CHARACTERISTICS OF THE DIGITAL ECONOMY

CHARACTERISTICS OF THE DIGITAL ECONOMY

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Digital economy is defined by Amir Hartman as "the virtual arena in the which business actually is conducted, value is created and exchanged, transactions occur, and one-to-one relationships mature by using any Internet initiative as a medium of exchange" (Hartman, 2000) , Its existence is marked by the rise of developing a business or commercial transactions that use the Internet as a medium of communication, collaboration, and cooperation between companies or between individuals. Look at how the rise of new companies and the old who jumped into the format of an electronic business e-business and e-commerce.

In order to survive and win the competition in the digital economy, the players need to understand the characteristics of the concept that became the foundation because it is very different from classical economics, which is known. It is not uncommon that a company must conduct business transformation in order to optimally play in the digital economy arena. This is due to implement it, we need a business model that is completely new. For new companies (start-up company), to go into business, it is usually easier than with a company that has long stood. Statistics show that most of the old company wants to take advantage of the existence of the digital economy should hold a fundamental change in its business processes radically (business process reengineering).

Don Tapscott find twelve essential characteristics of the digital economy should be known and understood by practitioners manajamen, namely: Knowledge, Digitazion, Virtualization, Molecularization, Internetworking, Disintermediation, Convergence, Innoavation, Prosumption, Immediacy, Globlization, and Discordance. Here is a brief explanation of each of the relevant aspects (Tapscott, 1996).

1. Knowledge

If in the classical economics of land, buildings, labor, and money are important factors of production, then in the digital economy, knowledge or knowledge is the most important type of resources that should be owned by the organization. Given that the knowledge inherent in the human brain, the intelligence factor of the human resources of the company is what determines the success or failure of the organization in achieving its objectives. Collective knowledge is what is the value of the company in the process of creating products and services. In addition, advances in technology have been able to create a variety of products artificial intelligence (artificial intelligence) that is basically capable of helping the management and staff of the company to improve intelligence (knowledge leveraging). Examples of software products and hardware that can be decision support systems are decision support systems and expert systems. The concept of knowledge management will be key to the success of a company in this era.

Source: Don Tapscott et al, 1996

2. Digitization

Digitazion is a process of transformation of various forms of information into formats digits "0" and "1" (based on number two). Although the concept seems simple at first glance, but its existence has produced a breakthrough and major changes in the world of business transactions. Take a look at how the shape of two-dimensional images such as paintings and photographs has been able to be represented in the format of a collection of bits that can be easily stored and exchanged via electronic media. This of course has been able to improve the efficiency of the company by reducing the costs associated with the manufacturing process, storage, and exchange media. Even the latest technology has been able to perform format conversion of analog video and audio into a digital format. Advancement of telecommunications technology that allows people to exchange information rapidly via email to all corners of the world are increasingly facilitate the delivery process and exchange all types of information that can be digitized. In other words, if the products and services offered can be represented in digital form, then the company can easily and inexpensively offer products and services worldwide. Electronic publishing, virtual book store, internet banking, and telemedicine are examples of a variety of products and services that can be offered on the internet.

3. Virtualization

In contrast to running a business in the real world in which physical assets require some sort of buildings and means of production, in the virtual world known virtualiasasi term that allows a person to start a business with a simple device and can reach all potential customers in the world. In the virtual world, a customer simply dealing with an internet site as an enterprise (business to consumer), as well as the relationship between the various companies that want to work together (business to business). In this relationship, a process that occurs in the transaction is the exchange of data and information virtually, without the physical presence of the parties or individuals who conduct transactions. In other words, the business can be done anytime and anywhere as long as 24 hours per day and 7 days a week on-line and in real time.

4. Molecularization

Organizations that will survive in the era of digital economy is successfully implementing molecular shape. Molecular shape is a system where an organization can easily adapt to any dynamic changes that occur in the environment around the company. As is known, at this time the majority of organizations are managed by using the concept of hierarchical structure or the more advanced matrix structure. Both of these concepts are particularly vulnerable to changes that will slow the movement of the company adjusting to market developments. One thing to remember is that the plunge into the virtual world means dealing head-to-head with companies around the world. Their behavior every day will greatly affect the market structure and related industries which often will change a variety of conditions. This is certainly a manifestation of free competition and strict happened besides a strategy to win the rivalry. In other words, change is a natural process that should be done by the company. Charles Darwin said that the nation will survive is not the biggest or the strongest, but the most able to adapt to change.

