1. EC02.02b The Impact of the Internet on Globalization of Business 1
The Impact of the Internet on
the Globalization of Business
EC Objective 2.02

2. EC02.02b The Impact of the Internet on Globalization of Business2
Issues in Global or
International E-Commerce
 Reality Check for the e-
Commerce Business: It is projected
that 40% of e-commerce sales involve
at least 1 party located outside of the
United States

3. EC02.02b The Impact of the Internet on Globalization of Business3
Issues in Global or
International E-Commerce
 What trade issues/barriers require
consideration by the e-Business that
wishes to establish a global presence?
 Trust Issues
 Language Barriers
 Time Zone Barriers
 Cultural Barriers
 Infrastructure Issues
 Legal Issues
 Tax Issues

4. EC02.02b The Impact of the Internet on Globalization of Business4
Trust Issues
 Since ancient times, the element of TRUST
has been an integral part of the relationship
between the buyer and the seller. What are the
TRUST issues unique to the e-Commerce
relationship between global entities?
 Establishing credibility
 Different customs
 Different legal systems
 Language

5. EC02.02b The Impact of the Internet on Globalization of Business5
Trust Issues—Establishing
Credibility
 Establishing credibility is essential
both in the United States and in
international markets
 Consumers lack trust in “strangers”
 Buyers must “trust” how a company will
act in specific circumstances--return of
defective products, lost products, etc.

6. EC02.02b The Impact of the Internet on Globalization of Business6
Trust Issues-Language,
Customs, Legal
 Language barriers,
different customs, and
different legal systems
contribute to the absence or
presence of "trust" between the
business entities"Forrester Research found that users stayed twice as long
and were three times as likely to buy
when content was presented in their native language.
"- Howard Schwartz, VP Marketing, Uniscape, Inc.

7. EC02.02b The Impact of the Internet on Globalization of Business7
Language Issues
 Placing language conversions on your site is
essential if you are going to do business
internationally (remember--40% of e-commerce
transactions involve at least one party outside the
US).
 The most used languages are English, Spanish,
German, Japanese, French, and Chinese.
*Although English is not the principal language
spoken by the vast majority of the world's
population, IT IS the language spoken by 50% of
the Internet's users.

8. EC02.02b The Impact of the Internet on Globalization of Business8
Language Issues
 “Think globally, act locally.” Consumers are far
more likely to buy products and services from Web sites
created in their own language, even if they read English
well.
 The inclusion of alternate language versions of your site
will help to establish the "Trust" element mentioned
earlier. It shows that the seller has anticipated the "virtual
arrival" of the buyer.
 Check out the HERTZ Rent-a-Car site's use of
multilingual versions. Why would this be an important
element of their web site? (Hint: what is the nature of
their business?...who are their customers?)

9. EC02.02b The Impact of the Internet on Globalization of Business9
Bridging Cultural Barriers
 Concept: EGOCENTRISM--a limited
outlook where one assumes that one's
culture and customs are the "most
preferred" or better than those of other
cultures; the belief that your "world
view" is the same as that of all others.

10. EC02.02b The Impact of the Internet on Globalization of Business10
Bridging Cultural
Barriers
 Customs--how people act in specific circumstances
based on the teachings of their forefathers. A gesture that
is benevolent in one culture might be offensive in another.
e-Businesses and site designers must carefully choose
images and language when building a site.
 Language--again, the customer must feel comfortable
with the language or he/she will not ?trust? your site well
enough to purchase products (Example: General Motors'
Chevrolet Nova did not sell well in Latin America. Why?
No va means ?it will not go? in Spanish.)
 Site Layout--keep in mind, for navigational purposes,
that some cultures read right to left and others in a
columnar format (up and down).

11. EC02.02b The Impact of the Internet on Globalization of Business11
Bridging Cultural
Barriers
 Business Policies--the elements of a country’s culture
that are ingrained in everyday business practices of a
country.
 (Example: The Japanese have very specific protocols for behavior
that display the "appropriate level" of "respect." One such protocol
is the "bow" which is expected as part of greeting one another. The
giving of gifts as a symbol of respect is also common. The refusal of
such gifts may be considered as a direct insult to the "giver.")
 Technology Infrastructure--the business and
government telecommunications networks that carry and
route computer data traffic in a country. These vary widely
and have a great impact on the country’s use of technology.

12. EC02.02b The Impact of the Internet on Globalization of Business12
Infrastructure Issues
 Internet infrastructure--the computers and
software connected to the Internet and the
communications networks over which the
message packets travel
 The speed and quality of transmission
varies widely from country to country
 Many governments heavily regulate the
telecommunications industry limiting
expansion
 In many countries, local connection costs are
very high

13. EC02.02b The Impact of the Internet on Globalization of Business13
Legal Issues
 Exposing your company
to different trade
laws in other countries
 Jurisdiction becomes
a huge concern (the
ability of a government
to exert control over a
person or corporation

14. EC02.02b The Impact of the Internet on Globalization of Business14
Tax Issues-Income
Income Taxes
 Any web site located in the US
that generates income is subject
to US federal income tax
 The US provides a credit for
taxes paid to foreign
counties
 If a business operates in several
states, it must file tax returns
in all of those states

15. EC02.02b The Impact of the Internet on Globalization of Business15
Tax Issues-Sales
Sales Taxes
 A tax on goods sold to consumers
 Businesses must file sales tax
returns in the state in which it operates.
 It must collect tax from customers
in that state
 Recently, in the US, tax filers must
submit the total of purchases made
online and pay tax on them when filing
their income tax return

16. EC02.02b The Impact of the Internet on Globalization of Business16
Facilitators of Global E-
Commerce
 Worldwide Access to the Internet
 Time Differences Eliminated (Asynchronous--
access anytime from anywhere...does not require
simultaneous--"real time" interaction)
 Global Network of Vendors--no geographic
barriers
 Electronic Currency in Transaction
Processing (EFT makes transfer of monies much
easier)

17. EC02.02b The Impact of the Internet on Globalization of Business17
Obstacles of Global E-
Commerce
 Currency Conversions
 Tariffs
 Import/Export Restrictions (this is
becoming less of an issue in light of
recent legislation such as NAFTA)
 Local Business Customs
 Laws of each Country

18. EC02.02b The Impact of the Internet on Globalization of Business18
Sources
 Developer of Global C, Global Checker for C+
+ and Java, Dialect and Net Dialect.
http://www.uniscape.com/
 Hertz Rental Car
https://www.hertz.com/rentacar/index.jsp?
bsc=t&targetPage=reservationOnHomepage.j
sp
 North America Free Trade Agreement
http://www.citizen.org/trade/nafta/