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Impact of Internet on Company Operations Analytical Essay

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Updated: Jun 17th, 2019

Introduction

Commercial use of the Internet and the World Wide Web is expanding at an astounding rate (Barnes & Hunt 2012). As we move into the twenty-first century, the number of people using online services continues to grow. The same applies to the number of Web hosts. From a business perspective, nearly 90 per cent of all corporations now maintain a Web presence (Mills & Law 2005).

Hundreds of thousands of companies have begun exploiting the commercial potential of the Web and the market has evolved into a multi billion dollar economy. In all these, the Web has proved to be the catalyst responsible for launching the Internet into commerce (Barnes & Hunt 2012).

Evidence clearly indicates that in many areas, the Internet is having a positive impact on business competitiveness and profitability (Khosrow-Pour 2006, p. 954). So much attention is being paid to how the Internet is changing business, corporate relations, education, and work.

This paper looks at how the Internet is impacting business operations, with specific reference to CPR Works which is an owner managed public relations company based in Birmingham, UK.

Defining the Internet

The Internet is a global network of interlinked computers operating on a standard protocol that allows information exchange. It is made up of computer networks, and individual computers throughout the world connected by phone lines, satellites and other telecommunication systems (Müller 2011, p. 3).

The original users of the Internet were researchers in the government and universities. Full commercial connection to the Internet only became available in the year 1990. The most popular early commercial activities on the Internet were email, advertising, and promotion.

Until the mid 1990s, applications were mostly text based and marketing involved sending plain text messages (Müller 2011, p. 5). However, the introduction of the World Wide Web completely changed things.

The adoption of the Internet has been fastest in countries with high gross domestic products and in countries where English is the first language or a widely spoken second language.

Impact of Internet on Business Operations in General

The Internet and related technologies offer an unprecedented opportunity for firms to benefit from the ability to gather information, promote their operations, and offer improved services to customers (Fletcher et al. 2004). A number of possible effects of the Internet on the marketing environment suggest that firms will experience fewer barriers to achieve efficiency.

The impacts of the Internet include reduced importance of economies of scale, lower marketing communications costs, greater price standardization, and reduced information float time, increased contact between buyers and sellers, and changes in intermediary relationships (Fletcher et al. 2004).

When it comes to search costs, the Internet increases the amount of information available to both buyers and sellers, and makes information available in a convenient and timely manner (Suder 2004, p.7).

As far as contracting costs are concerned, the Internet makes it easier to compare ad negotiate prices and other terms, and to keep in touch with and monitor the performance of partners in business relationships (Mills & Law 2005). Regarding coordination costs, the Internet generally reduces the costs of sharing information, and can automate and integrate many business processes.

Because of these changes, the boundary between a firm and its environment is changing drastically. Markets are becoming more efficient and agile and firms must become more flexible and responsive to compete with a more dynamic market for exchange.

Managers must increasingly deal with exchanges in the market place over which they have little control, rather than between subsidiaries, units, and employees over which they have administrative authority.

It is, therefore, quite obvious that Internet and related technologies are strong agents of change. If a firm in a value chain starts doing business electronically, soon companies up and down the chain must follow suit and start using similar technologies or risk substitution in the activities of the chain.

As a marketing channel, the Internet has a number of activities. First, the Internet has an ability to inexpensively store vast amounts of information at different virtual locations. Second, it offers a powerful and inexpensive means of searching, organizing and disseminating such information.

Third, it offers interactivity and the ability to provide information on demand. Fourth, it guarantees a firm the ability to provide perceptual experiences superior to those from the printed catalogue. The Internet can also serve as a physical distribution medium for certain goods such as software. It is also associated with relatively low entry and establishment costs for sellers (Suder 2004, p.14).

Generally, the Internet is both a communications and marketing intelligence tool. As a communications tools, it can help to build and maintain effective communications with customers, distributors, and suppliers. The Internet facilitates this by providing a low cost method of communication with people locally or abroad. Besides transmitting in text form, the Internet can also transfer graphics and drawings at very high speed.

