Over the last ten years, the Internet has significantly changed the ways in which companies do business. More companies are beginning to conduct business digitally. In a digital environment, communication with suppliers, consumers and other members of the company is instantaneous. In the past five years, Internet start-up companies have sprung up throughout the world. Investors are always looking for businesses with unlimited growth potential. They are contributing huge amounts of money to fund these new companies. Will this boom last? Will Internet trade be the commerce of the future?

CS Question #1: What are some examples of how the Internet changes the way a company does business?

The Internet was originally developed for the government and university communities. It was a method for delivering computer (digital) information over telephone lines. This allowed researchers throughout the world to quickly communicate and share results of their experiments.

In the early 1990s, the Internet was being used to market, research and sell products. The increase in digital technology has improved many features on the Internet. Businesses can advertise their merchandise without using expensive print media magazines. They can also keep consumers informed of new merchandise and special sales. Companies can reach all types of consumers, even those who do not live near a retail store. Businesses can also collect data about their consumers. They can find out where the consumers are located. They can also determine the types of products consumers buy and how often they purchase items from the Web site. This information is not that easy to gather in a retail store. Many consumers purchase items without providing any information. Businesses can also use the Internet to communicate with their suppliers. In the role of the "consumer," a business can digitally check inventory and place orders from its supplier. This instant communication allows for quick inventory turnaround. The result is increased profits for the business.

CS Question #2: What are some advantages for companies that conduct business over the Internet?

Consumers also have many advantages shopping over the Internet. They can view products online and check their availability. They can shop at any time of the day or night, not just during store hours. They can place orders and purchase items using credit cards. They can have the products delivered right to their homes. Imagine how valuable the Internet is for international purchases. Consumers can shop at stores in Germany, Italy and France without crossing any borders.

CS Question #3: What are some advantages for consumers who purchase items over the Internet?

The Internet appears to be a promising new tool for conducting business, especially international business. However, there are still some concerns. Governments are worried about tariffs and trade barriers that are being circumvented by Internet trade. By shopping on the Internet, consumers do not have to pay local taxes on imports or exports. They can also purchase goods from nations with which their home country does not have favorable trade relations.

Consumers are concerned with security issues. Many of them purchase items using a credit card. They are afraid that their information might be used without their permission. Businesses also face some concerns with digital technology. Running a business using the Internet involves strategies and decisions that are different from those of running a regular business. Companies must have a strategy before they begin using the Internet to conduct business. Additionally, companies worry about the reliability of the communications equipment. When a Web site goes down, an Internet company must literally shut its doors to business. No consumers can access the site to place orders. In addition, viruses and security breaches are a serious concern to companies doing business on the Internet.

CS Question #4: What are some of the drawbacks to doing business on the Internet?

Further Thought:

1. Given the positives and negatives of doing business on the Internet, do you think Internet commerce and trade will increase or decrease in the future? Explain your answer.
2. How can using the Internet help smaller nations compete in the international market?
3. The stocks of Internet companies have dramatically swung up and down in recent months. Would you be willing to invest money in these companies? Why?