Globalization and E-commerce

Globalization and E-Commerce
Arnaldy D. Fortin
St. Paul University Philippines
School of Graduate Studies
Doctor in Information Technology
1

Introduction
The main objective of all nations is development, passion, along with
providing security and relief for its citizens. However, it is apparent
that no nation is capable to maintain all of these development plans,
correspondingly nations tend to conduct business with other nations.
Kanchan (2016) defined this concept as Globalization which means
the dismantling of trade barriers between nations and the integration
of the nations economies through financial flow, trade in goods and
services, and corporate investments between nations.
2

Introduction
Furthermore, Kraemer et.al. (2002) claimed that the process of
globalization creates new challenges and opportunities for firms.
Globalization challenges firms to become more streamlined and
efficient while simultaneously extending the geographic reach of their
operations. Challenges arise when foreign competitors enter the firms’
domestic markets and compete with domestic competitors. Foreign
competitors have several options to take in order to attract the market
(customers) such as offering lower cost of products through global
sourcing, move production offshore or gain economies of scale when
they expand into new markets.
3

Introduction
And once the challenges have been hurdled, then opportunities sets
in, which include access to new markets that were previously closed
due to cost, regulation, or indirect barriers, the ability to tap resources
such as labor, capital, and knowledge on a worldwide basis, and the
opportunity to participate in global production networks that are
becoming prevalent in many industries such as automotive,
electronics, toys and textiles
Considering that globalization has its own special processes,
nowadays in the competition field, those companies and countries are
successful through the use the Internet specifically E-commerce.
4

Introduction
Since 1990, E-Commerce has increased the company’s efficiency,
dynamism, and speed in the process of export and by minimizing the
processes of work, make it simple and cost-effective. It also consists
of the exchange of data between four types of E-commerce business
models over the Internet to facilitate the financing and payments.
These models are B2C which stands for Business-to-Consumer, B2B
which stands for Business-to-Business model, C2C which stands for
Consumer-to-Consumer, and B2G which stands for Business-to-
Government.
5

Introduction
E-commerce encompasses any commercial activity that takes place
directly between a business, its partners or its customers through a
combination of computing and communications technologies. It takes
into account sales, marketing, communications, service, and
workflow.
In 2000, World Trade Organization (WTO) Director General Mike
Moore in his speech at the E-Commerce Conference; he emphasized
on the development dimension of the Internet. The growth of the
Internet can also increase the marginalization of the world's poor,
unless we take steps to ensure they get access to the Internet too.
6

Introduction
In addition, he stated that one of the purposes of the WTO's work
programme is to ensure that developing countries can derive
maximum benefit from the technology and are not left behind by the
speed of developments. To participate effectively in e-commerce
three things are needed.
• The first is access to computers and the other hardware at world
prices, which means, among other things, removing excessive import
duties on it.
7

Introduction
• The second is to have efficient, low-cost telecommunications, which
normally means reform and liberalization of national monopolies. The
WTO's Information Technology and Basic Telecoms agreements,
both signed in 1997, help promote e-commerce by eliminating duties
on computer hardware and liberalizing the telecoms services on
which the Internet depends. Further telecoms liberalization is being
negotiated in the services negotiations that are now under way. I hope
that a second Information Technology agreement that extends the
range of hardware that is traded duty-free can be concluded soon.
• The third requirement is to have trained personnel, where the WTO
unfortunately can do little to help, but where governments and private
industry can do a great deal.
8

One of the most beneficial aspects of globalization for businesses is
that companies can now take skills and knowledge from across the
globe and widen their horizon which leads to increased collaboration
and breakthrough innovations.
Communication and information transfer around the world allows
companies focus on their main core competencies which leads to
better collaboration and innovation. Consequently, companies are
now able to outsource and offshore sectors of their corporation or
merge with companies from different corners of the globe and are now
able to communicate and transfer knowledge efficiently and timely.
Additionally, there is a limitless talent pool available, ready and waiting
to be utilized; corporations now have the ability to use this talent pool.
9

Globalization has led companies to leverage on outsourcing and
offshoring as part of their business strategies to lower costs and
increase efficiency in their business functions.
“Outsourcing” means taking a specific business function that your
company was doing in-house and having another company perform
that exact same function for you. Companies outsource to take
advantage of specialized skills, cost efficiencies and labor flexibility.
While “Offshoring”, is when a company takes one of its factories that
is located locally and moving the whole factory off shore. Benefits of
offshoring are usually lower costs, better availability of skilled people,
and getting work done faster through a global talent pool. 10