Through the support offered by electronic communications, firms are now able to communicate quite smoothly and very cheaply, unlike in the past. It is thus obvious that firms that are not prepared to embrace technology are in danger of being left behind. In terms of advertising and promotion, the Internet is an effective medium because people wherever they are can receive messages as they are transmitted.

The information processing ability of the Internet is a market intelligence tool that acts as a link between firms and the external environment in which they operate. Effective management of information systems can be a powerful source of competitive advantage and the use of Internet for marketing intelligence enables firms to access information about the market with higher speed and at lower cost.

Search engines and electronic surveys also provide useful tools for obtaining information about different markets locally or internationally. Firms that are interested in Internet marketing can access a variety of international information sources such as online newspapers and journals, country and industry market research reports, trade lists of suppliers, agents and distributors as well as government contacts.

Industry Level Impacts

According to Wallace (2004, p. 19), Internet technology may be used as a mechanism to facilitate an industry wide set of objectives.

Developments in the UK accounting profession are a very good example of this. Although the primary use of the Internet within an organization is to communicate and access whatever information is needed, it may also be used to link collaborating organizations and ensure that they are able to work as a unit for their benefit and for the benefit of partners.

However, on the other side of the coin, the market positions of some players may be strengthened, leading to improved market share (Wallace 2004, p. 21). Apart from the effects of the Internet mentioned above, it is also possible to come across other effects that may not be obvious. In general, a firm that uses the Internet is regarded by stake holders as being inventive and ambitious.

The stake holders include customers, competitors, employees, and government. To clearly understand how the Internet impacts the industry, it is absolutely necessary to isolate interior and exterior impacts. Ordinarily, one will find that issues that are encountered differ from one firm to another significantly.

The following sub section takes a look at how the Internet has revolutionized the operations at CPR Works.

Background Information on CPR Works

CPR Works was formed as a limited company in December 1994 and currently, the company has a turnover of slightly less that £200,000 per annum (Barnes & Hunt 2012). The company provides a public relations service to the heating and energy industries. CPR Works currently employs three full time staff members and sub-contracts any additional work to freelancers.

The company uses two personal computers in its office premises, and the managing director uses a third personal computer at home. Since its inception, the company has been using computers to facilitate its business operations.

Initially, the computers were introduced to enable CPR Works handle simple computer based operations such as word processing and management of access databases. A few years later, CPR Works managed to secure a leased line Internet service.

Today, CPR has email, File Transfer Protocol (FTP), Web, and Usenet facilities. Usually, the Internet service provider (ISP) charges CPR Works a small fee to maintain the Internet connection and ensure that all is well. Recently, the ISP provided CPR with a dedicated connection for some of its staff to operate away from the office.

The Impact of the Internet on CPR’s Operations

In terms of the model of Internet impacts, CPR Works demonstrated the following important developments:

Communication

The benefits of networking communications have been significant. In environments where operations are time bound, a slight improvement in communication is very quite critical. The outcome of these technological changes has brought a radical transformation to the entire communication system at CPR Works. One notable change has been the increased processing speed.

With the kind of technology present at CPR, the firm is able to communicate much more quickly and at reduced costs. The presence of email and Usenet facilities implies that staff members can comfortably stay in touch with the organization from wherever they are.

Once again, execution time is lessened and both CPR and its customers are a satisfied lot. Compared to operating without an Internet facility, the cost of managing an Internet connection through an ISP is negligible. CPR Works, therefore, stands to benefit greatly from the improved communication services.

Customers are now able to contact staff members through email and Web based services such as Usenet. Obviously, the high level of availability and accessibility has resulted in outstanding services being offered to customers.

Today, CPR Works enjoys the benefits of an efficient email communication system that enables it to stay in touch with customers, besides guaranteeing smooth communication among staff members. Through effective use of the services provided by the Internet, CPR Works has also been able to improve its customer relations and this has led to repeat business from these customers.

