Maf 635 E Commerce

PART 1 CHAPTER 1 The Revolution Is Just Beginning CHAPTER 2 E-commerce Business Models and Concepts Introduction to E-commerce C H A P T E R 1 The Revolution Is Just Beginning LEARNING OBJECTIVES After reading this chapter, you will be able to:  ¦  ¦  ¦  ¦  ¦  ¦  ¦  ¦ Define e-commerce and describe how it differs from e-business. Identify and describe the unique features of e-commerce technology and discuss their business significance. Describe the major types of e-commerce.Discuss the origins and growth of e-commerce. Understand the vision and forces operating during the first five years of e-commerce, and assess its successes, surprises, and failures. Identify several factors that will define the next five years of e-commerce. Describe the major themes underlying the study of e-commerce. Identify the major academic disciplines contributing to e-commerce research. A m a z o n a t 1 0 : Profitable At Last A mazon. com is one of the Web’s most exciting and instr uctive stories.Started in a garage by Jeff Bezos in 1995, it has since grown to become the largest Internet retailer, with the highest levels of customer satisfaction, the fastest revenue growth rates, and finally, after nine years, profitable. One of the Internet â€Å"Big Four† companies, along with Yahoo, eBay and Google, few would have thought it possible when Amazon first opened for business that an online bookstore would become one of the premiere general retailers in the world. But Amazon’s ability to maintain operations at a sufficiently profitable level is a fact that continues to worry investors in 2005.Critics are of two minds: either Amazon will become the online Wal-Mart (and suffer from its huge size just as WalMart does) or it will fail to deliver superior growth and profits because it has spread itself too thin, taken on too many product lines, and given away too much revenue to customers by offering free shipping and superior service. Supporters, and B ezos himself, counter that Amazon has become the Web’s largest retailer on a revenue basis by focusing on the customer, not short-term profits, and that it will ultimately become one of the most profitable by following the same strategy.Amazon certainly has had a roller coaster ride in its ten brief years. In December 1999, Jeff Bezos graced the cover of Time magazine as its Person of the Year. In the same month, Amazon’s stock reached a peak of $113 per share. In January 2001, Amazon reported a whopping $1. 411 billion as its overall loss for the year. Its stock hit a low of $6 a share. Amazon laid off 1,300 employees, constituting about 15% of its workforce. Questions about its long-term viability abounded. Bezos promised he would make the company profitable in two years, but few believed this was possible.But, in 2003, Amazon reported soaring sales; it achieved its first annual profit ever (about $35 @ Amazon. com’s first Web site 3 4 CHAPTER 1 The Revolution Is Just Beginning million), and its stock price more than doubled to $25 a share. The good news continued into 2004 when Amazon reported profits of $588 million on $6. 92 billion in revenue. How was Amazon able to turn around its business from a $1. 4 billion annual loss to a $588 million profitable operation despite the dot. om stock market crash and the withdrawal of venture capital funding for e-commerce companies? The story of Amazon. com, the most well-known e-commerce company in the United States, in many ways mirrors the story of e-commerce itself. So, let’s take a closer look at Amazon’s path to preview many of the issues we’ll be discussing throughout this book. In 1994, Jeff Bezos, then a 29-year-old senior vice president at D. E. Shaw, a Wall Street investment bank, read that Internet usage was growing at 2,300% per year.To Bezos, that number represented an extraordinary opportunity. He quit his job and investigated what products he might be able to sell successfully online. He quickly hit upon books—with over 3 million in print at any one time, no physical bookstore could stock more than a small percentage. A â€Å"virtual bookstore† could offer a much greater selection. He also felt consumers would feel less need to actually â€Å"touch and feel† a book before buying it. The comparative dynamics of the book publishing, distributing, and retailing industry were also favorable.With over 2,500 publishers in the United States, and the two largest retailers, Barnes and Noble and Borders, accounting for only 12% of total sales, there were no â€Å"800-pound gorillas† in the market. The existence of two large distributors, Ingram Books and Baker and Taylor, meant that Amazon would have to stock only minimal inventory. Bezos easily raised several million dollars from private investors and in July 1995, Amazon. com opened for business on the Web. Amazon offered consumers four compelling reasons to shop ther e: (1) selection (a database of 1. million titles), (2) convenience (shop anytime, anywhere, with ordering simplified by Amazon’s patented â€Å"1-Click† express shopping technology), (3) price (high discounts on bestsellers), and (4) service (e-mail and telephone customer support, automated order confirmation, tracking and shipping information, and more). In January 1996, Amazon moved from a small 400-square-foot office into a 17,000-square-foot warehouse. By the end of 1996, Amazon had almost 200,000 customers. Its revenues had climbed to $15. 6 million, but the company posted an overall loss of $6. 24 million.In May 1997, Amazon went public, raising $50 million. Its initial public offering documents identified several ways in which Amazon expected to have a lower cost structure than traditional bookstores: it would not need to invest in expensive retail real estate, it would have reduced personnel requirements, and it would not have to carry extensive inventory, sin ce it was relying in large part on book distributors. During 1997, Amazon continued to grow. It served its one-millionth unique customer, expanded its Seattle warehouse, and built a second 200,000-square-foot distribution center in Delaware.By the end of 1997, revenues had expanded to $148 million for the year, but at the same time, losses also grew, to $31 million. In 1998, Amazon expanded its product line, first adding music CDs and then videos and DVDs. Amazon was no longer satisfied with merely selling books. Its business strategy was now â€Å"to become the best place to buy, find, and discover any product or Amazon at 10: Profitable At Last 5 services available online. † It also opened Web sites in Great Britain and Germany. Amazon, pundits noted, was planning to be the online Wal-Mart. Revenues for the year increased significantly, to $610 million, but the osses also continued to mount, quadrupling to $125 million. The year 1999 was a watershed year for Amazon. Bezosâ €™s announced goal was for Amazon to become the â€Å"Earth’s Biggest Store. † In February, Amazon borrowed over $1 billion, using the funds to finance expansion and cover operating losses. During the year, it added electronics, toys, home improvement products, software, and video games to its product lines. It also introduced several marketplaces, including Amazon. com Auctions (similar to that offered by eBay), zShops (online storefronts for small retailers), and sothebys. amazon. om, a joint venture with the auction house Sotheby’s. To service these new product lines, Amazon significantly expanded its warehouse and distribution capabilities, adding eight new distribution centers comprising approximately 4 million square feet. By the end of 1999, Amazon had more than doubled its 1998 revenues, recording sales of $1. 6 billion. But at the same time, Amazon’s losses showed no signs of abating, reaching $720 million for the year. Although Bezos and Ama zon were still riding high at the end of December 1999, in hindsight, it’s possible to say that the handwriting was on the wall.Wall Street analysts, previously willing to overlook continuing and mounting losses as long as the company was expanding into new markets and attracting customers, began to wonder if Amazon would ever show a profit. They pointed out that as Amazon built more and more warehouses brimming with goods, and hired more and more employees (it had 9,000 by the end of 2000), it strayed farther and farther from its original vision of being a †virtual† retailer with lean inventories, low headcount, and significant cost savings over traditional bookstores.The year 2000 ended on a much different note than 1999 for Amazon. No longer the darling of Wall Street, its stock price had fallen significantly from its December 1999 high. In January 2001, it struggled to put a positive spin on its financial results for 2000, noting that while it had recorded a s taggering $1. 4 billion loss on revenues of $2. 7 billion, its fourth-quarter loss was slightly less than analysts’ projections. For the first time, it also announced a target for profitability, promising a â€Å"pro forma operating profit† by the fourth quarter of 2001.Few analysts were impressed, pointing out that the method by which Amazon was suggesting its profit be calculated was not in accordance with generally accepted accounting principles. They also noted that growth had slowed in Amazon’s core books, music, and video business, and profit margins were slim in the faster-growing categories, such as consumer electronics. In 2001 and 2002, Bezos and fellow executives began to implement their strategy for profitability: cut prices, offer free shipping, and leverage Amazon’s investment in infrastructure and consumer brands, while lowering costs of operation significantly.By evolving and leveraging the existing business model, Amazon hoped to do what analysts thought was impossible. The â€Å"easy† part of the strategy was driving business revenues higher by offering customers the â€Å"lowest possible prices† for a broad range of goods, providing free shipping for orders greater than $25, and then multiplying sources of revenue. Amazon’s 6 CHAPTER 1 The Revolution Is Just Beginning SOURCES: â€Å"Amazon Announces Free Cash Flow Surpassed $500 Million for the First Time; Customers Joined Amazon Prime at an Accelerated Rate,† Amazon. com, February 2, 2006; Amazon. om Form 10-Q for the nine months ended September 30, 2005, filed with the Securities and Exchange Commission on October 27, 2005; †Amazon Faces the Challenges of Its Second Decade,† by Paul Festa, Cnetnews. com, July 15, 2005; â€Å"A Retail Revolution Turns 10,† by Gary Rivlin, New York Times, July 10, 2005; â€Å"Tabs on Tech: The Internet,† by Laurie Kawakami, Wall Street Journal, June 1, 2005; â€Å"Internet Big Four: Worth a Look As Growth Stocks,† by James B. Stewart, Wall Street Journal, May 4, 2005; â€Å"Amazon Net Falls As Rivals Take Toll, by Mylene Mangalindan, Wall Street Journal, April 27, 2005; Amazon. om, Inc. Form 10-K for the fiscal year ended December 31, 2004, filed with the Securities and Exchange Commission on March 11, 2005; â€Å"Amazon Gets the Last Laugh,† by Chip Bayers, Business 2. 0, September 2002. [email  protected] and Amazon Marketplace allow other businesses to fully integrate their Web sites into Amazon’s site to sell their branded goods, but use Amazon’s fulfillment and payment infrastructure. Nordstrom, Toys â€Å"R† Us, Gap Inc. , Target, and many other retailers use Amazon to sell their goods and then pay Amazon commissions and fees.Amazon also offers its expertise in Web site hosting through its Merchant. com program to national brands such as Target. In the Amazon Marketplace program, individuals are encouraged to se ll their used or new goods on Amazon’s Web site even when they compete directly with Amazon’s sales of the same goods. Amazon reports that sales by third parties now represent 27% of revenues and that it makes as much profit on commissions from other vendors as it does from its own sales. Lowering costs proved difficult, but not impossible.In early 2001, Amazon closed two of its eight warehouses and laid off 15% of its workforce. It hired 35-year-old engineer Jeffrey Wilke and a half-dozen mathematicians to figure out how to cut costs. The team found a way to redistribute book inventory among the warehouses to reduce shipping costs; used Six Sigma quality measures to reduce errors in fulfillment; consolidated orders from around the country prior to shipping (adding an extra day to fulfillment of â€Å"free shipping† orders); and further lowered shipping costs by using its own trucks to deliver orders to postal system centers.Wilke and his team reduced fulfillmen t costs from 15% of revenue in 2000 down to 10% by 2003. The effort contributed to Amazon’s first ever annual profit in 2003: $35. 3 million on revenues of $5. 26 billion. The results were even better in 2004: a $588. 5 million profit on revenues of $6. 92 billion. Looking back on the last ten years, it’s clear that Wall Street and Main Street have differing views on Amazon. Amazon has been a tremendous Main Street e-commerce success story even if it took nine years to achieve profitable operations.It has changed its business model several times, focused on improving the efficiency of its operations, and maintained a steady commitment to keeping its 49 million customers satisfied. In 2005, Amazon was one of the leaders in a survey of customer satisfaction with retail Web sites, while traditional bricks-and-mortar retailers such as Target and Costco received low marks for their online offerings. Right now, Amazon must be counted as an online retailing success story. Few would have predicted this outcome in 1995, or even in 2000.For the future, however, Amazon faces powerful competitors who keep innovating, such as eBay and Yahoo! Shopping. eBay has been profitable from its first day, while Yahoo achieved profitability in 2002. But despite Wall Street critics, Bezos has not changed his original vision: in 2005, for instance, he announced additional expenditures to increase customer convenience, such as a flat-fee shipping membership program (Amazon Prime). And although Amazon’s revenues continue to grow, profits in 2005 were down compared to 2004.So the Amazon roller coaster ride continues, and what’s around the next curve remains to be seen. E-commerce: The Revolution Is Just Beginning 7 T 1. 