How important is the e-business in today s world and in what ways does it affect decision making in corporations.
Student name: Rasheed Olawale Soetan, Student no: 7254432 University of Southcentral LosAngeles INTRODUCTION Technological breakthrough in such areas as fax machines, telephone, video player, audio devices and televisions took many years to commercialize and measure their impacts on business compared to this breakthroughs, telecommunications, information communication technology, miniaturization, computers and internet went through shorter product life styles and achieved widespread diffusion and reformed the nature of business operation and enhanced competitive business environment instantly. This technological advancement has resulted in evolution and innovation of many products, services and business processes. One of them is the emergence of ecommerce or electronic business. The internet had resulted in emergence of virtual markets with four primary distinctive characteristics, which are real time, shared, open and global. The application of internet is divided into three major activities that are publishing corporate information, conducting electronic commerce and business transformation. The greatest feature of the internet is absence of intermediaries; the manufacturers are able to sell their products relatively easier to buyers via the internet. E-business today is no longer a technological issue, but also business issuecommerce a core aspect of e-business involves a number of forms, varying level of cost and complexities, depending on the business need. In the past few years, enterprises across the globe have experienced significant changes in their business information system (BIS). Huge investments were made in business enterprise resource planning , system implementations but still they struggle to get timely information that is needed to make effective business decisions and to ensure continuous growth of enterprises. Placing e in front of any process or function seemed to be the magic prescription for never ending story of success and rapid returns for enterprises. E-business, e-procurement, e-sales, e-payment-banking, eCRM, e-CAD, e-delivery are just a few. The emergence of the internet and e-business throughout the world has been contributing such a variety medium in doing business as well as people lifestyle.
AN OVERVIEW OF KEY TERMS Definitions of e-business and e-commerce E-business has many definitions some of which are explored below; according to Elizabeth Hardcastle in 2008 e-business involves several key activities including improving business processes , enhancing communication and providing the means to carry out business transactions securely.E business is a part of internet economy which encompasses all of the activities involved in using the internet for commerce(1).
Electronic business commonly referred to as e-Business or e-business ``, may be defined as the utilization of (ICT) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business.Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses.( 2 ). E-business is buying and selling, servicing customers, collaborating with business partners and conducting electronic transactions within an organisation. (3) E-business refers primarily to the digital enablement of transactions and processes within a firm, involving only the information systems under the control of the firm. They are those activities other than buying and selling via electronic channels.(4) E-business is all about time cycle speed, globalisation, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage.(5) E-COMMERCE A common activity associated with e- business is e-commerce which can be described as using technology to conduct business transactions, such as buying and selling goods and services. However e- commerce involves more than merely conducting electronic transactions: it also encompasses a wide range of associated activities, such as after sales support and even logistics. E-business can take a varieties of forms, including electronic data interchange (EDI), direct link ups with suppliers, internet, intranet, extranet, electronic catalogue ordering and e-mail. An e-business model must have: 1. A shared digital business infrastructure including digital production and distribution technologies (broadband/wireless networks ,content creation technologies and information management systems)which will allow business participants to create and utilize network economies of scale and scope. 2. A sophisticated model for operations, including integrated value chains-both supply and buy chains. 3. An e-business management model consisting of business teams and or partnership and s; 4. Policy , regulatory and social systems that is business policies consistent with e-commerce laws, teleworking / virtual work, distance learning ,incentive schemes among others.
E-commerce activities can be broken down into the following basic types : Business-to-business (B2B).Transactions take place between companies.Approximately 80percent of all e-commerce is of this type. Business-to- consumer (B2C). Companies sell products directly to consumers.B2C can involve activities such as product research ( where consumers gather information and compare
prices)and electronic delivery( where information products are delivered to consumers via email or other means). Business to-government (B2G).Transactions take place between companies and public sector organizations. Consumer -to- consumer (C2C).Transactions take place between private individuals. Perhaps the best examples of C2C commerce are online auction sites and peer-to-peer systems. Mobile Commerce (m-commerce).M- commerce is a relatively new development and involves selling goods or services via wireless technology, especially mobile phones.
E-business processes are usually quite simple. In most instances, it is the buyers who dictate terms, yet many systems are very supply-centric. Within some sectors, notably aerospace, there have been a number of e-business portals and hubs to encourage e-business, particularly for those within existing supply chains. (11) Adoption steps of e-business services involves: Step 1. Messaging (internal and external e-mail). 2. 3. 4. 5. 6. Marketing and stock availability checks. Online ordering. Online payment. Monitor order progress. E- business.
Source DTI (2000) Chaffey 2nd Edition.
Six e-business strategic decisions : -E-business priorities -Business and revenue models -Market place restructuring -Market and product development -Positioning and differentiation -Organisational restructuring Source: Chaffey (2007) fig 5.6
CORPORATIONS A corporation is a company recognised by law as a single body with its own powers and liabilities, separate from those of individual members. Corporations perform many of the functions of private business, government, educational bodies and the professions.
