a chance to be observed seem to have become comfortable with the computer technology even before they could discover its commercial potential (Till). However, they have proved eager about finding out how potent the technology is to business. They understand the importance of the computer technology in information and communication.
The successful use of this technology is therefore possible with proper advice and training to business operators. While there are more explicit impacts of the Internet on business, the technology has had more slight effects. Those business organizations that have embraced the technology have come to be alleged as ambitious and innovative. The isolation of the impacts of the Internet that affect the business environment from the level of the industry from those that are external and internal gives a more precise inkling to the way each aspect of the business environment is affected.
Decision-making in business depends on the perception of these impacts. 6. 0 Conclusion This report comes to the conclusion that it is evident that there are positive impacts on business and the commercial environment of the internet technology. It however notes that there are also negative impacts. In order to make sure that the negative impacts are eliminated or minimized, it is necessary to give care, suitable advice and planning to business operators. The report also illustrates that there is a mounting focus on management of information in all kinds of businesses.
This focus is important if there is to be effective business operations and the internet provides the potential for constructive impacts as a mechanism for distribution of this information. Business operators therefore need to consult business advisors to help in planning the use of the internet technology. The report shows that a number of business organizations have undergone a transformation through the introduction of the internet. However, a significant number has experienced slight changes that relate to opinion and attitude instead of more essential adjustments in the activities they run.
From research, the Internet and the Web have impacted significantly on the business contacts of organizations. Such research as was carried out by Lymer, Johnson and Nayak supports the hypothesis that customers, suppliers and contacts experience positive impacts of the Internet technology. The new technology has provided a new ground for the interaction of business contacts. Suppliers also enjoy an enhanced value system for carrying out business. Business organizations are able to reach out to wider geographical markets and this has enhanced the ability of companies to market their products.
The biggest impact that the Internet technology has had is on communication within and across organizations and their markets. At the level of the organization, the impacts of Internet are inclined towards the general operations of business. Most of the impacts have been positive. As other areas of business are affected, the environment seems to undergo less change. The reason is that organizations have been using information technology even before the intrusion of the Internet technology. Nevertheless, it is worth noting that many cases have undergone focal changes that are influenced by the introduction of the technology into the system.
To wrap it up, the Internet and Web technology does not create or reduce the number of tasks and activities in business organizations. What it does is provide an alternative to the way things are done. Nonetheless, the technology demands that most of the business tasks and operations be carried out using a computer. This has led to increasing reliance of business organizations on the Information Technology infrastructures. 7. 0 Recommendations The Internet is here to stay and to change the order of things not just in business but as some say, also in the way we behave, play, work and learn among other things.
The Internet if put into proper use can be very beneficial to all kinds of businesses regardless of size. When business operators adopt the technology, they do so with an underestimation of the planning stage of the process. It should be a responsibility of accountants and consultants to offer relevant advice to the business dealers. The process should also be support by use of relevant tools like the Impacts model developed by Lymer and other scholars. There are certainly pioneers in the adoption of the Internet technology in business.
These have had some experience with the technology and can serve as examples to aspiring users of the technology. Advisors in business have a duty to search for such experience so that they will be prepared with enough knowledge to help business operators. SMEs need a lot of assistance in the use of the Internet to expand their business territories and without sufficient knowledge, then the advisors might not be effective in aiding their clients. There are local as well as international training opportunities that come in handy for these advisors.
Training is not enough though if they can not maintain the information through frequent updates. Besides the above recommendations is the need to encourage groups to get connected to the Internet. This will reduce the cost of connection per organization, minimize the involved risk of individual exposure as well as give the companies an opportunity for more sophisticated advice and support. This is possible if the companies that group together share some interests or geographical location. When scholars carry out research, findings should be availed to the owners of SMEs.
Histories of cases provide evidence of the impacts of the Internet technology, both negative and positive, to the decision-makers in organizations. By providing the context of accomplishment and disappointments they enable SMEs to deviate from making expensive slip-ups and facilitate success. Governments should get involved in providing such material. In the United Kingdom, DTI is one of those government organizations that can do this through companies like Business or Enterprise Link. References: Avecrem. Com, http://www. avecrem. com (25 March 2009).
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Organizational Design, Intelligence and Decision Making”, Academy of Management Review, vol. 15, no. 1, pp. 47-71. Lymer, A. , Johnson, R. and Nayak, A. , 1996. “The Internet and the Small Business: Case Studies in Business Development Through Technology”, Proceedings of the ISBA National Small Firms Policy and Research Conference, 20-22 November, Birmingham, UK. pp. 989-1006. Lymer, A. , Johnson, R. and Baldwin-Morgan, 1996b, “The Internet and the Small Business: A Study of Impacts. “
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