Internet has made the factors of production such as financial capital and human capital more mobile, due to easy access to information as well as progress in information technology. When companies are looking for talent, they can cheaply access international markets for talent, too and in addition employees in different parts of the work can collaborate on projects in real time. Internet has allowed companies to monitor and control their global operations more efficiently this is why organizations are willing to go anywhere in the world in search of cheap labor and production inputs. Some of the largest companies such including Nike, Apple, and Intel have built advanced global supply chain networks that would not have been possible without the internet.
Internet has also reduced the competitive advantage between large and small corporations. This is because setting internet operations is much quicker and cheaper as compared to brick-and-mortar operations in terms of time and set-up capital costs. Moreover, internet allows businesses to access customer markets that would not be possible with brick-and-mortar operations, thus, eliminating geographical constraints. In addition, internet allows efficiency in different aspects of business operations including marketing, inventory, payment processing, and shipping.
Internet has also encouraged businesses to seek international expansion because competing in the global marketplace doesn’t require physical transfer of business operations anymore. Thus, targeted markets could be increased much more conveniently as compared to the pre-internet days when international expansion used to be taken by medium-sized and large organizations only.
But at the same time, internet has also increased competition because now organizations do not only have to compete with domestic competitors but also international competitors. The outcome has been a greater focus on operational efficiency, leaner organizational structures, and less job security for the workforce except for the very best. But organizations are also more willing to collaborate with each other in order to share risk especially in uncharted territories or when uncertainty is high. Collaboration may also result out of desire to take advantage of each other’s core competencies.
Another internet impact on the global businesses has been in terms of workforce composition. Businesses now have increasingly diverse workforce and this is not out of legal obligations but also due to realization that diverse workforce has certain benefits. First of all, diverse workforce brings greater perspectives and ideas to the table. In addition, employees with local knowledge can help businesses target markets whose market structures, customer lifestyles, and cultures may be quite different. Diverse workforce also improves businesses’ social image and help them gain acceptance in the communities.
Internet has also allowed the businesses to improve customer service and marketing in global markets. Internet allows businesses to directly connect with their international customers as well as market to them. Social networking websites such as Facebook and Twitter have been embraced by many organizations with global operations and companies often seek ideas for new products and customer preferences through social networking websites. By directly communicating with customers, they are also better able to understand local tastes and identify mistakes before they become more expensive.