1 he Amazon story is emblematic of the e-commerce environment of the past ten years: an early period of business vision, inspiration, and experimentation, followed by the realization that establishing a successful business model based on those v isions would not be easy, which then ushered in a period of retrenchment and reevaluation, ultimately leading to a more finely tuned business model that actually produces profits.During the last two years, the fortunes of the ecommerce revolution once again have been contrary to what many people thought would happen after the stock market crash of March 2001, when the stock market value of e-commerce, telecommunications, and other technology stocks plummeted by more than 90%. After the bubble burst, many people were quick to write off ecommerce and predicted that e-commerce growth would stagnate, and the Internet audience itself would plateau. But they were wrong. E-COMMERCE: THE REVOLUTION IS JUST BEGINNING The e-commerce revolution is just beginning.For instance: †¢ Online consumer sales expanded by more than 23% in 2005 to an estimated $142–$172 billion (eMarketer, Inc. , 2005a; Shop. org and Forrester Research, 2005). †¢ The number of individuals online in the U nited States increased to 175 million in 2005, up from 170 million in 2004 (The total population of the United States is about 300 million. ) (eMarketer, Inc. , 2005b; U. S. Census Bureau, 2005). †¢ Of the total 112 million households in the United States, the number online increased to 71 million or 63% of all households (U. S.Census Bureau, 2005; eMarketer, Inc. , 2005b; Pew Research Center, 2005). †¢ On an average day, 70 million people go online. Around 140 million send e-mail, 8 million have created a blog, 4 million share music on peer-to-peer networks, and 3 million use the Internet to rate a person, product, or service (Pew Research Center, 2005; Pew Internet & American Life Project, 2004). †¢ The number of people who have purchased something online expanded to about 110 million, with additional millions shopping (gathering information) but not purchasing (Pew Research Center, 2005). The demographic profile of new online shoppers broadened to become more like ordinary American shoppers (Pew Research Center, 2005; Fallows, 2004). †¢ B2B e-commerce—use of the Internet for business-to-business commerce— expanded about 30% in 2005 to more than $1. 5 trillion (U. S. Department of Commerce, 2005). †¢ The Internet technology base gained greater depth and power, as more than 42 million households had broadband cable or DSL access to the Internet in 2005—about 38% of all households (eMarketer, Inc. , 2005c). 8 CHAPTER 1 The Revolution Is Just Beginning Initial public offerings (IPOs) returned, with 233 IPOs in 2004—more than the number of IPOs in 2002 and 2003 combined. The Internet stock group rebounded in value, along with the entire NASDAQ stock exchange, which is primarily composed of technology stocks. The rebound in Internet stocks was led by Google’s IPO, which raised $1. 67 billion. Google’s stock opened at $85 on the first day and has since rocketed to the $300 range (Hoovers, 2005; Riv lin, 2005; Elgin, 2005). These developments signal many of the themes in the new edition of this book (see Table 1. 1).More and more people and businesses will be using the Internet to conduct commerce; the e-commerce channel will deepen as more products and services come online; more industries will be transformed by e-commerce, including travel reservations, music and entertainment, news, software, education, and finance; Internet technology will continue to drive these changes as broadband telecommunications comes to more households; pure e-commerce business models will be refined further to achieve higher levels of profitability; and traditional retail brands such as Sears, J.C. Penney, and Wal-Mart will further extend their multichannel, bricks-and-clicks strategies and retain their dominant retail positions. At the societal level, other trends are apparent. The major digital copyright owners have increased their pursuit of online file-swapping services; states have successfull y moved toward taxation of Internet sales; and sovereign nations have expanded their surveillance of, and control over, Internet communications and content. In 1994, e-commerce as we now know it did not exist.In 2005, just ten years later, around 110 million American consumers are expected to spend about $142–$172 billion purchasing products and services on the Internet’s World Wide Web (eMarketer, Inc. , 2005b; Shop. org and Forrester Research, 2005; Rainie, 2005). Although the terms Internet and World Wide Web are often used interchangeably, they are actually two very different things. The Internet is a worldwide network of computer networks, and the World Wide Web is one of the Internet’s most popular services, providing access to over 8 billion Web pages.We describe both more fully later in this section and in Chapter 3. In 2005, businesses are expected to spend over $1. 5 trillion purchasing goods and services from other businesses on the Web (U. S. Departm ent of Commerce, 2005). From a standing start in 1995, this type of commerce, called electronic commerce or e-commerce, has experienced growth rates of well over 100% a year; although the rate has slowed and is now growing at about 25% a year. These developments have created the first widespread digital electronic marketplaces. Even more impressive than its spectacular initial growth is its future predicted growth.By 2008, analysts estimate that consumers will be spending around $232 billion and businesses about $3 trillion in online transactions (eMarketer, Inc. , 2005a; 2003; U. S. Department of Commerce, 2005). E-commerce: The Revolution Is Just Beginning 9 TABLE 1. 1 BUSINESS MAJOR TRENDS IN E-COMMERCE, 2006 †¢ Retail consumer e-commerce continues to grow at double-digit rates. †¢ The online demographics of shoppers continues to broaden. †¢ Online sites continue to strengthen profitability by refining their business models and leveraging the capabilities of the In ternet. The first wave of e-commerce transformed the business world of books, music, and air travel. In the second wave, eight new industries are facing a similar transformation: telephones, movies, television, jewelry, real estate, hotels, bill payments, and software. †¢ The breadth of e-commerce offerings grows, especially in travel, information clearinghouses, entertainment, retail apparel, appliances, and home furnishings. †¢ Small businesses and entrepreneurs continue to flood into the e-commerce marketplace, often riding on the infrastructures created by industry giants such as Amazon, eBay, and Overture. Brand extension through the Internet grows as large firms such as Sears, J. C. Penney, L. L. Bean, and Wal-Mart pursue integrated, multi-channel bricks-and-clicks strategies. †¢ B2B supply chain transactions and collaborative commerce continue to strengthen and grow beyond the $1. 5 trillion mark. TECHNOLOGY †¢ Wireless Internet connections (Wi-Fi, Wi-Max, and 3G telephone) grow rapidly. †¢ Podcasting takes off as a new media format for distribution of radio and user-generated commentary. †¢ The Internet broadband foundation becomes stronger in households and businesses.Bandwidth prices fall as telecommunications companies re-capitalize their debts. †¢ RSS (Really Simple Syndication) grows to become a major new form of user-controlled information distribution that rivals e-mail in some applications. †¢ Computing and networking component prices continue to fall dramatically. †¢ New Internet-based models of computing such as . NET and Web services expand B2B opportunities. SOCIETY †¢ Self-publishing (user-generated content) and syndication in the form of blogs, wikis and social networks grow to form an entirely new self-publishing forum. Newspapers and other traditional media adopt online, interactive models. †¢ Conflicts over copyright management and control grow in significance. †¢ Over half th e Internet user population (about 80 million adults) join a social group on the Internet. †¢ Taxation of Internet sales becomes more widespread and accepted by large online merchants. †¢ Controversy over content regulation and controls increases. †¢ Surveillance of Internet communications grows in significance. †¢ Concerns over commercial and governmental privacy invasion grow. Internet fraud and abuse occurrences increase. †¢ First Amendment rights of free speech and association on the Internet are challenged. †¢ Spam grows despite new laws and promised technology fixes. †¢ Invasion of personal privacy on the Web expands as marketers find new ways to track users. 10 CHAPTER 1 The Revolution Is Just Beginning THE FIRST THIRTY SECONDS It is important to realize that the rapid growth and change that has occurred in the first ten years of e-commerce represents just the beginning—what could be called the first thirty seconds of the e-commerce re volution.The same technologies that drove the first decade of e-commerce (described in Chapter 3) continue to evolve at exponential rates. Changes in underlying information technologies and continuing entrepreneurial innovation promise as much change in the next decade as seen in the last decade. The twenty-first century will be the age of a digitally enabled social and commercial life, the outlines of which we can barely perceive at this time. It appears likely that e-commerce will eventually impact nearly all commerce, or that most commerce will be e-commerce by the year 2050.Business fortunes are made—and lost—in periods of extraordinary change such as this. The next five years hold out extraordinary opportunities—as well as risks—for new and traditional businesses to exploit digital technology for market advantage. For society as a whole, the next few decades offer the possibility of extraordinary gains in social wealth as the digital revolution works its way through larger and larger segments of the world’s economy, offering the possibility of high rates of productivity and income growth in an inflation-free environment.This book will help you perceive and understand the opportunities and risks that lie ahead. By the time you finish, you will be able to identify the technological, business, and social forces that have shaped the first era of e-commerce and extend that understanding into the years ahead. WHAT IS E-COMMERCE? e-commerce the use of the Internet and the Web to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals Our focus in this book is e-commerce—the use of the Internet and the Web to transact business.More formally, we focus on digitally enabled commercial transactions between and among organizations and individuals. Each of these components of our working definition of e-commerce is important. Digitally enabled transactions incl ude all transactions mediated by digital technology. For the most part, this means transactions that occur over the Internet and the Web. Commercial transactions involve the exchange of value (e. g. , money) across organizational or individual boundaries in return for products and services.Exchange of value is important for understanding the limits of e-commerce. Without an exchange of value, no commerce occurs. THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS There is a debate among consultants and academics about the meaning and limitations of both e-commerce and e-business. Some argue that e-commerce encompasses the entire world of electronically based organizational activities that support a firm’s market exchanges—including a firm’s entire information system’s infrastructure (Rayport and Jaworksi, 2003).Others argue, on the other hand, that e-business encompasses the entire world of internal and external electronically based activities, including e-c ommerce (Kalakota and Robinson, 2003). E-commerce: The Revolution Is Just Beginning 11 FIGURE 1. 1 THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS E-commerce primarily involves transactions that cross firm boundaries. E-business primarily involves the application of digital technologies to business processes within the firm. We think that it is important to make a working distinction between e-commerce and e-business because we believe they refer to different phenomena.For purposes of this text, we will use the term e-business to refer primarily to the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm. For the most part, in our view, e-business does not include commercial transactions involving an exchange of value across organizational boundaries. For example, a company’s online inventory control mechanisms are a component of e-business, but such internal processes do not directly generate revenue for the firm from outside businesses or consumers, as e-commerce, by definition, does.It is true, however, that a firm’s e-business infrastructure provides support for online e-commerce exchanges; the same infrastructure and skill sets are involved in both e-business and e-commerce. Ecommerce and e-business systems blur together at the business firm boundary, at the point where internal business systems link up with suppliers or customers, for instance. E-business applications turn into e-commerce precisely when an exchange of value occurs (see Mesenbourg, U. S. Department of Commerce, August 2001 for a similar view).We will examine this intersection further in Chapter 12. e-business the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm WHY STUDY E-COMMERCE? Why are there college courses and textbooks on e-commerce when there are no courses or textbooks on â€Å"TV Commerce,† â€Å"Radio Commerce,à ¢â‚¬  â€Å"Direct Mail Commerce,† â€Å"Railroad Commerce,† or â€Å"Highway Commerce,† even though these 12 CHAPTER 1 The Revolution Is Just Beginning information asymmetry any disparity in relevant market information among parties in a transaction echnologies had profound impacts on commerce in the twentieth century and account for far more commerce than e-commerce? The reason, as you shall see, is that e-commerce technology (discussed in detail in Chapters 3 and 4) is different and more powerful than any of the other technologies we have seen in the past century. While these other technologies transformed economic life in the twentieth century, the evolving Internet and other information technologies will shape the twenty-first century. Prior to the development f e-commerce, the process of marketing and selling goods was a mass-marketing and sales force-driven process. Consumers were viewed as passive targets of advertising â€Å"campaigns† and brand ing blitzes intended to influence their long-term product perceptions and immediate purchasing behavior. Selling was conducted in well-insulated â€Å"channels. † Consumers were considered to be trapped by geographical and social boundaries, unable to search widely for the best price and quality. Information about prices, costs, and fees could be hidden from the consumer, creating profitable â€Å"information asymmetries† for the selling firm.Information asymmetry refers to any disparity in relevant market information among parties in a transaction. It was so expensive to change national or regional prices in traditional retailing (what are called menu costs) that â€Å"one national price† was the norm, and dynamic pricing to the marketplace— changing prices in real time—was unheard of. E-commerce has challenged much of this traditional business thinking. Table 1. 2 lists seven unique features of e-commerce technology that both challenge traditiona l business thinking and explain why we have so much interest in e-commerce. SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGYEach of the dimensions of e-commerce technology and their business significance listed in Table 1. 