E-commerce

The internet has spanned a number of businesses as well as services. Electronic commerce may be defined as the buying and selling of goods and services over the internet. There are two primary types of electronic commerce. There is business to business and business to consumer transactions.

This paper would trace the history of business to consumer transitions and the potential direction it would take.

Business to consumer transitions
Business to consumer as defined by Bidgoli (pp 105) involves retail sales characterized by mass customization over the internet. Most of the retailers on the internet started as internet companies. The on-line retail businesses emerged as a result of growing needs for diverse products and services. Examples of the on-line retailers are Amazon or Baines and Noble who are well known for their over the internet sales (Laudon  Laudon, pp 120).

The Future of Business to Consumer Internet Commerce
The internet retailers would need to employ their integrative knowledge in order to be able to get feedbacks from customers. This can always be done by monitoring the purchasing trends by the consumers. This would help the retailers know the types of products needed by the consumers as well as sequencing of such products (Bidgoli, pp 175).

The on-line retailer would have to analyze all core knowledge. This would enable them to provide a more purchased product based on the trends of available usage of certain products (Laudon  Laudon, pp 145). Thus, retail sales would be improved through provision of a more target based selling.

The emerging trends of businesses on the internet show ways through which companies can take advantages of the opportunities. It can only be said new products and knowledge would emerge as far as internet business is concerned. The direction and how they would evolve is still open for research.

The title for this paper is Framework for Characterizing the Design of Vendor Managed Inventory (VMI) Systems for SMEs. Previous studies have concentrated on the framework for characterizing the design of VMI in large multinationals and corporations but a few have realized the need to research the framework of VMI in the context of small and medium organizations and enterprises. With the increase in integration and collaboration that is taking place in the supply chains of the small and medium enterprises (SMEs), the concept of VMI or Vendor Managed Inventory has gained a lot of fame and prominence. The concept tells us that the management of inventory has become the responsibility of the supplier instead of the customer, which was the traditional case in most of the SMEs. According to the definition of European Union Enterprise and Industry, SMEs are organizations which do not exceed 250 people in the human resource, is limited to a turnover of   250 million or the balance sheet of the organization is limited to   43 million (European Commission 2003).

Focus of the Study
The focus of this study is to investigate the sustainability and the limitations of the framework for characterizing the design of VMI systems for small and medium enterprises. The framework used by the suppliers in the VMI of the customers will be studied deeply in this research paper but only the small and medium organizations using VMI for inventory replenishment will be used. The VMI has been implemented particularly in the retailing and apparel industry but only those companies which are small and medium will be concentrated in this research paper. The goal of improved VMI is the reduction in lead times, inventory turns, improved service levels, control of bullwhip effect, reduction is stocks and reduced stock-outs.

Main Issues of the Study
The main issues that this study will cover are the seamless integration of VMI with the supply chain of the customer and the effects of the limitations of e-commerce on VMI in SMEs. The major problem that the SMEs face is that the suppliers are not willing to devote their time and effort on the management of inventory of the SMEs. Usually the SMEs do not have a seamless information system in their organizations which discourages the vendors to interface their VMI system with the system of an SME organization.
For an effective VMI system, the customer should have a system that integrates the transformational activities inside the firm, the distribution of goods and services to the customers via the retailers and wholesalers and the procurement from suppliers. Another issue that the SMEs face is that they cannot afford to invest large reservoirs of money in point to point networks for reliability and security reasons. Therefore if VMI systems are implemented in small or medium enterprises, the systems will not be reliable and secure, unless a lot of investment is made (Binary Spectrum 2009).

CONTEXT OF THE STUDY
The description of VMI as given by Hines et al. in 2000 is the collaborative strategy between the supplier and the customer in order to optimize the exchange of products between the two companies at a minimal cost. Operational management is handled by the suppliers in the VMI system for inventory replenishment which is according to an agreed upon framework of performance targets that are monitored continuously and improved in order to create an environment of continuous update (Hines et al. 2000). The definition presents a mutual commitment by both the supplier and the customer to collaborate.

Since a decade, larger organizations, both in size and investment, have diverted their resources and efforts towards inter-organizational systems and supply chain management in order to increase effectiveness and efficiency. However, the SMEs have been struggling to adopt and get advantages from such systems. Reasons cited traditionally for this struggle were lack of technical capabilities and financial resources. Inter-organizational systems are defined by Morrell and Ezingeard as automated information systems connecting and allowing two or more parties to shares digital resources and data (Morrell and Ezingeard 2002).

To structure the literature review, a tentative model of framework for the VMI in SMEs has been developed. The drivers in the model are effectiveness drivers, efficiency drivers and competitive positioning. The objectives of such collaboration are enhancement of supply chain management and coordination amongst the organizations engaging in trade. The inhibitors in this model are operational, strategic, financial and infrastructural. The enablers, which are of particular importance, for this e-commerce model are of course technology and the organizational culture. These enablers are necessary for seamless running of the e-commerce solution and for the integration of the process of one organization with another.

