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Networking Age - Impact on the Economy
Our economy is shifting from one that is centralized, resource/asset-driven, manufacturing oriented to one better described as intangible, interconnected, value-oriented service delivery. Let's look at some of the key factors influencing these changes.
Globalization
-Distance and national borders are less important when dealing with digital products.
-International standards facilitate technological and economical integration.
-Is globalization feeding ebusiness or is ebusiness feeding globalization?
Stronger Links/Interconnectedness
Emphasis to intangible products
- media & entertainment
- software
- service-orientation
- brand recognition
- prestige, status, style
Improved economic efficiency
- more options
- lower transaction costs
Harnessing Collective Intelligence > Network effects
Posted by Mark Hemphill on October 1, 2007 in Module II - eBusiness | Permalink
Comments
Ebusiness is defiantly good for the economy. Any increase in efficiency (with lower transaction cost), increases productivity. This in turn increases our standard of living.
Posted by: Chad Hayward | Oct 2, 2007 12:54:45 PM
As opposed to the popular belief, I feel that it's great that companies produce their products in poor countries. Not only is it more cost effective for the company, but in some cases it makes the product cheaper for us to purchase. On top of all of this, yes I know that the children over in these countries are under paid, but if they weren't working in these 'shops' then they would have no income and would be working on the streets or even dead by now. Anyway, i'm positive that this is a very debatable discussion but in some cases I feel it's a good idea. There is always the horrible company..
Posted by: Katelyn Murnaghan | Oct 3, 2007 7:02:29 PM
I agree that it is good in some ways that companies produce their products in poor countries. However, I believe that a company has the responsibility to provide safe working environments and they should try to be socially responsible. Obviously they would not pay to the standards of the states or Canada but they should try to be companies that others would strive to be and be proud to be.
Posted by: Karen Deveaux | Oct 4, 2007 11:45:29 AM
With the question posed in this article, does globalization feed ebusiness or does ebusiness feed globalization? I think that the later (Ebusiness feeding globalization) is the correct side to take. With the introduction of new technological advances the development of ebusiness makes it easier to contact people in other countries that would have taken a lot longer in the past. Without Ebusiness I likely would not have searched out other sources for products I would like anywhere else but Canada. Now if i need something I can order it from the United States or anywhere. Ebusiness has removed the physical distance of other businesses because now they are all accessible. Karen has a good point, companies (though there will definetly be some that dont) should really try to provide a respectible working environment for their employees, no matter what country they are in.
Posted by: Devon Gillis | Oct 4, 2007 11:55:54 AM
I understand where Katelyn is coming from in regards to overseas production; it's a great opportunity for business to lessen their expenses and obtain better margins on their products. However, I do strongly agree with Karen that companies have a social responsibility to provide safe working environments. I'd even take it a step further to say that they have a responsibility to up the standard of living in the communities where they have production companies. If a company like Nike, for example, highly improved their working conditions and benefits for their foreign workers, than more people overseas would wish to work for Nike. This would lead to other production companies having no choice but to up their working conditions if they still wanted to keep their workers around. I have no idea how technically advanced some of these foreign production companies are, but I'm sure the networking age is having a great effect on these overseas companies and the new technologies are becoming easier to obtain in the poorer countries. I believe that technology has become a great aid in the fight for these poverty strucken countries.
Posted by: Jeff MacKenzie | Oct 4, 2007 5:55:18 PM
The question on globalization feeding ebusiness or ebusiness feeding globalization, I believe both is a result of each other. Since the world is becoming more and more decentralized, ebusiness is thriving from the growth of globalization. That said, globalization is also thriving because of ebusiness. They both work in conjunction with each other. But what does this do to the world's poorer countries that are unable to gain from the benefits of globalization?
Posted by: Billy MacDonald | Oct 4, 2007 6:03:52 PM
If you asked Nike about their sweatshops, they would likely tell you that they do not own nor operate any. Nike almost exclusively contracts out work to individual clothing manufacturers in foreign countries. This allows them to distance themselves from criticism over working conditions, wages, etc. in these plants. This illustrates an important technological impact on the economy. Technology has likely made Nike’s managing of relations with these individual suppliers much easier and cost effective. Where years ago it was easier for Nike to operate its own manufacturing centers rather than trying to initiate and maintain cost and time-consuming relations with other firms, now new communications and commerce technology has added just one more reason to outsource rather than vertically integrate.
