Archive for December, 2011
Have just been reading up on the Digital Economy Act, and its various ramifications. I have created a scribble that seems to me to show one of the key points – that only jumped out at me as I was doodling – that once again, the web has made Januses of us. I think that most of us are both copyright holders and copyright ‘acquirers.’
And in this case, the ISPs aren’t necessarily bad – if you are a struggling writer, musician or artist then if they are called upon to help you protect what you would think of as yours, you’re not really going to complain. (Speaking as someone whose household gets to buy stuff from royalties coming in from the British Performing Society.) However, most struggling artists, musicians and writers are (perhaps because they’re struggling , perhaps because it’s part of the creative process), also avid ‘collectors’ of what they might not necessarily have paid for… Obviously the issue is far more complex than this.
Certainly BT and TalkTalk have requested the review because of concerns about privacy (n.b. BT and TalkTalk took up a diametrically opposite stance on this very issue when it came down to Phorm and RIPA - perhaps they are now more wary of some of these issues). It certainly brings to the fore the issue of what is property on the web, what is private property on the web, and how far a government should allow intrusion into people’s lives in order to monitor or recover what might be defined as private.
John Stuart Mill wrote:
‘The things once there…mankind, individually or collectively, can do with them as they please. They can place them at the disposal of whomsoever they please, and on whatever terms…Even what a person has produced by his individual toil, unaided by anyone, he cannot keep, unless by the permission of society. Not only can society take it from him, but individuals could and would take it from him, if society…did not…employ and pay people for the purpose of preventing him from being disturbed in his possession..’ (From Heilbroner, p.129).
Mill saw that the principle of private property had not had a fair trial, and that reform could make changes to outdated laws, without recourse to outright revolution. He feared that Communism would stifle individual thinking and feared ‘whether there would be any asylum left for individuality of character; whether public opinion would not be a tyrannical yoke; whether the absolute dependence of each on all, and the surveillance of each by all, would not grind all down into a tame uniformity of thoughts, feelings, and actions…no society in which eccentricity is a matter of reproach can be in a wholesome state.’ (Heilbroner, .p132).
The doodle is JUST a doodle, it’s not good graphic design and it’s very messy.
Economics is a social science or discipline that analyses the production, consumption and distribution of goods and services, or from another perspective, ‘wealth.’ It often asks what is valuable at any one point in time by evaluating the worth of goods and services as they are exchanged. (Drawing on the notion of a point in time, and what we know about the modern capabilities of quantum computing, might suggest that any failure to properly understand where value lies and of what it consists, in immensely complex chains – for example in stock-market deals – could result in hugely disastrous market crashes.) Where this evaluation may be difficult to accomplish (for a number of reasons) this would seem to make economics a normative discipline. Schumacher suggested that its models and theories are based on value systems and embedded views of human nature and referred to meta-economics, as some of these values are not made explicit in the discussion of wealth and its distribution.
Schumacher actually compared two different economic systems in order to illustrate this point: one was the western ‘materialist’ system where the standard of living is measured by the amount of annual consumption – and which therefore seeks to achieve maximum consumption along with optimal patterns of production. The other was a Buddhist economics based on the notion of the ‘right livelihood’ and the ‘middle way’ – aiming for the maximum of human well-being with optimal patterns of consumption.
It is interesting that presently there seems to be more media attention given to research on economic notions of ‘well-being’ and even the search for drivers of happiness.
Economics emerged in and around the 17th century, in line with a value system that differed markedly from those in existence in medieval times. Until then most of what was needed to survive was produced and exchanged locally, within ‘tribes’ or local populations. Robert Heilbroner makes a distinction between markets, where food, materials for building shelter, and clothing might be traded, and ‘the market system’. (The Worldly Philosophers, p.27.) ‘For the market system is not just a means of exchanging goods; it is a mechanism for sustaining and maintaining an entire society.’ Markets existed, and not just for barter, but generally, profit was frowned upon (seen as ungodly) and there were severe restrictions on those who attempted to sell to promote their own self-interest.
