Page 534 - Using MIS

Commerce Type Cross-Border Percent
Telecommunication Voice: 2 percent
Figure ID-1 Internet and Voice: 7 percent
Percent of Cross-Border Immigration 3 percent immigrants
Commerce
Source: Pankaj Ghemawat, www.ted Investment 10 percent direct investment
.com/talks/pankaj_Ghemawat_actually_ Exports 20 percent commerce
the_world_isn_t_flat.html

article was published in 2007; the fact that it took such solid research and more than 6 years to
MyMISLab ™ gain widespread attention is a testament to the power of bias and preconception.
Some of Ghemawat’s data is summarized in Figure ID-1. Notice that, even including cross-
Improve Your Grade! border telecommunications, Internet and voice averages less than 7 percent. Even international
Over 10 million students commerce, which most people think is a large factor in all economies, is less than 20 percent,
improved their results using when corrected for double-counting. 3
the Pearson MyLabs. Does this mean that international business is not important to you? No, it does not. What it
Visit mymktlab.com for
simulations, tutorials, and does mean, as Ghemawat points out, is that most of the opportunity of international commerce is
end-of-chapter problems. ahead of us. The world is not (yet) flat. While information systems have already played a key role
in international commerce, their effect in the future is likely to be larger. As Web services become
more widespread, it becomes easier to link information systems together. As mobile devices
continue their exploding growth in developing countries, even more users will enter the world
economy via the Internet. And as collaboration tools become more powerful, it becomes possible
to provide services as well as products on the international stage. Opportunity abounds.

How Does the Global Economy Change the Competitive
Environment?

To understand the effect of globalization, consider each of the elements in Figure ID-2.
The enlarging Internet-supported world economy has altered every one of the five compet-
itive forces. Suppliers have to reach a wider range of customers, and customers have to consider
a wider range of vendors. Suppliers and customers benefit not just from the greater size of the
economy, but from the ease with which businesses can learn about each other using tools such
as Google and Bing and, in China, Baibu.com.
Because of the data available on the Internet, customers can also learn of substitutions
more easily. The Internet has made it substantially easier for new market entrants, although not
in all cases. Amazon.com, Apple, and Google, for example, have garnered such a large market
share that it would be difficult for any new entrant to challenge them. Still, in other industries,
the global economy facilitates new entrants. Finally, the global economy has intensified rivalry
by increasing product and vendor choices and by accelerating the flow of information about
price, product, availability, and service.

3 “Pankaj Ghemawat: Actually, the World Isn’t Flat,” TED, last updated October 2012, www.ted.com/talks/pankaj_
ghemawat_actually_the_world_isn_t_flat.html.
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