2 deserves a brief exploration, as well as a comparison to both traditional commerce and other forms of technology-enabled commerce. marketplace physical space you visit in order to transact Ubiquity In traditional commerce, a marketplace is a physical place you visit in order to transact. For example, television and radio typically motivate the consumer to go someplace to make a purchase. E-commerce, in contrast, is characterized by its ubiquity: it is available just about everywhere, at all times.It liberates the market from being restricted to a physical space and makes it possible to shop from your desktop, at home, at work, or even from your car, using mobile commerce. The result is called a marketspace—a marketplace extended beyond traditional boundarie s and removed from a temporal and geographic location. From a consumer point of view, ubiquity reduces transaction costs—the costs of participating in a market. To transact, it is no longer necessary that you spend time and money traveling to a market. At a broader level, the ubiquity of e-commerce lowers the cognitive energy required to transact in a marketspace.Cognitive energy refers to the mental effort required to complete a task. Humans generally seek to reduce cognitive energy outlays. When given a choice, humans will ubiquity available just about everywhere, at all times. marketspace marketplace extended beyond traditional boundaries and removed from a temporal and geographic location E-commerce: The Revolution Is Just Beginning 13 TABLE 1. 2 SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY BUSINESS SIGNIFICANCE The marketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location. â€Å"Marketspace† is created; shopping can take place anywhere.Customer convenience is enhanced, and shopping costs are reduced. Commerce is enabled across cultural and national boundaries seamlessly and without modification. â€Å"Marketspace† includes potentially billions of consumers and millions of businesses worldwide. There is one set of technical media standards across the globe. Video, audio, and text marketing messages are integrated into a single marketing message and consuming experience. Consumers are engaged in a dialog that dynamically adjusts the experience to the individual, and makes the consumer a co-participant in the process of delivering goods to the market.Information processing, storage, and communication costs drop dramatically, while currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap, and accurate. Personalization of marketing messages and customization of products and services are based on individual characteristics. E-COMMERCE TECHNOLOGY DIMENSION U biquity—Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime. Global reach—The technology reaches across national boundaries, around the earth. Universal standards—There is one set of technology standards, namely Internet standards.Richness—Video, audio, and text messages are possible. Interactivity—The technology works through interaction with the user. Information density—The technology reduces information costs and raises quality. Personalization/Customization—The technology allows personalized messages to be delivered to individuals as well as groups. choose the path requiring the least effort—the most convenient path (Shapiro and Varian, 1999; Tversky and Kahneman, 1981). Global Reach E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost-effectively than is true in traditional commerce.As a resul t, the potential market size for e-commerce merchants is roughly equal to the size of the world’s online population (over 1 billion in 2005, and growing rapidly, according to the Computer Industry 14 CHAPTER 1 The Revolution Is Just Beginning reach the total number of users or customers an e-commerce business can obtain Almanac) (Computer Industry Almanac, Inc. , 2006). The total number of users or customers an e-commerce business can obtain is a measure of its reach (Evans and Wurster, 1997). In contrast, most traditional commerce is local or regional—it involves local merchants or national merchants with local outlets.Television and radio stations, and newspapers, for instance, are primarily local and regional institutions with limited but powerful national networks that can attract a national audience. In contrast to e-commerce technology, these older commerce technologies do not easily cross national boundaries to a global audience. Universal Standards One striking ly unusual feature of e-commerce technologies is that the technical standards of the Internet, and therefore the technical standards for conducting e-commerce, are universal standards—they are shared by all nations around the world.In contrast, most traditional commerce technologies differ from one nation to the next. For instance, television and radio standards differ around the world, as does cell telephone technology. The universal technical standards of the Internet and e-commerce greatly lower market entry costs—the cost merchants must pay just to bring their goods to market. At the same time, for consumers, universal standards reduce search costs—the effort required to find suitable products.And by creating a single, one-world marketspace, where prices and product descriptions can be inexpensively displayed for all to see, price discovery becomes simpler, faster, and more accurate (Bakos, 1997; Kambil, 1997). And users of the Internet, both businesses and individuals, experience network externalities—benefits that arise because everyone uses the same technology. With e-commerce technologies, it is possible for the first time in history to easily find many of the suppliers, prices, and delivery terms of a specific product anywhere in the world, and to view them in a coherent, comparative environment.Although this is not necessarily realistic today for all or many products, it is a potential that will be exploited in the future. universal standards standards that are shared by all nations around the world Richness richness the complexity and content of a message Information richness refers to the complexity and content of a message (Evans and Wurster, 1999). Traditional markets, national sales forces, and small retail stores have great richness: they are able to provide personal, face-to-face service using aural and visual cues when making a sale.The richness of traditional markets makes them a powerful selling or commercial env ironment. Prior to the development of the Web, there was a trade-off between richness and reach: the larger the audience reached, the less rich the message (see Figure 1. 2). interactivity technology that allows for two-way communication between merchant and consumer Interactivity Unlike any of the commercial technologies of the twentieth century, with the possible exception of the telephone, e-commerce technologies allow for interactivity, meaning they enable two-way communication between merchant and consumer.Television, for instance, cannot ask viewers any questions or enter into conversations E-commerce: The Revolution Is Just Beginning 15 FIGURE 1. 2 THE CHANGING TRADE-OFF BETWEEN RICHNESS AND REACH E-commerce technologies have changed the traditional tradeoff between richness and reach. The Internet and the Web can deliver, to an audience of millions, â€Å"rich† marketing messages with text, video, and audio, in a way not possible with traditional commerce technologies such as radio, television, or magazines. SOURCE: Evans and Wurster, 2000. ith them, and it cannot request that customer information be entered into a form. In contrast, all of these activities are possible on an e-commerce Web site. Interactivity allows an online merchant to engage a consumer in ways similar to a face-to-face experience, but on a much more massive, global scale. Information Density The Internet and the Web vastly increase information density—the total amount and quality of information available to all market participants, consumers, and merchants alike. E-commerce technologies reduce information collection, storage, processing, and communication costs.At the same time, these technologies increase greatly the currency, accuracy, and timeliness of information—making information more useful and important than ever. As a result, information becomes more plentiful, less expensive, and of higher quality. A number of business consequences result from the gro wth in information density. In e-commerce markets, prices and costs become more transparent. Price transparency refers to the ease with which consumers can find out the variety of prices in a market; cost transparency refers to the ability of consumers to discover the actual costs merchants pay for products (Sinha, 2000).But there are advantages for merchants as well. Online merchants can discover much more about consumers; this allows merchants to segment the market into groups willing to pay different prices and permits them to engage in price discrimination—selling the same goods, or nearly information density the total amount and quality of information available to all market participants 16 CHAPTER 1 The Revolution Is Just Beginning the same goods, to different targeted groups at different prices.For instance, an online merchant can discover a consumer’s avid interest in expensive exotic vacations, and then pitch expensive exotic vacation plans to that consumer at a premium price, knowing this person is willing to pay extra for such a vacation. At the same time, the online merchant can pitch the same vacation plan at a lower price to more price-sensitive consumers (Shapiro and Varian, 1999). Merchants also have enhanced abilities to differentiate their products in terms of cost, brand, and quality. Personalization/Customization ersonalization the targeting of marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases customization changing the delivered product or service based on a user's preferences or prior behavior E-commerce technologies permit personalization: merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases. The technology also permits customization— changing the delivered product or service based on a user’s preferences or prior behavior.Given the interactive n ature of e-commerce technology, much information about the consumer can be gathered in the marketplace at the moment of purchase. With the increase in information density, a great deal of information about the consumer’s past purchases and behavior can be stored and used by online merchants. The result is a level of personalization and customization unthinkable with existing commerce technologies. For instance, you may be able to shape what you see on television by selecting a channel, but you cannot change the contents of the channel you have chosen.In contrast, the online verson of the Wall Street Journal allows you to select the type of news stories you want to see first, and gives you the opportunity to be alerted when certain events happen. Now, let’s return to the question that motivated this section: Why study e-commerce? The answer is simply that e-commerce technologies—and the digital markets that result—promise to bring about some fundamental, u nprecedented shifts in commerce. One of these shifts, for instance, appears to be a large reduction in information asymmetry among all market participants (consumers and merchants).In the past, merchants and manufacturers were able to prevent consumers from learning about their costs, price discrimination strategies, and profits from sales. This becomes more difficult with e-commerce, and the entire marketplace potentially becomes highly price competitive. In addition, the unique dimensions of e-commerce technologies listed in Table 1. 2 also suggest many new possibilities for marketing and selling—a powerful set of interactive, personalized, and rich messages are available for delivery to segmented, targeted audiences.E-commerce technologies make it possible for merchants to know much more about consumers and to be able to use this information more effectively than was ever true in the past. Potentially, online merchants could use this new information to develop new informat ion asymmetries, enhance their ability to brand products, charge premium prices for high-quality service, and segment the market into an endless number of subgroups, each receiving a different price. To complicate matters further, these same technologies make it possible for merchants to know more about other merchants than was ever true in the past.This presents the possibility that merchants might collude on prices rather than compete and drive overall average prices up. This strategy works especially well when there are just a E-commerce: The Revolution Is Just Beginning 17 TABLE 1. 3 MAJOR TYPES OF E-COMMERCE EXAMPLE Amazon. com is a general merchandiser that sells consumer products to retail consumers. ChemConnect. com is a chemical industry exchange that creates an electronic market for chemical producers and users. eBay. com creates a marketspace where consumers can auction or sell goods directly to other consumers.Gnutella is a software application that permits consumers to share music with one another directly, without the intervention of a market maker as in C2C e-commerce. Wireless mobile devices such as PDAs (personal digital assistants) or cell phones can be used to conduct commercial transactions. TYPE OF E-COMMERCE B2C—Business-to-Consumer B2B—Business-to-Business C2C—Consumer-to-Consumer P2P—Peer-to-Peer M-commerce—Mobile commerce few suppliers (Varian, 2000b). We examine these different visions of e-commerce— friction-free commerce versus a brand-driven imperfect marketplace—further in Section 1. 2 and throughout the book.TYPES OF E-COMMERCE There are a variety of different types of e-commerce and many different ways to characterize these types. Table 1. 3 lists the five major types of e-commerce discussed in this book. 1 For the most part, we distinguish different types of e-commerce by the nature of the market relationship—who is selling to whom. The exceptions are P2P and m-commerce, w hich are technology-based distinctions. Business-to-Consumer (B2C) E-commerce The most commonly discussed type of e-commerce is Business-to-Consumer (B2C) e-commerce, in which online businesses attempt to reach individual consumers.Even though B2C is comparatively small ($140–$170 billion in 2005), it has grown exponentially since 1995, and is the type of e-commerce that most consumers are likely to encounter. Within the B2C category, there are many different types of business models. Chapter 2 has a detailed discussion of seven different B2C business mod1 Business-to-Consumer (B2C) e-commerce online businesses selling to individual consumers Business-to-Government (B2G) e-commerce can be considered yet another type of e-commerce.For the purposes of this text, we subsume B2G e-commerce within B2B e-commerce, viewing the government as simply a form of business when it acts as a procurer of goods and/or services. 