Question:

term paper on Internet leading to globalization of the marketplace

Answer:

Internet leading to globalization of the marketplace

Introduction

Globalization may be defined as the process through which the world is undergoing integration in economic, political, and cultural aspects. Several years ago, if someone wanted to purchase an item, he could simply walk to the nearest store and buy it. It the item was not available, the individual would be out of luck. If one desired an item that was being sold only in a foreign market, he was out of luck as well. Then the internet came. During the few years that the internet has been in existence, many websites such as Amazon.com and eBay.com have come up and changed the way international trade is carried out. This is an indication of the ways in which the internet is bringing about economic integration.

Other than these websites, the internet itself is a great resource for people to use in carrying out business activities at the global level. The internet provides consumers with numerous ways of buying global products. Credit cards are being used on the internet to purchase items. With a credit card, one only needs to shop online, pay for the items, and he will have them delivered at his doorstep the following day. The information on which items to purchase is found on the internet. This paper discusses aspects of globalization of the marketplace as a result of the emergence of the internet. This term paper is based on the view that the impact of globalization on the marketplace will continue to be felt. Many more business will go online since this is where many future business activities will be taking place.

Overview of today’s globalized marketplace

Both globalization and internet technologies have brought about numerous changes in the way business activities are carried out. They have greatly contributed to the establishment of a new global economy that is powered by technology and driven by knowledge. This economy is fuelled is by information which has revolutionized relationships between businesses and individual consumers. In this globalized economy, information and communication technologies (ICT) play a critical role in the companies’ efforts to deliver services to consumers in a convenient manner.

According to Lituchy, the use of ICT in various business and marketing activities has enhanced productivity while at the same time encouraging greater participation by customers (91). Moreover, goods are easily customized for the mass market and then marketed on the internet. Consumers are able to make choices online, make payments, and have the products delivered at their doorsteps in a timely manner.

It appears that two major trends have been unfolding at the same time. First, globalization is changing the way business is done. At the same time, there is a widespread adoption of the internet. Consumers are increasingly relying on the internet to purchase items and access valuable services. More and more business transactions are being made online. Obviously, this trend raises numerous challenges especially internet privacy and security.

Many factors have resulted to the increased use of the internet for commercial activities. Some of these factors include trade liberalization, expansion of capitalism, and lack of internet regulation. Both globalization and the growth of internet-related technologies have revolutionized the internet. They have brought about increased economic activity at the international level. They have also led to an increase in productivity. Internet technologies have been a major driver of globalization. At the same time, these technologies have been greatly influenced by globalization. As more people continue to rely on the globalized economy for business survival, the need to improve the internet environment becomes a priority issue.

Globalization has created opportunities as well as challenges for firms. Some of the opportunities include access to a wider market, closer relationships with consumers, and the emergence of new approaches to marketing. There are many positive aspects that come with the dynamic and innovative nature of globalization. These aspects include increased access to information and technology, easier penetration of the market, and more income opportunities.

One of the main challenges caused by globalization is the entry of foreign competitors into the domestic markets. The foreign competitors easily kill domestic industries because of their higher competitive advantage and greater economies of scale. Moreover, the large foreign firms are able to cut their costs by outsourcing most of their operations. The internet is one of the platforms that the large firms are using to outsource their ‘back office’ tasks to emerging markets where labor costs are very low.

Moreover, in this era of globalization, firms have to streamline their activities and remain highly efficient. At the same time, they have to extend their operations in order to reach out to the global market. These challenges force the firms to change their strategies and align them with the realities of an internet-driven global economy. By adopting ICT and the internet, firms are able to extend their markets. They are also able to manage their business operations and monitor value chains across national borders. The internet enables the firms to lower transaction costs and reduce market frictions. These advantages make it easy for the firms to broaden the reach of their global markets. The ever-increasing competitive pressure forces firms to make use of the internet so that they can take advantage of new technologies to market their products and services in the international marketplace.

