Current Economic Period of Starting from the Early 1990s - Coursework Example

HOW TECHNOLOGY HAS CONDITIONED THE NATURE AND EXTENT OF ECONOMIC ACTIVITTY TODAY NAME COLLEGE INTRODUCTION In order to survive, man engages in economic activities. An economic activity according to (Kling, 2011) is a pattern of sustained trade and specialization. Economic activities comprises of patterns of specialization where different walks of life concentrate on a certain end while others engage in the other end. It involves production and what is produced is then sold. These commodities can either be good or services. They are produced and then availed to a market where exchange of ownership takes place between a buyer and seller. The process of production up to consumption is long and can be complex. Technology plays a vital role in simplifying it. Technology is the use of scientific knowledge for economic and practical purposes (Pearsall & Hanks, 2011). Technological revolution means embracing new methods of doing work. It is a period when one set of technology is replaced with a better and advanced one. The process of change from the agrarian economy to the industrial, machine for manufacturing dominated begun in England in the 18th century. It included the invention of new sources of energy, new machines that increased the production of goods and services such as the steam engine and the development in the transportation and communication such as railway and the telegraph. The contribution of new technology to economic growth can only be realized when and if the new technology is widely used. The increase in population resulted to increase in demand for goods and services thereby necessitating the invention of transportation technologies of automobiles and airplanes, infrastructure technologies such as highways, electricity and water systems, mass production manufacturing technologies and agricultural mechanization. Their aim was to increase the goods produced and services rendered to the people at reduced prices. New technology encouraged new ways of organizing work [Atk98]. The industrial revolution saw a shift from labor intensive production to capital intensive production. There was a rapid growth in living standards and production. This paper studies current economic period of starting from the early 1990s. This period has seen major technological advancements in the world that have led to a profound impact on the economic activities. The internet was developed and quickly became the enabling technology in the 1990s. This has been the most outstanding technological advancement in the last 5 decades. 1990s saw the development and release of WWW (World Wide Web). It started off as a networking university project t the University of Minnesota. A while later, Microsoft launched Internet Explorer which allowed people to browse the WWW. The internet enabled people to communicate in a new simple and efficient way, never witnessed before. The email was created and posting of letters became less popular (Tuten, 2010). Now, with accessibility of the internet form a computer, economic activities quickly realigned to adopt the new technology. It was the new platform for businesses which could not resist it due to its popularity. Businesses moved online and created websites. This bridged boundaries as businesses could now be available online all over the world on this common platform. Customers looking for products could now use the internet to identify companies selling them and even place orders online from the convenience of a sitting room or an office. On the side of businesses, they no longer needed to incur huge costs through adverts as they could do so over the internet. This is particularly the case today. The internet even makes segmentation easy as it is possible for businesses to target customers with specific preferences, gender, age, etc. The internet has proved to be a revolutionary technological advancement. It has changed the global space. The idea of big and small companies has been threatened as the small companies have a much easier of making it by leveraging on the internet. In the past, companies needed huge capital to start up but nowadays small businesses are being conceived within a few hours even from home and can instantly reach the entire world market. The internet has made processing, manufacturing, marketing, ordering and delivery of commodities much easier, faster and better. Today, internet technology has basically proven to be the common tool being employed by businesses, large and small (Jawadekar, 2013). The current world market is such that the consumer is more informed ad as a result he is more choosy. The internet makes it easier to compare products from different manufacturers before making an order. Companies have therefore set online stores where they list their products and their features and allow consumers to make orders. These stores are normally accompanied by pictures of the product. For instance, buying a car today is much easier and faster because all one needs to do is run an internet search on car sellers, compare different models, features and prices by different sellers and then make a choice. In the past, one had to visit a showroom but it is no longer necessary today. The Internet Has Changed the Following Economic Activities 1. Production and Operation Management Today, manufacturers have moved from mass production to demand driven production accompanied by mass customization to appeal to different customer clientele. Due to the choosy nature of consumers, manufacturers are more sensitive to specific appeals and seek to integrate them to the products