18 CHAPTER 1 The Revolution Is Just Beginning els: portals, onlin e retailers, content providers, transaction brokers, market creators, service providers, and community providers. Business-to-Business (B2B) E-commerce Business-to-Business (B2B) e-commerce online businesses selling to other businesses Business-to-Business (B2B) e-commerce, in which businesses focus on selling to other businesses, is the largest form of e-commerce, with over $1. trillion in transactions in the United States in 2005. There was an estimated $13 trillion in business-to-business exchanges of all kinds, online and offline, in 2002, suggesting that B2B e-commerce has significant growth potential (eMarketer, Inc. , 2003). The ultimate size of B2B e-commerce could be huge. There are two primary business models used within the B2B arena: Net marketplaces, which include e-distributors, e-procurement companies, exchanges and industry consortia, and private industrial networks, which include single firm networks and industry-wide networks.Consumer-to-Consumer (C2C) E-commerce C onsumer-toConsumer (C2C) e-commerce consumers selling to other consumers Consumer-to-Consumer (C2C) e-commerce provides a way for consumers to sell to each other, with the help of an online market maker such as the auction site eBay. Given that in 2005, eBay generated more than $44 billion in gross merchandise volume around the world, it is probably safe to estimate that the size of the global C2C market in 2006 will be over $50 billion (eBay, 2006).In C2C e-commerce, the consumer prepares the product for market, places the product for auction or sale, and relies on the market maker to provide catalog, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for. Peer-to-Peer (P2P) E-commerce Peer-to-peer technology enables Internet users to share files and computer resources directly without having to go through a central Web server. In peer-to-peer’s purest form, no intermediary is required, although in fact, most P 2P networks make use of intermediary â€Å"super servers† to speed operations.Since 1999, entrepreneurs and venture capitalists have attempted to adapt various aspects of peer-to-peer technology into Peer-to-Peer (P2P) e-commerce. To date there have been very few successful commercial applications of P2P e-commerce with the notable exception of illegal downloading of copyrighted music. Napster. com, which was established to aid Internet users in finding and sharing online music files, was the most well-known example of peer-to-peer e-commerce until it was put out of business in 2001 by a series of negative court decisions.However, other file-sharing networks, such as Kazaa and Grokster, quickly emerged to take Napster’s place. These networks have also been subjected to legal challenge. For instance, in 2002, the Recording Industry of America, a trade organization of the largest recording companies, filed a federal lawsuit against Kazaa and Grokster for violating copyri ght law by enabling and encouraging members to exchange copyrighted music tracks without compensation to the copyright holders. The Supreme Court issued a decision in the case against the file-sharing networks in June 2005.Read the case study at the end of the chapter for a further look at how file-sharing networks work and the legal issues surrounding them. Peer-to-Peer (P2P) e-commerce use of peer-to-peer technology, which enables Internet users to share files and computer resources directly without having to go through a central Web server, in e-commerce E-commerce: The Revolution Is Just Beginning 19 Mobile Commerce (M-commerce) Mobile commerce, or m-commerce, refers to the use of wireless digital devices to enable transactions on the Web.Described more fully in Chapter 3, m-commerce involves the use of wireless networks to connect cell phones, handheld devices such Blackberries, and personal computers to the Web. Once connected, mobile consumers can conduct transactions, includ ing stock trades, in-store price comparisons, banking, travel reservations, and more. Thus far, m-commerce is used most widely in Japan and Europe (especially in Scandinavia), where cell phones are more prevalent than in the United States; however, as discussed in the next section, m-commerce is expected to grow rapidly in the United States over the next five years. obile commerce (m-commerce) use of wireless digital devices to enable transactions on the Web GROWTH OF THE INTERNET AND THE WEB The technology juggernauts behind e-commerce are the Internet and the World Wide Web. Without both of these technologies, e-commerce as we know it would be impossible. We describe the Internet and the Web in some detail in Chapter 3. The Internet is a worldwide network of computer networks built on common standards.Created in the late 1960s to connect a small number of mainframe computers and their users, the Internet has since grown into the world’s largest network, connecting over 500 million computers worldwide. The Internet links businesses, educational institutions, government agencies, and individuals together, and provides users with services such as e-mail, document transfer, newsgroups, shopping, research, instant messaging, music, videos, and news. Figure 1. 3 illustrates one way to measure the growth of the Internet, by looking at the number of Internet hosts with domain names. An Internet host is defined by the Internet Software Consortium, which conducts this survey, as any IP address that returns a domain name in the in-addr. arpa domain, which is a special part of the DNS namespace that resolves IP addresses into domain names. ) In January 2005, there were over 317 million Internet hosts in over 245 countries, up from a mere 70 million in 2000. The number of Internet hosts has been growing at a rate of around 35% a year since 2000 (Internet Systems Consortium, Inc. , 2005). The Internet has shown extraordinary growth patterns when compared to other e lectronic technologies of the past.It took radio 38 years to achieve a 30% share of U. S. households. It took television 17 years to achieve a 30% share. Since the invention of a graphical user interface for the World Wide Web in 1993, it took only 10 years for the Internet/Web to achieve a 53% share of U. S. households. The World Wide Web (the Web) is the most popular service that runs on the Internet infrastructure. The Web is the â€Å"killer application† that made the Internet commercially interesting and extraordinarily popular. The Web was developed in the early 1990s and hence is of much more recent vintage than the Internet.We describe the Web in some detail in Chapter 3. The Web provides easy access to over 8 billion Web pages created in a language called HTML (HyperText Markup Language). These HTML pages contain information—including text, graphics, animations, and other Internet Worldwide network of computer networks built on common standards World Wide Web (Web) the most popular service that runs on the Internet; provides easy access to Web pages 20 CHAPTER 1 The Revolution Is Just Beginning FIGURE 1. 3 THE GROWTH OF THE INTERNET, MEASURED BY NUMBER OF INTERNET HOSTS WITH DOMAIN NAMESGrowth in the size of the Internet 1993-2005 as measured by the number of Internet hosts with domain names. SOURCE: Internet Systems Consortium, Inc. (www. isoc. org), 2005. objects—made available for public use. You can find an exceptionally wide range of information on Web pages, ranging from the entire catalog of Sears Roebuck, to the entire collection of public records from the Securities and Exchange Commission, to the card catalog of your local library, to millions of music tracks (some of them legal), and videos. The Internet prior to the Web was primarily used for text communications, file transfers, and remote computing.The Web introduced far more powerful and commercially interesting, colorful multimedia capabilities of direct relevance t o commerce. In essence, the Web added color, voice, and video to the Internet, creating a communications infrastructure and information storage system that rivals television, radio, magazines, and even libraries. There is no precise measurement of the number of Web pages in existence, in part because today’s search engines index only a portion of the known universe of Web pages, and also because the size of the Web universe is unknown.Google, the Web’s most popular and perhaps most comprehensive Web search engine, currently E-commerce: The Revolution Is Just Beginning 21 FIGURE 1. 4 THE GROWTH OF WEB CONTENT AS MEASURED BY PAGES INDEXED BY GOOGLE The number of Web pages indexed by Google has grown from about 1 billion in 1998 to over 8 billion in 2005. SOURCE: Based on data from Google Inc. , 2005. indexes over 8 billion pages. There are also an estimated 600 billion Web pages in the so-called â€Å"deep Web† that are not indexed by ordinary search engines such as Google.Nevertheless, it would be accurate to say that Web content has grown exponentially since 1993. Figure 1. 4 describes the growth of Web content measured by the number of pages indexed by Google. Read Insight on Technology: Spider Webs, Bow Ties, Scale-Free Networks, and the Deep Web on pages 22–23 for the latest view of researchers on the structure of the Web. ORIGINS AND GROWTH OF E-COMMERCE It is difficult to pinpoint just when e-commerce began. There were several precursors to e-commerce.In the late 1970s, a pharmaceutical firm named Baxter Healthcare initiated a primitive form of B2B e-commerce by using a telephone-based modem that permitted hospitals to reorder supplies from Baxter. This system was later expanded during the 1980s into a PC-based remote order entry system and was widely copied throughout the United States long before the Internet became a commercial environment. The 1980s saw the development of Electronic Data Interchange (EDI) 22 CHAPTER 1 The R evolution Is Just Beginning INSIGHT ON TECHNOLOGYSPIDER WEBS, BOW TIES, SCALE-FREE NETWORKS, AND THE DEEP WEB The World Wide Web conjures up images of a giant spider web where everything is connected to everything else in a random pattern, and you can go from one edge of the web to another by just following the right links. Theoretically, that’s what makes the Web different from a typical index system—you can follow hyperlinks from one page to another. In the â€Å"small world† theory of the Web, every Web page is thought to be separated from any other Web page by an average of about 19 clicks.In 1968, sociologist Stanley Milgram invented small-world theory for social networks by noting that every human was separated from any other human by only six degrees of separation. On the Web, the small world theory was supported by early research on a small sampling of Web sites. But recent research conducted jointly by scientists at IBM, Compaq, and AltaVista found some thing entirely different. These scientists used AltaVista’s Web crawler â€Å"Scooter† to identify 200 million Web pages and follow 1. 5 billion links on these pages.The researchers discovered that the Web was not like a spider web at all, but rather like a bow tie (see figure below). The bow-tie Web had a â€Å"strongly connected component† (SCC) composed of about 56 million Web pages. On the right side of the bow tie was a set of 44 million OUT pages that you could get to from the center, but could not return to the center from. OUT pages tended to be corporate intranet and other (continued) E-commerce: The Revolution Is Just Beginning 23 Web site pages that are designed to trap you at the site when you land.On the left side of the bow tie was a set of 44 million IN pages from which you could get to the center, but that you could not travel to from the center. These were recently created â€Å"newbie† pages that had not yet been linked to by many center pages. In addition, 43 million pages were classified as â€Å"tendrils,† pages that did not link to the center and could not be linked to from the center. However, the tendril pages were sometimes linked to IN and/or OUT pages. Occasionally, tendrils linked to one another without passing through the center (these are called â€Å"tubes†).Finally, there were 16 million pages totally disconnected from everything. Further evidence for the non-random and structured nature of the Web is provided in research performed by Albert-Lazlo Barabasi at the University of Notre Dame. Barabasi’s team found that far from being a random, exponentially exploding network of 8 billion Web pages, activity on the Web was actually highly concentrated in â€Å"very connected super nodes† that provided the connectivity to less wellconnected nodes.Barabasi dubbed this type of network a â€Å"scale-free† network and found parallels in the growth of cancers, disease transmiss ion, and computer viruses. As its turns out, scale-free networks are highly vulnerable to destruction. Destroy their super nodes and transmission of messages breaks down rapidly. On the upside, if you are a marketer trying to â€Å"spread the message† about your products, place your products on one of the super nodes and watch the news spread. Or build super nodes like Kazaa did (see the case study at the end of the chapter) and attract a huge audience.Thus, the picture of the Web that emerges from this research is quite different from earlier reports. The notion that most pairs of Web pages are separated by a handful of links, almost always under 20, and that the number of connections would grow exponentially with the size of the Web, is not supported. In fact, there is a 75% chance that there is no path from one randomly chosen page to another. With this knowledge, it now becomes clear why the most advanced Web search engines only index about 6 million Web sites, when the o verall population of Internet hosts is over 300 million.Most Web sites cannot be found by search engines because their pages are not well-connected or linked to the central core of the Web. Another important finding is the identification of a â€Å"deep Web† composed of over 600 billion Web pages that are not indexed at all. The pages are not easily accessible to Web crawlers that most search engine companies use. Instead, these pages are either proprietary (not available to crawlers and non-subscribers, such as the pages of the Wall Street Journal) or are not easily available from home pages. In the last few years, new search engines (such as the medical search engine Mamma. om) and older ones such as Yahoo! have been revised to enable them to search the deep Web. Because e-commerce revenues in part depend on customers being able to find a Web site using search engines, Web site managers need to take steps to ensure their Web pages are part of the connected central core, or super nodes of the Web. One way to do this is to make sure the site has as many links as possible to and from other relevant sites, especially to other sites within the SCC. SOURCES: â€Å"Deep Web Research,† by Marcus P. Zillman, Llrx. com, July 2005; â€Å"Momma. om Conquers Deep Web,† Mammamediasolutions. com, June 20, 2005; â€Å"Yahoo Mines the ‘Deep Web,’† by Tim Gray, Internetnews. com, June 17, 2005; Linked: The New Science of Networks by Albert-Lazlo Barabasi. Cambridge, MA: Perseus Publishing (2002); â€Å"The Bowtie Theory Explains Link Popularity,† by John Heard, Searchengineposition. com, June 1, 2000; â€Å"Graph Structure in the Web,† by A. Broder, R. Kumar, F. Maghoul, P. Raghaven, S. Rajagopalan, R. Stata, A. Tomkins, and J. Wiener, Proceedings of the 9th International World Wide Web Conference, Amsterdam, The Netherlands, pages 309–320.Elsevier Science, May 2000. 24 CHAPTER 1 The Revolution Is Just Beginning FI GURE 1. 5 THE GROWTH OF B2C E-COMMERCE In the early years, B2C e-commerce was doubling or tripling each year. This explosive early growth rate has since slowed. Currently, B2C e-commerce is growing at about 25% per year, with seasonal spikes showing stronger year-to-year gains. [Note: Revenue shown includes retail sales, travel and financial services revenues. ] SOURCES: Based on data from eMarketer, Inc. , 2005a;

