Assignment on I.T.

IMPACT OF INTERNET ON
BUSINESS AND FINANCE

Submitted to : Abdul Salam

(Course Incharge)
Submitted by : M.Sulaiman (12)
Sahibzada Yasir Zia (20)
Muhammad Fayaz (23)
Rehman Ullah (25)
Shehzad khan durrani (29)
Ikramullah Khan (16)

3RD Semester, Section A, Morning,

BBA (Hons).

INSTITUTE OF MANAGEMENT STUDIES

UNIVERSITY OF PESHAWAR
The Impact of the Internet on Business
Positive impact of Internet on Business
The Internet has a wide variety of uses. It provides an excellent means for disseminating
information and communicating with other people in all regions of the world. While the
greatest use of the Internet has been sharing information, other sources of use are rapidly
developing. For instance, chat rooms, a space where people can go to discuss an
assortment of issues, and Internet Commerce, which connects buyers and sellers online.
The following are other examples of current Internet uses:

1. Technical Papers

Originally, the Internet was only used by the government and universities. Research
scientists used the Internet to communicate with other scientists at different labs and to
access powerful computer systems at distant computing facilities. Scientists also shared
the results of their work in technical papers stored locally on their computer system in ftp
sites. Researchers from other facilities used the Internet to access the ftp directory and
obtain these technical papers. Examples of research sites are NASA and NASA AMES.

2. Share Company Information

Commercial companies are now using the Web for many purposes. One of the first ways
that commercial companies used the Web was to share information with their employees.
Sterling Software's Web page informs employees about such things as training schedules
and C++ Guidelines. There is also some information which is company private and
access is restricted to company employees only. Another company example is Sun
Microsystems which similarily contains general information about the Sun Microsystems
company.

3. Product Information

One of the ways businesses share information is to present their product information on a
Web page. Some examples are: Cray Research, Sun Microsystems, Hewlet Packard, and
GM's Pontiac Site. The Web provides an easy and efficient way for companies to
distribute product information to their current and potential customers.

4. Advertising

Along these lines, companies are beginning to actually advertise online. Some examples
of different ways to advertise online are Netscape's Ad Page. Netscape has a list of
advertising companies. They also use a banner for advertisements on their Yahoo Web
Page. Starware similarly uses banner advertisement. These advertisements are created in
the established advertising model where the advertising is positioned between rather than
within editorial items. Another type of advertising focuses on entertaining the customers
and keeping them at the companies' site for a longer time period. Some of the more
interesting of these are:

• MCI with a soap opera/ detective story.

• Ragu Soap Opera, Italian art, prizes, etc.
• Stoli Puzzles, submit drink receipes, prizes, etc.
• Miller Genuine Draft Discussions on various topics such as music
scene in Austin.
•

5. Business & Commerce on the Net

Commercial use restrictions of the Internet were lifted in 1991. This has caused an
explosion of commercial use. More information about business on the Internet can
be found at the Commerce Net. This site has information such as the projected
growth of advertising on the Internet and online services. Commercial Services on
the Net has a list of various businesses on the Internet. They are many unusual
businesses listed here such that you begin to wonder if they are legitimate
businesses. This topic is discussed in more detail in the section on risks and
consumer confidence. Business and Commerce provides consumer product
information. The Federal Trade Commission is also quite concerned about legal
business on the Internet.

WWW users are clearly upscale, professional, and well educated compared with
the population as a whole. For example, from CommerceNet's Survey
(CommerceNet is a not for-profit 501c(6) mutual benefit corporation which is
conducting the first large-scale market trial of technologies and business
processes to support electronic commerce via the Internet) as of 10/30/95 :

• 25% of WWW users earn household income of more than $80,000

whereas only 10% of the total US and Canadian population has that level
of income.
• 50% of WWW users consider themselves to be in professional or
managerial occupations. In contrast, 27% of the total US and Canadian
population categorize themselves to have such positions.
• 64% of WWW users have at least college degrees while the US
and Canadian national level is 29%.

CommerceNet's study also found that there is a sizable base of Internet Users in
the US and Canada. With 24 million Internet users (16 years of age or older) and
18 million WWW users (16 years of age or older), WWW users are a key target
for business applications. Approximately 2.5 million people have made purchases
using the WWW. The Internet is, however, heavily skewed to males in terms of
both usage and users. Access through work is also an important factor for both the
Internet and online services such as America Online and CompuServe. For an
example of the size of the market, the total Internet usage exceeds online services
and is approximately equivalent to playback of rented videotapes.