There are of course, examples of early traders who did undergo long voyages, (and thus were trading globally) but the suggestion is that these voyages were an end in themselves, and as much about discovery and adventure – ceremonial, bonding and social voyages – rather than for the ultimate motive of profit. A corollary to this might be that these ends are still in existence today (i.e. the bonding of the boardroom, the religious pursuit of profit, Thatcher’s yuppies who took to heart the free market forces and the limitation of the state’s role, and took the role of competitive individualism as their mantra for professional activities.)
In line with the emergence of economics, Beinhocker says, of the period between 1750 and the mid-eighteenth century,
‘According to data compiled by the Berkeley economist, J.Bradford DeLong, it took 12,000 years to inch from the $90 per person hunter-gatherer economy to the roughly $150 per-person economy of the Ancient Greeks in 1000 BC. It wasn’t until 1750 AD, when world gross domestic product (GDP) per person reached around $180 that the figure had finally managed to double from our hunter-gatherer days 15,000 years ago. Then in the mid-eighteenth century something extraordinary happened-world GDP per person increased around 37-fold in an incredibly short 250 years to its current levels of $6,600…’ (p.9).
The evolution of economics:
Earlier it was called political economy, but then it was suggested in the 19th century that ‘economics’ as the short form of economic ‘science’ seemed to suggest a wider scope for the subject.
There are basic contrasts between micro and macro economics – where the micro involves households, individuals and firms and macro looks at ‘entire’ economies and growth, unemployment, fiscal policy, inflation etc.. Normative economics looks at prescriptions – how economics should work, while positive economics looks at describing what occurs. As suggested above, the distinction between these two might not be as clear-cut as one might expect.
There is also economic theory and applied economics, rational and behavioural economics, mainstream and heterodox economics, econometrics (where economic theories are tested empirically, i.e. through observation, as opposed to via controlled experiments) and experimental economics.
Classical political economy
Adam Smith’s The Wealth of Nations described land, labour and capital as the three drivers of production and wealth. He also recognised that the division of labour could create great efficiencies, while perhaps causing problems for the common man whose world view was created by the day to day features of his job. Smith was the originator of resource allocation theory, suggesting that in a competitive but self-regulating space, resource owners will deploy these most profitably – resulting in an equal rate of return and satisfaction of economic needs of the people. The market was seen as a ‘mechanism’ (note Newtonian tone) acting as an ‘invisible hand’ paradoxically leading people selfishly pursuing their own interests to create social benefit. Self-regulation meant that the market was its own guardian, and didn’t need the interference of government. Prices are kept from ranging away from the cost of production via public demand. The market also encouraged risk, creativity and invention. Smith also referred to two laws: the law of accumulation and the law of population. Via the accumulation of capital society could benefit as money was invested in more machinery and means of production. However, while more machinery would mean more workers, which would in turn mean higher wages that would then dissolve profits – the law of population meant that ‘the demand for men, like that for any other commodity, necessarily regulates the production of men.’
Other early political economists were Malthus, John Stuart Mill and David Ricardo. Ricardo (writing just after the introduction of the Corn Laws, which practically broke Britain, in order to protect the landowners’ interests) looked at the distribution of income and conflict among landowners, workers, and capitalists. Ricardo saw that resources such as land are limited, and would result in problems emerging from the growth of population and capital, keeping wages and profits down while increasing rents. He grasped that the interests of landowners and capitalists were at odds and that the landowners were at war with the community. This position made Ricardo very popular with industrialists…
At a time when people were starting to question whether nationhood could be linked to population numbers, Malthus saw that human populations tended to increase, outstripping food production. One increase was geometric while the other was arithmetic. He also questioned the idea that a market economy could naturally create employment, suggesting (like Keynes in the 1930s) that savings (Smith’s accumulation) would create unemployment as countermanding spending. Malthus’ views were very unpopular. Malthus’ view was that, ‘Famine seems to be the last, the most dreadful resource of nature. The power of population is so superior to the power of the earth to provide subsistence…that premature death must in some shape or form visit the human race.’
