The new economy has created new market conditions that differentiate the new economy from the old economy. New market rules have emerged over the past decade and this market rules aim at improving the level of corporate competitiveness and performance. Companies need to move beyond simple business practices such as controlling cost to other newer practices such as marketing and advertising to create value for their products. Therefore the new market has established new themes such as knowledge. The new economy is developed on improvements on networks and human capital.
Knowledge has changed how firms deal with employees, suppliers, and products or services. Further, digitalization is a major feature of the new economy. Innovation has led to the development of social development and new wealth using virtual platforms. Business affairs such as commerce, human communications, and business transactions have been improved using new technologies such as fiber optic cables; that connect different economies worldwide. Similarly, virtualization is also a special feature of the new economy. Most nations have shifted from the analog era to a digital era. Physical things have become virtual through the use of virtual platforms. For instance, virtual malls and virtual classes are examples of physical things that are now virtual. Consequently, the new economy has achieved molecularization, which has transformed the old economy to the new economy. Molecularization has changed how business activities are performed in the new economy.
There are similar themes which are common in the old and new economy. Innovation is a common thing between the two economies. The new economy has promoted increased innovation in business practices to make the economy more efficient. For instance, firms now work on consistent quality improvement techniques to increase the demand of their products. Further, the old economy achieved convergence through the creation of dominant industries such as the automobile industry, which relied on metals such as steel. The new economy presents a similar scenario where dominant industries rely on information technology.
Creation of the new economy has changed the production requirements. Old market forces sought to centralize political and economic powers to certain individuals. However, the nature of work and employment in the digital economy is different from the old system. The number of workers and employment tactics used in the old system has changed vastly. The new economy presents employees with new opportunities such as high-skilled jobs, which are highly paying. Further, intellectual abilities have surpassed labor requirements for employees in the new economy. Machines have replaced human labor changing the labor sector. Consequently, intellectual capital has been essential in the new system with most firms providing employment on a contract basis. Knowledge workers have independence over their occupations. If they feel unwanted of exploited by their employers they can start their own firms. Literacy and technology has revolutionized the role of employees in production.
Business strategy entails a business plan on how a firm wants to achieve its future goals. A business strategy is derived from customer demand, organizational capabilities, and market forces. Effective business strategies enable firms to achieve a competitive advantage over other firms. Organizational strategies entail business process that enables a firm to achieve its business strategies. Therefore, organization strategies are used in the implementation stage. Organizational design consists of measures such as business processes, communication, decision process and formal structure. Organization design is fundamental in the creation of a functional organization strategy.
Business control measures contribute towards creating effective organizational strategies. These control techniques entails data availability, planning processes and performance evaluation. Business culture is also an essential part of the organization strategy. Business culture helps in the establishment of business values, incentives, and communication. Further, the information system strategy comprises of information technology strategies that help in implementing the set business strategy. Further, information system strategy enables the firm to create business strategy measures that suit the organization strategy. Thus, firms use unique implementation of information technology measures to gain a competitive advantage over other firms.
Disruptive technology is an innovative approach in the new market which influences the existing market, displacing market leaders in the old market. Market leaders fall prey to disruptive technology because they have inefficient market response techniques. Firms should create alternative flexible options to accommodate improving technology and avoid the negative effects brought by disruptive technologies. Some of the companies that have fallen victim to market disruption entail Kodak, Polaroid and Xerox. Kodak was a market leader in the camera industry. However, the invention f digital photography led to the loss of demand of manual cameras. Although Kodak was aware of the digital photography innovation, they were reluctant to incorporate the new technology in their business strategy. This led to the failure of the company as a market leader. Consequently, Xerox was also a market leader in information technology gadgets such as the mouse, graphical user interface and laser printer. However, technological innovations revolutionized the production of these gadgets into more effective gadgets. Xerox was slow to incorporate these technological innovations and they were affected by disruptive technology.
Internet auctions entail sales transactions through a competitive bidding process offered suing internet platforms. Internet auctions have grown vastly because of the increasing role of the internet in communication. Further, internet auctions have grown because they are now available for the global market through the internet. There are different bidding formats depending on the business strategy used. A sealed bid uses sealed offers without revealing information regarding other bidders. Therefore, bids are made individually by different people without the knowledge of each others bid. In addition, an outcry bid entails an open bidding session where each bid is open for all bidders and the highest bidder wins. In comparison, a fixed price auction entails a business transaction where the seller lists his price and amount of goods available for sale. Buyers respond by putting the quote on how many of these goods they want. Further, a Dutch auction entails a situation where the seller lists items in an auction and enters his or her minimum bid amount. The bidder is chosen after they have successfully met the minimum bid amount and they have placed their item quantity.
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