E-Business Macro Environment

Slide 3.
e-Business Macro Environment
MBA 7601 - Managing E-Business
Faculty of Management Studies

University of Delhi
October 07, 2020
Prof.
David Jyoti P.E-Business
Chaffey, Das & E-Commerce Management, 5th Edition, © Marketing Insights Limited 2012
Slide 3.2
Key management issues with e-business environment
• What are the constraints placed by the e-environment on developing and

implementing an e-business strategy?
• How can trust and privacy be assured for the customer while seeking to
achieve marketing objectives of customer acquisition and retention?
• Assessment of the business relevance of technological innovation.

trust
th Edition,
David Chaffey, E-Business & E-Commerce Management, 5 © Marketing Insights Limited 2012
Prof. Jyoti P. Das
Slide 3.3
Importance of macro factors on the e-business environment
In the session on marketplace analysis for e-business we discussed the importance of

monitoring changes in the micro environment and how they impact on an organization.
While businesses should micro-manage their online marketplace, macro-environmental
factors also exist and impact upon an organization. These include technological and
competitive factors and other factors like economic; political; legal and ethical; social;
and environment
• Organizations that do not monitor these
environmental factors, or those that do not Macro-environment Micro-environment (e-
respond to them adequately will not remain marketplace)
competitive and may fail. The process of Social The organization
monitoring the environment is usually Legal, ethical and taxation Customers
referred to as environmental scanning
Economic Suppliers
• This often occurs as an ad hoc process. The
problem with the ad hoc approach is that if Political Competitors
there is not a reporting mechanism then Technological Intermediaries

some major changes may not be apparent to Environment Other stakeholders
managers.
This table presents the main or macro-environmental factors and
• Environmental analysis is required to the micro-environmental factors that directly affect an
evaluate different information and respond organization.
accordingly
th Edition,
Prof. Jyoti P. Das
Slide 3.4
The e-business environment
Every organization is a part of the business environment, within which it operates. No entity
can function in isolation because there are many factors that closely or distantly surrounds
the business, which is known as a business environment.
• It is broadly classified into two categories, i.e.

microenvironment, and macro environment.
• The former affects the working of the particular
organization while the latter affects the
functioning of all the business entities in thetrust
industry or country to which they relate to
 The general environment within the economy that influences the working, performance,
decision making and strategy of all business groups at the same time is known as Macro
Environment. It is dynamic in nature. Therefore, it keeps on changing.
 It constitutes those outside forces that are not under the control of the firm but have a powerful
impact on the firm’s functioning.
 That is why, it is also termed as an external environment which consists of individuals, groups,
organizations, agencies and others with which the firm deals during the course of its business.
th Edition,
Prof. Jyoti P. Das
Slide 3.5
Micro environment analysis
 Micro-environment
• Customers – which services are they

offering via their web site that your
organization could support them in?
• Competitors – need to be benchmarked
order to review the online services they
are offering – do they have a
competitive advantage?
• Intermediaries – are new or existing
intermediaries offering products or
services from your competitors while
you are not represented?
• Suppliers – are suppliers offering
different methods of procurement to Characteristics of a Characteristics of a Elements in a company’s Elements in the external
competitors that give them a business which gives it
advantages over its
business which makes it
disadvantageous relative
environment that allows
it to formulate and
environment that could
endanger the integrity
competitive advantage? competitors to competitors implement strategies to and profitability of the
increase profitability business
David Chaffey, E-Business & E-Commerce Management, 5 th Edition, © Marketing Insights Limited 2012
Prof. Jyoti P. Das
Slide 3.6
Micro environment analysis
 Macro-environment
• Society – what is the ethical and moral

consensus on holding personal
information?
• Country specific, international legal –
what are the local and global legal
constraints for example, on holding
personal information, or taxation rules
on sale of goods?
• Country specific, international
economic – what are the economic
constraints of operating within a
country or global constraints?
• Technology – what new technologies
are emerging by which to deliver
online services such as interactive
digital TV and mobile phone-based
access?
th Edition,
Prof. Jyoti P. Das
Slide 3.7
Micro and macro environment comparison
BASIS FOR COMPARISON MICRO (INTERNAL) MACRO (EXTERNAL)

ENVIRONMENT ENVIRONMENT
Meaning Micro environment is defined as Macro environment refers to the

the nearby environment, under general environment, that can
which the firm operates. affect the working of all business
enterprises.
Alternatively known as Internal Environment External Environment
Elements COSMIC, i.e. Competitors, PESTLE, i.e. Population &