Benefits of the internet in business activities

Increased supply

With the increased use of the internet, it has become easy for companies to communicate well with customers. They are able to understand the specific needs of clients in different parts of the world. On this basis, they are able to supply the right products at the right time. There is a major improvement in the quality of customer service that leads to increased revenue. Moreover, the internet provides numerous opportunities for companies to learn about the best ways of supply products and services to the global marketplace.

The internet has greatly changed the way people understand the global marketplace. It is easy to understand the requirements of different segments of the market. This makes it easy for an ideal business strategy to be put in place. Through such a strategy, business operators are equipped with various ways of overcoming challenges in the competitive global business environment.

The increased supply is turning out to be a major catalyst for growth in both the developed countries and the emerging markets. In the developed world, people no longer rely on the retail store across the street whenever they need to buy a product. They can simply go online, pay for it, and have it delivered within twenty four hours. This online shopping trend has enabled business owners reach out to even more customers. In the emerging market, the internet is a great resource for business operations. In places where the infrastructure is poor, the internet becomes a relatively cheap resource that makes communication easy.

Additionally, increased supply has created new sources of revenue. These new sources are made possible through the creation of numerous links with commercial aspects of business. This creates an engine of rapid growth in both the developed markets as well as the emerging markets. There is no doubt that in future, more sources of revenue will be created through the use of the internet. This is because the internet enables businesses to manage their risks more effectively.

Moreover, with increased supply of goods and services, competitiveness is increased in many ways among businesses. The internet is creating numerous opportunities for businesses to differentiate their supply chains. By doing this, the businesses are able to deal with problems of reduced sales growth, increase in costs of inputs, lack of growth, and competition in aspects of price. This goal is achieved because companies are also able to position themselves in a manner that increases visibility and proper governance. The businesses are able to avoid unnecessary spending during their operations both at the domestic level and in global markets.

As the supply continues to increase, many opportunities for responding to the customers’ needs arise. The internet allows business operators to operate in a flexible manner as far as supply of goods and services is concerned. This is an aspect that they have to put into consideration in order to remain competitive in the online marketplace. Focus on the customer is a major requirement in ensuring that a company continues to operate in a sustainable manner.

Decrease in cost of business operations

There are numerous benefits relating to costs that businesses derive by using the internet in their operations. First of all, the cost of establishing the store front is drastically reduced. When a business operations are set to be conducted online, the overhead costs of establishing the physical premises is prevented. This makes e-commerce a very attractive option for those who intend to establish a business. In this way, more and more businesses are going online, leading to the globalization of the marketplace. This trend is largely expected to continue given the fact that the avoidance of start-up costs makes it easier for businesses to record continued growth.

In the globalized marketplace, business owners need not worry about the high costs relating to inventory management. Online management systems make it easy for inventory management to be automated. This brings about a major reduction in inventory costs. Manual business processes are replaced with automated electronic versions. This accelerates the procedures relating to ordering, product delivery, and processing of payments. The large businesses that have fully adopted the online mode of transacting business have saved billions of dollars in reduced inventory and operational costs. This is a crucial factor to be put into consideration in determining future trends in globalization as far as the marketplace is concerned.

There are numerous opportunities for online businesses to increase their sales dramatically as long as the appropriate methods of internet marketing are adopted. The sales increase dramatically because the marketers are able to reach certain regions of the world where it would have been extremely difficult if all operations were being carried out through physical business premises.

Even for those companies that have already established physical premises, there is a tendency to put in place online operations. These online operations are normally used to complement the physical operations. This is an even more attractive business proposition because such businesses are able to benefit from both physical and online presence. This trend also provides many traditionally-run businesses with an opportunity to go through a transition period and establish e-commerce platforms while continuing to operate their physical stores.