It is of note that (as Beinhocker points out, p.17), while some modern economists generally agree that economics should be studied as a complex system, and others agree that it has much in common with the idea of evolution, it was, of course, Malthus who inspired Darwin’s thinking, and that in fact much of our thinking about evolution derives from early economic ideas on wealth and population.
It is often important to account for the analogies and metaphors inherent in and between disciplines as these can account for some circularities and blind passages that seem to recur. Just as cognitive psychology might have suffered in part from its reductionistic reliance on the ‘brain as computer’ analogy (when the sorts of computers referred to in the analogy were created in order to attempt to replicate just one small part of how our minds work), so it is possible that thinking on economics might have been held back by earlier hesitation about exploring ideas about complex adaptive systems. There have been many works written on this subject: Veblen, Alfred Marshall, Schumpeter and Hayek, Nelson and Winter, for example, but it is generally agreed that mainstream economics has mostly been concerned with the model of economics as a form of self-governing mechanical system.
Although it seems that Smith, Malthus and Ricardo were opposed to one another, in fact it seems that partially where they differed was at the level of focus that they applied their thinking to. However, they saw social systems driven by the search for profit, market roles, a place for government and the force of competition. They also applied their thinking to technology. Smith described in great detail the ways in which pins were made, and how the division of labour and application of technology had their part in this process, but his thinking seemed to focus on a closed technological system. Malthus and Ricardo however were present when technology started to explode upon the scene, as more innovation came in, (the steam engine, the spinning jenny, iron working) it became apparent that with such innovation might come an upset to the ordered mechanisms of self-governing economies.
John Stuart Mill (worth writing about in far more detail) differed from these three thinkers in that he came of a more utopian approach. The social changes that were fostering early economic thinking had produced factories where social conditions were utterly appalling. Worse, because of an insistence on mechanism and natural law, it seemed to some that these appalling conditions were just a natural consequence of the market, and that while there was horror running through the fabric of these workplaces, it was akin to that of ‘nature red in tooth and claw:’ impersonal laws at work with no need for intervention.
Mill, following Robert Owen, Saint-Simon and Fourier, was convinced that a better way could prevail. Rather than encouraging the lower classes to revolt as did the Communists, utopian idealists wished to persuade those who held the power to change their ways, to reform. While the means of production might be functioning according to the laws described by Smith, Malthus and Ricardo, what happened to what was produced was actually down to a number of factors that could be controlled – and was not subject to natural law.
Finishing off my posts on this blog, I conclude with some final thoughts about e-business / e-commerce and the associated challenges faced by businesses in managing innovation and change in the context of the impact of Web/Internet on business competition. These bring together various topic strands from previous weeks.
For completeness sake:
• E-business refers to the integration, through the Web/Internet, of all an organization’s processes from its suppliers through to its customers. For example, a company may use a website to manage information about sales, capacity, inventory, payment and so on – and to exchange that information with their suppliers or business customers. In other words, they use the internet to connect all the links in their supply chain, so creating an integrated process (what is termed “Management in Practice’).
• E-commerce refers to the activity of selling goods or services over the Web.
As discussed last week, networked information systems enable companies to coordinate joint processes with other organizations across great distances. Transactions such as payments and orders can be exchanged electronically, thereby reducing the cost of obtaining products and services. Many such systems use Web/Internet technology, with labels such as extra-organizational systems, e-commerce, e-business systems and supply chain management systems (collectively, inter-organizational systems).
The relationship between a company and its channel partners can be fundamentally shifted by the Web/Internet (or by other applications of inter-organizational systems). They can create new relationships between an organization, its customers, suppliers and business partners, redefining organizational boundaries. Firms are using these systems to work jointly with suppliers and other business partners on product design and development and to schedule work in manufacturing, procurement and distribution.
This fact is because electronic networks can help to bypass channel partners – so-called disintermediation. Disintermediation is when intermediaries, such as distributors or brokers (whose function is to link a company to its customers), are removed. For example, a manufacturer and a wholesaler can bypass other partners and reach customers directly. The benefits of disintermediation are that transaction costs are reduced and that it enables direct contact with customers. This also makes it possible to increase the reach of companies, e.g. from a local presence to a national or international presence.