DECISION MAKING A decision is a choice or judgement that you make after a period of discussion, thought or consideration. Decision making is a process of making important decisions.Every organisation makes decisions at every point in time of their existence.There are various methods and processes of decision making.However, the main aim of all decisions of corporations is to achieve their corporate objectives .The core of these objectives is profit making and profit maximisation.
HOW IMPORTANT IS E-BUSINESS IN TODAY S WORLD E-business has gained a lot of popularity in today s world due to a multitude of operational benefits it can bring to purchasing practices. Examples of benefits are: cost savings resulting from reduced paper transactions, Shorter order cycle time and the subsequent inventory reduction, resulting from speedy transmission of purchase order related information and enhanced opportunities for the supplier/buyer partnership through the establishment of a web business-to-business communication networks. E- Business is enhancing supply chain efficiency by providing real time information regarding product availability, inventory level, and shipment status and production requirements. It is vastly facilitating collaborative planning among supply chain partners by sharing information on demand forecasts and production schedules that dictate supply chain activities. Moreover, it effectively links customer demand information to upstream supply chain functions e.g. (manufacturing, distribution and sourcing) and subsequently facilitating pull (demand driven) supply chain operations. (7) Aside from the above importance, e-commerce serves as an equalizer . It enables start-up and small-and medium sized enterprises to reach the global market. Example of: Levelling the playing field through e-commerce the case of Amazon.com. Amazon.com is a virtual bookstore .It does not have a single square foot of bricks and mortar retail floorspace .Nonetheless , Amazon.com is posting an annual sales rate of approximately $1.2 billion,equal to what about 235 Barnes & Noble (B&N) superstores. Due to efficiencies of selling over the web,Amazon has spent only $56million on fixed assets while (B&N) has spent about $118million for 235 superstores.( To be fair Amazon has yet to turn a profit ,but this does not obviate the point that in many industries doing business through e-commerce is cheaper than conducting business in traditional brick-and-mortar company). (8).
E-commerce as a major tool of e-business is making mass customization possible.e-commerce applications in this area include easy -to-use ordering systems that allow customers to choose and order products according to their personal and unique specifications.For instance ,a car manufacturing company with an e-commerce strategy allowing for online orders can have new cars built within a few days (instead of several weeks it currently takes to build a new vehicle) based on customer s specifications. This is working more effectively where a company s manufacturing process is advanced and integrated into the ordering system.
E-commerce allows network production . This refers to the parcelling out of the production process to contractors who are geographically dispersed but who are connected to each other via computer networks. The benefits of network production include: reduction in costs, more strategic target marketing,and the facilitation of selling add-on-products,services, and new systems when they are needed.With network production, a company can assign tasks within its own core competencies to factories all over the world that specialize in such tasks e.g. the assembly of specific components. To be consumers in C2B transactions,customers/consumers are given more influence over what and how products are made and how services are delivered,thereby broadening consumer choices.Ecommerce allows for a faster and more open process with customers having greater control. E-business has now become an element of overall business strategy and it is still widely seen as a way of transforming business operations and thinking.
E-business models have been benefitting communities that are sustaining significant collaborative relationships despite geographical diversity of membership. Meanwhile e-commerce focuses primarily on enterprise s customers,it enlarges the connectivity of the enterprises to include their suppliers, employees and potential investors or partners. E-commerce is the most important application of the new communication technology,manufacturers,traders and consumers can now reach the market more quickly and get more information that they could ever get before.The electronic commerce has penetrated the businesses in many ways.E-business has reduced the transaction costs via e-commerceallied with purchase, sales, operating, holding,inventory and financial cost.The application of e-commerce through development of websites enhances the potential global market and sales revenue,bring forth new products,potential new customers,services and geographical areas.In term of non financial benefits , e-commerce has significantly helped in improving human resources and timeliness, quality of services, customers satisfaction and some indirect effects. Research forecasts that e-commerce will account for 86% of worldwide sales of goods as services by year 2004.The potential for e-commerce is brighter, specifically in those markets where buyers and sellers are motivated to reduce costs, increase efficiency and cut delivery time.By 2003 estimated revenue from e-commerce across the globe was to be approximately 1.5 trillion dollars the rate of
growth varies due to the development of infrastructure especially in developing countries.Projected internet users by the end of 2000 are approximately 48%(North America),22% (Western Europe),17% (Asia Pacific) and 7% (Middle East/Africa) which of course stimulate further growth of e-commerce.(6) As at September, 2002 the internet the carriage of e-business reached two important milestones with 200 million IP Host and 840 million internet user.(12)
WAYS BY WHICH E BUSINESS AFFECTS DECISION MAKING IN CORPORATIONS Any organisation that will embark on e-business must take a decision on its business information system ( BIS)as there will be the need for the corporation to have a good understanding of computer based systems before it embarks e-business solutions .More often than not corporations do not opt for radical changes to their purchasing and customer supply systems- indeed paper based systems are often maintained in parallel .Usually, they modify and extend existing computer based systems such as ED I ,or they extend e-business options but retain older non computing systems. (7)
Since there are many factors affecting the e-business strategy such culture, leadership, motivation, infrastructure, globalisation, industry, size ,competition, supply chain integration mechanisms. Basically on e-business strategy corporations these days are taking various decisions, while some have decided to improve on their supply chain management strategies such as repackaging their emarketing tools,improving on planning,scheduling and change management,e -business analysis and design implementation and maintenance of existing infrastructure and control. Others have busy themselves with taking decisions on selling directly to their customers(disintermediation) while some involves new intermediaries though with its risks. Some corporations have decided to hold on to old customers relationships others enter partnership with intermediaries and a host of others do nothing to automate their existing structures.