Nevertheless, the traditional premise may never be completely replaced by its online version. At certain times, the physical store across the street is the best option particularly for members of a family with the need to have a pleasant shopping experience on a Sunday afternoon. On the other hand, when the family members go on holiday in foreign country, they may still be able to shop at their favorite brick-and-mortar store through online purchases. This is a clear demonstration of the impact of globalization on the operations of the today’s marketplace.

As more and more companies continue to go online, it becomes easier for the interests and buying habits of consumers to be monitored. Suppliers are able to anticipate demand and put in place appropriate measures to ensure smooth operations of supply chains. Moreover, the business owners are able to tailor the products to the requirements of specific customers. Through internet technologies, the seller is able to track the preferences and interests of customers upon obtaining their permission. This information is used to customize products and services in such a way that the customers’ needs are satisfied. This not only increases sales but also the level of satisfaction among customers. It is for this reason that many people associate globalization to marketplace convenience.

The goal of cost reduction is also achieved with regard to the issue of labor. The ease with which the globalized marketplace operations can be automated greatly reduces labor costs. Various enterprise resource planning systems make it easy for orders to be tracked and billing systems harmonized. In the brick-and-mortar business establishment, such operations would greatly contribute to high labor costs. Moreover, once the product is ready for shipment, e-commerce companies do not have to incur distribution costs. For instance, in online book stores, the buyer simply downloads a soft copy of the book after completing the online payment process.

The globalized marketplace has also expanded because of the ease with which advertising activities are carried out. A single advert that is published on the internet has a potential to be viewed by any person from any region of the world provided the individual has an internet connection. Moreover, in today’s fast-paced online environment, it is easy to make changes to the advertisements using software technology. This is unlike in print advertising, where a new publishing undertaking has to be pursued whenever there is a need to update an advertisement. It is much quicker, easier, and cost-effective to put in place, update, and undertake maintenance work on an e-marketing campaign. As internet technologies continue to improve, e-marketing campaigns will continue being relied upon by both small and large companies in their efforts to cut out a niche in the highly competitive international market.

Convenience

With the globalization of markets, consumers are no longer restricted to their immediate surroundings. They can conveniently use the internet to keep track of product and service trends in companies operating in far-away countries. The internet is full of purchasing options. E-commerce business operations are always keen on establishing a competitive advantage through a very high level of product differentiation. The consumer only needs to have some internet search skills for use in shopping online for the desired product or service. The aspect of convenience arises from the fact that through the internet, the marketplace is opened up to sellers worldwide. This is how the internet has ended up becoming a one-stop-shop for all consumers regardless of their nationalities, tastes, and preferences.

However, there are some challenges that businesses face in their online business operations. Most importantly, competition in the globalized marketplace is extremely high. For a business operator to remain relevant, the best option is to improve quality while offering prices that are lower than those of competitors. This turns out to be a benefit to consumers, who are able to get a better bargain. For consumers, this is a major advantage, particularly in these tough economic times.

E-commerce and firm performance in the globalized marketplace

According to Rattle, many scholars have likened the internet to the invention of the telephone or railroad (128). This is because of its ability to change the way markets operate. The emergence of the internet has marked a major milestone in the globalization process. The internet has made it possible for buyers and sellers from different countries to not only communicate but also build relationships that culminate in buying and selling of products and services online. As people from different countries continue to engage in trade through online platforms, an environment of interdependence that is characteristic of a globalized society is created.

In globalization, buyers and sellers come together through the electronic media to engage in many activities, including economic transactions. The power of the internet arises from its ability to provide an integrated multimedia platform where all electronic forms of communication are supported. Some of these electronic forms include telephone communications, video teleconferencing, online chat, transfer of audio messages, as well as the transfer of written messages in the form of emails and social media posts. Using these platforms, firms can easily enter into contractual agreements with buyers. They can easily discuss issues of pricing and delivery.