In todays environment, where the sales are quite stagnant because of the rising levels of unemployment and decreasing household incomes, the manufacturers operate in a market which can be characterized as stagnant. The prices are also reduced by the competitors in the market in order to gain a higher market share, therefore as SME is under constant pressure to reduce the cost of the production. In a market, where the prices are becoming more important to the consumers, small and medium manufacturers find it very hard to survive amongst the giant multinationals. The incentives of implementing a VMI framework described in this paper in small and medium enterprises are mostly in tangible form such as quicker response, reduction in operating cost, reduced paperwork, and improved accuracy and ordering (Morrell and Ezingeard 2002).

The supplier also sees the VMI with the customer as advantageous as the organizations share data and their organizational goals converge. The distributor could also improve its position through automation the repetitive processes and focusing on its role as a distributor. When the vendors are responsible for the inventory management, greater throughput with efficiency could be achieved and purchases could be made with little uncertainty (Morrell and Ezingeard 2002).

AIMS
The aim of this research paper is to provide a framework for characterizing the design of a VMI in SMEs. The objective of the paper is also to contribute to the research community and the SMEs with possible implementations of VMI and the provision of a framework designed for SMEs. The concept of supply chain management and VMI in business and logistics have received a lot of academic literature over the past decade but the SMEs have not yet received importance for implementation of VMIs. The paper will also describe the evolution of the technology from the traditional EDI approach to the new web based RFID approach of VMI (Pramatari 2007). In the past, when EDI was used, there were little opportunities for the SMEs to get involved and benefit from VMI systems. However, the SMEs can now benefit from the low cost of trading information over the internet using e-commerce. The framework to be presented in this paper will enable the SMEs to benefit from the supply chain collaborative practices and the low cost of the underlying technologies.

PROPOSED METHODOLOGY
Research Design
The framework of the VMI system for SMEs will be designed in this paper using the approach of Arbnor and Kovacs (1997 and 2006), which employs both the literature and the empirical data from research in combination with analysis and reasoning. The characteristics will be identified and then the framework will be built for VMI with configurations for SMEs. The VMI systems used by some SMEs will be selected and studied in the initial processes of the research. Through sampling, data will be collected from a number of organizations which fit in the category of SMEs. VMI systems being used by the companies from various sectors of diverse set of industries will be selected excluding the apparel sector which has already been researched a lot before. The main SME entities to be researched are small retailers, grocery stores, bakeries, software houses and workshops.

Data Collection and Analysis
Interviews will be used as the basic method of collecting the data in this research study. The interviews are expected to be formal in nature and each interview is to be to lasted not more than 10 minutes. These interviews will be recorded and transcribed for future references and the data will also be analyzed using these transcripts. The persons who will be interviewed will be responsible for either procurement or for the VMI partnerships with the vendors. Direct observation will also be used as a tool of data collection and used in the research study if necessary. Any patterns visible will be identified in the data gathered from the interviews and the hidden patterns will be identified using data analysis tools such as Run Chart, S-Chart and C-Chart etc. The partnership agreements with the vendors will also be studied for these participating SMEs whenever accessible.

For making the framework design more efficient and effective, the organizations and businesses being studied will also be asked for the missing attributed of the VMI system. The variables such as the number of orders, out of shelf indication, inventory information, expiration dates and product history are usually available in most of the VMI systems. However, these systems are not built for the SMEs. Therefore, the requirements that the SMEs have will also be identified from the research. Some of these distinct requirements include product shelf position, reverse logistics, shelf management, back room inventory and product recall date (Pramatari 2007).

The research is limited to only small and medium enterprises which have a different definition in different contexts. These are organizations whose size is under a certain limit which is defined differently by different authorities. These companies can be labeled as SMEs, if their headcount or turnover falls under a certain limit. SMEs comprise almost 99 percent of the total firms present in the USA and these SMEs employ about 65 million working population (U.S. Census Bereau 2008). European Union has declared the organizations with total headcount between 10 and 250 as SMEs (European Commission 2003) whereas the UK reports 90.3 percent of the firms being SMEs and the comprising of 50 to 249 workers. According to the USA, a business set with the help of a government department is an SME and the headcount can vary between 100 to 500 employees (UNIVERSITY OF STRATHCLYDE LIBRARY 2010).

Therefore only the organizations fulfilling the above criteria will be included in the research and the study. The view that will be presented in the paper will be generalized from the interviews and observation results and no specific examples of the interviewee will be cited, however, some names of the organizations will be used to identify the major points about VMI systems in SMEs. The approach of the study is of designing therefore the focus will be on the design of the new framework for SMEs and not large multinational corporations. The greatest limitation of the study is that there is no practical approach or test in the study. There is no practical test to confirm the success of this model as it is only a theoretical model. Framework will not be tested on any pilot sites because of irrelevance ti the topic and therefore no results will be presented in this paper. The situational factors affecting the output or the result also cannot be observed or found out (Tanskanen, Holmstrom and Talvitie 2009).

The proposed framework that is designed in this study is only for SMEs which want to use VMI as the tool for managing their inventory. This is potentially a big step toward the implementation of VMIs at small and medium firms such as mining firms, grocery stores, tailors, retailers and sport shops.