6. Magazines

Magazines are starting to realize that they can attract customers online. Examples
of magazines now published online are Outside, Economist, and Business Week.
These magazines are still published in hard copy, but they are now also available
online. Many of these publications are available free sometimes because of the
time delay (i.e. publications online are past issues) or usually to draw in
subscribers for a free initial trial period. Some of these publications may remain
free online if advertisers pay for the publications with their advertisement
banners.

7. Newspapers

Some newspapers are beginning to publish online. The San Jose Mercury News is
a full newspaper online, while the Seattle Times offers just classified ads and
educational information. The Dow Jones Wall Street Journal publishes its front
page online with highlighted links from the front page to complete stories. The
Journal also provides links to briefing books, which provide financial information
on the company, stock performance, and recent articles and press releases. For an
example of a briefing book see, Netscape Briefing Book. This is all free by the
Wall Street Journal during the trial period which should last until mid 1996.

8. Employment Ads

Companies are also beginning to list their employment ads online to attract
talented people who they might not have been able to reach by the more tradition
method of advertising in local papers. Sun Microsystems provides a list of job
openings on the Internet. Interested parties can submit a resume or call to
schedule an interview, which saves time for everyone involved. Universities can
also help their students find jobs more easily by using job listings on the Internet.
The University of Washington has a job listing site. Local papers can also make it
easier for job searchers by creating a database search feature. The job searchers
can select the type of jobs that they are interested in and the search will return a
list of all the matching job openings. San Jose Mercury News is a good example
of this approach.

9. Stock Quotes

There are several time delayed (15 minutes) ways to track stock performance, and
they are all are free. The first to provide this service was PAWWS Financial
Network, and now CNN also lets you track stocks. These are commercial
companies which provide stock quotes for free but charge for other services. A
non-commercial site, MIT's Stock & Mutual Fund Charts, updates information
daily and provides a history file for a select number of stocks and mutual funds.
Information in these history files can be graphically displayed so that it is easier to
see a stock's performance over time.

10. Country Investment Information

Thinking about investing in a particular country? Information on countries can be

found online. For example, check out the graphical information (GDP, inflation,
direct foreign investment, etc.) on Indonesia.

11. Order Pizza

You can order a pizza online. This Web site is actually a joke, but you can easily
imagine people working late at their offices and ordering out for food online.

12. Software Distribution

A very effective and efficient use of the Web is to order software online. This
reduces the packaging and shipping costs. Also documentation can now be
provided online. A good example is Netscape Navigator. Another example is
Macromedia's Shockwave. What is Shockwave for Director? The description
online is as following:
"Shockwave for Director is the product name for the Macromedia Director-on-
the-Internet project. Shockwave for Director includes two distinct pieces of
functionality:
(1) Shockwave Plug-In for Web browsers like Netscape Navigator 2.0 which
allows movies to be played seamlessly within the same window as the browser
page.
(2) Afterburner is a post-processor for Director movie source files. Multimedia
developers use it to prepare content for Internet distribution. Afterburner
compresses movies and makes them ready for uploading to an HTTP server, from
which they'll be accessed by Internet users."

So by reading about the product online, you can decide if it sounds interesting.
You can then immediately get the software by downloading it from Macromedia's
computer to yours. Next, you install it on your system and you're all set. You
didn't even have to leave your terminal, and there was no shipping cost to you or
the company.

13. Traffic Information

Ever wonder what the rush hour traffic was like before you head home and get
stuck in it? Many different cities are putting traffic information online. In Seattle,
a graphical traffic report is available.
 14. Tourism

Plan a trip to Australia or New Zealand with information gathered off the Internet.
These and other countries are on the Internet. So you can plan your vacation from
your computer.

15. Movie Previews

Who needs Siskel and Ebert, when you can be your own movie critic? Buena
Vista Movie Clips provides movie clips from many of their new releases. For a
sample movie clip preview "Unstrung Heroes".

16. Chat Rooms on AOL

Chat rooms are a more interactive technology. America Online

provides areas where people can "log on" and converse with others
with similar interests in real time. This is the first popular use of
interactivity by the general public. The other uses up until recently
have been more static, one-way distribution of information.
Interactivity is the future of the Internet (See the next section).
-Communication Capabilities

17. Fosters Collaboration

Internet communication technologies and networking software enable employees to
collaborate on projects across locations and geographical boundaries.

18.Transactions and E-Commerce

Web-based interfaces, payment gateways, and encrypted and secure portals have
facilitated quicker transactions for businesses. Invoices, purchase orders and online
tracking systems have fostered fruitful e-commerce relationships with vendors,
partners and suppliers.