11
Either outsourcing or offshoring, a company can either increase
efficiency by taking advantages of areas that specialize in
manufacturing that product or lower manufacturing costs by finding
the least expensive labor and resource costs and setting up an
industrial unit there.
The adoption of Information and Communications Technology (ICT)
such as the Internet makes it cheaper and easier for firms to extend
their markets, manage their operations and coordinate value chains
across borders. And with the speeding up of information flows along
with the intensifying of these flows, companies can now let consumers
take control and decide on products and services that they feel are
customized just for them.

1212
E-commerce offers businesses to empower the consumers.
Consumers are now capable to find the products that fit them best, as
products are now coming from countries all over the world. The ability
to communicate has grown easier and the transportation of goods has
become quicker; accordingly consumers can find any type, size, price,
customization of the product they choose. And due to increased
digital infrastructure, new wireless capabilities and changing
integration of worldwide economic policies barriers to global
competition have nearly disappeared.

13
eCommerce Next Wave: Productivity and Innovation
On the next slide, it shows the statistics presented by Julie Meringer,
Group Director at Forrester Research Ltd.; during the seminar on
Revenue Implications Of E-commerce in April 22, 2002, held at
Geneva, Switzerland.
The graph shows that there was an exponential increase in revenues
from E-commerce by the different categories of business industries;
from 2002 to 2007.

14
% of revenue from eCommerce
Base: executives at G3,500 companies
0% 5% 10% 15% 20% 25% 30%
Total
Electricity, gas,
and sanitation
Insurance
Finished goods mfg.
Retail
Financial
(noninsurance)
Primary production
and supply
Distribution
Services
Chemicals and
petroleum
Technology
and telecom
2002
In 5 years

1515
A new wave of productivity
On the next slide, it shows the graph on the new wave of productivity
presented by Julie Meringer and focuses on the following agenda:
1. IT productivity wave - B2B technology slashes the costs of working
with business partners through integration technologies like XML and
collaborative apps from firms like BIOS Group and Tilion. As shown
on the graph, these capabilities make it easier to coordinate across
multiple tiers of partners -- helping firms like General Electric realize
immediate profit gains.

16
2000 2012
IT productivity wave:
eBusiness productivity wave:
Externally focused investments in
technologies like supply chain and CRM
yield efficiency gains in three key areas:
1. Lower transaction costs
2. Improved market information
3. Intensified new competition
1990
Productivity:
(% change in
output per
unit of
labor input)
Internally focused
operational efficiencies
from hardware, services,
and ERP investments

171717
On the previous slide, it also present the graph on eBusiness
productivity wave and has the following agenda:
2. By using online tools for channel management and demand
forecasting, firms can gain insight that helps fine-tune operations.
Using supply chain execution software from PipeChain, for example,
one Ericsson plant has trimmed inventory stocks by 40%.
3. By delivering standards and simplifying access to global trading
partners, eBusiness technologies introduce more competition -- and
more efficiency -- into markets. Firms like Seagram are using tools
from ClearCross to cut regulatory compliance costs -- helping the
beverage firm more effectively enter and compete in new markets..

18
The X Internet refers to two “Xs”
An executable Internet that
supplants today’s Web
An extended Internet that
connects to the real world

19
X Internet refers to two X’s: an executable Internet that supplants today’s
Web and an extended Internet that connects to the real world.
The next revolution isn’t one wave of innovation, it’s two.
The "executable Internet,“ builds conversations between you and the server.
And offers several important advantages over the Web:
3) X Internet will be far more peer-to-peer -- unlike the server-centric Web.
1) It rides Moore's Law -- the wide availability of cheap, powerful, low
real-estate processing;
2) It leverages ever dear bandwidth -- once the connection is made, a small
number of bits will be exchanged, unlike the Web where lots of pages
are shuttled out to the client; and

20
• The other is the “extended Internet”, in which Internet connectivity is
pushed into many different devices beyond the PC.
The extended Internet will connect the physical entities in the world to
the digital world of information via Radio Frequency Identification
(RFID), sensors and wireless networks.
• The RFID tags are used to identify product location.
• Wireless sensors detect and send condition information of the
surroundings.
• Biometrics help to identify trusted individuals.