This study will be a huge contribution in the literature of supply chain and specially procurement in the firms which are small or medium in size. Previous studies are present but most have done studies on large firms and multinational corps. The university will be praised for the unique and original framework contributed in the field of VMI which is a very demanding subject in the 21st Century.  Some of the SMEs which are serious about reducing their costs and competing with the larger competitors can pay the university to use the framework in their enterprises. This will not only help the university gain popularity and fame in the VMI field but also develop my skills at a step ahead than my peers. The new framework will surely decrease the costs of the SME which uses it to implement the VMI in collaboration with a partner. The value of the paper is the vertical integration of the firms through sharing of information and designing logistics solutions for the industry.

ETHICAL APPROVAL
The information being collected in this research is from the SME organizations that have implemented VMIs already. It is not known whether the VMI is successful in these organizations or a failure, therefore the SMEs selected is a random sample. These VMI systems in SMEs are not in conflict with any ethical theory or right of anyone. Implementation of VMI required only two organizations to partner and share data in order to reduce their costs. The customer data is not collected in the VMI system therefore there is no ethical approval required from the customers.

The data gathered in the study phase of the research is going to come from the records of the SMEs that are being researched. The authorities will be concerned before the data is used in the study. The data will not be used for the SMEs whose authorities disapprove of reprocessing the data. The observations made will be used in the research without any prior notices to the authorities of the SMEs but no names will be used in the research paper to protect the privacy of the organizations.

Objectives
- Supply Chain Management
- Inter-organizational coordination

Supply Chain Design

- Principles

- Tools

Drivers

- Efficiency Drivers
- Effectiveness Drivers
- Competitive Positioning

Inhibitors

- Strategic
- Operational
- Financial
- Infrastructural

Enablers

- Technological
- Organizational

In 2005 the group of researchers from Harvard business school published the survey of Microsoft Company in 2005. The researchers also provided the brief review of the Company activity within its history. Shortly reviewing the history it is worth noting that Microsoft Company was founded in 1975 by Bill Gates and Paul Allen, and for almost fifteen years it has expanded as the software for PC developer. The most famous and popular product of Microsoft Company is Windows operating system, besides, the company developed application software. The unchallenged leader of the Company, Bill Gates, has shown himself as smart, farseeing and authoritarian leader, who made all the important decisions in the company. Despite the autocratic leadership style was sometimes the reason of lagging from the competitors, the positive impact of single strategy and strong business solutions allowed Windows to become one of the most  valuable and profitable companies of the world. As one of the leading software developers, Microsoft couldnt let the beginning of e-commerce pass.  Thus, in 2005, Microsoft invested in its new businesses, ranging fro Xbox to Business Solutions. Microsoft revenue from Business Solutions business made in 2003 and 2004 years the revenue of 632 and 760 million correspondently.   However, at the end of 2009 the revenue for this division was flat. This leads to the problem of software environment for e-business and Microsoft share on this market.

The software environment of e-business 
The key issue of this research is to identify the reason of lagging on the Microsoft software for e-business from the products of its competitors.

The e-business, or business via and in the Internet, played the significant role in the history of Microsoft Company. At the beginning of 1990th the Internet wasnt like the modern World Wide Web, and was aimed on the business purposes mostly. Bill Gates has highly evaluated the potential of connection between personal computers. In 2001 Microsoft formed Business Solutions division, which started the development of Microsoft Dynamics line  the line customer relationship management and enterprise recourse planning applications. The capabilities of these applications include sales, services, and marketing tools. Besides, this line includes the online version of this application. The Dynamics line provides the set of solution for small and middle-sized business as well as for the entire industry.

Supported by 2 billion in marketing since its creation in 2000, Microsofts Business Solutions revenue had increased to 556 million through Q3 FY05, but the segment still lost 54 million in the latest quarter. At the same time, competitive pressures increased as established players focused on the SMB segment. Many analysts also believed that the business application market was consolidating. Oracle acquired PeopleSoft in a hostile takeover, while in June 2004, Microsoft revealed that it had initiated preliminary discussions with SAP AG to explore the possibility of a potential merger between the two companies but ended these discussions due to the complexity of the potential transaction and subsequent integration(Yoffie et al)
In spite the strong competition on this sector Microsoft till now takes a significant market share in small, mid-size and even large companies CRM market.

Microsoft Business Solutions and its partners have a tremendous opportunity to exert a unique leadership position in the midmarket through delivering not only business applications, but also the surrounding infrastructure, all of which is backed by Microsofts brand reputation of ease of use, strong RD dollars, and executive leadership.(Karasev, 2009)

Along with Business Solutions line Microsoft has the division of online service, which includes MSN and new search engine MS Bing. MS Network provides the services of e-mail, different messengers, credit card processing, online bill payments along with the possibility to incorporate these services to other websites. The revenue of this division made in 2003 and 2004 1,953 and 2,216 million dollars correspondently. When it was launched, the main task of MSN was to compete with Yahoo and later Google on the market of online services. The opposition of Google and Microsoft on the market of internet-services is the captivating, process. The growing popularity of Google on the search market caused Microsoft to launch MSN search in 2005, and later on Microsoft released its own search engine Bing. As the business respond Google announced about the future release of Google Chrome OS, operating system that has to compete the main MS product Windows operating system.