19.Workforce Mobility
Wireless Internet options in notebooks, smartphones and other mobile devices let
frequent travelers, busy executives and off-site employees work anywhere anytime
without being tethered to a traditional office environment.
 Forecast of How the Internet & WWW Might Be
Used in the Future
There are many ways that the Internet could be used in the next 3 to 5 years. The
main aspect that they all have in common is the increased use of interactivity on
the Internet. This means that the Internet will shift from being a one-way
distribution of information to a two-way information stream. Scientists will
continue to lead the way in this area by watching the results from scientific
experiments and exchanging ideas through live audio and video feeds. Due to
budget cuts, this collaboration should be expected to increase even more to stretch
what budget they do have. (For more information on this, check out Business
Week article on science and technology "Welcome To The World Wide Lab"
10/30/95.)

1. Interactive Computer Games

One of the first areas where interactivity will increase on the Internet are
computer games. People will no longer have to take turns playing solitary or
crowd around one machine. Instead they will join a computer network game and
compete against players located at distant sites. An example of this is Starwave's
Fantasy Sports Game. This game is still a more traditional approach of updating
statistics on the computer and players looking at their status. A more active game
is Marathon Man, which portrays players on the screen reacting to various
situations. In the future, many of these games will also include virtual reality.

2. Real Estate

Buying a home online will become possible. While very few people would want
to buy a home without seeing it in person, having house listings online will help
reduce the time it takes to purchase a home. People can narrow down which
houses that they are actually interested in viewing by seeing their description and
picture online. An example is this list of house descriptions by region of the
country. This will be improved when database search capabilities are added.
People can select the features that they are interested in and then search the
database. In response, they will receive a list of houses that meet their criteria.
Also, having several different images of the House as well as a short video clip of
a walk through of the house, will help buyers make their selection quicker. This
area is growing quickly. For example, the following sites of interest to the West
Coast were added online since the writing of this paper: Windermere Real Estate,
Fractals, and Listinglink.

3. Process Mortgages online

After a house is chosen, potential buyers can apply for a mortgage online. No
longer will buyers be restricted to local lending institutions, since many lenders
will be able to compete online for business. Visit an example of an online
mortgage computation. In the future, each lender will have a Web page which will
process the mortgage application. One of the main reasons this has not been
implemented is security, which is discussed further under the strategic risks and
security section.

4. Buying stocks

Stocks will soon be able to be purchased over the Internet without the assistance
of a broker. Charles Schwab has a prototype that is being tested currently in
Florida. Once the security issues are ironed out, this application will also be
active.

5. Ordering products.

Ordering products online is an important application. As mentioned above, the

Pizza Page showed how easy it could be done. Other companies are setting up
Web pages to actually do this. An example is TSI Soccer. Customers can actually
order online if they choose to do so. They can even send their credit card number
over the network. Since this is non-secure, most people probably still call the
company to order any item.

6. Live Video

Viewing live video clips will become more common in the future. CNN has files
of video clips of news stories at video vault which can be downloaded and viewed
on a home computer. Seeing actual live video feed is dependent on network
speed, and most home users do not have fast enough connections to make this a
practical application yet. This is discussed in more detail under the section
strategic risk and speed of network access. Once the speed of network connection
increases, more people will be interested in live video clips.

7. "Chat" Internet Telephone

While AOL users are currently accessing "Chat Rooms" to communicate with
other people on the Internet, they are restricted to text-based communication or
possibly an icon as their identity online. CUCME from Carneige Mellon provides
a means for people to actually see other people online. However, network speed is
once again a limiting factor. If a user is not directly connected to the Internet
(most connections are via modem), then the image is extremely slow. This
application will become more popular with increased network connections.

8. Video Conferencing

On the other hand, businesses will begin using video to communicate with others.
Andersen Consulting is setting up training online. There should also be some
applications that businesses can choose to help set up video conferencing. IBM
bought LOTUS Notes for this reason last summer. IBM needs to make it a more
flexible solution by interacting LOTUS Notes with the Internet. They currently
are in the process of doing this. Netscape also offers a solution based on the
software company Collabora that they purchased last fall. These possible
solutions should encourage businesses to use video conferencing and online
training. Additional information on Video Conferencing is also available.

Strategic Risks Associated with Business Uses of

the Internet
1. Targeting right market segments.

