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Development of the Internet and its Impacts on Business

In the recent years, the developments of internet technologies are changing the world fast – from all of the following areas: political, social, economic and social-cultural context. Similarly, from the business management perspectives, the development and changes brought forward by the rapid advancement of Internet technologies are not something to be ignored. Indeed, it is not hard to observe that there are many crucial impacts brought forward by the development of Internet/ WWW technologies, affecting the competitive landscape a company from different dimensions or angles. Undeniably, the development and proliferation of Internet/ WWW can be threatening to the business models of some corporations, while at the similar time it give rise to tremendous opportunities to other entrepreneurial venture (Jahanshahi et. al., 2011). Many companies have and will continue to prosper from capitalizing on the trend of advancement and proliferation of Internet/ WWW technologies; while there are many unaware or ignorant companies being hurt by the trend. Today, companies must take the advancement of Internet/ WWW technologies into consideration in the strategic management of their corporation, and to think creatively and innovatively on how to capitalize on the new advancement of Internet or changes caused by the Internet for sustainable growth, superior profitability as well as attainment of competitive advantage in the new information era. In this writing, the development of Internet/ WWW as well as the corresponding impacts to business will be discussed. The discussion will be concentrated in the context of the development and impacts and internet towards a company operating in the tourism industry.

Emergence of the Internet. To begin, the Internet is actually a globally interconnected computer networks system that keeps the billion of users connected to each others. Internet users may consist of the usual private and public entities, individuals, government, business entities or other non-profit organizations (Spencer et. al., 2001). In the Internet, people can share information or knowledge freely and easily. Internet efficiently carries a wide range of information accessible by the many users, enabling the many people to reach each others, to communicate or to search for information in a highly cost efficient manner around the world. Today, most of the content of the Internet is available in the inter-linked hypertext documents under the World Wide Web system. Historically speaking, there are a few stages leading to the advancement of Internet/ WWW technologies to the current situation it is today. As early as 1960s, the concept of Internet is firstly commissioned by the government and private commercial entities of United States in order to build a robust computer networks. In 1980s, due to the funding by National Science Foundation as well as other private organizations in United States, the developments of new networking technologies are accelerated. However, it is until 1990s that the commercialization of Internet that eventually popularizes the Internet technologies, which in turn change the human life tremendously (Spencer et. al., 2001). According to the data provided by Demirdjian (2011), between the year between 1991 to 1996, the number of Internet users jumped from 600 thousands to 40 millions.  At first, Internet is only widely used in the developed nations, due to the availability of Internet infrastructure in these more developed nations. However, as the Internet technologies become more popular, the emerging countries are fast to embrace the technologies to keep up with the global competition as well (The Economist, 2004). Overall, the trend of increasing internet users is to be expected in next decade, and it is reasonable to expect more and more people will be adopting Internet as a way of life in the future. It can be seen that development and proliferation of Internet technologies are demanding or pressuring the businesses to conduct its business model in different manners. Traditional business models, practices, or techniques may no longer be effective in coping with the changes or competition comes from the marketplace today. In many instances, business manger must incorporate the social trend of Internet technologies adoption by the public into the strategic and marketing of an organization (He et. al., 2006). In fact, topics such as globalization, Internet technologies, as well as Managing Information System are becoming so important that these subjects are taught in most of the business schools worldwide. Case studies on how corporations have been successfully capitalizing on the rise of Internet technologies for fast growth, superior profitability as well as durable competitive advantage are discussed. Thus, business managers and practitioners will definitely be required to understand the impacts brought forward by the development and proliferation of Internet technologies. To capitalize on the advancement on Internet technologies will be an essential strategic management issues to be considered and investigated (Porter, 2001).

Importance of the Internet. As mentioned before, the advancement of Internet/ WWW technologies are changing the world significantly, from the political, economy, social-cultural as well as technologies perspectives. Such advancement had also change how the business should be conducted, for efficiencies or effectiveness. The rapid advancement of Internet had changed how successful business operations should be conducted differently – for sustainable growth and sharpening of competitive advantage in the competitive business environment (Porter, 2001). In a study by Yannopoulos (2011), it is mentioned that in United States, those small businesses that use the Internet have grown 46% faster than those that do not. As such, the availability of such statistic strongly suggest that a company operating in the new business environment must rethink how to re-position itself, to adopt new strategies, to capitalize on the new opportunities available due to Internet for competitive advantage in the future. The internet had brought a lot of impacts to the tourism industry. In a study by Mamaghani (2009) on the impacts of internet towards travel and tourism industry, it is found that a staggering 95% of web users have searched the Internet in order to obtain relevant information for their travel needs. Then, it is found that there is also 93% of the users visited the websites related to the tourism destination. Among these users, half of them tend to se email to obtain more information on the tourism destination. Besides, within these online travel buyers, a total of 75% of them will use search engines prior to their purchase decision making process. Then, Kundi and Shah (2007) pointed out that although less than 2% of the transaction in United State is performed online in the year 2001, it is expected that more than 10% of the business transactions will be conducted online by 2011. Indeed, it is also pointed out that more than 90% of businesses in United States plan to venture online to expand the business. Overall, all of these statistics significantly and clearly point out that Internet is a highly influential medium in getting the buyers or customers to connect or communicate to the travel or tourism agencies.