Lindsay lohan

Mary-Kate and Ashley Olsen had planned to spend their 18th birthday on June 13 side by side. But when the much-hyped day arrived, Ashley was left to celebrate without her twin sister, first poolside at the Beverly Hills Hotel and then with a Jaunt to Mexico with two pals. One week later the reason for Mary-Skate's absence became clear: The star, recently the focus of speculation regarding her Increasingly frail-looking body, had been admitted to an undisclosed facility for treatment related to an eating disorder. â€Å"This is a challenge that Mary-Kate has made a decision to face,† says her rep Michael Poignant. â€Å"This is a challenge she will meet. † The admission struck a sad and troubled note for Mary-Kate, who along with Ashley has turned their image as positive, clean-scrubbed role models into a business empire that grossed more than $1 billion in sales last year. Yet to friends, family and even casual onlookers, the subject of Mary-Skate's health has been a so urce of concern In recent months. Although the petite twins (Mary-Kate is 5'2†³; Ashley Is 5'1 have always been slender, Mary-Kate appeared to be painfully thin of late.So widespread was the talk about her weight that the actress herself poked fun at It when the twins hosted the May 15 Saturday Night Live; playing paparazzi photographers, they shouted, â€Å"Mary-Kate, you're so skinny?eat a sandwich! † Sadly, beneath the playfulness was a health crisis. â€Å"There was an intervention,† says someone who has known the Olsen for several years, adding that the twins' father, Dave, and Mary-Skate's therapist committed her to a treatment facility soon after her June 7 high school graduation. â€Å"They finally reached the point where they had to act. They didn't want to find her dead on the floor from not eating. Those close to the star say that there was no single Incident that triggered the decision to seek professional treatment; rather, Mary-Skate's problems had steadily worsened with time. One source says that the change In Mary-Kate, who dates Boston University student David Guttenberg, 21 (his dad Is Trademarks studio expounder Jeffrey Guttenberg), first became evident two years ago. â€Å"She looked different,† says the source. â€Å"She developed circles under her eyes. † Staging the intervention before Mary-Kate turned 18 meant that her parents still had a legal right o seek treatment for her.It isn't the first time her family has tried to aid Mary-Kate, whom close pals call MS. According to one source, after the actress got into a minor car accident about a year and a half ago her father tried motivating her to eat by telling her she couldn't get her black Range Rover back until she gained some weight. Another source says the family hired someone to monitor Mary-Skate's eating. â€Å"Sometimes she was taken out of school to eat,† says a former classmate at Campbell Hall high school. â€Å"During the last year sh e had an adult eating with her most of the time.Everyone knew how skinny she was. † disorder],† says director Dennis Gordon, who helped the twins' spring comedy New York Minute. â€Å"l had a lot of meals with her, and it didn't seem there was anything wrong. † Adds Dir. Drew Pinky, the TV psychologist turned actor who played the twins' father in New York Minute: â€Å"She was the sweetest of the two. But I didn't notice anything. She; hid it well. † Such deception is typical behavior among eating-disorder sufferers, many of whom go to elaborate lengths to disguise their problems. â€Å"Everyone was very angry with Mary-Kate at first,† says a source.She's lied so much and for so long. It's part of the illness. † In fact, both Mary-Kate and Ashley flatly denied such problems in an interview with PEOPLE in April. â€Å"Being in the public eye, you're labeled that you have an eating disorder,† Ashley said at the time. â€Å"You have a drug addiction,† said Mary- Kate. â€Å"We don't have problems! † declared Ashley. The fraternal twins?MS has long been known as the free-spirited one; Ashley as the sophisticated one?have also put on a united front dealing with other recent challenges, including the dismal $13. 7 million box office for New York Minute. We ere really disappointed,† says Gordon. â€Å"They were incredibly mature about it. They said, ‘Okay, I guess we can't open a movie Just yet. Next! ‘ † Showbiz vets since making their debut on Full House at Just 9 months old, the girls have long been praised for their business savvy and solid grounding. But others have wondered if the stress placed on their slender shoulders would eventually take a toll, as it has on other young Hollywood stars (see sidebar). â€Å"The pressures of the entertainment and fashion business are pressures that Mary-Kate and Ashley both have always thrived on,† says a friend.That said, â€Å"ther e's no doubt that the pressure of being successful, running a business and planning for college?that's a lot. † Still, adds the friend, â€Å"l don't think you can draw a straight line between the pressure in nobody's life to this sort of illness. † Says Carolyn Costing, the director of the Eating Disorder Center of California and the Monte Indo Treatment Center in Malibu: â€Å"We look at it like there's a gun, a bullet and the trigger: The gun is biological predisposition, the culture is the bullet and something like the stress of being a celebrity is what pulls the trigger.Not helping matters is the ever-present skinny sweepstakes among young women, many of whom worship stars like Mary-Kate as a source of â€Å"administration,† Shortly after Mary-Skate's appearance at a May premiere, Web surfers on a bulletin board at guru. Com posted messages like, â€Å"I'm convinced she's Ana [a slang term for anorexic]! † Another online follower took notice of Mary -Skate's red string bracelet, which some teens and young adults wear as a signal of their â€Å"Ana† pride and to remind themselves not to eat. (Her rep's response: â€Å"l don't believe that's true [of Mary-Kate]. â€Å")