they are manufacturing. In some web-based stores, consumers make orders before a product is manufactured. The designers customize the ordered product and then deliver it and this greatly cuts production time as the order is received instantly. Manufacturers also collect customer views online through use of tools such as online based polls or customer reviews and uses these to produce products that satisfy customer needs in a better way. 2. Marketing The use of online marketing and advertising strategies has gained popularity and has altered consumer behavior. Businesses no longer rely on home parties, door-to-door, catalogues and leaflets to market their products. The popularity of the internet has basically conditioned marketing in such a way that it is incomplete without and online component. TV marketing and telemarketing have faded and been replaced by e-marketing through the use of approaches such as eCRM (electronic customer relationship management) which involves data mining in order to have more direct and targeted marketing which yields better results. Social media marketing through sites such as Facebook and Twitter has also gained popularity and is the norm today. 3. Finance and Accounting The finance sectors play a major role in all economies in the world. They have been transformed by the internet today and are very different from the way they were 2 decades ago. Online banking has become popular as it means customers no longer have to queue in banks in order to enjoy the service. Today ATMs are the norm and consumers don’t have to carry physical cash to use a points of purchase as they can use credit and debit cards issued by banks and other financial institutions. 4. Trade in The Financial Markets Technology has always had an impact on the financial markets. The financial market moved swiftly to adopt the internet in the late 1990s. The direct impact of the internet profound and multifaceted. It facilitates the flow of information such as analysts’ reports and provides software and interfaces which facilitate the dissemination and evaluation of vital information. It also provides multiparty live discussions of the financial market in which information that results in certain actions in the market is obtained. It also affords participants direct access of the market in real time from any part of the globe (Economides, 2001, p.8). 5. Virtual Markets The internet has made it possible for traders to trade in virtual markets. This is an economic activity that is only possible over the internet. This is done through sites which create a platform for buyers and sellers to meet and exchange products. Such sites include Amazon and E-Bay. Manufacturers post their products and into these sites which link them to the world market instantly, something that was impossible in the past. They then collect orders and ship the merchandise to buyers all over the world. The beauty of it is that the buyer and seller don’t meet in a physical market. 6. Education The education sector plays a major role in the economy. It is through schools that students acquire knowledge. It is itself an economic activity as it involves provision of service through teaching. It has been greatly transformed by the advancements in internet technology. The internet provides access to unlimited educational materials. It is also possible to attend a class without being there physically through internet based applications. This means people from all corners of the globe can join universities and colleges abroad without leaving their countries of residence. Other Areas That Have Witnessed Great Changes Are 1. Nature of Businesses In the past, before the internet age, entrepreneurs could only dream of starting companies manufacturing physical commodities or offering financial services. However, today the business landscape has greatly changed. Due to internet-based economic activities, people are engaged in new activities such as provision of services like hosting and cloud computing. Companies lies Yahoo, Google, Facebook etc are some of the biggest companies today and they were purely born of the internet and they don’t manufacture any physical good. Due to the versatility of the internet, people are today engaged in economic activities that were non-existent before. Some people choose to work online from home doing tasks such as ads posting, research and conducting surveys online. Two decades ago, one had to wake up every morning and report at a factory or an office. 2. Jobs and Standards of living In America alone, the internet produced 3.1 million Jobs in 2008 and over $300 billion in economic activities. That was phenomenal despite the biting recession at the time (Burlacu, 2009). While it took 50 years of the Industrial Revolution to result in a $500 rise in per capita income, it only took 15 years for the internet ecosystem maturity to achieve the same result. This is a clear testament of the virtually limitless potential of the internet’s ability to positively influence the economic activities. This correlates with increased standards of living. The US leads in terms of internet infrastructure but driven by innovation and acceptability, the landscape is fast changing and currently China, Russia and India have the fastest growing ecosystems (Manyika & Roxburgh, 2011). 