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In the past few decades there has been a revolution in computing and communications, and all indications are that technological progress and use of information technology will continue at a rapid pace. Accompanying and supporting the dramatic increases in the power and use of new information technologies has been the declining cost of communications as a result of both technological improvements and increased competition. According to Moore's law the processing power of microchips is doubling every 18 months. These advances present many significant opportunities but also pose major challenges. Today, innovations in information technology are having wide-ranging effects across numerous domains of society, and policy makers are acting on issues involving economic productivity, intellectual property rights, privacy protection, and affordability of and access to information. Choices made now will have long lasting consequences, and attention must be paid to their social and economic impacts.One of the most significant outcomes of the progress of information technology is probably electronic commerce over the Internet, a new way of conducting business. Though only a few years old, it may radically alter economic activities and the social environment. Already, it affects such large sectors as communications, finance and retail trade and might expand to areas such as education and health services. It implies the seamless application of information and communication technology along the entire value chain of a business that is conducted electronically.The impacts of information technology and electronic commerce on business models, commerce, market structure, workplace, labour market, education, private life and society as a whole.
One important way in which information technology is affecting work is by reducing the importance of distance. In many industries, the geographic distribution of work is changing significantly. For instance, some software firms have found that they can overcome the tight local market for software engineers by sending projects to India or other nations where the wages are much lower. Furthermore, such arrangements can take advantage of the time differences so that critical projects can be worked on nearly around the clock. Firms can outsource their manufacturing to other nations and rely on telecommunications to keep marketing, R&D, and distribution teams in close contact with the manufacturing groups. Thus the technology can enable a finer division of labour among countries, which in turn affects the relative demand for various skills in each nation. The technology enables various types of work and employment to be decoupled from one another. Firms have greater freedom to locate their economic activities, creating greater competition among regions in infrastructure, labour, capital, and other resource markets. It also opens the door for regulatory arbitrage: firms can increasingly choose which tax authority and other regulations apply.
Computers and communication technologies also promote more market-like forms of production and distribution. An infrastructure of computing and communication technology, providing 24-hour access at inexpensive to almost any type of price and product information desired by buyers, will reduce the informational barriers to efficient market operation. This infrastructure might offer the means for effecting real-time transactions and make intermediaries such as sales clerks, stock brokers and travel agents, whose function is to supply a vital information link between buyers and sellers, redundant. Removal of intermediaries would reduce the expense in the production and distribution value chain. The data technologies have facilitated the evolution of enhanced mail order retailing, by which goods could be ordered quickly by utilizing telephones or computer networks and then dispatched by suppliers through integrated transport companies that rely extensively on computers and communication technologies to control their operations. Nonphysical goods, such as software, may be shipped electronically, eliminating the entire transport channel. Payments can be carried out in new ways. The end result is disintermediation throughout the distribution channel, with cost reduction, lower end-consumer prices, and higher profit margins.
The impact of information technology on the firms'cost structure may be best illustrated on the electronic commerce example. The main element aspects of cost reduction when carrying out a sale via electronic commerce as opposed to in a conventional store involve physical establishment, order placement and execution, customer support, strong, inventory carrying, and distribution. Although creating and maintaining an e-commerce web page may be expensive, it is certainly less costly to steadfastly keep up this type of storefront when compared to a physical one as it is obviously open, may be accessed by millions around the planet, and has few variable costs, so that it can scale up to generally meet the demand. By maintaining one'store'in place of several, duplicate inventory costs are eliminated. Furthermore, e-commerce is very effective at reducing the costs of attracting new clients, because advertising is normally cheaper than for other media and more targeted. Moreover, the electronic interface allows e-commerce merchants to check on that the order is internally consistent and that the order, receipt, and invoice match. Through e-commerce, firms have the ability to move much of these customer support online in order that customers can access databases or manuals directly. This significantly cuts costs while generally improving the quality of service. E-commerce shops require far fewer, but high-skilled, employees. E-commerce also permits savings in inventory carrying costs. The faster the input could be ordered and delivered, the less the requirement for a sizable inventory. The effect on costs related to decreased inventories is most pronounced in industries where the merchandise includes a limited shelf life (e.g. bananas), is susceptible to fast technological obsolescence or price declines (e.g. computers), or where there's a rapid flow of services (e.g. books, music). Although shipping costs can increase the price of many products purchased via electronic commerce and add substantially to the ultimate price, distribution costs are significantly reduced for digital products such as for instance financial services, software, and travel, which are essential e-commerce segments.