Portfolio and Reflection Essay Example | Topics and Well Written Essays - 4000 words

Portfolio and Reflection - Essay Example It was a very good experience doing social work; it was different from the usual corporate sector and it gave me lot of opportunities to learn a lot. I gained knowledge about variety of tasks and explored myself about my strengths and weaknesses. My job title was Business Organizer which incorporated a variety of tasks of different types which are explained in this report. Motivation First of all, I would like to discuss about motivation and how this motivation works for a social work environment. If we go to theoretical background we will have a look about McGregor and Maslow’s work and I will apply it on a social work context. According to McGregor, in his theory X which he gave in his book in 1960, work is distasteful and people do it just for money and security, they can only work when being observed. On the other hand theory Y people are self motivated to learn and accept responsibility for work.(The Human Side of Enterprise, 1960).I found myself as theory Y worker who wa nts more participative kind of environment given to me at Hadfield. I applied for this job because I wanted to improve my employability skills and I wanted to gain experience. I wanted to know how I work even when my job is not clearly defined. My job was more like a record keeping an administrative job where I had to do tasks like photocopying and filing. Still I was able to satisfy my supervisor about my competencies and hard work. There was more participation from workforce and I got my communication skills improved The first couple of days were hectic for me as I did not know about the organization; I searched on internet about the rights and responsibilities of citizenship. But tasks included variety and depending on the need I had to do different tasks. At first I got confused about the administrative and recordkeeping work because my tasks kept on changing in first few days. But then I realized that jobs at higher levels are even more competitive so I decided to develop stami na of working for variety of tasks so that I could be able for higher jobs. I was given full chance of communicating my point of view and my ideas and the colleagues and supervisor treated me very nicely. There were certain things which I did not know about myself before the experience at Hadfield e.g. my tasks were not hard but required lot of determination and I found myself to be fairly responsible about the tasks given to me. I had never thought of using my creativity to problem solving to such an extent before. The supervisor tried to test my capability, and this proved very helpful for me because I discovered and explored my own capabilities. If motivation concept is seen with a different perspective we can take Maslow’s hierarchy. According to Maslow, in his hierarchy of motivation given in his research paper, different people have different level of needs which motivates them to work. Money and security needs are the lower level needs and when they are fulfilled, peop le earn to fulfill their higher order needs. At the stage of self actualization, a person derives his identity from work and he works because he is intrinsically motivated to work (A Theory of human Motivation, 1943). I found myself on the esteem needs of Maslow’s hierarchy. Self-Actualization Esteem Needs Social Needs Safety Needs Physiological Needs I have reached that point in my career where I started deriving my identity from my work. I worked for satisfying myself as social work gives me satisfaction. Context of social work is little bit different from the usual jobs, here money is not the motivator but inner self is. So the higher order needs are in some way related to social work. I applied for this job to gain experience and to improve my

History assignmnt Essay Example | Topics and Well Written Essays - 500 words

History assignmnt - Essay Example bsite has been on-going with the effort to record and preserve the record of September 11, through the collection and storage of information from first-hand encounter of the event, digital photographs and artworks, and a variety of other digital materials associated to the attacks. The website also uses the events as a technique of evaluating in what manner history is being documented and conserved in the 21st century. It also helps historian’s better collect, preserve, and writes history in the new century. The main goal is to create an enduring documentation of events of 9-11-2001. The Archive has so far made contracting agreements establishing partnership with Library of Congress, which accepted a copy of the as its Archive permanent collections this ensures long-term preservation. Over the years, the archive has accumulated more than 150,000 digital files: stories, photographs, digital art images, videos, official documents, and oral histories. Altogether, these resources provide the substantial accounts of the event and instantaneous reactions of the events in New York, Arlington, and Shanksville. The site has also managed to archive record on the subsequent kaleidoscopic chronological remembrances that have been at the heart for much of the scholarship on September 11th. The September 11 website author being lovers of history and media, majority of them working in the George Mason University lack visible differences and thus the reason behind the continued success of the web page. Their love for history is said to be one of the pillars of the web page. Also, the model of data collection and preservation is a significant contributor to its continued success. Being in the 21st century majority of readers would prefer to get information on the website. This gives the September 11 a boost to its success as there are not many such sights where individuals can access such information. The website â€Å"The September 11† has been providing software’s that

Single Tuned Harmonic Filter Design Research Paper

Single Tuned Harmonic Filter Design - Research Paper Example Therefre, the filter re ued t ntrl hrmni in the netwrk. T deign uh filter, it i neery t: Minimiztin f ttl t f the filter (bjetive funtin) ubjet t ertin vlue f filter rmeter (ntrint) i the bigget hllenge fr filter deign. n timiztin re n be defined mximiztin (r minimiztin) f n bjetive funtin, f(x), ubjet t me ntrint f the rblem, g(x). Thee ntrint define the feible regin, i.e. regin tht ntin ible lutin f the rblem. The bjetive funtin i t minimize the ttl t f the filter n be frmulted : where F i the ttl filter t; R the filter reitne; X the fundmentl frequeny itive retne; XL the fundmentl frequeny indutive retne; Q the qulity ftr; X0 the rennt retne; min nd mx: dente the minimum nd the mximum limit, reetively. The ue f nventinl L tehnique i ulr, ne my ue due t the imliity f ytem mdeling nd bjetive. The qulity ftr determine hw hrly the filter i tuned t the trget hrmni rder. The dmittne f high Q filter dr ff quikly t frequenie bve nd belw it trget vlue. The timl Q fr ingle tuned filter led t hve the lwet hrmni vltge ditrtin. where ; ; ; U the inrementl t f the itr nd it i equl t 170103LE/MVR; UL the inrementl t f the retr nd it i equl t 170103LE/MVR; n the hrmni number; K=ntnt=0.4KW/MVR ; If the fundmentl urrent mnent; Ih the hrmni urrent mnent; U i ntnt, nd it i equl t : The fuzzy liner rgrmming tehnique i ued t minimize the bjetive funtin in Eq. (1) nd tify the filter rmeter (ntrint). ... The imedne f ingle tuned filter (Z) n be exreed : (7) t the trget hrmni rder, the filter retne i: (8) nd (9) where h i the trget hrmni rder. The ttl filter t bjetive funtin f filter deign f Eq. (1) n be exreed : (10) =K1R+K2X+K3XL where ; ; ; U the inrementl t f the itr nd it i equl t 170103LE/MVR; UL the inrementl t f the retr nd it i equl t 170103LE/MVR; n the hrmni number; K=ntnt=0.4KW/MVR ; If the fundmentl urrent mnent; Ih the hrmni urrent mnent; U i ntnt, nd it i equl t : (11) U=8760vFuUu where Fu i the Filter utiliztin ftr whih i equl t 1.0 nd Uu i the t f wer l/KWH whih i equl t 0.2 L.E. (12) nd N i the filter life=15 yer; I i the interet rte=0.05. 3.2. FD uing fuzzy liner rgrmming (FL) timiztin tehnique The fuzzy liner rgrmming tehnique i ued t minimize the bjetive funtin in Eq. (1) nd tify the filter rmeter (ntrint). The differene between L nd FL tehnique i tht the vlue nd ertr uing the nventinl L re ri vlue, while, the vlue nd/r ertr f the FL re Fuzzified hrteriti, uing FL tehnique. 3.2.1. Fuzzy mdeling f ntrint The red tringulr fuzzy mdeling fr the filter reitne i hwn in Fig. 1. It i een tht, memberhi funtin fr the reitne i equl t 1 igned t Rmed, eh mnent f filter i rereented by tw liner ntrint: the lwer limit nd the uer limit. The lwer limit memberhi fr the reitne f the filter i deribed fllw: (13) nd the uer reitne limit memberhi i: (14) imilrly, the red tringulr fuzzy mdeling fr the itive retne i hwn in Fig. 2. The lwer limit memberhi fr the itive retne f the filter i deribed fllw: (15) nd the uer itive retne limit memberhi i: (16) imilrly, the red tringulr fuzzy mdeling fr the indutive retne i hwn in Fig. 3. The lwer limit memberhi fr the indutive retne f the filter i deribed

Why did the social war between Rome and her Italian allies break out Essay

Why did the social war between Rome and her Italian allies break out in 90 BC - Essay Example The crisis eventually culminated into a social war in 90 BC. It is called the social war because it was between Rome and its allies. According to Salmon (1958), the social war between Rome and her Italian allies was waged between 91 and 88 BC; it was mainly between several cities in Italy and the Roman Republic (162). Before the war, the Italian cities had been Roman allies for many centuries. Fundamentally, the ancient Rome’s Italian allies who were against the Roman franchise had waged the war. Previously, the allies in southern and central Italy had fought with Rome in various wars and therefore they had grown restive under the autocratic rule in Rome. Their allies were interested in gaining the Roman citizenship and the privileges that come along with it (Ogilvie, 1980, 18). In 91 BC, in a bid to pursue this interest, Marcus Drusus, the Roman tribune, attempted to solve this problem through a legislation proposal that would have ensured that all Italians are admitted to citizenship. This proposal led to a furious debate in the Senate; those opposed to it were so bitter that they assassinated Drusus. As a result, the Italian allies were frustrated and rose into revolt (Brunt 1971, 13). It is important to first understand the situation between Rome and Italian alliances prior to the war. Gabba (1976) observes that the Early Italian campaigns of between 458 and 396 BC saw the conquest of Italy by the Romans thus resulting into a collection of alliances between the Italian communities, cities, and Rome. The alliances collection was on favourable terms influenced by whether a certain city had been defeated in war or if its alliance with Rome was voluntary. Theoretically, these cities were independent but in practice, Rome had authority over them as it had the right the right to demand tribute money from them, and their desirable number of soldiers. Two centuries later, two- thirds of Roman soldiers were from the Italian allies. This meant that

How do you feel that Native Americans were portrayed in the works of Essay

How do you feel that Native Americans were portrayed in the works of Ben Franklin and John Smith Do the authors treat them in a - Essay Example However, at the same time, he started viewing Native Americans favorably on the same lines as the White Americans, degrading or belittling the Black Americans in some of his writings. In his 1751 essay, â€Å"Observations Concerning the Increase of Mankind,† Franklin wished that America could be for whites and Native Indians only, writing, â€Å"Why increase the Sons of Africa, by Planting them in America, where we have so fair an opportunity, by excluding all Blacks and Tawnys, of increasing the lovely White† (). In addition, Franklin understood the culture of Native Americans and also lobbied to protect them, against any retribution by the majority population. He wrote, â€Å"If an Indian injures me, does it follow that I may revenge that injury on all Indians? ... If it be right to kill men for such a reason, then, should any man with a freckled face and red hair kill a wife or child of mine.† (). Capt. John Smith, an English soldier, explorer and author, was known for establishing the first English settlement in North America in Jamestown, Virginia.