Disintermediation can be contrasted with reintermediation (the creation of new intermediaries between customers and suppliers by providing (new) services such as supplier search and product evaluation helping customers to compare offers and link them to suppliers: examples are Yahoo and Amazon).
From a management perspective, the challenge of transforming a company into an e-business lies in reorganizing all the internal processes. A major concern of companies moving towards e-commerce or e-business has been to ensure they can handle the associated physical processes. These include handling orders, arranging shipment, receiving payment and dealing with after-sales service. This gives an advantage to traditional retailers who can support their website with existing fulfilment processes. Given the negative effects of failure once processes are supported by inter-organizational systems, it seems advisable to delay connecting existing systems to the new system until robust and repeatable processes are in place.
Kanter (2001) found that the move to e-business for established companies involves a deep change. She found that top management absence, short-sightedness of marketing people and other internal barriers are common obstacles. Based on interviews with more than 80 companies on their move to e-business, her research provides ‘deadly mistakes’ as well as some lessons, including:
• Create experiments and act simply and quickly to convert the sceptics.
• Create dedicated teams, and give them autonomy. Sponsor them from the wider organization.
• Recognize that e-business requires systemic changes in many ways of working.
Earlier, I identified the management job as being to add value through the tasks of planning, organizing, leading and controlling the use of resources. In particular:
• Planning – this deals with the overall direction of the business, and includes forecasting trends, assessing resources and developing objectives. I also introduced Porter’s five forces, widely used as a tool for identifying the competitive forces affecting a business. Information technology can become a source of competitive advantage if a company can use them to strengthen one or more of these forces. Managers also use IS to support their chosen strategy – such as a differentiation or cost leadership. IS can support a cost leadership strategy when companies substitute robotics for labour, use stock control systems to reduce inventory, use online order entry to cut processing costs, or use systems to identify faults that are about to occur to reduce downtime and scrap. A differentiation strategy tries to create uniqueness in the eyes of the customer. Managers can support this by, for example, using the flexibility of computer-aided manufacturing and inventory control systems to meet customers’ unique requirements economically.
• Organization – This is the activity of moving abstract plans closer to reality, by deciding how to allocate time and effort. It is about creating a structure to divide and coordinate work. Information systems enable changes in structure – perhaps centralizing some functions and decentralizing others. For example, Siemens have used the Internet to bring more central control.
• Leading – This is the activity of generating effort and commitment towards meeting objectives. It includes influencing and motivating other people to work in support of the plans. Computer-based IS can have significant effects on work motivation, by changing the tasks and the skills required. >>>
• Controlling – Computer-based monitoring systems can constantly check the performance of an operation, whether the factor being monitored is financial, quality, departmental output or personal performance. Being attentive to changes or trends gives the business an advantage as it can act promptly to change a plan to suit new conditions.
The Web, like other new technologies, also enable processes of international business, since firms can disperse their operations round the globe, and manage them economically from a distance. The technology enables managers to keep in close touch with dispersed operations – though at the same time raising the dilemma between central control and local autonomy. This internationalisation effect also makes possible working interdependently with other organizations: previously this was constrained by physical distances and the limited amount of information that was available about the relationship. As technology has advanced, interdependent operations become more cost effective – most obviously through outsourcing and other forms of joint ventures. Companies can routinely exchange vast amounts of information with suppliers, customers, regulators and many other elements of the value chain. This implies that managers need to develop their skills of managing these links (to foster coordination and trust between network members).
In summary, the Web enables radical changes in organizations and their management. It enables management to erode the boundaries between companies, through the use of inter-organizational systems. They can then develop systems for e-commerce and e-business, ultimately connected with all stages in their supply chain.