Organization itself, Suppliers, Demographic, Economic, Socio-
Market, Intermediaries and Cultural, Technological, Legal &
Customers. Political and Environmental.
Nature of elements Specific General
Are these factors controllable? Yes No
Influence Directly and Regularly Indirectly and Distantly
th Edition,
Prof. Jyoti P. Das
Slide 3.8
PESTLE analysis
• The study of macro environment is
performed through PESTLE analysis.
PESTLE stands for the variables that exist in
the environment
• Population & Demographic,
• Economic,
• Socio-Cultural,
• Technological,
• Legal & Political,
• Environmental
• These variables consider both economic
and non-economic factors like
• social concerns;
• government policies and political
stability;
• population size, ethnic mix, and
family structure;
• Inflation and GDP aspects,
• Income distribution,
• taxes, and duties, etc.
th Edition,
Prof. Jyoti P. Das
Slide 3.9
Macro environment analysis method

CONTINUE
Groups of factors Events Threats/ Likelihood Importance Influence on Action

Possibilities of event of factor organization program
Social
Legal
Economic
Political
Technological
Environment
th Edition,
Prof. Jyoti P. Das
Slide 3.10
External factors affecting e-business

Social factors – these include the influence of consumer
perceptions in determining usage of the Internet for
different activities.
Legal and ethical factors – determine the method by
which products can be promoted and sold online.
Governments, on behalf of society, seek to safeguard
individuals’ rights to privacy.
Economic factors – variations in the economic
performance in different countries and regions affect
spending patterns and international trade.
Political – national governments and transnational
organizations have an important role in determining the
future adoption and control of the Internet and the rules
by which it is governed.
Technological factors – changes in technology offer new
opportunities to the way products can be marketed.
Environmental factors - Environmental factors too have a
special importance in the context of e-business industry.
While the direct environmental impact of this industry is
very low and nearly zero, it still focuses heavily on For each factor we look for new issues
sustainability. raised for an organization
th Edition,
Prof. Jyoti P. Das
Slide 3.11
Wave of change
An indication of the challenge of assessing the macro-environment factors is presented in
the figure. This figure of the ‘waves of change’ shows how fluctuations in the characteristics
of different aspects of the environment vary at different rates through time. An organization
has to constantly scan the environment and assess which changes are relevant to their
sphere of influence
• Changes in social culture and particularly pop

culture (what’s hot and what’s not) tend to be very
rapid.
• Introduction of new technologies and changes in
their popularity tend to be frequent too and need to
be assessed.
• Governmental and legal changes tend to happen
over longer timescales although, since this is only
a generalization, new laws can be introduced
relatively fast.
• The trick for managers is to identify those factors
which are important in the context of e-business
which are critical to competitiveness and service
delivery and monitor these. The technological and legal factors which are
most important to managing e-business so we
focus on these.
th Edition,
Prof. Jyoti P. Das
Slide 3.12
Social and cultural factors
The social and cultural impacts of the Internet is important from an e-business
JAN
2020 perspective since they govern demand for Internet services and propensity to
purchase online.
TOTAL NUMBER INTERNET USERS AS ANNUAL GROWTH IN AVERAGE AMOUNT OF TIME

OF GLOBAL A PERCENTAGE OF THE NUMBER OF PER DAY SPENT USING THE
INTERNET USERS TOTAL GLOBAL GLOBAL INTERNET INTERNET BY EACH
POPULATION USERS INTERNET USER
4.54 59% +7.0% 6H 43M

BILLION +298 MILLION
SOURCES: ITU; GLOBALWEBIN DEX; GSMA INTELLIGENCE; EUROSTAT; SOCIAL MEDIA PLATFORMS’ SELF-SERVICE ADVERTISING TOOLS; LOCAL GOVERNMENT
BODIES AND REGULATORY AUTHORITIES; APJII; UNITED NATIONS (ALL LATEST AVAILABLE DATA IN JANUARY 2020). TIME SPENT DATA FROM GLOBALWEBIN DEX
(Q3 2019), BASED ON A BROAD SURVEY OF INTERNET USERS
G
l
th
David Chaffey, E-Business & E-Commerce Management, 5 Edition, © Marketing Insights Limited 2012
Prof. Jyoti P. Das o
Slide 3.13
Social factors governing e-business adoption

