Business Economics Assignment Essay
Where, Land offers the basic raw materials that become the commodities, Labor does the hands on work, Capital is the tools that make the job easier and entrepreneurship organizes the full operation. When we speak about the factors of production, in that respect are some overlapping categories. Economic experts have used the four general factors of production (Land, labor, capital and entrepreneur) from the very early stage. These factors contribute a large portion of the industrial revolution in the sass, because the factors of production, especially entrepreneurs were largely split into groups.
Labors, for instance, seldom owned capital or land, nor did they begin their own business. Land lords almost never did manual labor, nor did they become owning factories. In the olden days (18th century) entrepreneur, labor, UAPITA and land, were not just four categories of factors of production, they were four different socio-economic groups. Traditional Business Vs.. E-Business When we compare traditional business and e-business, both are similar in scope to the competitive marketplace.
Although a brick-and-mortar shop and an online marketplace are both “real,” they appeal to different characteristics, display their goods through different methods and offer consumers different levels of pricing, service and comfort station (Christina Hamlet). The following are some of the significant differences of traditional business and E-business. Needs Assessment The nature a small business and the type and quantity of customer interaction it requires to be successful dictate whether you call for a physical address or a practical one. For instance, you’re providing writing, copy-editing, consulting, and accounting or billing services.
While, your primary interface with your guests is by telephone, email and fax, negating the need for workspace beyond a home office. On the other hand, a small business in which you sell cosmetics, jewelry, graphics, furniture or home equipment will require display space, changing rooms and proper storage. Page 4 Home and Work Environment As a single business proprietor, you are just equally likely to desire about its wellbeing, whether it’s far away or close. To sort out your work life from your personal life has been normally a larger challenge when personal life and work life live under the same roof.
The anytime availability environment of e-business makes it to start knowing yourself as accessible to your customers round-the- clock, something that would not go on if you kept traditional hours at a shop. Legalities and Expenses Traditional Business and e-businesses both require you to possess a business permit. Registering your business name with the registrar, acquiring a tax ID number, examining local zoning and licensing regulations, acquiring insurance pertinent to your needs and creating banking relationships are critical steps in setting up shop in either Traditional Business or e-businesses.
While telecommunications expenses, office supplies and a marketing or advertising budget are necessary expenses in both traditional and commerce. But, in the traditional commercial enterprise model has more overhead expenses such as lease, staff salaries and other benefits, maintenance costs and expenses incurred or security arrangements, however, e-business operate from a home office, which utilizes mostly existing facilities.
Customer Convenience Since e-business is available 24 hours (24/7), customers are freer from the challenges, like, difficulties in reaching the shops due to bad weather or difficulties in parking, than a physical shop located across town, which is normally open five days a week for a specific time period. E-commerce not only save customers’ time and energy, it also, avoids customers from paying sales taxes, offer more outlets to compare stores. However, most of the customers deed to inspect the sellers personally, take advice as well as support and be able to bear the goods home immediately instead of paying shipping costs and waiting.
However, a traditional business satisfies those needs by producing an environment, where customers can deal face to face. Page 5 Market Models In economics, the market structure is the number of firms producing similar products which are identical. The following are some of the significant market structures of today’s business environment. Monopolistic Competition In these markets, there is a large number of firms, each firm is having a small reapportion of the market share and slightly differentiated products. Oligopoly It is a marketplace, where a miniscule number of firms that together bear the major share of the market.
Monopoly This is a market condition, where there is a single supplier of a product or service. Perfect competition The Perfect Competition Structure is a theoretical structure that features no barriers to entry, an unlimited number of producers and consumers, and a perfectly elastic demand curve. Impact of Technology on business The continuous evolution of technology is changing the way we do business, the Hyannis of the workplace and what we perceive is possible. During the last 10 to 15 years, the technology is extremely changing the approach and the production processes.
Significantly, the continued evolution of telecommunications and Information Technology is increasing the ongoing translation of the business environment to hold advantage of available tools and opportunities (Rosily Frenzy). In some countries, there can however be arguments between the traditional practices and the modern business methods that can be realized through technology. This might be that decision makers still have not fully appreciated for he irrecoverable changes that technology had brought to the business methods. Indeed, to get these changes, the key role is played by internet.
The Internet is quickly becoming the base of choice for e-commerce. Because it offers a universal and user friendly set of technology, which can be used by all organizations, no matter which information technology platform they use. Moreover, this technology offers a much cheaper and easier replacement for management activities than traditional methods. Business organizations can utilize Internet technology to decrease their operational and administrative expenses. Fundamentally, internet technology lowers the cost of data processing, sending and storing of data while producing that information more widely useable. Age 6 By using Internet and other networks for e-commerce, organizations in some industries can make transactions directly with clients and suppliers. The Internet can assist companies for the production and making profits in new ways by adding special value to existing products and services. In many e-commerce platforms, like Ebay, Alabama or Amazon creates information brokers, virtual storefronts, transaction brokers, online marketplaces, online service providers, intent providers, virtual communities, and online portals.
Following are some of the enhancements brought by information and digital technology. Productivity The usage of computers has changed the work environment and the speed of work in the past days. It pushed down the cost of data processing, and the simplicity with which large volumes of data can be manipulated by and transferred between several units within the business organization. And also, thus increasing the processing power along with the extensive range of standard and customized hardware and software.
