Impact on the Internet on the Horizontal Boundaries of a Firm

Over these years, internet has been growing so widely. The internet technology opens a new channel for business opportunity, principally because of this enabling the limitless of information exchange with an easy, fast, and low cost. See how we can easily find anything we want to know just by utilizing the internet. The implication of this is that it will promote the political, social, economic, and cultural aspects of a country, heading to globalization. Some people with the entrepreneur sense are just very quick response to the growth of the internet technology, viewing it as the opportunity and as a tool to grow the business across the boundary. Therefore, they switch from the traditional way of doing business to a new way of operating business through the virtual business or e-commerce.

There are many theories from the researcher and expert, claiming that the internet technology is proven to be beneficial in growing a business. In a book by Tawfik Jelassi and Albrecht Enders, titled Strategies for e-Business: Creating Value through Electronic and Mobile Commerce, they point out two concepts that are feasible in e-commerce. The first concept is economies of scale. This means that by increasing the production output, the company decreasing their operation cost. Their second concept is economies of scope. This means that expanding the variety of products sold using the same R&D, production and delivery assets.

We can see the success of e-commerce on eBay, a (virtual) company hosted in California, belongs to Pierre Omidyar, where the company act as a virtual market for transactions of anything, starting from household goods, computers, consumer electronics and other tradables (ticket to sporting events). Also Bertelsmann online company, BoL.de in Germany, a business in selling books through online channel.

Further that that, we can also see the trend begins to spread over in Indonesia. Namely Bhinneka.com, a company owned by Hendrik Tio, which was first operated as a shop, selling computer peripheral which also in 1997 began to operate its online business transactions. The same case also happen in Gramedia book store. It is no longer just a book store that we can find in almost every shopping center, but we also can visit its online shop and make a purchase without having to go to a shopping center.

From the point of view of the writer, she sees that the growth of internet users in Indonesia might not as high as in American or European countries. Just like the case of Bhinneka.com, the profit of the company could not cover the investment cost on the technology (based on the data year 1999-2002, a case study by Pierre Wirawan, http://wirawans.wordpress.com). Therefore, the concept of virtual business in Indonesia still needs to be supported by ‘traditional’ concept of business. However, the writers believes that in the long term the concept of e-commerce will does give higher revenue for the company, considering that the technology has the forcing power over the human and environment. They who do not have the ability to adapt with the new technology will surely be blown away, as the out-dated technology dies.