As well as transforming the internal context of organizations, the Web also affects the external context (hand in hand with internationalization and other factors) to transform the competitive landscape in which firms operate. The Web has enabled companies offering high-value/low-weight products to open new distribution channels and invade previously protected markets. These forces have collectively meant a shift of economic power from producers to consumers, many of whom now enjoy greater quality, choice and value. Managers wishing to retain customers need continually to seek new ways of adding value to resources if they are to retain their market position. Unless they do so, they will experience a widening performance gap (when people believe that the actual performance of a unit or business is out of line with the level they desire).
I have also considered how people introduce change to alter the context, with management attempting to change elements of its context to encourage behaviours that close the performance gap. For example, when supermarkets introduced on-line shopping, their management needed to change technology, structure, people and business processes to enable staff to deliver the new service. Thus there is an interaction between context and change: with change affecting context but also context (organisational culture) affecting change.
The only constant is change. Heraclitus, 500 BC
A global crisis was predicted by Prof Beddington at the Sustainable Development UK 2009 conference because of the 50% food and energy jump, rise of 30% of fresh water need and climate change by 2030 when the population will reach 8 billion. The United Nations Environment Programme predicts widespread water shortages across Africa, Europe and Asia by 2025. The amount of fresh water available per head of the population is expected to decline sharply in that time.
In the introduction of the Future Society envisioned by the Science Community report the following problems are identified: In its “Japan Vision 2050”, the Science Council of Japan (SCJ) points to “global environmental degradation”, “population growth” and “the widening North-South divide” as major global problems of the 21st century that seriously threaten the sustainability of human society. As a way of solving these global problems, the SCJ proposes that steps should be taken to achieve a “balance between environment and economy“. In recent years, the creation of innovations has been attracting interest in many countries. This is due to the expectation that breakthroughs forged by science, technology and innovation could solve these major global problems of the 21st century, and could achieve sustainability for humankind.
The ideal society envisioned in the year 2025 will be a society in which people can live in health and safety, a society in which highly advanced information technology (IT) systems are widely used, a society in which Nature has been restored and local communities revitalized, a society in which efforts are made to solve the problems of the global environment and energy, and a society in which a suitable response has been found for the problems of water and food supply. This Report highlights innovations that should be promoted with a view to realizing this vision.
The suggested solutions are presented in 2 chapters out of which we only selected some of them:
- The ideal society of the future and the innovations to be promoted
To achieve a society in which everybody can live in good health by the year 2025, society will need to be given the means to address the problems of declining birthrates, aging and population shrinkage.
Biotechnology, information technology, and others must be integrated with a view to creating innovations that offer sufficient levels of medical and health care.
Here, I must add my short article written for the Bionanotechnology lecture about this life-saving technology.
By integrating the development of artificial rainfall technology, desalination plants powered by solar batteries, water-retentive gel technology, and others, it will be possible to prevent desertification and create green areas in deserts.
By launching satellites that can convert solar energy into microwaves and transmitting those microwaves to Earth, photovoltaic power will be generated in outer space and the power used on Earth as a clean and efficient form of energy.
A voice-recognition portable automatic translation device will be developed to assist smooth communication between people from different parts of the world, greatly enhancing cross-cultural understanding.
2. Conditions, environments and systems for creating innovations
Deepening our understanding of science and technology, investigating “social
technology” and the nature of systems that allow science and technology to fully demonstrate their social character
Teachers’ ability to pass down the pleasure and fun of learning to their students should be fostered
As we pointed out in our previous post, there is an imbalance between the technological overdevelopment and the social underdevelopment in our society. As the number of young unemployed reaches a record level in the UK and as the education taxes increase, the situation is not becoming any clearer and confusion and uncertainty reigns. We are going to explore the main factors of these problems and some solutions to them in the following and next post.
Globalization, Uncertainty and Youth in Society by Hans-Peter Blossfeld, Erik Klijzing, Melinda Mills and Karin Kurz published in 2005 seemed to predict the economical problems facing the world 3 years later. The main factors are:
- internalization of markets
- liberalization within nations
- accelerated diffusion of knowledge and the spread of global networks that are connecting all kinds of markets on the globe via new information and communication technologies
- rising importance of markets and their dependece on random shocks occuring somewhere on the globe ( e.g. major scientific discoveries, technical inventions, new consumer fashions, major politcal or economical upsets)
The authors mention that the markets are becoming more dynamic and more less predictable. The national institutions meant for reducing this uncertainty are employment, education and family systems as it can be seen in the figure below.
