The Digital Economy - 2000 Words Essay

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• Processed on: 21-Feb-2019 12:45 AWST
• ID: 1081256694
• Word Count: 2330
• Submitted: 1

The Digital Economy - Assignment 3 By Mohammad Taifur Rahman

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Submitted to Curtin University of Technology on 2019-02-17

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Tai-Yoo Kim, Eungdo Kim, Jihyoun Park, Junseok Hwang. "Chapter 5 The Faster-Accelerating Digital Economy", Springer Nature America, Inc, 2014

Assignment 3 Title: Digital Economy creates a new relationship between Business, the State and the Consumers. Student Number & 19722115 Mohammad Taifur Rahman Name: Unit Name: The Digital Economy Email Address: rahman_fardeen@yahoo .com Date Submitted: 21 February 2019 Word Count: 2330 URL (if applicable): I declare that I have retained a copy of this assignment. I have read and understood Curtin University policies on Plagiarism and Copyright and declare that this assignment complies with these policies. I declare that this assignment is my own work and has not been submitted previously in any form for assessment. ______________MOHAMMAD TAIFUR 21 /02/2019_____________ (Date/Signature) (Typing your name in the space provided is sufficient when submitting online via FLECS-Blackboard.) Digital Economy creates a new relationship between Business, the State and the Consumer 19722115 Mohammad Taifur Rahman Table of Contents Introduction ............................................................................................................................................ 3 Analysis ................................................................................................................................................... 3 The relationship between the state, business and consumers as influenced by digital economy. 3 Influence of digital economy to business, State and Consumers ................................................... 5 Digital buying and selling ................................................................................................................ 6 Conclusion ............................................................................................................................................... 7 References .............................................................................................................................................. 9 Introduction Digital economy can be defined as an economy based on the digital computing technologies, which is sometimes perceived as the conducting of the business through the market based on the internet. The business is also an organization where people work together towards achieving certain economic goal. A business can generate a profit or a loss. In a business, people buy and sell products and services. Consumers are the people who use economic services or activities. When looking at the way the world is rapidly changing due to introduction of technology, it is clear to say that this digital period has transformed everything more especially the product and the market nature and how they operate through production, delivery and payment of the capital scale in order to operate around the world and the requirements of human capital. The period has also boosted productivity, technologies, exposure of the companies to the new ideas, business models and improved management and creation of the access of the new market channels. It is possible therefore to predict that, in the near future, the firms will adopt the digital ways of doing things by increasingly relying on artificial intelligence when handling basic routines and the more sophisticated tasks. For the current digital technology to affect economic development there must be appropriate policies to be put in place so as to remove the possible obstacles that prevents the emergence of the economy from engaging fully in the digital economy and benefit optimisation, while risk minimisation not left behind. The article will examine the relationship between the business, the state and consumers that is created by digital economy. It will also discuss the relationship between the digital economy and the economic development and try to explore the challenges that arise from the emerging economies. The article will explore the benefits of digital world to business, state and consumer relations. It is through exploring of the benefits that will enable us to understand the relationship that has been created by digital economy to the current global business. Analysis The relationship between the state, business and consumers as influenced by digital economy The digital economy has brought a new perception and total transformation of the ways the businesses are located when compared with the past. In the old economy for instance, the business location mattered a lot. The companies were located near transportation and raw materials and the needed labour so as to meet the consumer’s demands and also make a lot of profit. The places which were viewed to be expensive in terms of location of the new business were considered to be unfit. Nowadays due to digital economy, such believes are foregone tales. Digital economy is concerned with how the firms interact and consumers obtain the required services, how information is passed and how goods are being delivered. The new digital economy has taken a great role on taking the shape on how the business should be structured. The violent use of data has contributed to transformation of business models, facilitation of new products and services and also has helped in accompanying in the new management culture. The digital economy has also contributed to the changing of the paradigm regarding on how the business should be structured as well as the required resources to help increases business productivity. It has also changed the importance of the partnerships and structure and also industry collaboration both within and across the country. The marketing and goods and service distributions are made to meet consumer demands and also digital economy. The notable transformation recently is the news site from digital economy, the largest company of the world; 'Uber' has no vehicles to help it carry out its services. The popular Facebook owner creates no content to the business. Also, Alibaba, the most known retailer, has no inventories and finally Airbnb, the largest provider of accommodation in the world, has no real estate. All economic sectors have adopted the enhancement of ICT productivity, reduction of operation costs and also enlargement of the market reach across the economy. The ICT adoption is revealed through the spread of the business broadband connectivity, which almost every country is universal for the large enterprises or the smaller businesses. The wide spread of ICT adoption, and the faster decline and increased on the technology performances, has led to the development of new activities in both private and public sector. The technologies have also enabled new products and services development, together with the developed market reach and the costs of goods have been lowered. Through these technologies, the production and delivery of products and services have changed as well as the business models that are used in the companies that range from multinational enterprises to the start-ups. ICT activities also support individuals and the consumers and they are led to the formation of new payment mechanisms which is consisted of the new forms of digital currencies. The introduction of the internet brought many changes to entertainment, advertisements, news and in the retail industries. In the retail industries, the common digital players started initially form the traditional business models which were later adopted and were made the end-user equipment and increased extensive internet connections. For instance, online retailers first adapted the model of business by selling traditional physical goods like the books digitally. Furthermore, many online intermediaries whom were responsible in 4 managing specific sales began to evolve and developed the capability of creating