The Lady or The Tiger Essay Example | Topics and Well Written Essays - 1000 words

The Lady or The Tiger - Essay Example During the trial, the lover looked closely for any signs from the Princess, who was seated at the King’s right hand. This essay therefore explores the possible course of action of the Princess’ lover selecting one door over the other. One’s personal contention is that the lover would be led to the door where the tiger would emerge. At one side of the coin, the princess could lead her lover to the door to the lady. There is the possibility that the Princess could love him so much and would not even dare seeing the consequence that he would be devoured by the ferocious tiger. As Stockton initially emphasized, â€Å"she was the apple of his eye, and was loved by him above all humanity† (3). The love that was supposedly shared happily between them for several months was enough to ensure that the Princess would like him to live and spare his life from being killed by the tiger. Likewise, the princess’ skills, power, and notoriety exemplify possessing sim ilar traits as that of his father, the king. Therefore, by leading her lover to the door to the lady, she could think of ways and means to send that lady to the same fate that her lover encountered. As she used her skills and power to determine which particular door contains the lady and which one contains the tiger, she could likewise use this power to manipulate the fate and destiny of the lady who would supposedly marry her lover. By saving him from being eaten, she still has the chance to look forward to a life with him somehow in the near future. On the other hand, the princess could also lead her lover to the door which contains the tiger. It was explicitly stated that the princess hated the lady since â€Å"often had she seen, or imagined that she had seen, this fair creature throwing glances of admiration upon the person of her lover, and sometimes she thought these glances were perceived, and even returned† (Stockton 4). The jealousy and alleged burned agony that the princess felt as she imagines her lover being married to the lady was just unbearable. As such, there is greater possibility that the princess would rather see her lover die by being devoured by the tiger, rather than see him wed to another woman. The reflective question noted could also possess validity: â€Å"Would it not be better for him to die at once, and go to wait for her in the blessed regions of semi-barbaric futurity?† (Stockton 6). The princess could decide that it would be better for her lover to have met his death in this world and that their love story to be continued in the afterlife. Even if she could save her lover from the pangs of the tiger by leading him to the lady, there were no laws in their kingdom that would allow them to continue and consummate their love for each other. Thus, if she could not have him for herself; then, by all possibilities and given her devious and scheming demeanor, she would most probably lead her lover to the door containing t he tiger. The personality and character of the princess parallels the personality of the king. In this regard, one doubts that the princess would allow her lover to be married to another lady, of whom she detests. She would rather see him killed than know that he lives and be married to someone else. The agony and jealousy that she would have to contend for the rest of her life would be too much to

Business - Smucker's Case Assignment Example | Topics and Well Written Essays - 1500 words

Business - Smucker's Case - Assignment Example It expanded itself beyond jams and jellies so that it can shield itself from becoming an acquisition of any of the larger firm. The company has been successful at expanding its operations, enhancing its sales and revenues by greater margins and increasing the price of the stock (Gamble, J. E., â€Å"Smucker’s in 2011: Expanding the Business Lineup†). The products of J. M. Smucker Company helped it to achieve its long-term goals. The company’s brand demonstrates strategic fit in the sense that all its brands are performing quite well. Smucker’s expected its net sales to augment by 6 percent annually by increasing the sales growth to 2-3 percent resulting from future acquisitions, and increase in sales by 1 percent from the introduction of the new product. It is identified that in the year 2010, the company was capable of becoming the market leader in 11 of its food categories such as fruit spreads as well as dessert toppings, roasted and ground coffee, heal th and natural beverages, peanut butter, cooking oil and condensed and evaporated milk. It can be stated that it is feasible for the company to expand its operations beyond its core competencies in order to fight the competition that it confronts from its rivals. This will help the company to generate high sales and revenues, along with that it will also assist the company to increase substantial market share. Question Two One of the factors impacting the successful operations of Smucker’s is taxation. Changes in the tax rates and laws have a significant influence upon the company. Competition is the other macro environmental factor which hampers the sales and profitability of the company. Nestle and Kraft Foods are the main competitors of the Smucker’s in United States. Economic slowdown and recession in the USA has an impact upon the operations of the firm. It is observed that the first three months of the year 2011 seemed to be promising despite the persistent impac ts of economic downturn in the United States. The revenues of the company were same for the period i.e. first three months in the fiscal year 2010. However, there was rise in the operating income by 5 percent in the first quarter from $185 million of the year 2010 to $195 million in the very first quarter of the year 2011. When the USA faces with the issues related to currency and interest rates fluctuations, the companies like Smucker’s may have to face significant problems since these companies have its branches in many of the foreign nations. There has been change in the consumption pattern of the people of the USA during the period of recession and as a result the organization had to focus upon the budget cuts and concentrate more upon the home made meals rather than readymade meal as sold by Smucker’s. Sudden change in the consumption habit has a significant impact upon the company. Therefore, it is quite significant for the company to take certain initiatives so that it can minimize the negative impacts of such threats and help in the enhancement of the sales and revenues of the company. If such issues are not paid due attention, then the company’s profitability will be hampered to a great extent. Question Three There are many subsectors of processed food industry and each subsector has different growth expectations, competitive intensity, profit margins and business risks. The industry can be identified as attractive in the

Order Qualifiers and Order Winners for Toyota Essay Example for Free

Order Qualifiers and Order Winners for Toyota Essay Order Qualifiers can be described as aspects of competitiveness where the operation’s performance has to be above a particular level to be considered by the customer. Order Qualifiers may not be the major competitive determinants of success but are important in another way. (Jones, Robinson 2007) Order Winning Factors are those things which directly and significantly contribute to wining business. They are regarded by customers as key reasons for purchasing the product or service. Raising performance in an order wining factor will either result in more business or improve the chances of gaining more business. For Automotive industry, major order qualifiers could be defined as price, quality and variety. Toyota, Ford and GM are leading companies within that sector, which manufacture correspondent cars with these order qualifying factors mostly. However, due to high level of competitiveness, companies are struggling to keep their sales high. Even little problems within car or company may impact company’s future sales dramatically. Toyota is one of example that experienced reliability and quality problem with its cars lately likely Ford and GM experienced before. As result of upcoming reliability issue, if we look over market share of Toyota within North America, which takes place of its most sales in comparison with other regions around world, has faced with a serious decline in market share within 2008-2009 . Ford and GM also try to improve their market share within North America, while Toyota loses customers during 2008-2009 . On the other hand, Order winners for Toyota are continuous innovation of Toyota and standardized quality. People, who choose Toyota, are mostly satisfied with innovative internal and external features of Toyota’s cars. Since, Toyota always spares huge amounts of money about research and innovation for car manufacturing as explained in deeper within Toyota and Innovation section below. For Example, Prius, first mass production hybrid car in the world, is clear indicator of innovative mindset of Toyota Motor Corp. In terms of quality and flexibility, Toyota Quality Management is one of well known systems in world for car manufacturing quality control, which is still functioning and reason to buy a Toyota.