It is useful for organizations to understand the different factors that affect how many
people actively use the Internet. If these are understood for customers in a target market,
action can be taken to overcome some of these barriers.
The following factors are important in governing adoption of any e-business service:
1. Cost of access Includes:

• Cost of home computers(for those who do not already own the one)
• Cost of using an ISPs to connect to internet
• Cost of using media to connect(Telephone or cable charges) Free access will certainly
increase adoption and charges
2. Value Proposition
• Customers need to perceive a need to be online – what can the Internet offer that other
media cannot?
• Examples of value propositions include access to more supplier information and lower
prices
• Company advertisement started to refer to ‘Internet prices”
th Edition,
Prof. Jyoti P. Das
Slide 3.14
Social factors governing e-business adoption
3. Ease of use.
• Ease of first connecting to the Internet using the ISP and the ease of using the web once
connected.
4. Security.
• The perception generated by news stories may be that if you are connected to the
Internet then your personal details and credit card details may not be secure.
• It will probably take many years for this fear to diminish as using the Internet
slowly becomes established as a standard way of purchasing goods.
5. Fear of the unknown.

• Many will simply have a general fear of the technology and the new media, which
is not surprising since much of the news about the Internet non-adopters will
concern pornography, fraud and privacy infringements.
th Edition,
Prof. Jyoti P. Das
Slide 3.15
Barriers for use of Internet
Barriers for individuals include:
• Lack of Interest– Some people are simply not compelled to use the Internet. McKinsey found that
people may not have an awareness about the myriad of information available on the Internet.
Unreliable e-commerce platforms in some parts of the world in addition to government
surveillance and censorship may also be contributing factors.
• Affordability– The largest obstacle to Internet access is the cost. Most individuals who make up
the offline population live in poverty and therefore do not have the funds to buy a computer or
pay their service providers.
• User Capability– The offline population generally cannot afford computers and tend to be digitally
illiterate. This generates a culture of distrust and misunderstanding that drives away potentials
users.
• Infrastructure– Some countries do not have the resources or have chosen to not invest in the
necessary infrastructure to provide Internet connectivity in rural areas.
These barriers to access and usage will remain and governments are concerned about social exclusion
where some sectors of the society have lower levels of access and opportunity
th Edition,
Prof. Jyoti P. Das
Slide 3.16
User access requirements
 To fully understand online customer propensity to use online service we need to consider
the user’s access location, access device and ‘webographics’, which can help target
certain types of customers and are an important constraint on site design. Webographics
includes:
• Usage location (in most countries, users access either from home or from work, with
home being the more popular choice)
• Access device (browser and computer platform including mobile devices)
• Connection speed – broadband versus dial-up connections
• ISP
• Experience level
• Usage type
• Usage level
th Edition,
Prof. Jyoti P. Das
Slide 3.17
Daily time spent with media
JAN
THEAVERAGE AMOUNT OF TIME EACH DAYTHATINTERNET USERSAGED 16 TO 64* SPEND WITH DIFFERENTKINDS OF MEDIA AND DEVICES
2020
USING THE USING WATCHING LISTENING TO USING A

INTERNET SOCIAL MEDIA TELEVISION* MUSIC STREAMING GAMES CONSOLE
SERVICES
global global
web web
inde inde
x x
6H 43M 2H 24M 3H 18M 1H 26M 1H 10M
SOURCE: GLOBALWEBINDEX (Q3 2019). FIGURES REPRESENT THE FINDINGS OF A BROAD SURVEY OF INTERNET USERS AGED 16 TO 64. SEE GLOBALWEBINDEX.COM FOR MORE DETAILS.
*NOTES: TELEVISION TIME INCLUDES BROADCAST (LINEAR) TELEVISION AND CONTENT DELIVERED VIA STREAMING AND VIDEO-ON-DEMAND SERVICES. USE
OF DIFFERENT DEVICES AND CONSUMPTION OF DIFFERENT MEDIA MAY OCCUR CONCURRENTLY.
Prof. Jyoti P. Das
Slide 3.18
Mobile, Internet, social media usage
JAN
2020
TOTAL UNIQUE MOBILE INTERNET ACTIVE SOCIAL

POPULATION PHONE USERS USERS MEDIA USERS
zzzzzzzzzzzzzzzzzzzzzzzz
zzzz
7.75 5.19 4.54 3.80

