Impacted Technology on Commerce in the 21st Century
The Impact of Technology on Doing Business
Before the advent of technology and, in particular, information technology, businesses irrespective of the kind needed a geographical location. Depending on the kind of business conducted, the location could include the four walls of an office, a lot at the fair, a table, the kitchen, or a factory floor. It was imperative that the sellers had a place where they could be contacted, and the buyer knew exactly where they were. This paradigm was in place because of the nature of communication that existed, thus people were restricted to conducting business exclusively within the places they could move to. Technology, however, has now irrevocably changed that. This paper will attempt to show some ways in which technology has impacted or changed the way businesses are in the 21st century.
On the topic of distance and its impact on the conduct of business in goods and services, we find that increasing evidence points to the role-played by information technology in the increase of volume of goods and services for which transactions are made. Anecdotal evidence abounds that people are able to conduct business using information technology that they would not be able to do if these technologies were absent. An article in the New York Times perfectly illustrates this development: a woman in Guyana is able to sell hammocks around the world to people who she probably will never meet in her life via the internet (Romero 2000). This is just one way in which technology has affected the way business is conducted. Today people irrespective of their geographical location are able to conduct transactions of goods and services to places they have only heard of.
Technology and the Internet
One aspect in which the technology and the internet in particular have improved the commerce is in the creation of access to goods and services to potential clients. The first need of any business after, of course, identifying and producing the goods or services they intend to offer, is to create awareness of these goods to potential customers. Without technology, this advertisement would exclusively be by word of mouth and would be restricted to the immediate community where the person lived. As evidence points out, market specific sunk costs are a determinant of market share of goods. The internet strategically, reduces these costs because suppliers of goods and services can advertise to several clients at once. It has the ability to increase trade volume. Observed trade patterns have shown that countries that have boosted their web host by a 10% show a 1% increase in trade volume. It has the strongest single impact on trade volume in developing countries (Freund & Weinhold, 2000)
Advertising and Business
Advertising of goods before the expansion of the internet just told the customers where the goods were and it was enough because they could see and touch (if it was required) the goods that they need. Advertising business on the internet has, however, changed the way business is conducted. The concept of advertising without internet’s aid was restricted to brand promotion and solicitation of business. With the internet the landscape of advertising has evolved to a whole new level. Advertising on the internet is today is a whole new kind of advertising, whose management requires innovative concepts and thinking that cannot find an equivalent in any other medium. Web advertising today goes beyond putting up fancifully designed and attractive banners to attract attention, they are a fully functional business operation. Apart from marketing and branding, which is their raisin the internet advertising website now comes along with extra net for suppliers and intranet for employees in addition to various sales and services to their clients. The requirements of special skill for internet trade do not in diminish the requisite basic skills of advertising in other media. Vastly different from the other media of advertising, internet advertising includes elements of presentation of information (branding and soliciting) collaboration with partners who offer adjunct services (or services whose products complement those which they are advertising) communication and interactivity, as well as actual transactions.(Gretzel et al, 2000)
Not only trade of goods has been impacted by the geometric expansion of the internet, service provision has also been affected. With companies seeking comparative cost advantage, outsourcing of production and service provision like call center operators, customer care and other similar services are all currently possible because of the platform provided by the internet for such businesses to flourish. One such sector that has experienced a boost unlike any other is the tourism sector. Employing the advertising as described above, the tourism sector has witnessed a boom unlike at any time before to such an extent that some local and even national economies are sustained almost exclusively by the income from tourism. This sector has benefited from just about every technological advancement, ranging from transportation, to communication, commerce, finance, infrastructure and banking. The tourism industry is a vital part of commerce because it boosts the GDP of the nation that is involved in this trade. The existing forms of tourism today include recreational, health, and educational tourism respectively.