Taking to cognisance product and market development decisions of corporations the following are some of the ways e-business affects them: more corporations have firmly decided to enhance their market penetration via selling more of their existing products to existing market relying on favourable customers perceptions. On market development on the other hand, some corporations are using new channels for new markets for existing products which includes geographical expansion i.e. international sales. Particular trend can easily be noticed on product development decisions of corporations in the field of information/news delivery that have decided to be having e-versions of newspapers or magazines that interested customer can subscribe to for some fees.
Generally however, some corporations have decided to diversify by creating varieties of new products to sell to new markets not minding the fact that this involves more unknown factors and so higher risks.
Many corporations have already decided on having creative positioning of an e -business strategy. A good example can be found in the instance stated below; Dawson s antiques is a 23 year old small antiques business .With the emergence of online auction sites , the owner ,Linda Dawson ,foresaw the need not only to accommodate the internet in their business strategy but also to take advantage of it in order to survive as a business. This came with the recognition that many of her clients were exposed to a wide of antiques from competitors at online auction sites at prices lower than she was charging. Meanwhile, Sotheby s, then a growing online auction site (and now one of the largest online auction sites), realised the merit of increasing its auction inventory to attract a bigger audience on the internet .It revised its internet strategy by opening its website, Sothebys.com, to smaller dealers and auction sites instead of competing directly with its competitors in the online auction business. With this approach, Sotheby experienced an exponential growth in its inventory, which attracted a bigger market. Dawson s enlistment in Sotheby s was instrumental in expanding its client base. To make things easier, Sotheby s not only provided the web site for its members (Dawson s included) . (8) WHERE WILL E-BUSINESS GO FROM HERE? As we have seen , e-business has taken a number of paths since companies first started using web, and since they began to take advantage of e-commerce opportunities. As technology advances and the web users become more immersed in it,e-business will inevitably have to evolve and adapt to change in the web culture. Overall, we can expect to see the following e-business movement s in the coming years: Renewed SME entrepreneurialism ; Economic drivers will catalyse the resurgence of entrepreneurialism, as disenfranchised employees look to the web for new opportunities .Small businesses in particular will also be able to offer lower costs to their customers, so the coming years will be an interesting time for small businesses with little capital to play with. A social media slowdown may be witnessed as many organisations are already feeling saturated by social media tools. Savvy businesses may look to tools to help consolidate their use of social platforms-perhaps through one port of entry or single sign on. An online advertising revolution; Downloadable widgets (tools that allow chunks of codes to be distributed through third party sites) will continue to have far reaching possibilitiesespecially to drive online sales and further marketing and PR. So instead of static banner ads, companies will increasingly put interactive content in their place.
Greater customer-centricity ; Leaders in e-business already allow users to choose what content they see ,and e-commerce sites in particular can target products and service to those most likely to make a purchase . However, sites that allow customers to choose what they see( as well as buy) will strengthen trust and increase their sales. The dawn of the e-commerce price wars; As the recession persists, price wars will continue to break out between both store and online rivals.However as retailers drop their prices further ,they risk devaluing some of the brands they represent.Therefore, many manufacturers-dependent on their product type-may choose only to work with more established bricks & mortar outlets with an e-commerce channel-or simply sell directly their customers online. (14)
CONCLUSIONS The rapid growth in e-business around the world has prompted many to look for better ways of measuring the phenomenon .As more and more countries and international agencies become involved, it is important to develop plans to ensure that there is no unnecessary duplication of efforts and that users have the data necessary for informed decision making at the earliest opportunity. Despite various potential benefits of e-business ,not every corporation is ready to adopt it as a purchasing tool or business strategy .Some serious hurdles to the successful impleme ntation of ebusiness include a host of security, legal and financial problems, all of which are significant factors in business decisions for e-business introduction .In particular ,the incoherence of the web and concerns about security and flexibility limit the confidence of business in internet based trading systems .Current e-business systems do not yet fully address these concerns, and most concentrate on bilateral relationships between sellers and buyers. From the above discourse, it can be easily argued that e-business in today s world is a silver bullet that is no doubt a very important and useful tool for many corporations and individuals that are ready to catch up with the current trend of change in the business world. Corporations leaders and individuals that want to maximise their benefits should therefore not only listen to the popular press or consultants, but rather put in place sense making approaches that questions e -business appropriateness to their corporations and its circumstances.
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