In the next post we will look at the 2007 Future Society envisioned by the Science Community of Japan report to find solutions to these global problems and to diminish uncertainties.
Two theives plan to rob a shop, as they approach they are arrested for trespassing (the story differs depending on where you get it from, but focuses on the same point). Based on the assumption the criminals were going to rob the store they put them in different rooms at he station, giving each the same choice:
‘ in exchange for your cooperation, I will dismess your tresspassing charge, and your partner will be charged to the fullest extent of the law – a twelve month jail sentence… if you both confess, your individual testimony is no longer as valuable and your jail sentence will be eight months each.’
Game theory assesses the game with a matrix, see below:
There are two rows and two columns relating to each of the two criminals. Each players ‘payoff’ is a ranking of his most preferred outcome. In this game we are to assume that the players main intention would be to reduce the time spent in jail. The core of Game Theory is the opinion that everybody is ultimately selfish and will always do what is best for them, when confronted with the option to do so. ‘ Game theory does not force players to believe that this is case, as critics frequently claim’. GT simply analyses the options and assembles the most likely strategy for each player based on the potential outcomes.
The most preferred outcome in this case is worth 0, the least is -12 and everything else is representative to the game being played. These values are irrelevant to the outcome of the game however, as they can be replaced with other sets of numbers such as 1-4 representing the most and least preferred outcomes see below:
We are able to see from both tables that the preferred outcome for both players is to confess. There are more complex tree structures and matrix diagrams to go, but for now this is Game Theory 101.
Globalisation refers to the how the world is ‘shrinking’ culturally and economically. How the world is changing from different nations managing themselves to one big world trading ideas, people, products and money. There are many global companies such as MacDonalds that exists everywhere! There are a number of advantages and disadvantages to globalisation. Sometimes it can be seen as a good thing that benefits small businesses by giving them access to a larger market, such as through the Internet. However, sometimes it can also be seen as a bad thing, for example with the outsourcing of work to poorer countries and buying materials for production in poorer countries to save money which can affect the local and national economy.
The Long Tail – Chris Anderson
The tail refers to the long end of the curve on the graph that depicts the popularity of all products. As you can see from the image above, ‘the head’ is short and contains the most popular of products. These are things that everyone wants, think of it is the top 40 songs in the charts. ‘The tail’ is much longer and consists of every other product in existence (or every song that is not in the top 40!). These things are much less popular, but there is a lot more of them. Money can be made by just selling products from the long tails, you would sell maybe one of each product rather than millions of one product as is seen in ‘the head’.
Companies do still aim for a business model that targets ‘the head’ rather than the long tail. For example radio stations tend to play the popular music at that moment in time, but there is a suggestion from Chris Anderson that the radio is dead.
Why the radio is dead:
- Radio stations need money so they need advertising and therefore need listeners. To get the most listeners you need to appeal to the majority who like what is popular at that moment in time (‘the head’).
- The rise of technology in the form of MP3 players. You can listen to any music you want at home, on your PC, on my personal MP3 player and even take that into your car and connect it to a modern car stereo.
Chris Anderson also suggests that “The Long Tail is full of crap.” Which is it…It does contain everything! But the compelling thing about the long tail is that there is something for everybody that they would not be able to find and purchase otherwise.
The Internet and the Long Tail
The internet has given us unprecedented ability to access products never before available so quickly and easily. The Internet is the best example of how globalisation can reach everyone. Someone who makes Doggles (goggles for dogs), or other niche items, can become a millionaire.
A real shop on the high street may have trouble making money if it was taking advantage of the long tail. Not just for the reason that it cannot reach as many customers as an online shop, but for more practical reasons that it would be difficult to sort through all of the many niche products. Being able to search through the ‘crap’ and filter to get to the information you actually want is very much a benefit you can see online. Social media may also help with this, we often see suggestions for other items we might like on online shops like Amazon. Folksonomies consisting of lots of tags collaboratively created may also assist with finding things you want and things that are similar to it.