In 2005 Bill gates stated, Weve been in the search business even before Google was around. The commitment we made is to build unique search technology across the board. Our research agenda will allow us . . . to make what we have today look like a joke. And a lot of that will be built into applications like Office or the Windows shell (Yoffie et al)

Though Microsoft takes the significant part on this market also, the performance in this division is worse than in Business solutions. In 2009 Microsofts online services business division failed to post a profit. According the manager of division, online business of Microsoft is just a flanking strategy for the company whose core business is still operating systems and servers and tools. In 2009 the sales fell 5 and the division lost 466 million.

Alternative solutions and recommendations
It is obvious that Microsoft performs better in the sector of business solutions than in the sector of Web-service. The reason of the last is the marketing strategy of Google, which proposes most of its service for free. Most of these services are able to compete with the Microsoft productions successfully. For example, the online text redactor Google dos have the less functions comparing the Microsoft Word, but it is available online and for free. Microsoft invests large amounts into security of its software including the protection for illegal copying, and that is why MS isnt strive to create the online versions of its the most profit-making product.

The solution on this situation could become the technology of Web 2.0, which uses the web as a platform. One of Web 2.0 basic principles is use Software as a Service, and the rapid growth in this sector threatened the MS Company. Bill Gates worried about these services in 2005, when he stated
This coming services wave will be very disruptive.... Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses (Caplan, 2009).

Thus, the very best solution for MS it would be to provide the online solution on the base of Microsofts Azure PaaS solution. This application has already received the positive grades from the early users. It could be the development platform for enterprise and ISVs developers.  This would create the competitive advantage over Google,  Salesforce.com, and Amazon because they have no rich experience of work with third-party developers.

Conclusion though Microsoft was late reentrant on the market of software as service on the Web 2.0 technology, and its performance is lagging those offered by todays industry innovators, the company still has a good starting position to become a dominant force in the market of Web 2.0 technologies, including the latest trends in business solutions.

The rise of credit and debit card use to make purchases and conduct banking activities has brought to the fore many concerns regarding their security. There have been numerous cases of private information lost, and the cases of fraud reported are rising every day. With such attacks on e-commerce in general and e-banking in particular, primarily targeting customers, conducting transactions using these technologies has become really hard for consumers, financial institutions and online shopping stores.

Of course, people are really worried about the privacy of their personal data and they are right to be. Internet crime is on the rise, and no matter what security measures are put in place there are still smarter crooks that use Trojan horses and other kinds of Spyware to retrieve personal information of e-banking clients for unscrupulous use (Chowdhury, Sejdini,  Xiaoming, 2005). When personal and private information is illegally acquired, it is used in crimes such as identity theft, credit card fraud and money laundering.

The root of the problem is that private information in debit and credit cards is stored in a readily retrievable magnetic band (Chowdhury, Sejdini,  Xiaoming, 2005). Even though chip and personal identification number (PIN) technologies managed to alleviate the insecurity of private information, the expansion of e-commerce to include mobile telephone and internet opened a lot of loopholes through which criminals and other unauthorized people can access this information (Chowdhury, Sejdini,  Xiaoming, 2005). When there has been a breach of privacy, safeguards and penalties are not enough. Individuals who orchestrate electronic crime should be dealt with severely. Governments, being the chief custodians of the people, should liaise with financial institutions to track down culprits of e-crime while still working on methods towards a more secure online transaction system.

Electronic commerce is the practice of buying and selling of products and services over an electronic system connected via internet or any other network. On the contrary traditional commerce relies on the traditional ways of doing commerce that occur physically. Traditional commerce is expensive, time consuming and  may not have good market reach. E-commerce is relatively cheaper, less time consuming and gives businesses the opportunity to have a global market reach.

The two developments that contributed to the emergence of the internet as an electronic commerce infrastructure are collaboration and the exchange of information. Through collaboration people and organizations are able to interact, communicate and search for information easily. This exchange of information along with the processing, storing and transmission of information are the key factors that made internet as the best place to do electronic commerce.

Transaction costs are charges that take place whenever an economic exchange occur. On the internet the transaction costs are low because it is easier to tap larger markets in less time and gathering the information and getting the best price is much easier.

The internet enables transparent exchange of information more over anyone can directly contact anybody. It becomes more like a network than the traditional hierarchical economic structure, in which firms can only buy and sell within an organization, and small firms had limited reach.

Managers can increase the performance of their company by being innovative. The best practice is to first identify changes that can add value to the performance. The identification can be done by breaking down the current value-adding activities of the company that help generate revenue. Through this technique the manager will easily be able to find the best solutions for his company.

The process of buying a product through internet is relatively more convenient. One can buy anything while sitting at home. The details and features of a product can be better understood, and hence  good decisions can be made while choosing a product. Companies that do business online have developed a lot over the years, enough that end buyers can now search and buy product more easily. Websites are user-friendly and anyone with little knowledge about the good can still find his way with the help of active help given by most websites. Prospective buyer for example if intends to buy a printer can easily log on to multiple vendors websites, compare and contrast the features and make an informed decision.

