The Impact of the Internet on Globalization Makiko Miyashita COM538 Evolution and Trends in Digital Media Technologies University of Washington December 9, 2003 The reasons why I chose this topic are a) I am interested in international business and b) I would like to work for a multinational company after finishing this master program. Also, the international business course that I took last autumn inspired me to work on this topic.

Introduction Purpose To examine the impact of the Internet on globalization from a global business standpoint. Thesis Statement The Internet has significantly affected globalization.

Topics The Definition of Globalization Accelerator of Globalization The Changing Demographics of the Global Economy Growth of Global E-Commerce Uses and Gratifications: B2C Web Site Electronic Supply Chain The Next Generation of the Internet Future Customers Relationship Conclusion The topics that I am going to cover tonight are …

What is Globalization? The act, process, or policy of making something world wide in scope or application (The American Heritage). Globalization refers to the process by which transnational forces cross and ignore borders – in some ways weakening and diminishing states (Clemens). Globalization is about more than economics. America’s purpose must be to bring the world together around democracy, freedom, and peace and to oppose those who would tear it apart (President Clinton). Globalization can be defined as the process of integrating the world economically, politically and culturally. There are many definitions of globalization. [Read the slide] There is no single definition or theory of globalization. However, globalization can be categorized into three aspects that are most affected by globalization: economic, political and cultural. So, I define that globalization is the process of integrating the world economically, politically and culturally.

Accelerator of Globalization Accelerators Global communication, the standardization of world time, and global competitions such as the Olympics and the Nobel Prize The spread of new communication and information technologies The end of the cold war-the collapse of communism Accelerators from the perspective of economic globalization GATT (General Agreement on Tariffs and Trade) WTO (World Trade Organization) [Explain the slide] These are considered accelerators of globalization. Specially, the end of the cold war-collapse of communism-is considered the most significant impact on globalization. From economic globalization perspective, lowering the trade barriers to the free flow of goods, services and capital has contributed to globalization. GATT has contributed to reducing trade barriers and increasing protection for patents, trademarks and copyrights. WTO polices the international trading system.

The Changing Demographics of the Global Economy World output The U.S. was the dominant industrial power in the early 1960s. The U.S.: 40% of world output in 1968 but 20% in 1997. Foreign investment U.S. firms: 66% of foreign direct investment in the 1960s. Multinational enterprise The U.S. and U.K.:48% and 18% of the top 260 in 1973 The U.S. and Japan: 32% and of 25% of the top 500 multinationals in 1997. World order A series of democratic revolutions occurred and swept the communist world between 1989 and 1991. Accompanying the trend toward globalization has been a dramatic change in the demographics of the global economy over the past 30 years. [explain the content] 1) World output is measured by gross national product. In the early 1960s, the U.S. was the dominant industrial power. The U.S. accounted for 40% of world output in 1968; however, the number dropped to 20% in 1997. These declines do not mean that the U.S. lost powers. These are relative declines, reflecting the rapid growth of other economies, especially in Asia. 2) Foreign investment Reflecting the dominance of the U.S. in the global economy, U.S. firms accounted for 66% of foreign direct investment flows in the 1960s. This has declined in relative terms due to foreign direct investment in other countries. 3) Multinational enterprise In 1973, U.S and U.K. firms accounted for, respectively, 48% and 18% of the top 260 largest multinationals. In 1997, 32% of the top 500 multinationals were the U.S. firms, and 25% were Japanese firms. 4) World order A series of democratic revolutions occurred and swept the communist world between 1989 and 1991. [at last] Considering this background, let’s move on the present impact of the Internet on globalization.

Growth of Global E-Commerce Global B2B e-commerce will reach $1.41 trillion in 2003. will grow at a rate of 162% per year. will exceed $2.5 trillion by 2004. Global B2C e-commerce will grow at a rate of 185% per year. will reach $400 billion by 2004. These figure show how the Internet has affected global economy. E-commerce is still a major economic driving force despite the dot-com fallout in 2000. In addition, the IT and communication sectors of the world economy will grow at 30% to 40% annually for the next decade. This corresponds to 10 times the growth rate of the rest of the economy.

Uses and Gratifications Applications to web sites for B2C e-commerce Dimensions Motives/Gratifications Information-seeking To find specific information/to research topics I am interested in; as a source for general information; to learn how to do something Consumer information-transaction To get specific information about products I am thinking about buying; to purchase products; to get specific information for making decisions Surveillance To learn about what could happen; to get news Social communication To meet new people/to be with others; to chat with friends/others Entertainment To relax/to have a good time Next, I examine motives/gratification for B2C e-commerce web site with the uses and gratification theory. The No. 1 contribution to web user (customer) satisfaction is achieving the goals (purposes) of the user. Therefore knowing your web users/customers and their purposes is most important. Because the uses and gratifications theory is based on consumer control over accessing media content according to their goals or needs, this is one of appropriate approaches. [Explain the table] Motive and gratifications for [information-seeking] are to …

Electronic Supply Chain Traditional Supply Chain Electronic Supply Chain Technology Electronic Data Interchange (EDI), fax, telephone Internet (and EDI) Relationships with Partners Long-term relationships Technology-enabled relationships New Business Opportunities Difficult to increase Ease to increase Management Costs Expensive Inexpensive Next, I examine one of the important business for companies, supply chain. How the Internet has transformed the supply chain. This table shows comparison between traditional supply chain and electronic supply chain. Although many companies are still using electronic data interchange, fax and telephone, in the near future, all companies will use the Internet for the supply chain. [Explains the table] Electronic supply chain is created via electronic linkage, thereby providing low switching cost, it allows for the supply chain configuration to be very adaptable to changing trends. I assume that companies will put less relative value on partnerships and strategic alliances in the future. Electronic supply chain will contribute to globalization. Therefore E-supply chain organization will put less relative value on partnerships and strategic alliances in the future, when compared to traditional supply chain organizations.

The Next Generation of the Internet Fast Everywhere Always on Intelligent Natural Easy Trusted Fast Everywhere: the era of the PC as the center of the web will be over. Mobile phones, kiosks, PDAs, new wireless devices will enable the Internet to be everywhere. Always on: you do not need to log on. Intelligent: the users of the next generation of the Internet will have the search tools they need to search not only for key words, but also images in video and photographs. Natural: New user-friendly interfaces will enable humans to interact with computers and the Internet by means of voice recognition and other technologies. Easy: Different Internet applications will work together seamlessly. Trusted: Today the Internet is vulnerable to malicious hackers, viruses and human error. In the future, security will no longer be the biggest issue.

Future Customers Relationship More power to customers 24/7 customer service Customized web site Next, take a look at how customers have changed with the improvement of the Internet. More power to the customers: The Internet empowers customers to compare prices all over the world. With more transparent markets, global customers will be demanding inexpensive prices, and consistent quality and customer service. 24/7 customer service: Consumers will want their questions answered and their idea heard. Customer service will need to be available around the clock. Customized web site: CRM management system of most companies will keep track of customers, learning about each one’s preferences from various sources such as transactions records. Most companies will offer customized web pages like amazon.com does.

Conclusion The Internet has significantly affected globalization. The needs of the globalized world are the accelerator of Internet-related technologies. Thank you!