IB Digital Society 4.2A Business Notes

4.2A Business

What Counts as a Business Now

1. Digitalization: using digital systems to reshape how an organization operates (shop to website, filing cabinet to database). It rebuilds the business itself, which is more than running the old processes on a computer.
2. The concepts to watch here are change, systems, and power. Digital tools make firms cheaper to run and able to reach a global market, yet the advantage concentrates with whoever owns the platforms and data.
3. Digital change hits every part of a business at once: reaching customers, pricing, stock, pay, rivals. A firm that ignores it can be undercut fast. The gains and the risks land on different players, and so does control.

Digital Business Models

1. E-commerce is selling online; the deeper change is the platform business, which makes no product itself but connects others (sellers and buyers, hosts and guests) and takes a share of every exchange.
2. Growth comes from network effects: each extra user makes the platform more valuable to others, so digital markets tip toward one or two giants and new platforms race to get big first.
3. This is a change and power story: platforms give tiny firms global access, but the platform sets the rules, fees, and visibility, so traders depend on decisions they cannot control.
   1. Gains split unequally by design. The platform captures the data and sets the fees. A small trader gets reach but on terms it did not write, and the customer gets choice while funding the platform's cut.
4. Latin America has its own giant. MercadoLibre pairs its marketplace with Mercado Pago, a payments and lending arm that brought millions of unbanked people into digital finance, building regional power by banking its own users.