Does the Internet bring down the barriers for businesses?
Is Globalisation good for the small business?
Yes and no, it depends on what you are selling. There is the potential for more sales through having greater access to a wider market. This is especially true for niche items and products where in some situations they may sell nothing if they are not based near their market. The Internet definitely assists with globalisation based on geography. There is also the benefit that selling products online is very cheap to set up and use. Google Analytics is also a nice tool to assist with marketing and improving your own business website.
However, with the benefits of reaching more people, large businesses will also receive this benefit. Large businesses may be able to give better prices due to mass production, but this shouldn’t effect niche businesses where large businesses do not offer so many niche products.
Picking up from where I left off last week – I want to shift the focus firmly onto the impact of the Web/Internet on business competition as I move on from broad principles of management/economics to specifics. The examples used below are taken from Boddy’s ‘Management, An Introduction’.
I kick off with a consideration of Google as an illustration of the impact that the Web/Internet has had on competition between businesses. Google exemplifies a company created to use the Web/Internet – it is a pure e-business company built entirely around information technology. Since the search engine serve is free, it generates revenues by providing advertisers with the opportunity to deliver online advertising that is relevant to search results on a page. The advertisements are displayed as sponsored links, with the message appearing alongside search results for appropriate keywords. They are priced on a cost-per-impression basis, whereby advertisers pay a fixed amount each time their ad is viewed. The charge depends on what the advertiser has bid for the keywords, and the more they bid the nearer the top of the page their advertisement will be. Google has rapidly expanded the range of services it offers.
Pure e-businesses such as Google which focuses on search processes (other examples include easyGroup which exclusively sells its services online and eBay which facilitates online transactions) can be contrasted with companies existing before the Web/Internet but which use it to support many of their activities. They may still perform the same functions, but the Web/Internet often enables them to offer new services through an additional distribution channel online (such as banks).
As well as offering new ways of doing business, the Web/Internet also affects the way services are created and delivered. Examples include: delivering media content; satellite freight tracking services; and, social networking sites. Picking up on this last example in particular, social networking sites (types of community systems) enabling people to exchange information have grown very quickly. Setting up blogs is one major use, as are websites through which people with particular interests exchange information. They are significant for businesses even if they extend beyond the firm, since customers can use them to exchange positive or negative information about the company. These applications affect the strategy and competiveness of organization.
The publishing industry (compare music, film and journalism) is an example of a business model founded on information (its gathering, processing and dissemination) for whom the Web is the biggest threat. As digitisation and the Web have reduced the cost of the dissemination of information, it undermines the value proposition of those industries built on its premise.
There is also an internal business impact of the Web in terms of changing various aspects of organisational activity. Common information systems based on the Web/Internet move information between organizations, often having direct links with customers. This is part of a broader assessment of how information technology, in general, is affecting the way that business is carried out.
One way to consider the impact of the Web/Internet on business is by geographic reach. Inter-organisational information systems link organisations electronically by using networks that transcend company boundaries. They enable firms to incorporate buyers, suppliers and partners in the redesign of their key business processes, thereby enhancing productivity, quality, speed and flexibility. New distribution channels can be created and new information-based products and services can be delivered. In addition, many information systems radically alter the balance of power in buyer-supplier relationships, raise barriers to entry and exit and, in many instances, shift the competitive position of industry participants.
From an alternative perspective as an information system, the Web/Internet has had wide effects on managing data, information and knowledge. It can, for example, be used to integrate processes, from suppliers through to customer delivery. Managers must ensure that their organisation makes profitable use of the possibilities that the Web/Internet offers in a way that suits their particular business; and, not just as a technology challenge, but also as a ‘people challenge’. For example, network systems help people to communicate and interact with each other, but they do not define how they should do so (such as who should gain access to which part of the system or who is responsible for responding to customer comments on a blog – these are matters to be implemented and modified in the light of experience).