5. Internetworking

There is no company that can work alone without cooperating with others, as one of the prerequisites to be successful in the virtual world. Based on the business model chosen, the related company should determine its core activities (core activity) and collaborates with other institutions to help implement the processes supporting (supporting activities). Examples of those who serve as the general partner is technology vendors, content partners, merchants, suppliers (suppliers), and so forth. Business concept that wanted to control its own resources from upstream to downstream will not last long in the digital economy.

6. Disintermediation

Another distinctive feature of the digital economy arena is a continuing lack of mediators (brokers) as an intermediary for the transactions between suppliers and customers. Examples mediators in economic activity are wholesalers, retailers, broadcasters, record companies, and so forth. Companies that rely classic as mediator itself forced to go out of business with the internet business. The free market allows the transactions between individuals without having to involve other parties.

7. Convergence

The key to success in internet business enterprise lies in the level of capability and quality of the company in convergence three industry sectors, namely: computing, communications, and content. Computers that are at the core of the computing industry is the nerve center of data processing and information needed to conduct business transactions. The products that are most relevant communications industry is the infrastructure of information and communication technology as a distribution pipeline data and information from one place to another. Real competition lies in the content industry is a type of service or services offered by a company to market in cyberspace. Three of the above is an absolute requirement that must be owned and controlled user to successfully run a business successfully.

8. Innovation

Activity on the Internet is 24 hours instead of 8 hours like the companies in the real world. Competitive advantage (competitive advantage) is very difficult to sustain in view of what a person or company other internet very easy to imitate. Hence, rapid innovation and constantly needed for a company to survive. The management company should be able to find a way to get the key players in the organization (management and staff) can always innovate like firms in Silicon Valley. The concept of learning organization deserves to be considered and implemented in the company.

9. Prosumption

In the digital economy boundaries between consumers and producers that are seen clearly become blurred. Almost all consumers of information technology can easily become producers who are ready to offer their products and services to the public and the business community. An example is a person who has to pay 5 dollars US to gain access to a mailing list system. Then concerned makes a community mailing list in which each member must pay one US dollar to him. In the short time that question has been able to obtain the benefit of small businesses. In this context, the individual concerned is categorized as a prosumer.

10. Immediacy

In the virtual world, customers are faced with a variety of companies that offer similar products or services. In choosing a company, they only used three main criteria. In principle, they will enter into transactions with companies that offer products or services are cheaper, better, and faster compared to its peers. Given that the switching cost on the internet is very easy and inexpensive, then the customer will continue to look for companies that most provide the highest benefit to him. Seeing this the company must always be sensitive to the various needs of customers who require a particular service satisfaction.

11. Globalization

The essence of globalization is the collapse of the boundaries of space and time (time and space). Knowledge or knowledge as the main resource, knows no geographic boundaries so that the existence of state entities to become less relevant in the context of running a business in cyberspace. A pure capitalist will tend to conduct business from a place that is cheap and convenient, selling products and services to a rich society, and the results of its profits will be transferred and stored in the safest bank and give the greatest interest. Segmentation of the market who have often performed by the boundaries of time and space must also definited recall that the whole society has become one in the virtual world, both producer and consumer communities.

12. Discordance

Characteristic of the past in the digital economy is the phenomenon of social and cultural changes in the structure as a logical consequence of the impact of the changes in a number of paradigms related to everyday life. Increasingly summarily organization will lead to unemployment everywhere, livelihood mediators (brokers) to be lost, the workers became workoholic because competition is very tight, the influence of western culture is difficult to prevent because it can be accessed freely by anyone over the internet, etc. is an example of a phenomenon that occurs in the era of digital economy. Unpreparedness of an organization in the face of any possible negative impacts would be bad (boomerang) for the company's survival.

Now that the discussion in this post about the characteristics of the Digital Economy may be useful knowledge. If there are not understood please ask your friends via the comments box below. Thank you for visiting Science Lovers Blog, do not forget to like, follow, and commentary here! :)