Such activities have led to the emergence of a new approach to business operations known as e-commerce.  In e-commerce, a lot of focus is on the sales aspect of online business operations. It also encompasses the process of exchanging data in facilitating online payments. In e-commerce, the exchange of products and services may occur in four distinct ways. The first one is between businesses and businesses; the second one is between businesses and consumers; the third one is between consumers and consumers; and the fourth one is intra-company exchange.

As internet technologies continue to develop, e-commerce also continues to undergo rapid improvements. Those who are keen to use e-commerce have been looking up to internet technologists to build new, more secure online platforms. The main areas of growth that have occurred in e-commerce as a result of improvement in internet technologies include computing, sales, communications, marketing, and workflow. In e-commerce, the entire model is automated. It is also streamlined through internet-based communication to avoid any mistakes and to encourage automation. The ability by business operators to successfully run businesses on the internet is one of the main highlights of the power of the internet in influencing operations in the globalized marketplace.

The continued use of the internet in this era of globalization is expected to redefine the way nations interact with each other. The internet is a key facilitator of the newly established knowledge economy, which is also referred to as e-economy or New Economy. This type of economy is understood to be synonymous with the emergence of globalization. After all, it is through globalization that the economic structure in all regions of the world has been changed. According to Alden, research also indicates that internet technology has greatly contributed to increased international trade operations (231). The internet is being increasingly relied upon in mediating transactions. These transactions may be between consumers or between consumers and businesses. It is also becoming increasingly common for inter-business and intra-business transactions to be processed over the internet.

The internet is being used not just for processing transactions and marketing products but also in the activities of brokerage firms. It has drastically changed the costs relating to the acquisition, processing, and transmission of information among participants in the stock market. These changes can be best understood if the brokerage process was segmented into various value-added activities or components. This segmentation can make it easier for the impact of e-commerce on the operations of brokerage firms to be evaluated. The underlying effect, though, is that the internet creates a reliable link between buyers and sellers. In this environment, the primary role of the broker is to be an intermediary between buyers and sellers of securities.

Those who participate in the stock market via the internet reap better returns because the commissions payable to brokers and brokerage firms are drastically reduced. Both buyers and sellers are empowered through timely access to information on the internet. Therefore, it is hard for unscrupulous brokers to take advantage of their ignorance. If anything, the sellers and buyers benefit from economies of scale whenever they carry out securities transactions involving huge stock volumes.

However, for firms to take advantage of the internet, they have to take a positive stance towards the globalization. They need to undertake measures that place them in a position where they can benefit from globalization. In other words, globalization first has to occur at the level of the firm. The business organization should be open to new, innovative ideas. It should also put in place infrastructure that makes it possible for the marketing department to carry out online marketing campaigns.

Fortunately, a firm does not have to establish a physical office in a foreign location for it to become globalized. It only needs to make use of the internet to reach out to customers from all parts of the world. It also needs to put in place a proactive approach to the challenges of globalization such as stiff competition, aggressive campaigns, improvement in quality, and lowering of prices of goods and services on the global marketplace. For firms that are already facing foreign competition, there is a lot of pressure to use internet technologies that can help them protect and expand their market share as well as operate in a more cost-efficient manner.

It is expected that as internet technologies continued to improve, firms that do business away from their home countries will be motivated to lower transaction costs through the use information technology in negotiation, information search, and monitoring of performance. They are likely to succeed because both time and money is saved when transactions and coordination efforts are undertaken over the internet. The internet guarantees rich information flows. This flow has proved to be extremely useful in simplifying and streamlining the flow of goods along within the supply chain.

The pressure to adopt e-commerce is not limited to firms that are facing competition from foreign companies. Even firms that operate in international markets are under intense pressure to adopt e-commerce. This pressure comes mainly from trading partners who are keen to ensure improvement in coordination among all members within the value chain. In most cases, this happens in companies that are involved in global network production that is dominated by multinational enterprises. In such networks, it is important for all partners to put in place e-commerce platforms to streamline business operations.