The laws enforced by China and Germany will force companies to limit their operation in these countries unless these companies adhere to the regulations. Specifically with China, the company might have to work along with the Chinese government as it maintains significant oversight over foreign businesses, e.g. Google was asked to ban pages against the Chinese government if it wanted to operate in China.

For the online video business, the following three features of online book-stores can be adapted
Top-seller This feature is used by online book-stores to give customers instant information about the best selling books. For the online video business, this feature would inform the customer about the highest selling videos, making it easier for customers to make a choice.

Discounts For online book-stores, this feature tells the cost-conscious customer about the cheaper titles. This can easily be adapted by an online video business, with the feature informing customers about cheaper videos.

Express Shipment This feature is used by customers who want delivery of their books faster than the normal shipment time. With the online video business, this feature would be very useful for  customers who would want early delivery of their videos.

Inflation is determined by movements in both prices and wages. During the 1990s, price increases remained in check due to rising productivity growth and favorable supply shocks. But since this event occurred during a period of rising productivity growth and declining unemployment, wage stability requires a more nuanced explanation. Macroeconomic theory traditionally has assumed that, in the short run, low unemployment rates give workers a bargaining advantage relative to capital. It is expected that workers should be able to demand and receive higher wages given the scarcity of employable labor and the rising demand for that labor. This process is expected to result in greater rates of inflation, assuming that firms pass on higher labor costs to consumers via a markup over unit labor costs.

Phillips Curve Models of Inflation
Phillips noted an abundance of statistical evidence from the United Kingdom that supported the hypothesis that the rate of change of money wage rates can be explained by the level of unemployment and the rate of change of unemployment (299). When labor is scarce and its demand is high, excess demand is created and market forces will lead to employersbidding more vigorously for the services of labor. During periods when labor is in high supply relative to demand, excess supply is created and employers will be less inclined to grant wage increases, and workers will be in a weaker position to press for them (283). The result of this dynamic is increasing nominal wage growth when unemployment is low or decreasing and declining nominal wage growth when unemployment is high or increasing.

Samuelson and Solow applied Phillips analysis to the United States and found a negative relationship between the unemployment rate and the rates of wage and price inflation. Their findings suggested a menu of choice between different degrees of unemployment and price stability (192). Policy makers could choose the combination of unemployment and inflation that was desired by stimulating or depressing aggregate demand. This could be accomplished by fine-tuning both fiscal and monetary policy to produce the preferred outcome.

In response, Phelps and Friedman augmented Phillips analysis with inflation expectations and argued that Samuelson and Solows menu of choice was only possible in the short run. Friedman forcefully asserted that there is no permanent trade-off in the long run (11). In the long run, the menu of choice disappears as the economy tends toward its natural rate of unemployment or the non-accelerating inflation rate of unemployment (NAIRU). These long-run equilibrium rates of unemployment are identical in that they are consistent with a stable rate of inflation.

Phelps further developed the microeconomic foundations of the natural rate by analyzing labor market frictions that allocate heterogeneous jobs and workers without perfect information (161). Search unemployment creates frictions that lead to deviations from the natural rate of unemployment in the short run. Only when individuals have correct expectations, which is how long-run equilibrium is defined in these models, will the long-run Phillips curve be vertical at the natural rate. The short run is a period of disequilibrium in which individuals make forecast errors about future inflation.  Given enough time and data (i.e., in the long run), they will adjust their expectations and the economy will gravitate to a supply-side determined equilibrium rate of unemployment.

Friedman and Phelps argued that attempts to stimulate aggregate demand could not have a permanent effect on this equilibrium unemployment rate. Policies that target nominal variables, such as monetary policy, can only have temporary effects on real variables, such as output and employment. In a long-run equilibrium, when all expectations are correctly realized, the economy will be unable to deviate from this natural rate. Money illusion, it is assumed, does not exist. Therefore, the actual unemployment rate can deviate from the natural rate only when economic agents have incorrect expectations about future inflation.

The dynamics that lead to a long-run Phillips curve that is vertical at the NAIRU can be explained as follows. Suppose the monetary authorities increase the money supply to stimulate aggregate demand. This expansionary policy then leads to an increase in the aggregate price level. Firms are induced to sell more of their products as they see prices rising. However, they are unable to distinguish between specific price increases for their products and an increase in the general price level. So, initially, they hire more labor to accommodate the rising level of demand and unemployment falls. Nominal wages temporarily rise as firms increase their wage offers to attract more employees.

Since it is assumed that responses to wage changes happen more rapidly than responses to changes in the aggregate price level, workers supply more labor as they believe their real wages have risen. The economy then moves upwards along the short-run Phillips curve to a new, lower level of unemployment but at the cost of higher inflation. Conversely, if monetary authorities reduce the money supply to reign in aggregate demand, this process will operate in reverse. In the short run, then, there is a tradeoff between inflation and unemployment.

In the long run, however, this trade off disappears as inflation expectations are correctly revised. Over time, firms will see that price increases are not specific to their product, but a general phenomenon. They realize that their original strategy of hiring more labor was misinformed due to an erroneous interpretation of the rise in prices. Although firms are bound in the short run by fixed-term contracts for labor, once these contracts expire firms begin to shed unnecessary employees. Workers simultaneously begin to decrease their labor supply as rising inflation lowers their real wage. Their original decision to supply more labor was the result of misperceived (or incorrect) information.