A useful distinction can be made between intranets and extranets. The former is a private computer network operating within an organisation, using Web/Internet standards and protocols and security protected. An extranet is a closed, collaborative network that uses the Web/Internet to link businesses with specified suppliers, customers or other trading partners. It can be linked to business intranets where information is accessible through a password system.
The simplest Web/Internet applications provide information, enabling customers to view products or other information on a company website; conversely, suppliers use their website to show customers what they can offer. Web/Internet marketplaces are developing in which groups of suppliers in the same industry operate a collective website, making it easier for potential customers to compare terms through a single portal. The next stage is to use the Web/Internet for interaction. Customers enter information and questions about, say, offers and prices. The system then uses the customer information, such as preferred dates and times of travel, to show availability and costs.
Another use is for transactions, when customers buy goods and services through a supplier’s website. Conversely a supplier who sees a purchasing requirement from a business (perhaps expressed as a purchase order on the website) can agree electronically to meet the order. The whole transaction, from accessing information through ordering, delivery and payment, can take place electronically.
Finally, a company achieves integration when it links its own information system to customers and suppliers: it becomes an e-business. Dell Computing is an example. Other companies use the Web/Internet to create and orchestrate active customer communications (e.g. Kraft, Intel and Apple). These communications enable companies to become closer to their customers and to learn how best to improve a product/service much more quickly than is possible through conventional market research techniques.
In conclusion, the Web/Internet is radically challenging many established ways of doing business. Combined with political change, this is creating a wider, often global, market for many goods and services.
Next week, in my final post, I will round up on the topics of e-commerce and e-business and the associated challenges faced by businesses in managing innovation and change.
The following is a brief discussion of random ideas I have so far. My blogs in the next few weeks will elaborate on some of the following ideas. These ideas in their present form are by no means fully formed or coherent. Rather, there are posted here as a general guide for me to investigate further with a general sense of direction eventually leading to material suitable for our assignment.
Cognitive psychology/artificial intelligence along with constructivism in learning. Is it possible to compare constructivism with the concept of a filing system in a computer? For example where we talk about scaffolding in education, is it is similar idea to rural and a filing system in a computer? In a computer, there is a short-term memory as well as a long-term memory. RAM and ROM, and that’s what it’s all about.
Social cognition dealt with a lot on the behaviour of an individual in a social setting. It dealt with how the individual looks at oneself, how they perceive the characteristics of a group, and how they behave accordingly. Could it be that is part of this awareness is what drives the popular uptake of social networking? If this were so, how much of that can be gleaned and adopted for collaborative learning via the Internet?
Over the last few weeks, I have learned much about social cognitive, social identity, social representations, and discursive perspectives. In particular, I have looked further into social perception, attitudes, self and identity. I have found it very interesting to see how within the same topics, different models coexist to describe the same thing. In my previous posts, I have also tried to highlight the common ground as well as the differences between these models.
As I began reading, it became clear to me that the so-called individual cannot be properly and fully understood in abstract isolation from the social. Even in the most minimal of social groups constructed in the laboratory, the group has meaning because of the network of social relationships in which participants are implicated.
I have also come to conclusion that humans do actively construct their own social environment. Exactly how this is done, people seem to differ in their own opinion. Some resting on a realist philosophy of science suggests that it is possible to build a theoretical knowledge of the world which resembles truth. They assert that some theoretical accounts can be judged to be more true than others. However the discursive perspective does not accept that view, and differences between different theoretical accounts arbitrated, by recourse was to empirical data. Rather, one account prevails over another because of the attitude of the social and political processes of negotiating shared understandings of the world, not because of its greater truth value.
I cannot decide between the two viewpoints. However, what is clear to me is that social psychology cannot proceed without all thorough and more adequate analysis of the truth and reality. The bottom line from me is, it may well be the case that one theoretical or empirical account of the social issue prevails because of the social and political processes of negotiating shared understanding rather than because of the ability of data, but that date are themselves are also an important part of the way in which understandings are negotiated.