CPR Works uses mostly Microsoft Outlook for email communications, but employees are free to use any other email program. Some employees have, therefore, chosen to use Gmail, Yahoo mail, Hotmail, and other email based programs. To surf the Web, employees use various Web browsers.

CPR Works prefers Internet Explorer, but staff members are also free to use other web browsers like Mozilla, Opera, Google Chrome to name but a few. Although these browsers generally function in a similar way, they tend to differ in terms of speed, security and other additional features that boost performance.

Information Retrieval

Through the use of Internet services, CPR Works can now easily monitor the activities of both its partners and clients. The Internet also enables CPR Works to monitor the activities of rival firms and to respond appropriately in retaliation. However, staff members are often concerned about the fact that they can not find time to sit at their computers as frequently as they would like to.

With the help of technology, CPR Works is now able to securely store its data. This includes maintaining back up copies just in case a disaster occurs. The firm is able to facilitate easy retrieval of information using well designed databases. This easy retrieval of information eventually translates into speedy processing and improved business performance.

With a working database in place, CPR is can interact more frequently with customers and partners. Interestingly, most of the interaction takes place through web based applications. More than anything else, the web based applications have played a big role in helping to lock in customers.

Like other companies that use databases, CPR Works will need to improve its performance by purchasing and configuring a database server to be used to service requests from client machines. The said client machines may be internal or external to the firm.

Knowledge Management

Increasingly, firms are realizing that besides capital, labor, and land, knowledge is also very critical to the success of business operations. Intellectual property is a synonym used to refer to knowledge management. Typically, knowledge is classified as tacit or explicit. Tacit knowledge exists within individuals and can not be easily reduced to the digital domain (Ian 2009, p. 9).

Explicit knowledge on he other hand, can be recorded digitally in various forms. Some factors to consider in knowledge management include sharing of best practices, globalization, handling rapid change, dealing with down sizing, effective management of information and communication overload, embedding knowledge in products, and achieving a sustainable competitive advantage.

By ensuring that best practices are freely shared, CPR is able to create a learning environment, and less skilled employees can get an opportunity to learn from the highly skilled staff members in the firm. This becomes particularly useful as the firm continues to expand in size. It is, however, necessary for CPR to put in place a scheme to motivate staff to share with colleagues what they are able to do effectively.

Well managed knowledge will certainly create an opportunity for the research and development team at CPR to make available their research reports regarding the global business environment (Ian 2009, p. 12). This information can later be used to formulate effective marketing strategies. Usually, when an organization downsizes, it stands the risk of losing the best talent.

Effective knowledge management is one way of ensuring that an organization maintains its knowledge even when an important employee leaves. Effective knowledge management will enable CPR to capture all the critical knowledge that resides within people and put it in a digital form, ready to be accessed and used by other staff who are authorized to do so.

It may be necessary to also ensure that such information is properly backed up and put in safe custody. With a good knowledge management system, CPR Works will also be able to stay ahead of its competitors.

The firm will gain ideas regarding the market situations and what competitors are doing to get to succeed. With such information at its disposal, CPR will be able to device strategies that will allow it to take advantage of any available opportunities to defeat competitors.

For a very long time, CPR was not able to place its knowledge in a digital form in order to facilitate easy access. Part of this is proper tracking of CPR Works’ relationships with its clients. With the new technological developments in the firm, however, it has now become possible to get this done.

As has been highlighted above, effective knowledge management is very critical to the success of business operations and results to improved efficiency in different parts of the organization.

Productivity

By having information stored in a digital form, manipulation is simplified and CPR Works can utilize the information in numerous situations.

This tremendously improves the response time of CPR Works’ campaigns. The fact that the information exists in a digital form also means that the same information may be used more than once to meet different needs. With Internet services in place, CPR’s marketing can now happen in a less stressful way (Daft 2000, p. 5).