BILLION BILLION BILLION BILLION
URBANISATION: PENETRATI PENETRATION: PENETRATION:
ON:
55% 59% 49%
67%
SOU RCES: POPU LATION: UNIT ED NAT IONS; LOC AL GOVERNMENT BOD IES; MOBILE: GSMA INT ELLIGENC E; INT ERN ET: ITU; GLOBALW EBIND EX; GSMA
INTELLIGEN CE; LOC AL T ELEC OM S R EGU LAT OR Y AU THORITIES AND GOVERNM ENT BOD IES; APJII; KEPIOS ANALYSIS; SOCIAL M EDIA: PLATF ORM S’ SELF-
SER VICE AD VERTISIN G T OOLS; C OMPAN Y ANNOUNC EMEN TS AND EAR NIN GS REPORT S; C AFEBAZ AAR ; KEPIOS AN ALYSIS. ALL LAT EST AVAILABLE D AT A IN
JANUARY 2020.  COMPARABILIT Y ADVISORY: SOURCE AND BASE CHANGES.
Prof. Jyoti P. Das
Slide 3.19
Global e-business spend by category
th Edition,
Prof. Jyoti P. Das
Slide 3.20
Motivation for use of online services

Web Motivation Inventory (WMI) is a framework for understanding different motivations
for using the web. The four motives which cut across cultures are:
• research (information acquisition),
• communication (socialization),
• surfing (entertainment) and
• shopping
These are broken down further below:
Community Transaction Interaction

• Get to know other people • Make a purchase • Connect with my friends
• Participate in an online chat • Buy things • Communicate with others
• Join a group. • Purchase a product I’ve heard about. • Instant message others I know.
Search
Entertainment Game • Get answers to specific questions
• Amuse myself • Play online games • Find information I can trust.
• Entertain myself • Entertain myself with Internet games Exploration
• Find information to entertain • Play online games with individuals • Find interesting web pages
myself. from other countries. • Explore new sites
• Surf for fun.
Product trial Survey News
• Try on the latest fashions • Take a survey on a topic I care about • Read about current events and news
• Experience a product • Fill out an online survey • Read entertainment news.
• Try out a product. • Give my opinion on a survey.
Information Downloads
• Download music
• Do research
• Listen to music
• Get information I need
• Watch online videos.
• Search for information I need.
th Edition,
Prof. Jyoti P. Das
Slide 3.21
Development of Internet usage

Increasing numbers of consumers are now purchasing online, but research on behaviour
suggests it takes time for individuals to build up confidence to purchase. Frequency of
purchase is also increased through adoption of the broadband Internet.
• The figure shows that initially Internet

users restrict themselves to searching
for information or using e-mail.
• As their confidence grows their use of
the Internet for purchase is and move
to higher-value items and more-
frequent purchases.
• For this reason, there is good potential
for e-retail sales, even if the percentage
of the population with access to the
Internet plateaus.
• Internet users take longer to become
confident to buy more expensive and
complex products.
th Edition,
Prof. Jyoti P. Das
Slide 3.22
Variation in purchase of online products and services
There is now less difference between the products than there was two or three years ago.
• Use of digital technologies for

marketing vary according to product
type. In some, such as cars and complex 59%
bought products/service online

financial products, the main role of
% of online shoppers w ho
46%
online marketing is to support research, 42% 41%
38% 38%
while for other standardized products 27% 27% 25%
22% 19%
like books and CDs there will be a dual 15% 15% 14% 14% 14%
role for the web in supporting research
and enabling purchase.
• The extent of adoption also varies

significantly by country according to
other political, economic and cultural
factors.
• There is a potential for further growth
in e-cusiness in countries where e-
business adoption has been lower.
Prof. Jyoti P. Das
Slide 3.23
Ethical and legal factors
 Introduction of new technologies and changes in their popularity tend to be frequent