Technologies of Transport
Technologies of transport has vastly improved over the years from the animal drawn wagons to cars, trains boats and airplanes. There have never been so many options available to people as are available today in regard to tourism. Today beyond getting people from location A to location B, transport services today have come to embrace other aspects. It is common today that transportation systems cater to the comfort of their clients. Those value added services include recreational facilities, feeding arrangements, provision of emergency care personnel, and even internet facilities to mention but a few. The internet has enabled tourist agencies to advertise, actively solicit (through the sending of brochures and sometime calling potential clients) interact with them, enable them to plan their vacation and actually make concrete preparations like booking a flight, reserving a hotel or car, spa treatment and all the other things that go with a vacation from the comfort of their home countries or cities, while the tourist agents employ services like the global distribution system, to micromanage the various aspects the tourism experience. (Nath & Menon, n.d)
Technologies of Banks
Over time the banks have come to be the most representative symbols of trade, more so now that the world is gradually moving to an era of cashless transactions. Banks are almost inseparable from the conduct of business since their advent. They, first of all, served as a repository of money safe from the effects of banditry and acts of God, because the money secured in the banks was insured against such eventualities, so it made sense financially and otherwise to secure hard earned funds in the banks. Additionally, the banks became a source of money in the sense that people who needed loans or financial Sureties would do it through the collaboration with their banks acquiring such facilities. Technology has since changed the way that banks and, by extension, businesses operate. The need for cash for business transactions is one that half a century ago was a genuine need. In countries with less developed banking systems people had to carry huge sums of money from place to place in order to conduct business. Remote banking is a massive new banking innovation that is about a decade or less old, it has eliminated the need for customers of banking institutions to be physically present in banks. Prior to the application of technology to banking operations every single transaction required that the customer be physically present in the bank for the transactions to be held. The withdrawal and deposition of cash required physical presence of the client, questions to the staff as well as any other financial request would require the same. Today new technologies have changed all of that and enabled banks to offer services to their customers without the need to be physically present within the banking hall. Long queues at banks and the waste of valuable man-hours have been eliminated by way of wired money transfers, bank drafts, automated teller machine (ATM) cards and other such innovations. All of these have changed the way customers interact with the banks as well as with each other. Consultation with the banks have evolved from physical presence to virtual presence, telephone banking, PC and internet banking are all ways in which services and bank-customer relations and interactions have been changed in the presence of technology.(European Central Bank, 1999)
The use of electronic payment options is one area in which the banks have changed the way in which business is conducted. In this day and age the banks have assumed the role of more than just a cash repository or a go-to-person for loans and credit facilities to an active play in business activities. With the mergers, partnerships, acquisition and MOU’s being signed by various financial institutions the reach of these firms is being extended. Banks with international partners are now able, with authorization from their clients, to conduct business for and on behalf of their clients, they facilitate international trade be conducting wire transfer of cash to enable the business transactions of the clients to run smoothly. E-banking options are currently available and being increasingly utilized by individuals families and cooperate bodies, to interact with and conduct business transaction (Robins 2006) (European Central Bank, 1999) These are the services that banks by the skillful applications of technology have been able to assist their customers with. Conducting business usually entails using lots of paper. A study carried out in America showed that the cost of paper shifting amounted to as much as 20% of the entire production costs in an international transaction. Clearly the amount of hours spent paper pushing, would be better employed in doing other things that directly lead to the conclusion of business. And the replacement of paper by paper communication by network to network communication would represent massive value savings, as well as a solution to the paper accumulation problem. The result of this conversion has been called electronic trading, computer assisted trading or electronic data exchange, which is a technology that aids the business process.
The impact of technology on commerce will, of course, be incomplete if the advances that it has brought to communication are not highlighted. The telephone is singularly the greatest invention of the 21st century. Is has abolished the distance between potential clients and more than anything else fostered the development of relationships which are the bed rocks of any commercial endeavor. Today business conference calls are not uncommon, shipping orders can be faxed, scanned and received all in real time. If there is a phrase that encapsulates the advantages that technology has brought to commerce it is “opportunity and speed”.
However, as we know from human interaction, everything that has an advantage has a disadvantage as well. Technology is in itself neutral, it is just a tool, the impact of it in any way or in any sphere is a function of the hands that have control over it. Today data security is a very serious issue; the proliferation of internet access to various facilities is both an advantage and a disadvantage. Hacking of a website is no longer a doomsday conspiracy scenario, but a real threat to 21st century human existence. Because the bulk of human to human interaction is done using devices, there is the potential risk that if anyone has control over those devices remotely, those people in essence have control over what anyone does, because the advantage in any negotiation lies with knowing what the other person wants and if one were to possess this information, then whatever communication ensues after that is essentially a charade. Almost all the institutions that function today are accessible via the web, this not only makes them and the information they wish to share accessible, it also potentially is a risk for them because their mere presence in such a medium exposes them to undue interference from people of questionable motives. Today more money is spent by institutions on securing their virtual integrity than on so many other things for which a real need exists.
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Because of the constantly evolving nature of technology, there is a constant race to get the latest gadget or the latest security of software. This means that the trend of spending on technology, especially software, will only increase because as the producers are done with one they move on to upgrading them or producing one which is on an entirely different level of performance. This makes the scenario that one goes to buy a device only to discover on delivery of the said device that it is already outdated. This is a real issue today because the concept of durability in regard to technology is one that is increasingly becoming obsolete (European central bank, 1999)
Technology is both a blessing and a curse, but proper management and strategic planning will ensure that it ushers mankind into an era of prosperity unlike any other that has existed before it.