Global Information Economy and International Business

Question 1

Briefly discuss the differences between conventional economy and information economy. Why is information economy considered as more complex compared to conventional economy?

Answer 1

Conventional economy is based on three major factors of production: Land, labor and capital. It relies on Adam Smith’s natural endowment and the theory of absolute advantage of nations. Information economy is about the pervasive use of knowledge and information as both input and output throughout the economy.

The information economy is considered more complex compared to conventional economy because employees and customers need to be able to deal with increasing quantities of information and decide what information is most valuable. It can also cause information overload, which makes decision making more difficult and reducing the efficiency of the business.

Question 2

What are the 3 Cs of information interface? What role could social media and smartphone technology play in making the interface more efficient?

Answer 2

The 3 Cs of information interface:

• Culture
• Convenience
• Cost

Social media and smartphone technology can play a huge role in making the interface more efficient as they easily can affect the openness of society to new ideas and processes, help meet defined needs and reduce costs.

Question 3

What are the major impacts of ICT on international business? Briefly discuss each.

Answer 3

The internet increases global commonality in customer needs and tastes:
- This is especially true if brands are global and products offered are common among states

The internet creates global customers:
- MNEs acts as global customers by coordinating or centralising their purchases

The internet facilitates global channels:
- Channels of distribution that have emerged on a global or regional basis

The internet makes global marketing more possible:
- The internet potentially has global reach, enabling global marketing to occur. In addition, the internet increasingly demands globally standard brand names

The internet highlights lead countries:
- The internet offers greater openness in identifying industry leaders and monitors their offerings