This causes unemployment to rise to the level that existed prior to the monetary expansion, but this level of unemployment is now accompanied by a new, permanently higher rate of inflation. In order to combat greater unemployment, monetary policy would have to become ever-more expansionary and would cause ever-higher inflation rates. Any attempts to decrease unemployment below its natural rate would therefore lead to perpetually accelerating inflation rates in the long run.

As inflation expectations rise, the short-run Phillips curves shift continuously up and to the right. Once monetary authorities abandon their effort to lower unemployment via monetary stimulus, the economy moves onto the vertical long-run Phillips curve at the natural rate of unemployment.

Alternative Approaches to Estimating Phillips Curves
The malignant behavior of the Phillips curve tradeoff during the 1970s and the benign behavior of this tradeoff during the 1990sespecially for the 1996-2000 periodgenerated a wealth of models that sought to identify the forces that lead to such shifts. Applying an econometrically rigorous Phillips curve analysis to the U.S. economy during the 1990s, Gordon argued that wage inflation followed an upward course given the falling unemployment rate throughout the decade, but price inflation did not behave as predictably as it fell in the face of declining unemployment. He argues that the low inflation of the 1990s was the result of a lower value of the time-varying NAIRU (TV-NAIRU).

Gordon uses what he calls a triangle model of inflation, which summarizes the dependence of the inflation rate on three basic determinants inertia, demand and supply (14). Inflation inertia is measured by lagged values of actual inflation and represents the role played by fixed-term labor and supply contracts. Demand pressures are specified as the difference between actual unemployment and its time-varying natural rate or, alternatively, GDP growth that is above its potential. Supply determinants are exogenous shocks that cause a change in the prices of relevant goods.

Extending his triangle model, Gordon examines the feedback between wages and prices and argues that the low unemployment, low inflation Goldilocks economy of the 1990s was the result of five supply shocks that suppressed the rate of inflation
...between 1993 and 1998 the economy benefited from a powerful and interactive push toward decelerating inflation, resulting from appreciation in the dollar, a decline in real oil prices, an accelerated rate of decline in computer prices, a reduced relative rate of inflation in medical care, and a series of measurement improvements in the official price indexes.

Gordon, alludes to the potential influence of bargaining power on inflation when he notes that price changes were restrained by factors that limited wage changes, for example, worker insecurity (305), but does not explicitly model this in his analysis. Gordon offers additional explanations for declining inflation during the late 1990s, which include the hypothesis that the so-called new economy provided cheap technological goods that rendered obsolete previous capacity constraints associated with the Phillips curve (298). Worldwide financial crises led to an inflow of capital into the U.S., which, in turn, reduced interest rates and import prices. Weak unions, a decline in the real value of the minimum wage, job insecurity, and falling employee benefit costs (primarily due to the presence of cost-minimizing HMOs) also mitigated inflationary pressures.
Other models incorporate forward-looking expectations and sticky prices through fixed-term supply and labor contracts into a Phillips curve model that also includes the unemployment or output gap. Taylor, using rational expectations, finds that staggered wage contracts lead to both unemployment and inflation persistence, which significantly outlasts the duration of the longest contract (2). Calvo and Mankiw, using a sticky-price model, argue that monetary shocks (say, a monetary contraction) will cause firms to shed employees because they cannot sell all the goods they want at prevailing prices. Unemployment results since price adjustment is costly and is thus not immediately responsive to the shock (Mankiw 49). These studies argue that rational expectations do not necessarily imply policy ineffectiveness in the presence of nominal rigidities.

The models of inflation for the United States that are rooted in a Phillips curve approach, in which short-run decreases in inflation must come at the expense of higher unemployment. Since the short-run Phillips curve shifted out during the 1970s and shifted in during the latter half of the 1990s, many studies have attempted to explain what factors led to these shifts.  Mainstream Phillips curve models typically focus their theoretical and empirical analyses on changes in inflation inertia, inflation expectations, demand pressure, supply shocks, and price and wage rigidities.

At low levels of unemployment, workers gain a bargaining advantage relative to capital. When unemployment is high, the relationship is reversed. The short-run Phillips curve is negatively sloped, but in the long run, the equilibrium rate of unemployment is determined by the supply-side of the economy and the Phillips curve is vertical at a unique NAIRU.  On the other hand, when the Phillips curve is horizontal, changes in inflation stem from exogenous shocks, such as commodity prices or import prices, or, possibly, from the institutional structure of the labor market. That is, increases in employment insecurity or the social bargain could offset the inflation-inducing declines in the unemployment rate.

Corporate market is one segment in business that drive many innovations due to the increasing needs to produce a product and service more efficient and competitive. In order to do so, many applications are developed to match each corporate needs and they are shared within a diverse a geographic areas from small offices to global presences. These facts underline the development of telecommunication technologies. Thanks to the improvement and maturity in networking technologies that helps people to communicate one to another across the cities, lands, or even continents.