Internet to reach the global market. From the statistics presented above, it is obvious that Internet is causing the competition between businesses to the global scale. As Internet is a medium linking people around the world in a low costs and yet fast manner, the development and proliferation of Internet technologies is urging the various corporations to venture into the international markets (Tiago et. al., 2007). As competitors are fast to tap on the opportunities available in the foreign nations, organizations must also fast to venture into the international context to assess to larger market and to establish oneself as an international branded corporation (Mastacan, 2009). Business managers today can no longer ignore the development of economic or business situation in the foreign or international arena; but should proactively participate in the global competition. Indeed, business manager should be able to anticipate the competition from the corporations originated from the foreign nations (Tiago et. al., 2007). As a result, it can be seen that it is critically important for a tourism agency to understand that the world is becoming more integrated, and to adapt fast to the changes in the worldwide business environment to capture the opportunities available in the international market place. Tourism agencies can now reach wider audience from different countries as long as they are experienced and knowledgeable on the process of leveraging on Internet to reach the global market. The advancement of Internet should change the perspectives of tourism agencies, and instead of limiting the audience to a certain marketplace, any tourism agency can now direct their marketing communication messages and campaigns to different people from different countries. All of these can be performed at low costs, while at the similar time, to enhance the reach of the marketing campaigns.

The rise of Internet marketing. Perhaps the most significant influences due to the advancement of Internet are the emergence of different new market, profits and marketing opportunities to businesses. For example, due to Internet, corporations can now reach a wider range of consumers from all around the world. This is something not possible in the past. Today, with a fraction of the costs required in the past, corporations can target, promote and sell their products to people around the world, as long as the targeted consumers is equipped with basic Internet connectivity and facilities. Corporations today no longer limit their marketing efforts to traditional market place, but today many corporations must also compete to position themselves smartly in the market space (Bielski, 2008). Compared to a few decades ago, companies, big or small, have respective web portal to reach and serve the end users and customers. Website development is place utmost important priorities by the manager and marketers, something to communicate to the consumers and to make a company known to the wider public (Taylor et. al., 2006). A company web-portal had become the medium of communication and interaction between consumers and the business (Bruner et. al., 2000). For a tourism company, Internet can be the useful way to reach worldwide global travelers, with a fraction of the costs required to reach and communicate to these travelers in the past. Websites development is now crucial to the branding and marketing strategies of any tourism related company. For example, as it is pointed out that a whopping of 95% travelers tend to serve the websites on a tourism destination before making their traveling agendas and destination, tourism company is now compete to design and enhance the attractiveness, feasibility, and responsiveness of their websites to entice travelers from all around the world to visit to a particular tourism destination. From the information and websites experiences these travelers experienced on the websites, it is likely that their purchase decision making process will be affected or influenced by the websites design and positioning of a particular tourism agency.

Aside from websites, many different internet marketing strategies or techniques are also available to the marketers, which among them include: social media marketing, permission marketing, email marketing, and search engine marketing (Chirca et. al., 2008). Among the most promising medium for internet marketing is through social media networking. Today, businesses now must adapt to the new lifestyle of consumers, to make their selves friendly, known and familiar between the prospects, by signing up and advertising itself in Facebook, Twitter, You Tube, My Space and etc (Falk et. al., 2007). Close relationships between businesses and customers can be maintained through various Internet technologies, such as email, RSS, blogs and other more evolved or advanced Internet technologies. As cited by Das & Sahoo (2011), from year 1997 to 2010, there are a total of 1.5 billion users of social networking websites, and the numbers are expected to keep increasing fast in the next decade. Specifically, as shown in Table 1 below, the most popular social networking site is Facebook.