Posted by: Ben Howard | Oct 4, 2007 8:13:17 PM
some good points being made here.
Posted by: Mark | Oct 4, 2007 8:52:37 PM
Wow, this is a tough subject. Globalization is good in the sense that it brings down barriers of distance. However, as above I agree that we need to be socially responsible and some of the working conditions in these countries that are producing products for North America are not good. Lowering business costs through the internet are ok but not if we are creating a poor standard of living for someone in another country. It's a tough subject because I have seen poverty with my own eyes but I haven't seen manufacturing buildings be ran in other countries. I still believe that IT is a good thing but like anything else it creates downfalls. By no means am I saying it's ok to run sweatshops, it's not. Businesses need to focus on their social responsibility which should be a part of their value chain.
Posted by: Krista Mackenzie | Oct 5, 2007 11:04:22 AM
When I look at all the ethical issues that are raised now I actually feel a tiny bit of sympathy for companies such as Nike. If you think about it their original plan to outsource most or all of their production is really an amazing idea or concept. I would like to give any company or person who came up with an idea as good as that the benefit of the doubt that they did not see the undesirable circumstances that have been created ie. child labour and poor working conditions. It seems obvious that it would happen now to us and we immediately think how could they do that? However they have maneuvered themselves into a position where they rely on it to stay at the top. If they tried to change their production now it would be devastating to their company. The sad part is that other companies do it to compete and companies like Nike get a very bad rap for coming up with what was originally a very good idea on paper. It is troubling to see people turn a blind eye to the problems that have been created but that bings up the question of would these countries be any better off annyway? And this post is already too long.
Posted by: Eric Horne | Oct 5, 2007 3:59:51 PM
Eric does have a really good point. Companies like Nike and other fashion designers who are known to use these resources for their production areas do seem to get the majority of the blame for it, which is unfair because unfortunately, many companies follow suit! At the same time though, what would exactly happen if we were to remove such businesses from those countries? Would they actually be better off? Yes and no. We can't do anything about the lack of child labour laws and cheap labour costs already in place by their government, but by continuing to take advantage of such laws we only promote them.
Posted by: Lauren Tweel | Oct 6, 2007 1:26:11 AM
These companies may not be able to do much to influence labour laws in foreign countries, but I'm talking about when companies fail to even abide to their laws. To pick on Nike again, when they were in control of their sweatshops, they were caught violating minimum-wage and overtime laws. Now it's a good assumption that if a large company like Nike was doing this, then many other companies were doing this too, so you can't just pick on Nike. It's also hard to understand the views of this subject from someone that actually works in the sweatshops of whatever company. It's difficult to appreciate the culture diversity.
Posted by: Jeff MacKenzie | Oct 6, 2007 3:50:35 PM
Once again, with pros, there are cons. Most people are talking about ethical issues of outsourcing. It is cheaper to outsource to developing or third-world countries, for both the consumer and the producers. However, there are risks and duties that the producers must take notice of. Children are working in factories. These children are those who can't afford to go to school and whose families need any income they can. It is not the producers concer to send them to school, but if they are going to employ them, they should at least give decent wages and working conditions. It's the same for adults as well.
Posted by: Colin Butler | Oct 8, 2007 8:39:31 PM
It is interesting that we are talking about sweatshops as an economic impact of the Network Age. The concept of sweatshops has been around for at leat 200 years and they were prevalent in the United States in the 1800's. It appears that sweatshops may be an indicator of an economy starting to develop...perhaps even a stepping stone to prosperity. I think that we are seeing sweatshops in developing countries, not because the Networking Age has caused them, but because of the transparency and dissemination of information that the Networking Age has made possible. Pair that with a society (our society) who, for the most part, has not experienced a serious economic depression and we tend to have an emotional reaction to hearing about people being paid wages that would cause us to be living in the street. I think that the people in developing countries may be happy to have these new jobs and wages. As it did in America, this work may become a better organized industry in these countries as more and more people become employed in them. This can lead to increased standards of living and people ultimately being able to build "relative" wealth within their country.
