.
Effect of the digital revolution
The New Economy vs The Old Economy
The New Economy is globalized in nature, with fast paced market dynamics. Hyper competition, varying technologies and the empowered customer challenge companies constantly into changing their strategies. The New Economy is spurred by the digital revolution and the advances in the field of IT.
The Old Economy was born after the Industrial Revolution and centered on the manufacturing industries. Products were standardized to bring down costs and customized service was not a priority. Market Size was on constant expansion with the aim to achieve economy of scale. Procedures and policies were affected by the geography of the market and the managing hierarchy within the organization.
The effect of the digital revolution on the new economy and consumerism :
Increase in buying power due to convenience :
A click on the Net ensures that buyers can :
i. Compare prizes and product attributes
ii. Chat with Sales
iii. www.priceline.com enables buyers to name the price they wish to pay and check for willing suppliers.
iv. Business buyers can run a reverse auction.
v. Buyers can aggregate their purchases and thus achieve discounts
Increased availability of Products & Services: Almost anything can be ordered from anywhere and the population in the remote parts of the globe has developed access to goods from other parts of the world. www.amazon.com is a websites that sells printed media. Costs of purchases can effectively be reduced by ordering quality goods from countries with lower prices.
Increased Consumer Awareness : i. Any material in myriad languages is available to any user of the Net. Online encyclopedias, dictionaries, medical information, market research are the order of the day and have effectively increased the wakefulness level of the sundry consumer.
ii. Clientele can visit chat rooms where notes on similar purchases may be exchanged.
iii. www.ivillage.com is a meeting point for those interested in lifestyle.
iv. The typical buyer may order from anywhere, 24 x 7 hours a week.
Companies operate on a Digital Nervous System
The Sales of companies have an amplified geographical reach to efficiently promote their product and service mix. The companies create websites committed to different causes. Communication channels with the customers are opened with such sites. It is now easier to dispatch and receive coupons, samples .
Organized information in the form of data mines and market research are available on the Net for the interested organization. Fresh market research may be organized by forming focus groups, sending questionnaires and gathering primary data.
The Net offers enhanced in-house communication among the employees by offering clubbing, chatting and idea exchange facilities at a very nominal cost.
Analysis of the number of visits to a site projects the precise nature of customer requirement, thereby enabling the companies to customize their products and services.
HR Policies have been revamped by online recruitment procedures and automated advertisement generation on the arising of vacancies.
Operations and Supply Chain Systems are on an upswing due to automated orders, invoicing and billing, enabling quicker deliveries and resourceful savings due to lack of superfluous paperwork. Swapna Datta Khan
ICFAI National College
Published: March 28, 2007
More in Management & Leadership
More summaries by Prafulla
More