Digital economy

1. An economy is a pretty simple thing conceptually. It is fundamentally massive inter-related collections of organisations and individuals buying and selling in many marketplaces. Oh, and of course we need structures such as governments to regulate it all! We normally call these collections of organisations and individuals buying and selling in many marketplaces. Draw a diagram showing a conceptual structure of an economy. Explain the role of each of the elements you have shown. The above structure basically puts it that the economy is made up of three basic sectors; the primary sector, secondary sector and tertiary sector. This pyramid therefore illustrates that without sectors such as agriculture, mining and forestry, it is impossible to effectively run the rest of the sectors. This essentially means that for an economy to run efficiently it must be run from the bottom up with a firm focus being placed on the production of basic supplies to sectors dealing with the production of goods and to tertiary sectors such as trade and education (Rost 1).

2. It is widely accepted that the digital economy is changing both organisations and markets dramatically. Increasing instances of both disintermediation and re-intermediation using examples explain what these types of changes involve and why digitalisation? The adoption of aspects such as e-commerce and the web which characterise the digital economy has been linked with a distinct elimination of social boundaries which further works to significantly change the accepted traditional hierarchies at the workplace. This has a subsequent effect on the determination of both individual as well as organisational performance. This essentially encourages organisations to make distinct changes in their networks. In this regard, digitalization is seen as critical since it helps to significantly reduce the time that it takes individuals to acquire information. Another change is in the area of competencies since a digital economy essentially encourages organisations to learn the balance between exploiting competencies that are already public knowledge to them and exploring new sources of information (Carley 11).

3. Michael porter also observed that all competitive advantage is eroded over time. Explain why he believed this to be true. Why is it more difficult to achieve sustainable competitive advantage in the digital economy than it has even been before. Michael Porter believed that competitive advantage is eroded over time due in large fact to organisations which seek to create more levels of specialization. This essentially means that because these firms have focused their effort and investments towards the achievement of one particular goal, they often miss out on other opportunities which could have been beneficial to the organisation. In addition, these organisations are often less flexible with regard to accepting technological changes within their environment which further works to curtail their competitive advantages. Within the digital economy it is becoming more difficult to achieve sustainable competitive advantage due to the fact that organisations are unwilling to share information that would enable them to actively identify opportunities that would lead to joint success for both organisations (Jap, 11).

4. Computer and IT have changed things dramatically over the past 70 years. Describe six major changes which technology has facilitated during this time. For each example state whether you would consider these changes to related to digital economy. The advent of computers has brought about several changes including greater connectivity for individuals. Through the invention of social networking and smart phone technology, have enabled people to interact with each other at a greater level. This is a change related to digital economy since it facilitates faster information sharing. Another change is the facilitation of the spread of globalization and outsourcing. This is because the presence of IT has changed the manner in which organisations have access to larger markets. This is related to digital economy since it has enabled these organisations to cut back on costs associated with manufacturing and made innovations more possible (Heffernan 12). Another change is the fact that IT has led to a significant increase in the levels of productivity and performance of businesses by facilitating easy storage of information and enabling stakeholders to have larger access to information. This is yet another aspect of digital economy. Advances in IT also brought with them significant changes in the manner in which trademark and copyright issues were handled. This is because it has enabled consumers’ greater access to the production and distribution of music which is yet another aspect of digital economy. The invention of computers also brought with them a greater level of security with regard to record keeping which has enabled organisations to achieve greater efficiency which is yet another aspect of digital economy. The advent of computers led to the rise of the service economy which had a subsequent effect on encouraging migration from industrial cities into the suburbs. This is an aspect of digital economy since the major characteristic of a digital economy is a focus on the use of IT and computers as opposed to the setting up of factories (Heffernan 13).

5. Rogers proposed a model to describe and explain the diffusion of innovation. What is this model and why is it important when trying to understand and predict the speed of change at which technology is driving our lives. In you answer mention critical mass, innovators, early adopters, early and late majority, late adopters and laggards. Rogers’s theory of the manner in which innovations are adopted is perceived as key towards effectively understanding how technology is accepted and integrated. Rogers essentially put it that individuals make the decision to adopt innovations based on the extent to which they can gain information on this innovation and actively process it. In this regard, this information motivates the individual to reduce levels of uncertainty with regard to the impacts of an new good or service that has been brought forward in the market. Rogers essentially put it that there are different classifications of adopters to innovation including innovators, early adopters, early and late majority as well as laggards. Rogers’s diffusion of innovation essentially shows the extent to which individuals might be willing to embrace innovations as well as the speed with which they might be willing to adopt this change with early adopters being seen as more adaptative with regard to embracing technological change (Sahin 19, 20). Work cited Carley, Kathleen, M. Organisational Change and the Digital Economy: A Computational Organisation Science Perspective. 2000. Web. 4 December 2013. <http://www.casos.cs.cmu.edu/publications/papers/ORGTHEO56.pdf> Frost, Norbert. Regional Economy Systems as Complement to Globalisation. Regionalentwicklung.De. 8 October 2007. Web, 4 December 2013 <http://www.regionalentwicklung.de/regionales-wirtschaften/uebersetzungen-translation/regional-economy-systems-as-complement-to-globalisation/> Hefernan, Virginia. The Digital Revolution. (Lyons: ENS LYON), 2012:12-13 Jap, Sandy. D. Perspectives on Joint Competitive Advantages in Buyer-Supplier Relationships. International Journal of Research on marketing. 2000. Web. 4 December 13. <http://www.bus.emory.edu/sdjap/docs/ADVANTAGESFinal.pdf> Sahin, Ismail. Detailed Review of Rogers’ Diffusion of Innovations Theory and educational Technology- Related Studies based on Rogers’ Theory. The Turkish Online journal of Educational Technology, (2006), 5.2: 19-20