This resulted in changing employer and client expectation of work quality and output, at the employee and organizational levels. Banking services are good examples of this point. A wide range of services are giving through internet or intranet which involves a number of different software and hardware. Some of the services supplied by financial institutions with the help of technology is ATM and internet banking services. Today, most of the banks realize that they should change the way they do business to take maximum profit.
For instance, America’s most go-getting banks were shifting from acquisitions to providing Internet-based financial services John McCoy) Collaboration In a situation, where persons might not be in office to physically interact with clients, technology is providing a number of connectivity choices that facilitate continued discussion and collaboration among work forces. Options can allow both the real-time and non-real time communication, and also they can integrate into a platform of specialists to access and use of different tools and features.
For example, people can buy and sell on Ebay at any time, in addition to that, buyers and sellers can communicate real time or non-real time. Some of the other famous online stores are Amazon, Alabama, best buy etc. Age 7 Resounding With the help of technology, business organizations find new ways of increasing their resources. Cloud computing is a good example, which offers a large scope of resources, such as computer applications, online storage and processing power. By the help of the cloud technology, companies can decentralized or delegate different aspects of their businesses to either affiliate or third parties.
For example, Google provides online storage, which allows organizations as well as individuals to store and share their documents whenever they want. Interaction and participation Customer interaction and participation is readily apparent through the impact of social media in business. In addition to providing a platform for the distribution of information, marketing and promotion, social media creates an environment to generate feedback from consumers and the public. Many organizations are starting to take advantage of the chances to secure feedback on their products and services (Jack Supple and Michael Schmaltz).
A good model for such platform is Faceable, which offers a number of chances for the purpose of marketing and promotion as well as sharing information and collecting feedbacks. Cost management While performing in a competitive marketplace, Organizations are continuously trying to manage the operational costs and to control spending. To accomplish this goal, technology has provided a platform with cost effective alternatives, such as skilled labor and computing resource outsourcing. This result, increasing productivity, efficiency and individual performance.
The financial results of the top 25 e-commerce platforms including the AOL, eBay, Yahoo and so on, all together generated about $5 billion in revenue and spend around $1 billion last year (John McCoy). For example, Banks and Airlines. Processing an airline ticket on the Internet costs $1, compared with $8 through a travel agent (the Economist). Page 8 Efficiency and optimization At last, this stage is a very significant outcome of most of the points brought up earlier, since there is a higher expectation of the organizations becoming more efficient.
In traditional business models, one of the greatest challenges that organizations have confronted is that although they might be very open about what their core objectives might be, considerable attention on financing, workforce, management, and etc. Had been given to supporting activities and recesses to the core business. However, technology based companies have more choices through which to move their efforts towards the most important natural processes that they must manage, thereby increasing productivity and output.
Effects on factors of production In today’s business world, the factors of production are used in different ways. Let’s take the four factors of production to measure the impact of information technology. Land In recent days, the number of businesses moving to e-business are increasing and the amount of physical stores is decreasing. This reduces the demand for and and increasing availability of land at a cheaper rate. Labor When organizations are focusing more on internet based activities, the involvement human activities are turning more depressed.
As a consequence of that the number of employees required for the production or day to day operations is less than before and need for skilled labor is increasing. This earns more income for the skilled labors and employing more skilled labors will increase the productivity and performance. Example: Faceable, statistics shows, Faceable Inc. Employed 150 people in 2006, 450 people in 2007, 450 and at the ND of 2013, 6,337 people were in full-time. (The Statistics Portal). Capital In Economics, capital means not only the investments, but also human capital.
In modern business models, human capital is the most important component. Since, Human capital includes knowledge and skills, information technology enables to access a wide range of trainings programs and information which helps to increase the level of skill and knowledge which is required for the organizational purposes. Apart from that, information technology facilitates a platform where anyone can easily access and start to invest in small or large scale. This gives a hope for more people to invest and increase their capital.
Page Entrepreneur As a result of widely using information technology in the business environment, people can easily start a business without investing much more money. In today’s e-commerce models, entrepreneurs are organizing and managing the line of works, however suppliers from different areas are supplying their goods and services to the customers through the online platform of the entrepreneur. Thus increasing the number of people who is entering into the business environment and increasing competition, which leads availability of goods at cheaper rates.
For example, Ebay, Alabama, the entrepreneurs are just organizing and managing the activities of their cloud stores. Due to changing the business environment, many economists consider the human capital as the fourth factor of production and entrepreneurship as a kind of human capital (Wisped). Meanwhile, some refer to intellectual capital (Wisped). More recently, many people have considered Social Capital as a factor of production (Wisped), which is normally difficult to define. But some authors define social capital as an attribute of an individual in a social context (Pierre Broodier).
And also, when human capital is a part of the factors of production, Technology can be considered as a part of the factors of production, which plays a great role in the production and distribution of goods and services. Conclusion Today, Information Technology is used all over the world and the internet is creating new businesses and business models each and every day. Some of them are becoming wider, and some are controlling their particular segments. The powers they share are an evidence of how technology can attend their professional plans.