3. E-BUSINESS E-business is a form of internet application that is used for conducting businesses on the Internet. It involves buying and selling of goods and services from a business to another or to the consumers. It is at times used as a base for advertising your products to reach consumers who are not within the geographical region to which the business is located. E-business sites must be innovative in that they should attract all consumers who are using the E-business to want to know more about goods and services being provided by the organization and they should also add value to the business and provide useful information to consumers. One of the biggest benefits of the Internet is its ability to allow organizations to perform business with anyone without considering the language barriers since it also provides translation software, anywhere you are provided there is an internet connection. The development of intermediaries such as software and other businesses that bring buyers and sellers together to provide a link or a network that enhances e-business. E -business model is an approach to conducting electronic business on the Internet. E-business transactions take place between two major relationships that include businesses and consumers. All E-business activities happen within the framework of two types of business relationships: the exchange of products and services between businesses (business to business) and the exchange of products and services with consumers (business to consumer). The primary difference between business to business and business to consumer are the customers; business to business customers are other businesses while business to consumer markets to consumers. (Bezos, 1994, p. 76) Transformational Impact on GDP The impact of the internet cannot be expounded without touching on its transformational nature. It has transformed the world economies into digital economies, based on digital technologies. The economic activities of today are interlinked to those of the past. For instance, if one buys a product online, the order is placed over the internet but the delivery is done manually in the traditional way. It has also transformed economies from solely relying on the big industries such as manufacturing. In 2010, the internet directly contributed about $50 billion to the Australian economy, which is 3.6% of its GDP. This is equivalent to Australia’s ore exports industries. This means the internet is outgrowing traditionally popular and useful economic activities while at the same time conditioning how they are carried out because some of them are done over its platform (Deloitte, 2011 ). CONCLUSION The internet is an application that is here to stay. It has greatly shaped our lives for the past decade in ways such as the way we do businesses, our lifestyle, and our health. It has greatly influenced the economy of most countries that have embraced the technology. The earlier we embrace the technology the better and easier our lives will become. The world is much smaller today because of the internet. Small companies can have a world-wide reach and serve people from all continents owing to the internet’s ability to reduce the world into a small global village. Economic activities are nowadays no longer limited to the traditional ways. Markets are virtually limitless and sellers and buyers must not necessarily meet to close a sale. Communication is much easier, cheaper and faster. It is no longer a must to engage in traditional economic activities as the internet offers a platform to do new things such as marketing and advertisement as well as creation of websites and a myriad of services that online businesses require. Businesses are the major economic activity in most of the world economies and their reliance on the internet technology shows just how transformative and important it is. In today's world, businesses are moving into the internet in order to relate with their customers better and remain competitive. The internet has basically redrawn the map of the global economy and since it has no borders, companies must expand their activities beyond their national borders and the internet makes this possible at a fraction of the traditional costs. As Sudweeks (2000, p.1) notes, E-commerce is therefore the most important economic trend of our generation. It has transformed the world economy and will continue playing an increasingly important role in the future. References Atkinson, R. D. (1998). Technological Change and Cities. A Journal of Policy Development and Research , 3 (3), 129-133. Bezos, J. (1994). E-Business. In Business Driven Information Systems (pp. 62-100). Burlacu, R. (2009, June 12). Internet Impact on Economy. Internet Impact on Economy. Retrieved April 28, 2014, from http://news.softpedia.com/news/Internet-Impact-on-Economy-113952.shtml Deloitte (2011), The Connected Continent, How the Internet Is Transforming the Australian Economy, Deloitte Access Economics, Sydney. Economides, N. (2001). The impact of the Internet on financial markets. Journal of Financial Transformation, 1(1), 8-13. Jawadekar, W. S. (2013). Management information systems: text and cases : a global digital enterprise perspective (5th ed.). New Delhi: McGraw Hill Education (India). Kling, A. (2011, February 14). What is Economic Activity?. , Arnold Kling. Retrieved April 28, 2014, from http://econlog.econlib.org/archives/2011/02/what_is_economi.html Manyika, J., & Roxburgh, C. (2011). The great transformer: The impact of the Internet on economic growth and prosperity,. McKinsey Global Institute, xx, 3. Pearsall, J., & Hanks, P. (2001). The new Oxford dictionary of English. Oxford: Oxford University Press. Sudweeks, F. (2000). Introduction. Doing business on the Internet: opportunities and pitfalls : with 39 figures (2nd print. ed., pp. 1-5). London: Springer. Tuten, T. L. (2010). Enterprise 2.0: how technology, ecommerce, and Web 2.0 are transforming business virtually. Santa Barbara, Calif.: Praeger. Read More