The Effects of Technology on International Business

As the cell phone rings, the blackberry pings, and the microwave dings, a flurry of activity occurs in less time than it would take for a 5 year old to tie his shoes. Simultaneously pulling food out of the microwave oven, answering the phone with a terse "talk to me" and scrolling through the new email on the blackberry, the employee engaged in another working dinner. If the employee must communicate in real time with colleagues working in another time zone, country, or even continent, technology facilitates such demands.

One hundred years ago, one could not conceive such a scenario. Even fifty years ago, the technological capabilities of the time did not foreshadow the possibilities of productivity abilities that society now enjoys in the 21st century. With the boom of the internet, the development of the technology industry in the nineties, international business uses technology to deal with today’s challenges.

The challenge of globalization faces international businesses. Three-time Pulitzer Prize winning journalist Thomas Friedman analyzed the concept of globalization in his book, "The Lexus and the Olive Tree." Friedman argues that globalization replaces the Cold War system as the new international system. The integration of capital, technology, and information across national borders creates a single global market and an analogous global village. One way to think about international business entails its involvement within the framework of globalization. For an enterprise to realize its full potential on an international scale, it must understand globalization.

Globalization has led to an overall rise in the standard of living, but also bears the responsibility for the difficulty in dealing with poverty. The title of Friedman’s book comes from the tension between globalization, represented by the luxury car, the Lexus, as the forces of culture, geography, tradition, and community, represented by the olive tree. International corporations would do well to heed local customs and sensibilities while integrating themselves in each community in which they participate. This effort will continue to create goodwill and develop or open markets so they can keep expanding. More local enterprises do not have the resources to do things in the same way as the multinationals, and the olive tree more accurately symbolizes such enterprises.

Traditional mom-and-pop stores, local establishments, regional, and even national players fill a very different role than international conglomerates. These types of businesses tend to fill local needs, according to the "local knowledge" its managers and employees have accumulated as a result of the organization’s history. These enterprises can be more responsive to local market shifts, but may have fewer resources than international conglomerates for a myriad of reasons, such as diminished access to capital. With less capital, the organizations may have difficulty integrating technology in their enterprises.

Without technological innovations such as the internet, telecommunications, and fast planes, globalization would not be possible. Increasing telecommunications capabilities enable conference calls, videoconferencing, email/internet, and increasing media capabilities. The internet’s speed and large amounts of information allows its users to find information quickly with several clicks of the button. More and more, people leverage the internet as a social and professional networking tool. Employers also use the tool to research prospective employees. Increasing media and communications capability enable corporations to increase its overall productivity, thus impacting profitability and shareholder value.

Technology continues to impact international business by providing the means for greater growth. Unlike inputs such as steel, coal, and energy whose costs depend on the market, knowledge and technology cannot be traded on a commodities market. After an initial investment for implementation, managing the company’s technological resources has a much lower maintenance fee. Companies without a minimum level of technological infrastructure will not have the ability to compete with those with such infrastructure. For example, a store that does not have a website that facilitates online purchases can only service consumers during store hours. A store with such a site has the ability to sell its goods virtually 24 hours a day. Without technology, international business would operate on a much slower speed and a smaller scope.