 

Table 1: World Top 10 Social Networking Sites

 

Furthermore, according to Das & Sahoo (2011), it is estimated that Facebook has more than 500 million active users, and people are found to spend over 700 billion minutes per month on Facebook. Then, a total of 70% of the Facebook users are outside United States. All of these statistics are showing that Facebook is indeed an international widely popular social site, which can be capitalized as the medium to reach the global market. Particularly for the tourism related company, uploading nice, wonderful, interesting and attractive photos on the tourism destination, in the form of picture and videos will definitely attract many viewers in a short time frame. Then, when the Facebook users click the ‘Like’ icon on those photos or video, their friends are likely to take notice, and further, being attracted to view these videos uploaded by the tourism operator. This is a particularly powerful way to reach the wide market on the global scale in the lowest possible costs. Judging from the 500 million Facebook users, a marketing video can reach 5 million viewers if only 1% of the Facebook users are attracted to the particular message, video or photo.

            Intense competition on pricing. One of the biggest impacts of advancement of Internet technologies is leading the world into the information era (Ngai, 2003). Under such an environment, people can readily access to mass amount of information in front of a computer within a few click of the mouse. For businesses, such a situation is heightening the competitive landscape between businesses, as pricing to consumers are becoming more transparent. As information is easily accessed, with minimal costs to the consumers, the reputation of a corporation is becoming highly crucial in affecting the performance of the corporation. Indirectly, such a situation favor the best companies operating around the world, as consumers are likely to choose the best products or services available at the lowest prices (Cheng et. al., 2009). To stay average is no longer an option, as accessibility to information at low costs will push the consumers to seek out the best possible products or services to their advantages. Then, as the competition between businesses is becoming more intense, companies must not only compete on quality, low prices, but also to compete on speed or responsiveness to market demand or changes (Khazem, 2008). To stay relevant, businesses must be adaptable to the dynamic environment, to stay flexible as well as responsive to consumers’ demands, preferences and tastes (Mastacan, 2009). The impact to a tourism agency is that there will be an adverse squeezing of profit margins and weaker bargaining power towards customers. Any tourism agency can no longer stay average, as under the Internet economy, it is a “winner takes all” situation. Tourism agency must now deliver the emotional appealing, highly differentiated and highly perceived value travelling packages to the travelers. The capability of the tourism agency to promote the tourism package through Internet will ensure if that company able to stand out from the many other competitors. Besides, as the pricing information become transparent, intermediaries in the tourism industry are increasingly being excluded from the value chain (Mamaghani, 2009). Thus, tourism agency must truly ensure that their activities are really adding values, enhancing the travelers experience and capable of providing unforgettable memories to the travelers to ensure that they will remain relevant in the competitive marketplace.

In conclusion, it is discussed that the advancement and proliferation of Internet technologies are affecting how a business organization should perform to attain competitive advantage, to stay relevant and indeed, to capitalize on the upcoming opportunities for sustainable growth and profitability in the long run. There are many different impacts caused by such development, but one of the most significant impacts is that the rise of Internet technologies worldwide is about the change of marketing strategies and techniques required of the various businesses. In this essay, the impacts due to Internet is limited to the discussion on how Internet is and will be affecting a tourism agency operating in the new Internet economy. There are many impacts of emergence of Internet to a tourism agency, among them include: the competition between tourism agencies had intensified as the pricing of tourism products is becoming more transparent under the Internet, dis-intermediaries effects, consumers to enjoy more information on the products offered by different tourism agencies around the world, and the threats of competition coming from aboard. Nevertheless, there are many opportunities brought forward by the emergence of Internet technologies. Many successful tourism agencies will be those that are capable of capitalizing on the benefits and opportunities offered by Internet technologies. For example, the rise of Internet technologies enable tourism agencies to reach the global market – i.e., to venture into the international market or even into the market space, to reach wider audience through the use of websites, social media networking sits or other mean of Internet marketing technologies, to be more responsive and reactive to changes in consumers or market demands or preferences, to reach the consumers with lower costs, and to implement more efficient supply chain. In such perspective, Internet technologies is simply the advancement that offer huge leverage opportunities for businesses to do more with less – to enhance profitability with lower costs (Hynes, 2010). It is obvious that it is managerial imperative for a tourism agency to capitalize on the technologies for better business performance in this new business era. Those tourism agencies that can adapt fast under the new Internet economy will likely to gain more advantages, from marketing, operational as well as growth prospect perspectives, when compared to those tourism agencies that ignore the important impacts brought forward by the rise of Internet technologies.

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