It is important for advertisers to spend their advertisement dollars wisely. They

can achieve this by using appropriate methods of advertising and targeting the
right market segments. Two different types of advertising are entertainment ads
and traditional advertising. Entertainment ads focus on entertaining a customer
whereas traditional advertising is more direct and usually positioned between
rather than within editorial items. When the entertainment ads work well, they can
be quite successful in drawing customers to their site; however, it is very easy for
this type of ad to flop resulting in no one returning to visit the advertisement site
after they see it once. Traditional advertising has better readership. It can also be
used well in targeting the right market segments. For instance, the ESPN Sports
page would be a good site to place ads by Gatorade and Nike. Sports minded
people that might be interested in these products would be likely to access these
pages. A good reference for researching this topic further is at Advertising Age.

2. Security

One of the main factors holding back businesses' progress on the Internet, is the
issue of security. Customers do not feel confident sending their credit card
numbers over the Internet. Computer hackers can grab this information off the
Internet if it is not encrypted. Netscape and several other companies are working
on encryption methods. Strong encryption algorithms and public education in the
use of the Internet should increase the number of online transactions. After all,
getting your credit card number stolen in every day transactions is easier. In
addition, securing private company information and enforcing copyright issues
still need to be resolved before the business community really takes advantage of
Internet transactions. There are, however, currently some methods within
Netscape for placing the information online yet restricting it to only certain people
such as company employees.

3. Consumer confidence
Consumer confidence is essential for conducting business online. Although
related to security, consumer confidence also deals with feeling confident about
doing business online. For instance, can consumers believe that a company is
legitimate if it is on the Internet, or could it be some kind of boiler room
operation? Also, companies must be able to substantiate their advertising claims if
they are published online. These are some of the issues that concern the Federal
Trade Commission, as well as the future of Internet commerce. After all, if
consumer confidence is low, businesses will not succeed.

4. Speed of network access

The speed of network access is a risk for businesses. If businesses spend a lot of
money for fast network connections and design their sites with this in mind yet
customers have lower speed connections, this may result in less consumers
accessing their site. Less consumers accessing their site most likely results in
lower profits which is in addition to the extra cost of the faster network
connection. On the other hand, if the company designed for slower access yet
customers have faster access, they could still lose out in profits. Currently, some
of the options that home users have to choose from are traditional modems, ISDN,
and Cable Modems. Traditional modems are cheaper but the current speed is a
maximum of 28.8 Kbps. ISDN is faster at 56 Kbps, but more expensive. Cable
modems are faster yet with a speed of 4 Mbps. However, two-way interaction
with a cable modem needs some more testing to be sure that it works as well as
ISDN.

5. Picking Wrong Industry Standards

Along these lines of picking industry standards, companies must also be sure that
the Web Browser that they develop for is the standard. Otherwise, some of the
features that they are using to highlight their site may not work. Currently the
defacto standard is Netscape. There also needs to be a standard language that adds
high quality features such as animation, so that software applications written for
the Internet will run on all the different types of architectures customers may
have. Major computer industry players have backed JAVA by Sun Microsystems.
So while some areas are becoming standardized, companies must be alert to
industry changes to avoid becoming obsolete in hardware, software, and data
communications.

6. Internet Community & Philosophy

The Internet was originally developed with a philosophy for sharing information
and assisting others in their research. The original intent emphasised concern for
others, technological advances, and not for profit organizations.
With the lifting of commercial restrictions in 1991, businesses are now joining the
Internet community. As with any small town that has a sudden increase in
population, fast growth can cause problems. Old residents could create animosity
if they feel that the new residents are taking over their community and causing
congestion and prices to increase. Businesses need to be conscious of this
phenomenon.

While businesses can expect help from Internet users, businesses will lose this
help if they only use it to make a quick profit. As in a large city, people will start
to feel less like helping others in need. Businesses will be more successful on the
Internet if they can emphasize how they can help add value to the Internet rather
than focusing on how to make a quick profit. For example, businesses can take
advantage of the opportunity to provide additional Internet services (e.g., services
discussed in the sections on current uses of the Internet and future uses) now that
funding from the government is being reduced.

An example of a city that has grown rapidly, yet still considered very livable, is
Seattle. One of the reasons attributed to Seattle's successful growth is, that despite
it being a large city, there are numerous small communities within the city. These
small communities retain such benefits as concern for others within the
framework of services that a large city can provide. If businesses along with the
Internet community follow this model, the Internet will have a chance to keep its
successful small town atmosphere while adding increased services for more
people.

Conclusion

The Internet is a dynamic environment. While there are many risks involved with
change, there can be many benefits. This paper has given some ideas on possible
benefits and possible risks. Now it is up to each business to decide if the potential
benefits outweigh the potential risks. Hopefully, we'll see you on the Web!

Refrences:

www.google.com
www.ensyclopedia.com
www.ask.com