In addition, the development of computer and telecommunication technologies becomes interesting journey as it presents other opportunities for application developers to develop multiple applications that suit individuals or corporate needs. One interesting development in the computer and networking technologies is the emerging applications like social networking that grows rapidly amidst the development of mobile technologies, which is predicted that during 2009-2010, there are eight technologies that would grow significantly (Perez, 2009).

This situation highlights collaboration between software and hardware in building the reliable and strong information systems (IS). Concerning the discussion of IS system, this paper will elaborate three technologies that currently become the newsmakers as they will influence the way retail and corporate consumers communicating with others. The three technologies are cloud technologiescloud computing, mobile technologies, and social networking.

Review of Technologies

Cloud Technologies
In corporate use, the increasing number of subscribers, employees, orderstransactions, and partners will lead to the increasing needs of data storage that stores the record of any transaction within an enterprise. This situation can be summarized into several challenges that IT faces as following
Increased capacity as the result of increasing number of applications and also users, which are implemented in an enterprise
Raising capability of a network or shared applications without the needs to invest new infrastructure
Personnel development due to the complexity and variety of problems that IT personnel faces
Licensing new software

Figure 1 shows typical applications of cloud computing that encompassing the subscription-based or pay-per-view service. As the technology is sharing-based by nature, it suggests that cloud computing will be carried out over the internet. The sharing model also implies that cloud computing will consider the services just like public utility where every users will access the same resources with some degrees of separation among each typical users in order to maintain the security issues.

 SHAPE   MERGEFORMAT

As with other shared applications, the cloud computing also receives many pros and cons. From the pros point of view, the advantages include
The capability of services enabling the dynamic movement, growth, and also the protection of services
Compliance with the disruptive innovation, which refers to the packaged technology that designed to suit the needs of small enterprises and also start ups, who do not afford to establish their own sophisticated networking infrastructure.

However, cloud computing also invites critiques and concerns due to several factors, especially regarding security and applicability as following
Cloud computing suggests that customers data will be always in transit that provide questions whether another user that uses the shared application will be capable of accessing the data
The rising complexity of cloud will demand the provider to establish a ultra secured infrastructure to protect each customers private data, which is now still in the development.

Mobile Technologies

Basics of Mobile Technologies Development
Portability is one feature that becomes key drivers of innovation since late 20th century and continues today as inventions on portable gadgets rise everyday. Those technologies are the result of services providers, gadget manufacturers, and application developer who are racing for finding new things that attract consumers to use them. Wi-Fi enabled handsets, personal digital assistants, GPS (global positioning system) devices, and laptop computers, to name a few, are some examples of well-known innovations in information technology (IT) that are saleable in the markets.

Within the past two decades, one technology that grows fast is wireless technology, especially mobile technology. This technology speeds up as cellular services grow at that time. Moreover, the recent development in mobile devices and wireless technology also leads to mobile computing that leads to a paradigm shift from desktop computers to mobile devices. Recently, it is usual to find consumers using their Personal Digital Assistants (PDAs), smart phones, and notebooks that strengthen the facts that business has gone mobile so that the consumers can do all things over wireless gadgets the same with doing by desktop computers (Business Link. 2010).

This trend is also supported by microprocessor manufacturers like Intel that continues developing powerful processor for instances, in mid 2005, Intel delivered the next generation processors that enable cell phones and PDAs to meet multimedia, low power, and security requirements (Intel, 2004).  

Mobile Technologies
The attractiveness of mobile devices capability soon raises the number of cellular phones customers. This condition becomes issues for telecommunication companies and content providers to develop new killing applications besides voice communication that will increase the corporate revenue. The new application is data communication that is accessed over various systems. Sarah Perez (2009) reveals eight mobile technologies to watch in 2009-2010 in which they share something in common higher speed of data transmission, compact devices, longer coverage, and embedded with interesting features. Those technologies include

Bluetooth. It is a technology that enable direct connection between mobile devices such as hand phones, PDAs, portable game consoles etc. the recent development is the Bluetooth 3.0. This new version will have the faster data rates up to 480 Mbps (megabits per second)
802.11n  Cellular Broadband. This is the wireless connectivity continuing the common standard 802.11 bg. Similar to Bluetooth technology, the new standard will guarantee more speed for users in accessing data.
Location Awareness. At initial development, this location awareness is offered by mobile operators under the LBS (location-based services). The next development of location awareness will integrate several systems GPS, Wi-FiWiMax, and cellular services. The application also increases as it will enable a user to broadcast our location to a network of friends.

The typical configuration of cellular services in the remote areas (for example in Hawaii) is described in Figure in which it deploy the integrated cellular and satellite technologies to reach a remote location.

The figure assumes that a cellular providercarrier wants to expand their cellular coverage into Hawaii. In order to do so, the carrier provides communication links from the nearest mobile switching center (assume in Los Angeles). In the Hawaiian side, in order to provide cellular services, Sprint (or other telecommunication carriers) must set up cellular system including Mobile Switching Center (MSC), Base Station Controller (BSC), BTS (Base Transceiver Station), numbering plan and many others.