Posted by: Cory | Oct 9, 2007 12:06:08 AM
When any business is doing sales it is going to have a positive impact to the economy. I think that the greatest impact that ebusiness has on the economy or at least the canadian economy is that we are now able to export our goods to more of the world because individuals are looking and buying without it being sold to another company who is going to raise the price some more so they make a profit too. It really is cutting out the "middle man" keeoing prices lower therefore seeming like the cheaper purchase.
Posted by: Joseph Bondt | Oct 9, 2007 11:45:48 AM
No doubt that there is a huge impact on the economy.Let's see the role of China for example.In the past two months there has been fear of economies performing low,due to the mortgage crisis in the US.Regardless we never really experinced an increase in general price level of goods and services in most sectors. This can be partly attributed to the low cost of production of household goods in China that are in almost every shop in North America.It is not solely that the Wall street guys or Bay street guys worked hard to contain the problem or maybe they di. All in all this is due to the cheap labour, transportation etc of which it comes from the cost of the social corporate irresponsibility in terms of labour use and the dangerous working conditions in the so called underdeveloped countries.
Posted by: wycliffe ogucha | Oct 9, 2007 1:00:07 PM
Globalization is like most anything else...it has its good points and its not so good points. The sweatshops and the child labour just about make me sick to think that at this point in time it is still taking place but then I have to put aside my personal feelings and realize that there are different cultures that I certainly don't understand. If some of these organizations had not gone into these countries...the people would have not had the employment at all.
I find it hard to believe that large corporations from Canada/US can go into these countries and not feel that the working conditions are appauling...would the Presidents and CEO's allow their children and wives to work in those conditions. But then again, I attempt to look at the other side of the coin and wonder what they would be doing to pay to feed their families without these corporations. It is a no win situation but the bottom line for me is that I would much rather them to have employment with these companies then to enter the world of prostitution where they are at the mercy of low lifes.
Posted by: Frieda MacLaren | Oct 11, 2007 9:42:43 PM
As far as the question goes, I feel that ebusiness feeds globalization. Of course there was globalization before the evolution of the ebusiness, but only to a certain extent. Now with ebusiness, companies don’t just promote their services/goods to the rural areas in which they operate, but they can also promote to consumers all over the world just over a simple web page. Also, because of new technologies dealing with ebusiness, companies and consumers can interact with one another no matter where they are in the world, which is also a very big advantage since the industrialization stage. As a lot of people have said however, there is always a bad side of everything. As far as the sweatshop factories in developing countries, it does have a good side and a bad side. For businesses, they obviously get their products made cheaper and we in turn get them for cheaper as well, but the children who work in these shops aren’t getting paid enough for their labor. The way I feel is that if these companies like Nike and Adidas want consumers to see their companies as upper class and having well made products, shouldn’t the companies have fair wages and well designed, safe shops in these countries to back up their statement as being upper class companies?
Posted by: Jordyn Woodside | Oct 12, 2007 2:40:28 PM
This relationship is quite similar to the people creat the technology or technology creat the people. Some one said ebusiness feeds globalization, just part of the relationship.Using Nike and Adidas as the example. They go to China or east asia to bulid copmanied because of the cheap labour. It's a strategy of the intenational business. Also they open the market in these countries. Later ebay, google such as these big ebusiness companies have these countries' languages web site. And sell some products not only similar to the canada or US but also has some tradition part of those countries. So from this we will see globalization also feeds ebusiness.
Posted by: XiaoJiang | Oct 13, 2007 9:52:34 PM
As for outsourcing i think that it is a good concept. You allow people to do parts of your job that you aren't so good at or you know that they know more about which should create a better product. But will the people acutally do a good job and will they care about their work as much as you will?
Posted by: Katelyn Tweedy | Oct 18, 2007 5:49:46 PM
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