However, as Khiabany points out, some scholars argue that the adoption of e-commerce and other internet technologies is not a global process (146). These scholars argue that whereas some business activities and industries tend to move towards local divergence, others tend to move towards global convergence. Shah points out that in this debate, the scholars assess the different ways in which internet-based transactions are carried out in business-to-business (B2B) as well as in business-to-consumers (B2C) processes (17). In many instances, the business-to-business processes tend to move towards globalization while business-to-consumer processes move towards localization.

According to Wheeler, the main reason why some researchers insist that globalization does not have any significant impact on retail (business-to-consumer) operations is the existence of multiple competitors within the domestic market (33). These multiple competitors emerge because of the heterogeneous nature of consumers. Their emergence is also influenced by the existence of many national regulatory systems. Nevertheless, even those businesses that engage in retail operations also make use of the internet. It is only that they use it mainly with the aim of gaining competitive advantage at the domestic level.

It may be proper to argue that even in today’s globalized world, local physical presence cannot be ignored. Some firms are keen to use internet technologies to enhance their local physical presence while others use them to increase global competitiveness. Firms that focus on both local physical and virtual presence exhibit a major competitive advantage compared to those that have only a virtual presence. There are many reasons why this is the case. First, a pre-existing relationship is important in establishing recognition of an online firm as well as enhancing consumer trust.

Secondly, when an online business is integrated with local presence, it becomes easy for the diverse preferences of consumers to be satisfied in terms of their shopping habits. The online business operator is also able to take advantage of knowledge of the consumers’ circumstances. Lastly, the firms can use the existing infrastructure as a physical avenue for the delivery of goods and services.

It is also true that highly global firms have the ability to perform better than those that adopt a local approach to business activities. This performance takes the form of lower costs, increased sales, and improvement in competitive position. Moreover, firms with a global outlook are able to employ knowledge as well as resources mobilized through global operations to bring about improvement in business processes. Moreover, they are able to make the best use of internet technologies. Through the use of internet, the firms are able to achieve a global reach as well as economies of scale. This is an excellent indication of the close relationship that exists between globalization and internet use in business operations.

Conclusion

In summary, the emergence of the internet has led to the globalization of marketplace. One of the main benefits of the use of internet in the globalized marketplace is an increase in supply. A company that chooses to globalize its operations has a lot to gain by adopting the use of the internet. In fact, any company that tries to reach out to the global market without reliance on e-commerce and other internet-related platforms will not easily achieve success.

Today, the internet may be said to be the engine that drives globalization. It is at the center of the emergence of the knowledge economy. Global companies need to information over the internet in order to coordinate various business activities along the value chain. The internet is a reliable tool for facilitating a rich, constant, flow of valuable information that firms can rely on to gain competitive advantages. Other benefits of the internet on firms include convenience, decrease in cost of business operations, ease of obtaining the desired products and services, and convenience. In conclusion, it is evident that future marketplace will be characterized by an increase in reliance on online business operations, leading to increased use of internet technologies and globalization.

Works Cited

Alden, Dana. “Consumer attitudes toward marketplace globalization: Structure, antecedents and consequences”. International Journal of Research in Marketing 23.3 (2006): 227–239.

Khiabany, Gholam. “Globalization and the Internet: Myths and Realities”. Trends in Communication 11.2 (2003): 137-153.

Lituchy, Terri. “Bed and Breakfasts, Small Inns, and the Internet: The Impact of Technology on the Globalization of Small Businesses”. Journal of International Marketing 8.2 (2000): 86-97.

Rattle, Robert. Computing Our Way to Paradise?: The Role of Internet and Communication Technologies in Sustainable Consumption and Globalization. London: AltaMira Publishers, 2010.

Shah, Nisha. “From global village to global marketplace: Metaphorical descriptions of the global Internet”. International Journal of Media & Cultural Politics 4.1 (2008): 9-26.

Wheeler, Mark. “Globalization of the Communications Marketplace”. The International Journal of Press/Politics 5.3 (2000): 27-44.