Impact of internet and e-commerce on international business and how it is conducted

Author: Iloka Benneth Chiemelie

Published: 9/12/2013

Assess the impacts that the Internet and E-Commerce have had on international business and how it is conducted

Iloka and Vimala (2012) discussed on the influence of internet and E-commerce on businesses, with the discussion also presenting how E-commerce is being played out in the modern setting. In their discussion, it was made known that the increasing level of globalization and a common standard in consumers demands, companies have reverted to adopting internet and E-commerce as an entry strategy especially for services. This new trend has a number of impacts on MNCs and these impacts are as discussed below.

Increased competitive advantage (Chase, 2011) – as a result of their adoption of internet and E-commerce, MNCs can now afford to market their products in foreign markets and gain customers awareness even before entering the market, and this gives them the needed competitive advantage to survive upon entrance. Numerous medium such as EBay and Amazon also allow them to sale these products and have it delivered to the customers upon order. Thus, the internet and E-commerce impacts positively on the competitiveness of MNCs.

Constructive response to shortcoming through e-PR (Chase, 2011) – the internet also impacts on the PR settings of MNCs. This is because there are a high volume of consumers from different markets in the internet and the fact that services are free, the companies can adopt this medium to constructively deal with issues with service quality, social factors or other issues that might influence the performance of the company negatively.

Job recruitment (Chase, 2011) – the internet also offers MNCs the chance of recruitment some of the most talented workforce. This is because the reach for job adverts placed on the internet can be heavily significantly and the reply can be very encouraging as well. As such, MNCs such as IBM, APPLE, LENOVO, SAMSUNG and virtually all the big MNCs have a web link where applicants can submit their resume at any given point in time for a potential job offer in the future.

Innovation through customers’ interaction (Chase 2011) – the internet such as social Medias (e.g. FACEBOOK & TWITTER) allows companies to interact with their customers. Through such medium, the customers can lay down their ideas for improvement on products and the MNCs can adopt these ideas to innovate their products to enhance the level of customer satisfaction. 

Increase in business transparency (Chase 2011) – the internet also impacts on the transparency in a company. This is because the company can highlight its management approaches and commitment to the customers, while the customer on the same hand can adopt this medium to critique the bad performance and unethical practices in the company.

Increase transaction efficiency and effectiveness – the internet offer companies the needed efficiency with transaction while also providing customers with convenience as they can make purchases for goods and/or services at any given point in time. For instance, PAYPAL is one of the most common means of making payment to companies nowadays and the money reaches the company instantly.

How E-commerce is conducted

Iloka and Vimala (2012) also provided an analysis of how the concept of E-commerce is conducted in businesses today and it can be illustrated in the figure below.

Order – at this stage, the customer reviews the products and/or services and makes an order for the product. This order is virtually sent to the company which determines the exact amount for the products and added costs such as delivery.

Pay – the customer then accepts the price and conditions set by the company and proceeds to make payment for the service.

Receive – the company will now receive the payment, review it to ensure that the payee matches information provided by the customer in order to reduce fraudulent transactions. Once the information is correct, the company will then send the order to the customer based on the chosen medium.

What are the main opportunities and challenges these technologies have presented to MNEs?

Opportunities of internet technology

Increased sales – just like the impact discussed above, internet technology provides an opportunity for companies to increase sales as they can sale their goods and services online (Iloka and Vimala, 2012).

Penetrate new market – sometimes the products that are being used in a country might not be available in another country but can be used to meet certain needs in that country. Companies can then adopt the internet to eliminate all barriers to market entry via the conventional medium and meet the needs of these customers (Iloka and Vimala, 2012).

Reduce employment cost through customer integration– since services and products can be delivered to any part of the world through E-commerce, customers are normally provided with manual of how to make use of such products or services. This reduces the cost of employing staffs on that account such as the repairmen and installers for a new system (Iloka and Vimala, 2012).

Challenges

Fraud – the internet offers the perfect medium for fraudulent activities as the customers are not in direct contact with the seller and the both parties come from different countries with different laws. Thus, fraudsters can hide in the internet and never get detected while they conduct their activities system (Iloka and Vimala, 2012).

Virus – besides fraud, the internet also opens the right medium virus attaches on companies and this exposes loses to corporate information that can cause further financial risk to the business sustainability.

Conclusion

From the above analysis, it is clear that the internet technology has influenced businesses in a number of ways but the level of influence laid on the business depends on whether or not the MNCs adopts internet technology. On the same hand, the influence can be either negative or positive, thus companies need to monitor their adoption of internet technology.

References

Iloka, B.C. and Vimala, T. (2012), “Social Network Adoption in Businesses.” Available at: http://www.iservices.ilokabenneth.com/social_networking_and_businesses.html [Accessed on: 24/08/201].

Chase (2011), "Social Networking Strategies for Business: Engaging Online Communities for Competitive Advantage." Available at: https://www.chase.com/online/commercial-bank/document/Perspective_SocialNetworking.pdf [Accessed on: 02 – 04 – 2012].