The effect of terrorism and digital commerce on a company and its operations essay

Throughout history terrorism has been a part of the global society and along with the world globalization trends terrorism has also become more advanced and organized in its nature. Alongside the digital commerce has been born and today, it appears to be an inevitable part of the world’s daily life. In fact, globalization can be held accountable for both terrorism and digital commerce: first, it nurtured numerous intercultural tensions which in turn gave a rise to terrorism, facilitating the means and conditions; and second, together with the technology innovation it raised world’s commerce to new highs. On the other hand, it is widely argued that globalization is the key to resolving the terrorism issue as well as the engine of the future global progress.
Terrorism affects numerous layers of society and in particular, its impact on the business world is enormous. Multinational organizations and corporations often become the targets of certain terrorist attacks and extremist activities. Typically, the aim of such terrorist attacks is to expel, disrupt, or take advantage of a specific business. Terrorism negative effect on businesses can range from insufficient corporate losses to total bankruptcy or default of the business. As a result of terrorism activity aimed at particular business organization, the country it operates in becomes a subject to disruption and suffering as well. Yet, terrorism might have huge business implications for the financial industry including insurance companies, mortgage and loan providers, banks and others. For instance, the terrorist attacks of the September 11, 2001 caused immense costs and disruptions to US economy. Recognizing posed threats US financial markets immediately reacted to the risks of terrorist attacks by including the terrorism exclusions in standard commercial property loss contracts, and introducing terrorism insurance coverage policies. (Gordon, Moore, Richardson, 2009) Nevertheless, apart from being a victim in a terrorist attack, businesses as well as governments are able to actually control and confront such encounters. History counts hundreds of terrorist – business encounters including the tragedy of 2001 in US, Chiquita Banana International terrorist crisis in Colombia, TajMahal Palace Hotel terrorism case in Mumbai. Unfortunately, most of the time businesses are not able to mobilize and react accordingly and in time. (Mazzarella, 2005)
Research on terrorism and its impact on business environment, in particular on management and strategy formulation, has grown substantially since the world’s big tragedy of 9/11 in US. Today companies pay a great deal of attention towards threat of terrorism and its prevention. Businesses recognize that along with the business progress and innovation terrorism has undergone a number of evolutionary changes as well. Multinational businesses and their operations can be easily destroyed or disrupted as they are largely dependent on their supply chain and logistics which concern cross-national flow of goods, means of transportation and international routes. Terrorism gave a rise to a new business concept known as the crisis management. Hence, crisis management is directly concerned with such encounters as terrorist attacks and extremist activities within the business world. Multinational organizations understand that critical management, thorough strategic planning and prevention plans are a must have in order to secure their businesses form possible crisis. Considering terrorism from a managerial economic perspective businesses incur enormous costs and expenses. Therefore, terrorism has a direct impact on company’s strategy formulation and implementation. Organizations must be able to secure and protect their operations and corporate environment in order to survive and ensure continuous growth. (Baumert, Tomasco, 2012)
Digital commerce or as it most frequently regarded e-commerce has become a new market platform for conducting business. For its most part, e-commerce influences such business sectors as finance, communications, and retail. However, it has a huge potential to grow further beyond and conquer the rest of the world. Whereas the direct impact of e-commerce on the businesses isn’t quite visible yet, it is highly pervasive as it concerns numerous routine operations. In particular, digital commerce has the potential to fully transform the marketplace and business practice by elimination of the traditional intermediary functions, innovation of new products and services, new approaches to relationship building within business-to-customer and B2B markets. It is already quite obvious that e-commerce is transforming into a huge network which step by step creates links and unites various aspects of life. For the business world e-commerce opens up new horizons and potential advantages: time efficiency, cost efficiency, easier and faster access to a broader pool of customers, ideas and knowledge. (OECD, 1999)
Digital commerce resulted in intensive personalization of goods and services particularly by customers. Companies put a lot of effort in order to fully embrace the idea of e-commerce and put it to work within their own business models. Digital commerce is a great business tool which companies should employ and exploit as it provides numerous benefits including execution of routine general and administrative tasks, on-line marketing, generation of higher sales through on-line retailing, information and education of the customers, search for and target of potential new customers, market analysis, communication with customers, and other businesses and within the company. (Balasubramanian, Mahajan, Wu, 2009)
Globalization appears to be that same medal with two sides as it is often the cause for certain event and at the same time its resolution. Though at a first glance terrorism and digital commerce may seem totally unrelated concepts they have the same roots and shared connections. Both concepts are highly related with the business environment as they have significant impact on companies and their operations.


Balasubramanian, S., Mahajan, V., Wu, F. (2009, May 22). An Analysis of E-Business Adoption and its Impact on Business Performance. Journal of the Academy of Marketing Science 2003; 31; 425. DOI: 10. 1177/0092070303255379
Baumert, T. Tomasco, S.(2012, November). TERRORISM AS A STRATEGIC CHALLENGEFOR BUSINESS. Chair of the Economics of Terrorism – UCM. Retrieved from:
http://www. sipri. org/research/armaments/milex/ICES2013/papers/archive/tomasko-baumert-terrorism-as-a-strategic-challenge-for-business
Gordon, P., Moore, J. E., Richardson, H. W. (2009). Global Business and the Terrorist Threat. University of Southern California, USA. Retrieved from:
http://faculty. haas. berkeley. edu/jaffee/Papers/NBCRUSC. pdf
Mazzarella, J. (2005, Spring). Terrorism and Multinational Corporations: International Business Deals with the Costsof Geopolitical Conflict. Major Themes in Economics. Retrieved from:
http://business. uni. edu/economics/themes/mazzarella. pdf
OECD (1999), “ Economic and Social Impact of Ecommerce: Preliminary Findings and Research Agenda”, OECD Digital Economy Papers, No. 40, OECD Publishing. http://dx. doi. org/10. 1787/236588526334