Why e-Business is important to the world economy.

Essay by gophergirlUniversity, Bachelor'sA, February 2008

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While the terms e-business and e-commerce are often used in the same context there is a difference between the two. E-commerce generally refers to financial transactions that take place on the Web, whereas e-business refers to all types of transactions over the Web. The use of the Web, or Internet, is perhaps one of the greatest changes in business practices today. "The transforming power of this mode of business extends far beyond the obvious points of convenience for the customer and cost savings for the business. The most powerful implementations of e-business enable a complete restructuring of business models" (Ware, 1999). The extensive acceptance and relatively low cost access is making a change in the world's economy. This paper will attempt to identify some the reasons that e-business is important to the world economy.

Many businesses are interested in e-business for the most simple of reasons, which is the increase of profits and, generally, a decrease in costs.

Often the decrease in costs is associated with paperwork, employee pay and overhead, and these savings can be passed on to the buyer. An example is Cisco Systems who today sells the majority of its computer networking equipment over the internet. According to Schneider:Because no customer service representatives are involved in making these sales, Cisco operates very efficiently. In 1998, the first year in which its online sales initiative was fully operational, Cisco made 72 percent of its sales on the Web. Cisco estimated that it avoided handling 500,000 calls per month and saved $500 million in that year alone. (2004, pg. 15).

In a business-to-business (B2B) transaction, if a buyer can purchase more of a product for a lesser amount, they can sell more as well. Selling more helps to stimulate the economy in any country. In addition, when a company...