MSC as similar function like switching center in PSTN (Public Switch Telephone Network) in which it is responsible for setting up call between customers, releasing it, recording the billing of a call, managing mobile phone access to HLR (home location registry) for authentication and location update. BTS composes of transmitter and receiver that have function to handle telecommunication traffic between mobile phones in a cell. Several BTS is handled by a BSC that handle handover when a mobile phone moves from one cell to another cell.

In other mobile technologies like Bluetooth and Wireless Fidelity (Wi-Fi), technically the difference with cellular system lies on the capability of hand-over into adjacent transceiver in the cellular system.

Social Networking
In spite of inviting people to gather in a specific location like cafs, malls, or other spots, internet has enabled us to share ideas, meet old friends, send and receive messages. One popular web-based application within the past decade is social networking. The idea of these applications is to enable a user to connect with their friendscolleagues all over the world. They include the popular My Space ( HYPERLINK httpwww.myspace.com www.myspace.com), Friendster ( HYPERLINK httpwww.friendster.com www.friendster.com), and the continually growing Facebook ( HYPERLINK httpwww.facebook.com www.facebook.com) and also Twitter ( HYPERLINK httpwww.twitter.com www.twitter.com). Concerning the social networks websites, this paper will discuss about the phenomena of Facebook, a social network at college. Technically, social-networking websites have several characteristics

Powerful platforms
Social-networking websites like facebook typically has three important components, which are identity platform, community platform and application platform. The identity platform underlines the fact that Facebook have rich metadata and they have massive intelligence on users. Users can even see detailed metadata regarding friends connected to them. Other forums and blogs do not provide such detailed amount of users data. The community platform on the other hand, represents the fact that Facebooks ability to map relationships and affinities and segmenting communities from interests. As an application platform, Facebook uses API platform to gather intelligence from application deployment

Various applications media embedded and event management
Those are some of the most interesting features Facebook has offered to its consumers. These attributes generate significant progress for the company. For instant, in less than one month, the application sections exploded from hundreds to thousands. The application is created by a PHP developer. Within the system, audio, video and live streaming video are available. The richness of media embedded is one of the value creators of Facebooks services. The affinity groups within Facebook can also organize and promote events from Facebook (Delaney, 2006)

Social or business problem
Travel industry still provides great opportunity as it becomes very popular these days. For telecommunication industry, the increasing number of travelers also gives opportunity to raise their revenue from international roaming as telecommunication becomes one main need for them.

Interestingly, when people arrive in a new city, they always need lots of information about buses, trams, place of interests, and hotels, especially for backpackers. No matter how much they prepare or search on line before the trip, there will be some unexpected events which could not be updated on time.

Under such circumstances, there will be another opportunity for business to develop information services that every travelers could have once they are connected to any mobile services in the destination country. This situation underlies my idea to offer the information pack or software, which can be downloaded into pocket devices, such as mobile. It is very useful when we arrive in the airport and having all the information about this strange city in our hands right away.

Typical information of location based services is typically sent over the 3G network or Wi-Fi internet access at the airport and shopping centers where we can access to all the information about this city. When we want to know the fastest and the relatively cheapest way to go to CBD, there is no need to call or ask any one, all the recent posted answers can be found in this information pack.  It is like having someone who has lived here for years and knows everything about this town right beside you. No matter what you want to know, there will always be many alternatives.

Proposed Technologies 
Based on the identified problems where userscustomers need reliable information that they receive in their handheld, therefore, the proposed technologies is mobile location-based services.

The basic technology that our location-based service will offer to customer is that it integrates several entities that form the LBS products (Figure 5). Typically, it composes of four entities as following
Mobile operators or Wi-Fi carrier. The role of carrier is the road that enables the location information providers - composing of hotels, cafs, restaurant, hospitals, gas stations, schools, retailers etc- to send the promotional items to the customers. The basic technology to be used in this application is SMS (short message services) and web-based advertising. These technologies are used altogether as customers may have different types of mobile devices. However, we would not rely solely on SMS technology solely as the costs of sending SMS to every customer that walk by out store or those who located within the range of a cellular network are quite high even the costs are charged to the advertisers (Schapsis, 2008).

Another technology that would be employed in this service is web-based applications where customers once they arrive in the airport or those who enter a location will download an application that become the interface for any advertisers sent through the mobile carriers or Wi-Fi operators.

Information provider. This entity composes of application developers that develop web-based or SMS-based application and also the advertisers. The idea is every advertiser would provide mobile coupon (M-coupon) that sent through the mobile network so that every customer that receive the M-coupon can redeem this to obtain special offering. If the advertisers are not profit-oriented companies such as public or government agencies that inform the public announcement etc, therefore the information is just general information like public announcement etc.

Customers. This is the targeted entity in any location-based service where they can redeem the coupons that an advertiser sends.

The benefit of location based service is it enables a user to get updated news that could be designed to match their interests. For example, in RIMs BlackBerry Application World, they will update the news of information that divided into several groups such as cafs, games, entertainment etc.

Figure 6 show that users have broad interests in using the location-based services. There are several items that listed on top 10 applications of LBS. however still the most famous is about the weather, store location, and navigation (deGaravilla, 2009). The next growing application of LBS is special offers that can be offered to retailers, stores to advertise their offerings.