3.

Information Economy:Electronic Value Creation and Chain

Toufik Sahraoui : E-Business Management - Kiel University of Applied Sciences
Germany

Human Resource Management

Technology Development
Procurement

Inbound
logistics

Operations

Outbound
logistics

Marketing
and sales

Online order
entry system

Market
analysis
product
profitability

service

Process

Automated
warehousing
system

Controlled
Manufacturing

Primary activities

According to Pro .M .Porter The secondary or Support Activities create value in

an indirect manner by supporting the primary processes ( inbound logistics
operation outbound logistics marketing and sales service ) and and this
activity lead to improvement and forced the competitive advantage .The support
activity can divide in four generic categories :
1- Procurement: This concerns how resources are acquired for a business or
the function of purchasing input (e.g. sourcing and negotiating with
materials suppliers). It occurs in many parts of the organisation with
purpose to support the main functions to carry out their activities
And the procurement is important in competitive advantage and play a big
role to determinate the cost of output product because the purchased input

cost ( supplier and transportation logistics - fuel ) for an company that

produce orange juice will determine the cost of the product after
manufacturing (operation ) it .
2- Technology Development : Activities concerned with managing
information processing and the development and protection of
"knowledge" in a business. In addition, it involves technology
development to support Research and Development, process automation,
and product design for example : may say a programme ERP ( for
example SAP )to manage all the company activities and use one single
true database of information and treat that information to avoid making
errors or progress the production are using report for develop product or
study a market
3- Human resource management : This is how well a company recruits,
hires, trains, motivates, incentives, rewards, and retains its workers.
People are a significant source of value, so businesses can create a clear
advantage with good HR practices. And by experience I saw a firm lose
her value in the market because because the dispersion of the HR
management and the staff have lot of waste of time and deadline and
non efficient task for this the humain resource management its affect
competitive advantage in any company because its the determine the
skills and motivation employee in addition the cost of hiring and
training the the staff
4- Firm Infrastructure These are a company's support systems, and the
functions that allow it to maintain daily operations. Accounting, legal,
administrative, and general management are examples of necessary
infrastructure that businesses can use to their advantage. For example a
company like teleperformance it call centre that provide help support
and sales advising and with the top service provide the cost value will
increase or like in manpower agency that proper and top management
lead to dealing with the company client that want look for them a
professional staff and by that attract more client and have more
revenue

Assignment 3.2: Strategic Challenges of E-Business

The advantages and disadvantages of the strategies for big and small businesses
Adventage :
- In e-Commerce the business hour are 24/07 : mean that online store opens
24/7. Even while youre sleeping, your customers can visit your store and
browse your products and place their orders.
- Can Gain a Consumer loyalty
- Market offers a different way of shopping adding to the traditional
shopping companies complement their product offerings through the
concept of shopping from home-where electronic commerce is the most
fast way of shopping,
- Innovative products and business models
- Worldwide Presence: new markets, eliminate territorial barriers this is the
biggest advantage of conducting business online. A firm engaging in ebusiness can have a nationwide or a worldwide presence. IBM was one of
the first companies to use the term e-business to refer to servicing
customers and collaborating with business partners from all over the
world Amazon.com is another success story that helps people buy
internationally from third parties.

- Lower Transaction Costs : With a well-implemented online store you can

automate many things. By automatization you can cut the costs on areas
like documents preparation, error detection and correction, mail order
catalogs, phone calls and labor costs.

- Better Customer Service : E-business has resulted in improved customer

service. Many a time, on visiting a website, the customer is greeted by a
pop-up chat window. Readily available customer service may help in
encouraging the customer to know more about the product or service.
Moreover, payments can be made online, and products can be shipped to
the customer without the customer having to leave the house. Also the
customer can make and give feedback about the product and how they
desirable the product

- Intensifying and improving business relations as the electronic

environment facilitates communication between organizations and
customers (open standards associated to internet provide interoperability
between companies and sites)

- New sources of income from publicity, online services, and virtual

communities, selling data on customers

Disadvantages :
- Shipping Takes Time : for physical goods, shipping it halfway round the
world might take several days, weeks or even more. It means you cannot
send certain products as fresh food or dairy products.
- Shipping Costs More : The basic shipping cost rule is simple: the more
the weight, the more the cost.
-

Doubts and Fears : Many people dont understand the awesomeness of

shopping online. They are too afraid to buy something on the web because
they doubt if the store is reliable, curious if the product is as good as it
looks like on the site, afraid that you would steal their money.

- Costly E-business Solutions for Optimization: Substantial resources are

required for redefining product lines in order to sell online. Upgrading
computer systems, training personnel, and updating websites requires
substantial resources. Moreover, Electronic Data Management (EDM) and
Enterprise Resource Planning (ERP) necessary for ensuring optimal
internal business processes may be looked upon, by some firms, as one of
its disadvantages

- Secure the e- payment: many users still dont trust in the electronic
methods of paying and give up buying online because of this.
- major disadvantages may be the lack of trust of the users because of the
constant virtual promotions that appear to be frauds. This is an aspect that
deteriorates the image and reputation of quality and honest companies.

- In some societies shopping is social experience where people love to shop

in the mall because it gives them an opportunity to have fun with friends
and family ,Its something online stores lack of.
- The legal environment and copying: the electronic copying environment
and any in-formation published on the net is accessible to be copied ,
ex: music industry

- Like I mentioned before security and confidentiality of information , may

there store its fake and fraud also they can take your personal information
like name account bank Credit card