It is now also possible for CPR Works to receive details from clients in a much easier and faster way. Similarly, clients are able to get whatever information they need from the company quite speedily. In the past, clients would have to fax information to the company and the company would do the same in reply. Today, however, communications have tremendously been improved (Daft 2000, p. 7).

To further strengthen its operations, CPR should invest in effective electronic systems. With such systems in place, CPR will be in a better position to motivate all employees who will in turn ensure that delivery meets the standards expected by clients. A positive change in the level of productivity at CPR Works will immediately translate into improved profits, and a satisfied team of customers.

Environment

In most cases, change always meets with resistance. Employees often worry about the repercussions of the new developments. In the case of CPR Works, there have been considerable changes in the organization. Nevertheless, every employee was prepared, and the firm had already made all the technology purchases necessary to create the entry level environment for the new technology (Bak & Stair 2011).

Everyone within the organization is more focused on improving customer service. Although CPR Works already had much of the hardware needed for it to take advantage of what the Internet had to offer, there were other requirements that the company still had to provide and these had to come at a price.

Generally, the increased use of the Internet has compelled employees to turn to the use of information technology. As a result, the business is now exposed to new risks that are technologically related.

However, everyone is excited about using the new technology. Importantly, the company is changing the way it assesses data (Bak & Stair 2011). This clearly represents a fundamental change to the internal environment. In the past data was received in whatever form, often by fax, and then manually input to spreadsheets for analysis. Now, data and processes are seen as dynamic and automated processes mean that minimal data entry is used.

Conclusion

Clearly, the Internet has had a significant impact on the CPR’s business contacts as well as its operations in general. All stake holders in the business environment have been impacted by the business in one way or another.

In general, the Internet presents a new platform for interacting with suppliers, customers, and partners. Using the Internet, a firm such as CPR will be able to access a much wider market that could extend beyond the borders. By and large, the greatest impact of the Internet on the way firms operate has been improved communication.

Organization level Internet related impacts are also common. To a great extent, most of the impacts of the Internet on business operations have benefited many organizations. Ordinarily, no major change is expected within organizations since most of them have been using information technology for the longest. However, most of these organizations were forced to change in one way or another due to the onset of Internet.

For most organizations, the Internet is a critical instrument that can be used to facilitate both individual and organizational growth. Although there are some negative impacts that have been associated with using the Internet, it has been beneficial to the business world in general.

Reference List

Bak, O & Stair, N 2011, Impact of E-Business Technologies on Public and Private Organizations: Industry Comparisons and Perspectives, Idea Group Inc (IGI), Hershey, PA.

Barnes, S & Hunt, B 2012, E-Commerce and V-Business, CRC Press, Woburn, MA.

Daft, RL & Marcic, D 2010, Understanding Management, Cengage Learning, Bedford Row, London.

Fletcher, R, Bell, J, McNaughton, R, McNaughton, RB 2004, International E-Business Marketing, Cengage Learning EMEA, Bedford Row, London.

Ian, S 2009, Online Banking and the role of CRM: The impact of the internet as online business platform on CRM (Study of Online banking in the UK), GRIN Verlag, Norderstedt, Germany.

Khosrow-Pour, M 2006, Emerging Trends and Challenges in Information Technology Management: 2006 Information Resources Management Association International Conference, Washington, DC, USA, May 21-24, 2006, Volume 1, Idea Group Inc (IGI), Hershey, PA.

Mills, JE & Law, R 2005, Handbook of Consumer Behavior, Tourism, and the Internet, Routledge, Binghamton, NY.

Müller, C 2011, The Impact of the Internet and Social Media on the Hotel Industry: How the Internet and Social Media have changed the Way Hotels Need to operate if they are to succeed in Today’s Dynamic and Global Markets, GRIN Verlag, Norderstedt, Germany.

Suder, GGS 2004, Terrorism and the International Business Environment: The Security-Business Nexus, Edward Elgar Publishing, Northampton, MA.

Wallace, P 2004, The Internet in the Workplace: How New Technology is Transforming Work, Cambridge University Press, New York, NY.

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