digital online services. This included the auctioning of vehicles and properties which paved a way for other inspiring traders, hence, kick starting the beginning of a new generation of traditional online services such as insurance brokers and many more (Schmid, 2011). The retailers later adapted the selling of the digital products and services online like the movies, downloadable music and games among others. Online advertisement was later developed through advertising business models, which increased the potential digital technology in the industries. The new online services that enables sharing and providing economic services have developed allowing people rent out their vehicles, homes and skills to their third parties. The advancement of ICT has led to fall of prices which have proven to be the general-purpose technology is the central if the business models of the companies operating around the economy. The business across the sectors are now in a position to design and built operating models which revolves around technological capacity so as to improve flexibility and be able to reach out their global markets. The businesses have changed across all the sectors in the manner in which they are conducted by taking advantage of communication and data processing ability advancements to lower costs of production and transactions and extension of their market reach. The advancements together with trade policy liberalisations and reduction in the costs of transport, have expanded the business ability in all economic sectors to take the value of chains advantage in which geographical disbursed areas top enjoy the advantage of their services globally. Influence of digital economy to business, State and Consumers Digital economy despite playing a great role in changes of business models and cultures, it has also developed a diverse logistical education and also keeps changing it due to widespread of ICT. Looking at the retails, the digital economy has enabled the retailers to be able to place orders online which makes it easier for the retailers to gather and analysis customer data and also provision of personal set services and advertisements. Digital economy has also enabled the retailers to be in a position of managing logistics and supply stores with the products which has brought a positive impact to retail productivity and profits. On the same note, transport logistics sector has also been transformed by digital economy. This is by enabling the tracking of cargo and the vehicles across the world, providing customers with information and facilitation of development of the new processes of operation like timely delivery of goods in the manufacturing sector. Keeping records of the vehicles helps in maximising efficiency of fuels and also ensuring efficient use of maintenance activities of the support fleet and transport networks as a whole. The information that has been collected by the fleets may be useful in creating the commercial value datasets. Digital economy has played a great role in financial services. Under this, the insurance providers, banks and companies of different types, where non-traditional providers are included, has enabled the customers increasingly to be able to manage their contact transactions, finance and new line of products. The digital economy has made it easier for the companies and the country to be able to track indices and investment portfolio management and specialist expenditure in high trading frequency. The digital economy has also influenced agriculture and manufacturing by enhancing design and development. It is through digital technology that it has enabled the ability of monitoring the process of production in the factories and the control robots which has contributed to the greater design precision and development together with refinement of the ongoing products. The products that are produced has a high knowledge intensive (Valenduc, & Vendramin, 2016). In the automobile industry for instance, it is estimated that the new car features as an important software component. On the farms, the produced systems can be used to monitor animals and crops, and soil quality. Precisely, agricultural processes and routine equipment’s can be controlled through the automated systems. Digital economy not only has influence on business, it also has a great influence in education. This is because, the spread of digital economy is accompanied with the increase of the tutor services, universities implementing online learning and many other education services, which helps the state to have informed and educated citizens. This online education services offered are able to provide remote courses without the need of face to face interaction through the influence of technology like online collaboration portals and video conferencing which has enabled the universities to trap into leverage demands and global brands in the way which previously seemed to be difficult. This enables the State to address the tax challenges on the digital economy and also business modelling around the States. Digital buying and selling While worldwide trade in the goods and flow of finance seem to be in the peak in terms of the share they hold in GDP, the flow of data is exponentially growing. According to (Araya & Peters 2016), they clearly state that, between 2005 and 2014 global data flow grew from 45 and it is predicted to grow further by nine in the next five years. On the same note, the flow of data added $3.2 trillion directly to global GDP and $2.8 trillion were added indirectly. Expanding of the 6 connectivity, network effects, and sensor costs. infrastructure, open software architectures and introduction of the digital markets have accelerated the adoption and technological use as a whole. It therefore seems reasonable to assume that, the effect of adopting the new digital technology on the competitive flows when the firms in an industry are given access to the new technology, the competitiveness rapidly increases as illustrated in the figure below. Fig 1: Relationship between online buying and selling and competitiveness Conclusion The gains of the digital economy to the country cannot be underrated for in the emerging countries, the benefits are gradually large. This is because, it provides a significant competitiveness and productivity. This is done by boosting the related opportunities to access to the digital products and services that help in optimization of the production processes and reduction of production costs and the supply chains. The digital economy on the same note has declined the costs of information and communication technology that encourages developments of investments and providing the firm with competitive prices. All this is meant to enable the firms to participate the value of chains globally and enhancement of the direct access to customers in the foreign markets for the advanced economies. The benefits to the consumers are that, the consumers have access to wider range of goods and services at low prices. The digital economy also offers the consumers with the new opportunities for job creation and entrepreneur developments. The government also benefits from the digital economy in that, the country has access to technologies that enables it to deliver more and better public services, evaluating the policies and overall delivery of the better results. References Araya, D., & Peters, M. A. (Eds.). (2016). Education in the creative economy: Knowledge and learning in the age of innovation. Peter Lang. Degen, M., Melhuish, C., & Rose, G. (2017). Producing place atmospheres digitally: Architecture, digital visualisation practices and the experience economy. Journal of Consumer Culture, 17(1), 3-24. Quah, D. (2003). Digital goods and the new economy .Schmid, B. F. (2011). What is new about the digital economy? Electronic Markets, 11(1), 44-51. Valenduc, G., & Vendramin, P. (2016). Work in the digital economy: sorting the old from the new (No. UCL-Université Catholique de Louvain). Brussels: European Trade Union Institute. Digital Economy creates a new relationship between Business, the State and the Consumers. 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