Thursday, August 9, 2012

Essay on E-Commerce

Essay on E-Commerce

The modern world is characterized by the rapid world of new technologies which became an important part of socio-economic life. In fact, new technologies are rapidly penetrating in all spheres of life affecting absolutely all people and, what is more important, they are spreading worldwide contributing to the creation of the New Economy. The New Economy is based on the wide implementation and rapid spread of new information and communication technologies. In recent years, there have appeared numerous works in literature dedicated to the problem of the development of New Economy, especially e-commerce, its perspectives and potential. Basically, numerous studies assess positively the current trends in the world economy but some specialists, such as Mohammad Naim Chaker emphasize that this problem is still under-researched and it is necessary to carefully and critically evaluate the perspectives, potential, and effects of the proliferation of the New economy, information technologies and communication on socio-economic and managing equilibrium that existed in the conventional economy (2005, p.58).
On analyzing the current economic situation M.N. Chaker points out that the New Economy is based on the wide use of information technologies and communication (2005, p.58). In fact, the word economy, especially the economy of well-developed countries is really changing. In the modern world information and knowledge play increasingly more and more important role to the extent that often the investments in IT proves to be even more effective than investments in conventional industrial development (Summers, 1992, p.9).

At the same time, it should be said that e-commerce as a constituent part of the New Economy offers a lot of new opportunities and seem to be quite convenient for customers. In this respect, the author points out that the New Economy really offers larger opportunities to customers since they can use a variety of services and choose from a huge variety of goods which they cannot find anywhere else but in the virtual world of e-commerce. For instance, he states that “the sheer number of stores that can be visited online far exceeds even the most densely populated retail areas in industrial countries” (2005, p.58). In such a way, the New Economy may be viewed as a positive phenomenon since, according to numerous researches it can facilitate business-customer relationships making it more personal and more customer-oriented (Han, 1997, p.27).

Also, it is worthy of mention that the New Economy is rapidly progressing and spreading worldwide. In such a way, it is possible to estimate that in the nearest future the New Economy will produce more significant impact on the development of the world economy (Han, 1997, p.29). The current trends in the world economy consistently contribute to the progress of the New Economy due to the process of globalization which makes countries closer to each other eliminating geographical and financial barriers on the movement of international capital. In such a situation, the New Economy and e-commerce in particular may be viewed as effective tool that can be widely applied in terms of global economy, improving the quality of services and goods available to customers worldwide.

However, in spite of such optimistic perspectives, M.N. Chaker is quite skeptical about the current progress of the World Economy and its effects. In fact, he argues that it is necessary to analyze in depth its effects on various spheres of human life because, as he predicts, it can misbalance the world socio-economic development (2005, p.59). To put it more precisely, he speaks about the possibility of various disequilibria, including corporate disequilibrium, labor market disequilibrium, social disequilibrium, innovation disequilibrium, and development disequilibrium.

Speaking about corporate disequilibrium, M.N. Chaker argues that the reality is far from optimistic forecasts. For instance, he emphasizes that technology is not cheap and are not always available to little companies. Furthermore, the development of e-commerce and the New Economy at large may be accompanied by the new risks such as the spread of frauds and viruses in the virtual world. Furthermore, M.N. Chaker underlines that “regulatory mechanisms for e-business are not yet in place in many countries”, while “many business transactions are still depend on trust” (2005, p.59). This means that there is still the lack of control over e-business that enhances the threat of frauds making it unreliable and quite risky compared to conventional business. In response to these potential threats the author recommends to develop a new corporate culture that will meet the demands of the New Economy.

At the same time, the New Economy may lead to the labor market disequilibrium. N.M. Chake argues that the development of new technologies lead to the consistent shift in the labor market (2005, p.60). To put it more precisely, professions related to IT and communications are growing popular while conventional professions gradually degrade while the gap in the level of income grows respectively to the changes in the labor market. It is worthy of mention that IT specialists are currently among the most well-paid jobs in the modern labor market, but the mismatch refers not only to the level of income but to the level of skills as well (Chake, 2005, p.60). Consequently, there is growing polarity between well-paid, highly qualified specialists and the rest of employees.

The same trends are typical to social disequilibrium. The author underlines that the modern networking contributes to the disproportionate digital divide where different social groups are more or less involved in the e-commerce. The divide depends on various factors, such as age, country of residence, social status, etc. The solution of this problem may be found only with the assistance of international developmental agencies, such as IMF, the World Bank and others (Chake, 2005, p.60).

Finally, there are innovation and developmental disequilibria which basically sprang out from the difference in the technological development of various companies and even countries (Chake, 2005, p.61). To put it more precisely, new technologies can put a company in an advantageous position compared to competitors or even lead to the monopoly if the company invents a totally new product or service, while countries are characterized by the different level of technological and scientific development and, therefore, have different and unequal potential and perspectives. In this respect, Chake underlines that the government should play the key role in the legislation in the domain of new technologies and e-commerce and state support and control of their development (2005, p.61).

Thus, it is possible to conclude that the development of the New Economy, in spite of optimistic forecasts of various specialists, is accompanied by numerous threats that can lead to significant disequilibria that latter can consistently change the existing social order and deteriorate socio-economic life of society contributing to the growing inequality between rich and qualified, on the one and, and poor and low-qualified, on the other. In such a situation, the government and international developmental agencies should regulate the development of New Economy and maintain the balance.
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