2121
The concept of the extended Internet is that a wire will be created that
connects every manufacturer to the products that they make in the next few
years. The implication is that vehicles, home appliances, medical instruments
and all other nontrivial things in the universe, can have some type of link to
the Internet.
For example in Associated Food Stores in Farr West, Utah (near Salt Lake)
supplies over 600 grocery stores in 8 states. They do this with a million
square foot warehouse in a one square mile distribution center. The logistics
associated with getting trucks in and out of this facility are complex -- and
costly. AFS has bought electronic tags and sensors from WhereNet which
allow wireless real-time tracking of every truck and load in the facility within 10
feet. These Internet-connected sensors feed systems back at the AFS control
center.

222222
The world has now become a global village. Borders and barriers are
going to be vanished. In order to operate effectively in an environment
of borderless markets, global multinational corporations have to
manage their corporate philosophy in order to sustain in this
environment of globalization and information technology.
Conclusion
Telecommunications and transport links flourished by the globalization
created a new way of accessing to the new markets through e-
commerce. However all the countries and firms couldn't make use of
this advantage same way due to their opportunities to access to
technology and telecommunications.

23232323
But, telecommunications and technological substructure of developed
countries are directly benefited from the globalization process. In this
regards developed countries which are into globalization process way before
have solid infrastructure of telecommunications and technology.
Conclusion
As a result for these countries e-commerce is more effective on globalization
than the opposite case. However in developing countries in which
globalization process is rather new and technological infrastructure is poorer
the situation is different.
And this was given emphasis at the E-Commerce Conference by WTO DG
Mike Moore in his speech ; regarding the development dimension of the
Internet. The growth of the Internet can also increase the marginalization of
the world's poor, unless we take steps to ensure they get access to the
Internet too.

2424242424
And as statistics have shown that Globalization and E-commerce are
two main drivers that provided the landscape to succeed in doing
business in these modern times.
Conclusion
Firms should strategize and invest to maximize the potential of these
two drivers in order to provide their goods and services to utmost
customer satisfaction.

2525
The X Internet as an innovation is truly a viable tool to further improve
business operations in Internet of Things.
And it has been started by several industries like Caterpillar which is
connecting heavy machines; Delta is connecting jet engines and GM
is connecting its cars using this technology.
Conclusion

26
The 20th Century was the century of Aviation and the
century of Globalization. The next century will be the
century of Space.
Wilson Greatbatch

272727
Moore, Mike. 31 October 2000. Opening Remarks, E-Commerce conference, ITC
Retrieved from: http://www.wto.org/english/news_e/spmm_e/spmm40_e.htm
References
Meringer, Julie. April 22, 2002. E-Commerce Next Wave: Productivity and Innovation. Programme and
presentations for the seminar on revenue implications of e-commerce.
Retrieved from: http://www.wto.org/english/tratop_e/devel_e/sem05_e/presentation_meringer.ppt#
http://www.wto.org/english/tratop_e/devel_e/sem05_e/presentation_tuthill.ppt#25
Ali Ghorbani, Mohammad Bakhtazmay Bonab (2013). Globalization and the Role of E-Commerce in Its
Expansion. J. Basic. Appl. Sci. Res., 3(1)78-82, 2013. © 2013, TextRoad Publication. ISSN 2090-4304
Journal of Basic and Applied Scientific Research
Retrieved from: https://www.textroad.com/pdf/JBASR/J.%20Basic.%20Appl.%20Sci.%20Res.,%203(1)78-
82,%202013.pdf

28282828
Kanchan. (May 17, 2016). Globalization and Its Impact on Indian Economy. International Journal of Business
Management and Scientific Research Vol: ISSN: 2394-6636
Retrieved from: http://eminencejournal.com/images/pdf/MY9.pdf
References
Kenneth L. Kraemer, Jennifer Gibbs and Jason Dedrick. December 20, 2002. Impacts of Globalization on E-
Commerce Adoption and Firm Performance: A Cross-Country Investigation. Center for Research on
Information Technology and Organizations.
Retrieved from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.86.4367&rep=rep1&type=pdf
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References
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Retrieved from: https://www.google.com.ph/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-
8#q=extended+and+executable+Internet&*

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THE END...
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Globalization and E-commerce

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