Theodore Levitts Theory of Globalization

Theodore Levitts Theory of Globalization To most of us, globalization—as a political, economic, social, and technological force—appears all but unstoppable. The ever-faster flow of information across the globe has made people aware of the tastes, preferences, and lifestyles of citizens in other countries. Through this information flow, we are all becoming—at varying speeds and at least in economic terms—global citizens. This convergence is controversial, even offensive, to some who consider globalization a threat to their identity and way of life. It is not surprising, therefore, that globalization has evoked counter forces aimed at preserving differences and deepening a sense of local identity. Yet, at the same time, we increasingly take advantage of what a global economy has to offer—we drive BMWs and Toyotas, work with an Apple or IBM notebook, communicate with a Nokia phone or BlackBerry, wear Zara clothes or Nike sneakers, drink Coca-Cola, eat McDonald’s hamburgers, entertain t he kids with a Sony PlayStation, and travel with designer luggage. This is equally true for the buying habits of businesses. The market boundaries for IBM global services, Hewlett-Packard computers, General Electric (GE) aircraft engines, or PricewaterhouseCoopers consulting are no longer defined in political or geographic terms. Rather, it is the intrinsic value of the products and services that defines their appeal. Like it or not, we are living in a global economy. Levitt’s argument was about new technology has â€Å"proletarianized† communication, transport, and travel, a new commercial reality-the emergence of global markets for standardized consumer products, Converging Consumption Pattern: Almost everyone, everywhere wants global products, wish of modernity, Prefer low prices to supposed national characteristics and the Earth is flat. He also argued about Global Corporation vs Multinational Corporation and further more over Multinational corporations knows a lot about great many countries and adapts to supposed differences. Now while doing the critical evaluation of his arguments, he proposed strategies that companies should move from multinational to global corporation because in his view the market for multinationals was sinking. He found much more scope when it comes to operate over the Global market. He also proposed that not to adapt the superficial differences but force suitably standardized products globally. Which mean s that the market for standardized products should be kept global. He urged over making the standardized products global in order to maintain their market worth and image. Another concept given by Levitt was about offering everyone simultaneously high-quality, more or less standardized products at optimally low prices. This idea was basically approved to satisfy the needs of everyone as the products will be available at optimal prices. People tend to prefer more standardized products so this was the best deal for them. He also wanted few standardized markets instead of many customized markets. Because of this the customization of products was ended and with formulation of few standardized markets the Global corporations maintained a better worth instead of going through the customized markets form. The most important strategy proposed by Levitt was, there is no other appeal like price. People like money, and they want to spread it over as many goods as they can. So if the prices of commodities will be available at low and it will be standardized as well then people will definitely prefer to spend money and the most motivational factor for people to buy something is its good quality on low prices. Levitt quoted about the concept of Standardization that â€Å"If a company forces costs and prices down and pushed quality and reliability up while maintaining reasonable concern for suitability –customers will prefer world standardized products†. This statement has got clear linkage with the above strategies evaluated by Levitt’s views. Now if we put a light over the marketing concepts he proposed, in his opinion the company should know more about what customers wants than the customer himself or herself knows, or at least more than the customer can articulate. The successful global corporation does not abjure customization or differentiation for the requirements of markets that differ in product preferences, spending patterns, shopping preferences and institutional or legal arrangement. But global corporations accepts and adjusts to these differences only reluctantly, only after relentlessly testing their immutability, after trying in various ways to circumvent and reshape them. Global strategy and organization has been strong in the last two decades. Numerous perspectives have been proposed to examine the issue, and so have numerous prescriptions for businesses facing global competition. On the one hand, these perspectives have enriched our understanding of the complexity of competing globally. On the other hand, the diversity of perspectives creates a great deal of ambiguity and confusion about how to compete worldwide, about the definition of a global strategy, about why a business chooses a global strategy, and about the implications of that choice. Without a unified framework to integrate these diverse perspectives, ambiguity and confusion are likely to persist, leading to contradicting theories and discouraging practical application of knowledge. Levitt (1983) argues forcefully that advances in communication and transportation technologies and increased worldwide travel have homogenized world markets. Increasingly, consumers in different parts of the world tend to demand the same products and have the same preferences. In this new era, the strategic imperative for businesses competing globally is to achieve the economies of scale which the global market affords. Thus, multinational corporations which treat individual country markets separately are likely to disappear and be replaced by global corporations which sell standardized products the same way everywhere in the world. A major source of competitive advantage has become the ability to produce high-quality products at lowest cost, since global consumers will sacrifice their idiosyncratic preferences for the high-quality but low-priced products. Instead of a single standardized product, they recommend a broad product portfolio, with many product varieties, so that investments on technologies and distribution channels can be shared. Cross subsidization across products and markets, and the development of a strong world-wide distribution system, are the two moves that find the pride of place in these authors views on how to succeed in the game of global chess. When the global producer offers his lower costs internationally, his patronage expands exponentially. He not only reaches into distant markets, but also attracts customers who previously held to local preferences and now capitulate to the attractions of lower prices. The strategy of standardization not only responds to worldwide homogenized markets but also expands those markets with aggressive low pricing. According to Levitt (1983), the optimum global strategy is to produce a single standardized product and sell it through a standardized marketing program. The essays argument is that the emergence of global markets for standardized consumer products† of a hitherto undreamed-of magnitude. The era of the â€Å"multinational corporation† was drawing to a close, Levitt asserted. The future belonged to the â€Å"global corporation.† The global corporation did not cater to local differences in taste. Those differences were being overwhelmed by the ability of the global corporation to market standardized products of high quality at a cost lower than that of competitors due to â€Å"enormous economies of scale in production, distribution, marketing, and management.† The global corporation was being called forth by a new era of â€Å"homogenized demand.† A few years ago, globalization was the new paradigm in international business, however from a branding pers pective it has lost its initial efficiency giving the fact that consumers do not seem to feel a connection anymore with the standardized products of global corporations, catered to them in mass marketing communication programs. With their centralized decision making, most companies simply stopped having a connection with the new global marketplace and neglected its emergence. There are arguments for and against the idea of the globalization of markets. On the one hand, people are gradually seeking high quality/low cost products due to the advancement of technology and communication (Levitt, 1983). Levitt both overestimated and underestimated globalization. He did not anticipate that some markets would react against globalization, especially against Western globalization. He also underestimated the power of globalization to transform entire nations to actually embrace elements of global capitalism, as is happening in the former Soviet Union, China, and other parts of the world. He was right, however, about the importance of branding and its role in forging the convergence of consumer preferences on a global scale. Think of Coca-Cola, Starbucks, McDonald’s, or Google. A global product is an important element of a global marketing strategy. A product can be defined as global if it can be marketed in different markets, with minimal or virtually no modification or adaptation. The focus of an enterprise is on serving global markets with global products. A global product does not have to sell in every market. For some types of products, the U.S., Japan, and Europe can represen t 70% (or even 90%) of the world market demand. And within this increasingly homogeneous triad, many manufacturers can benefit from universal product designs. A global product brings benefits to the producer and the consumer. The advantages to the producer are lower costs and economies of scale in production and management. The consumer benefits through lower prices, better serviceability, increased quality and consistent reliability. However, not all products can become global products. Studies have found that the ability of a product to be global significantly depends on whether the product is regarded as being essential and without close substitutes. Globalization which essentially refers to growth of trade and investment, accompanied by the growth in international businesses, and the integration of economies around the world, advanced in 1990’s and in the twenty first century. The globalization of business is easy to recognize in the spread of many brands and services spr eads around the world. Forexample, Japanese electronics and automobiles are common in large part of the world. Moreover, companies have become transnational or multinational those are based in one country but have operations in others. For example, Japan/based automaker Honda operates the largest single factory in the United States, while U.S. based Coca-Cola operates plants in other countries including France and Belgium with about 80% percent ofthat company’s profits come from overseas sales. Nevertheless, the rapid growth of globalization that was considered as a success particularly due to the rapid economic growth and success of Asian Tigers and Taiwan in early 1990’s, was undermined by these countries major economic setbacks in the late 90’s. A number of rallies of anti-globalization forces attempted to portrait that globalization is not a panacea for the worlds problems. Their demonstration in all fronts during the Seattle meetings of the World Trade Orga nization that turned into a fiasco is an example. Thus, globalization continues through its agents, i.e. MNE by changing strategies to internationalize theirbusinesses. Prof Ghemawat, (2007) believed that the above definition of Levitt still reign the world, he however, challenges it and redefined globalization as it will be explained later. Multinational enterprises (MNEs) are the key drivers of globalization, as they fosterincreased economic interdependence among national markets. The ultimate test to assess whether these MNEs are global themselves is their actual penetration level of markets across the globe, especially in the broad triad markets of NAFTA, the European Union andAsia. A powerful force drives the world toward a converging commonality, and that force is technology. It has proletarianized communication, transport, and travel. It has made isolated places and impoverished peoples eager for modernity’s allurements. Almost everyone everywhere wants all the things they have heard about, seen, or experienced via the new technologies. The result is a new commercial reality—the emergence of global markets for standardized consumer products on a previously unimagined scale of magnitude. Corporations geared to this new reality benefit from enormous economies of scale in production, distribution, marketing, and management. By translating these benefits into reduced world prices, they can decimate competitors that still live in the disabling grip of old assumptions about how the world works. Gone are accustomed differences in national or regional preference. Gone are the days when a company could sell last year’s models—or lesser versions of advanced products—in the less-developed world. And gone are the days when prices, margins, and profits abroad were generally higher than at home. The globalization of markets is at hand. With that, the multinational commercial world nears its end, and so does the multinational corporation. The multinational and the global corporation are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each—at high relative costs. The global corporation operates with resolute constancy—at low relative cost—as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere. Which strategy is better is not a matter of opinion but of necessity. Worldwide communications carry everyw here the constant drumbeat of modern possibilities to lighten and enhance work, raise living standards, divert, and entertain. The same countries that ask the world to recognize and respect the individuality of their cultures insist on the wholesale transfer to them of modern goods, services, and technologies. Modernity is not just a wish but also a widespread practice among those who cling, with unyielding passion or religious fervor, to ancient attitudes and heritages. Companies may enter the global market through various kinds of international investments. Companies may choose to make foreign direct investments, (FDI) which allow them to control companies and assets in other countries. Indeed, the largest 500 MNEs account forover 90% of the world stock of foreign direct investment (FDI) and they, themselves, conduct about half the world’s trade, (Rugman, 2004). In addition, companies may elect to make portfolio investments, by acquiring the stock of companies in other countries in order to gain control of these companies. They may participate in the international market by eitherlicensing or franchising. Another way companies tap into the global market is by forming strategic alliances with companies in other countries. While strategic alliances come in many forms, some enable each company to access the home market of the other and there by market their products as being affiliated with the well-known host company. This method ofinternational business also enables a company to bypass some of the difficulties associated with inte rnationalization such as different political, regulatory, and social conditions. The home company can help the multinational company address and overcome these difficulties because it is accustomed to them. Multinational enterprises (MNEs) largely operate within their home region of the triad, or, at best, are bi-regional (competing only across two of the triads of the EU, NAFTA and Asia. Most of the largest 500 MNEs are interested in the deepening of regional trade and investment agreements in Europe, the Americas and Asia. This is a high end  ³niche ´ of the commonality viewpoint in which they argue that the world’s clearly becoming more unified and homogeneous ´. However, basically every aspect oftheir arguments wrong. Instead of one language, one thirst, one food, one car, etc. there are strong regional differences within each part of the triad. Despite their global nature, some argues that companies must customize their products orservices to meet the needs of vari ous international markets, and hence must use a multi-domestic strategy at least in part. For example, a US fast food companies such as KFC, McDonalds although have a standard approach globally, they adapted their strategy to the preference of regions or countries like in China, Japan, Middle-East. KFC introduced smallerpieces of foods to cater to a Japanese preference, and located restaurants in crowded are as along with other restaurants, moving away from independent sites. As a result of these changes, the fast-food restaurant experienced stronger demand in Japan. As Grant, 2008, indicated, for instance McDonald carefully blends of global standardization and local adaptation in most countries. Its menus feature an increasing number of locally developed items like McVeggie Burger in India, McArabia in Kofta in Saudi Arabia, Kosher food in Israel by still maintaining globally standardized items, i.e. the big Mac and potato fries. Carindustries like Toyota adapt their product also as per region. Product for the US market and other part of the world is different. As the rising tide of globalization, some companies may lost the way or make mistakes to set out to create a worldwide strategy. In fact, better results come from strong regional strategies, which is the bridge that connect the local and global initiatives, and can significantly boost a company’s performance. As indicated earlier, an increasing number ofcompanies regard regions as enabler o f cross-border integration because high level ofcross-border integration usually accompany with high level of regionalization. Besides the geographic proximity, the cultural, administrative and economic proximity also become an important competitive advantage in regionalization and contribute a significant weight ofsales. Embracing regional strategies requires flexibility and creativity. Managers must be conscious that markets, supplies, investors, locations, partners, and competitors can be anywhere in the world. Successful businesses will take advantage of opportunities wherever they are and will be prepared for downfalls. Successful managers, in this environment, need to understand the similarities and differences across national boundaries, in order to utilize the opportunities and deal with the potential downfalls. Once this analysis is complete, managers must establish strategic goals, which are the significant goals a company seeks to achieve through a particular pursuit such as entering a new regional market through considering the above five regional strategy model. International strategies refer to those that address competition in each country or region on an individual basis, whereas global strategy refers to addressing competition in an integrated and holistic manner across country and regional boundaries. Hence, multi-domestic international strategies attempt to appeal to the needs of customers in different countries or regions, while global strategies attempt to standardize products and marketing to work across boundaries. Levitt will be remembered by the world as the man who coined the word â€Å"globalization,† but for his former students, his colleagues, and his loved ones, he was above all a man who could bestow down-to-earth advice as well as ground-breaking theory.