Monday 4 April 2011

Digital Economy

Digital Economy or New economy is business transactions on the Internet (the marketplace that exists on the Internet). (Microsoft, 2009)

New economy refers to the economy that is emerging in the midst of the ongoing IT revolution. The IT revolution refers to the reduction in the cost of finding and communicating information. There are more convinient and more powerful computing equipment, especially personal computers (PCs), in combination with better and more affordable telecomunication services are jointly driving the IT revolution. Revoliton is the Internet which can connect ust to the rest of the world in the comfort of our homes and offices. The IT revolution is giving rise to a new economic paradigm – the New economy. (Digital Economy, 2005)
Beside the technology, the market and society also drive of changing the old economy to new.
The foundation of the New Economy is there cognition that economic competition and success are now determined on a global, not local,scale.

Comparison between Old Economy and New economy (Alabama Cooperative Extension System, 2000):
  1. The old economy primarily focused toward local, state and national markets, the new economy has a global focus.
  2. The old economy required manual labor; the new economy required science
    and technology with fewer non-skilled jobs available.
    Old economy was production based/ new is knowledge based
  3. Old economy is competition but new economy is colaboration (people and organization interact, communicate, collaborate and search for the information)
  4. Old economy is paper based work which result mass in the working environment  like safety, sharing as loss and etc. but new economy is computer based work that result safety improvements, sharing (will have back up of the files), safety etc.
For example,
Dell organization
Dell is using Internet to conduct the business so it is Visrtual Organziation (VO).
Dell uses a variety of suppliers and customers order using the Internet from a list of available options. Based on the match of the different components that are specified by the customer, the order is routed dynamically to one of the suppliers that are carefully chosen by Dell and all the interfaces are done through Dell system.
This makes Dell a VO because Dell does not carry any inventory but rather uses the suppliers who incur the cost of inventory but are in partnership with Dell, which guarantees a constant flow of orders for the suppliers. Dell is using mass customisation business model that allows customers customise the product and the suppliers will follow the build to order concept. (Free reserach paper, n.d.)
The diversity of suppliers in partnership with Dell enables the organization to be abreast of technological development and innovation, which can in turn better satisfy customer requirements. (Free reserach paper, n.d.)
Through Dell.com all business activities is done by online. Its direct online business model. Buying, selling of products, offer services as e-learning to their empolyeers.
Dell is using Affiliate business model which put banner ads, advertisments of different companies that done online as well in their website.
When Dell Inc. first began using the Internet to expand their business, the company had three basic objectives:
  1. to make it easier to do business with Dell,
  2. to reduce the cost of doing business with Dell, and
  3. to enhance their customer relationships.
Dell uses Internet browsers to essentially give that same information to customers and suppliers – bringing them literally inside their business. This became the key to what I call a virtually integrated organization – an organization linked not by physical assets, but by information. By using the Internet to speed information from between companies, essentially eliminating inter-company boundaries, it would be possible to achieve precision and speed-to-market for products and services in ways not dreamed possible before. It would be the ultimate business system for a digital economy. (e-Coach, 2001)


Dell is click and mortar organization everything done by online.

The benefits of online business of Dell:
1) Global marketplace
Dell web site can be accessed from anywhere in the world, which now means you could sell to anyone
2) No middleman - By selling directly to the customers Dell can now cutout the middleman. As Dell uses the online direct business model.
3) Increased customer information - Instead of posting  latest brochure or clients account statement, they can access them via website
4) Increase profit by working 24 hours; by saving manpower; by saving money(To start a business company need to do advertising for products or services. How much cost comany need to do advertising on TV and media. But internet is providing  the convenient in this case.

Referencing:
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1 comment:

  1. INDAH ISMAIL11 April 2011 at 14:11

    A very good write up. The discussion of old economy vs digital economy is simple , yet clear in order to understand them easily. Good flow of discussion: define terms, compare then give / relate with examples. Keep up the good work! =)

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