Although electronic commerce causes the disintermediation of some intermediaries, it generates greater dependency on others and also some entirely new intermediary functions. One of the intermediary services that could add costs to e-commerce transactions are advertising, secure online payment, and delivery. The relative simple becoming an e-commerce merchant and creating stores results such a huge number of offerings that consumers can easily be overwhelmed. This increases the significance of using advertising to ascertain a brand name and thus generate consumer familiarity and trust. For new e-commerce start-ups, this technique can be expensive and represents a significant transaction cost. The openness, global reach, and not enough physical clues which can be inherent characteristics of e-commerce also allow it to be vulnerable to fraud and thus increase certain costs for e-commerce merchants when compared with traditional stores. New techniques are being developed to safeguard the utilization of credit cards in e-commerce transactions, but the requirement for greater security and user verification leads to increased costs. An integral feature of e-commerce is the convenience of getting purchases delivered directly. In case of tangibles, such as for example books, this incurs delivery costs, which cause prices to increase generally, thereby negating most of the savings associated with e-commerce and substantially contributing to transaction costs.
With the Internet, e-commerce is rapidly expanding right into a fast-moving, open global market having an ever-increasing quantity of participants. The open and global nature of e-commerce will probably increase market size and change market structure, both with regards to the amount and size of players and the manner in which players compete on international markets. Digitized products can cross the border in real-time, consumers can shop 24 hours a day, seven days weekly, and firms are increasingly faced with international online competition. The Internet is assisting to enlarge existing markets by cutting through lots of the distribution and marketing barriers that can prevent firms from gaining usage of foreign markets. E-commerce lowers information and transaction costs for operating on overseas markets and provides a cheap and efficient way to strengthen customer-supplier relations. Additionally, it encourages companies to develop innovative means of advertising, delivering and supporting their product and services. While e-commerce on the Internet offers the prospect of global markets, certain factors, such as for example language, transport costs, local reputation, along with differences in the price and simple access to networks, attenuate this potential to a better or lesser extent.To acquire new details on cato Learn More Here
Computers and communication technologies allow individuals to speak with one another in ways complementary to traditional face-to-face, telephonic, and written modes. They enable collaborative work involving distributed communities of actors who seldom, if, meet physically. These technologies utilize communication infrastructures that are both global and always up, thus enabling 24-hour activity and asynchronous in addition to synchronous interactions among individuals, groups, and organizations. Social interaction in organizations will soon be suffering from utilization of computers and communication technologies. Peer-to-peer relations across department lines is likely to be enhanced through sharing of information and coordination of activities. Interaction between superiors and subordinates will be much more tense as a result of social control issues raised by the usage of computerized monitoring systems, but on one other hand, the utilization of e-mail will lower the barriers to communications across different status levels, causing more uninhibited communications between supervisor and subordinates.
That the importance of distance is likely to be reduced by computers and communication technology also favours telecommuting, and thus, has implications for the residence patterns of the citizens. As workers find that they'll do most of these work at home rather than in a centralized workplace, the demand for homes in climatically and physically attractive regions would increase. The effects of such a shift in employment from the suburbs to more remote areas could be profound. Property values would rise in the favoured destinations and fall in the suburbs. Rural, historical, or charming aspects of life and the surroundings in the newly attractive areas will be threatened. Since most telecommuters could be among the greater educated and higher paid, the demand in these areas for high-income and high-status services like gourmet restaurants and clothing boutiques would increase. Also would there be a development of services of most types, creating and expanding job opportunities for the area population.
By reducing the fixed cost of employment, widespread telecommuting should allow it to be easier for individuals to focus on flexible schedules, to work part time, to fairly share jobs, or to hold several jobs simultaneously. Since changing employers would not necessarily require changing one's host to residence, telecommuting should increase job mobility and speed career advancement. This increased flexibility might also reduce job stress and increase job satisfaction. Since job stress is a major factor governing health there may be additional benefits in the shape of reduced health costs and mortality rates. On another hand one may also argue that technologies, by expanding the amount of different tasks which can be expected of workers and the array of skills needed to perform these tasks, might accelerate work and increase the level of stress and time pressure on workers.
A question that's more challenging to be answered is all about the impacts that computers and communications could have on employment. The capability of computers and communications to perform routine tasks such as for instance bookkeeping more rapidly than humans contributes to concern that individuals will be replaced by computers and communications. The response to the argument is that even when computers and communications cause the elimination of some workers, other jobs will soon be created, particularly for computer professionals, and that growth in output increases overall employment. It's more likely that computers and communications will lead to changes in the types of workers required for different occupations as opposed to to changes as a whole employment.