too and need to be assessed.
 Governmental and legal changes tend to happen over longer timescales. The trick for
managers is to identify those factors which are important in the context of e-business
which are critical to competitiveness and service delivery and monitor these.
 Legal factors are most important issues for the organization to address. The six most
important legal issues to assess are
1. Data Protection and Privacy Law
2. Disability and Discriminating Law
3. Brand and Trademark Protection
4. Intellectual Property Rights
5. Contract Law
6. Online Advertising Law
th Edition,
Prof. Jyoti P. Das
Slide 3.24
Legal issues that impact e-business
Legal issue Digital m arketing activities affected
1. Data protection and privacy law • Collection, storage, usage and deletion of personal information directly through data capture on forms
and indirectly through tracking behaviour through w eb analytics
• E-mail marketing and SMS mobile marketing
• Use of viral marketing to encourage transmission of marketing messages betw een consumers
• Use of cookies and other techniques for personalizing content and tracking on-site
• Use of cookies for tracking betw een sites, for example for advertising netw orks
• Use of digital assets installed on a user’s PC for marketing purposes,
e.g. toolbars or other dow nloadable utilities sometimes referred to as ‘malw are’
2. Disability and discrimination law • Accessibility of content such as images for the visually impaired w ithin different digital environments:
• Web site
• E-mail marketing
• Mobile marketing
• IPTV
• Accessibility affecting other forms of disability including hearing difficulties and motor impairment
3. Brand and trademark protection • Use of trademarks and brand names w ithin:
• Domain names
• Content on site (for search engine optimization)
• Paid search advertising campaigns (e.g. Google AdWords)
• Representation of a brand on third-party sites including partners, publishers and social netw orks
• Defamation of employees
4. Intellectual property rights • Protection of digital assets such as text content, images, audio and sounds through digital rights
management (DRM)
5. Contract law • Validity of electronic contracts relevant to:

• Cancellations
• Returns
• Errors in pricing
• Distance-selling law
• International taxation issues w here the e-commerce service provider is under a different tax regime
from the purchaser
6. Online advertising law • Similar issues to traditional media

• Representation of offer
• Causing offence (e.g. viral marketing)
Prof. Jyoti P. Das
Slide 3.25
Ethical standards and privacy

• Ethical standards are personal or business practices or behaviour which are generally
considered acceptable by society. Acceptable ethics can be described as moral or just
and unethical practices as immoral or unjust.
• Ethical issues and the associated laws developed to control the ethical approach to
Internet based transactions constitute an important consideration of the e-business
environment
• Privacy of consumers is a key ethical issue on which since many laws have been enacted
and it affects all types of organization regardless of whether they have a transactional e-
business service.
• A further ethical issue for which laws have been enacted in many countries is providing
an accessible level of Internet services for disabled users.
• Other laws that have been developed for managing e-business, covering commercial
transactions and selling online.
• In many cases, the laws governing e-business are in their infancy and are unclear, since
they may not have been tested in a court of law. So, often organization have to take
decisions not based solely on the law, but on whether they think a practice is acceptable
business practice or whether it could be damaging to the brand if problems arise and
consumers complain.
th Edition,
Prof. Jyoti P. Das
Slide 3.26
Privacy legislation
Privacy is to a moral right of individuals to avoid intrusion into their personal affairs by
third parties. Privacy of personal data such as our identities, likes and dislikes is a major
concern to consumers, particularly with the dramatic increase in identity theft. This is
clearly a major concern for many consumers when using e-business services since they
believe their privacy and identity may be compromised.
th Edition,
Prof. Jyoti P. Das
Slide 3.27
Why personal data are valuable for e-business
Although there is much natural concern amongst consumers about their online privacy,
information about these consumers is very useful to marketers. Through understanding
their customers’ needs, characteristics and behaviours it is possible to create more
personalized, targeted communications such as e-mails and web-based personalization
about related products and offers which help increases sales
Effective e-business requires a delicate balance to be struck between the benefits the
individual customer will gain to their online experience through providing personal
information and the amount and type of information that they are prepared for
companies to hold about them.
The main information types used by the e-marketer/retailer which are governed by
ethics and legislation are:
• Contact information.
• Profile information.
• Platform usage information.
• Behavioral information (on a single site).
• Behavioral information (across multiple sites)
th Edition,
Prof. Jyoti P. Das
Slide 3.28
Information types used for e-business
1. Contact information: name, postal address, e-mail address and, for B2B companies,
web site address.
2. Profile information: information about a customer’s characteristics that can be used
for segmentation. They include age, sex and social group for consumers, and company
characteristics and individual role for business customers.
3. Platform usage information: Through web analytics systems it is possible to collect
information on type of computer, browser and screen resolution used by site users.
Many Internet users will not realize that their visits are tracked on virtually all sites,
but the important point to know is that it is not possible to identify an individual
unless they have agreed to give information through a web form.
4. Behavioral information (on a single site): This is purchase history, but also includes the
whole buying process. Web analytics can be used to assess the web and e-mail content
accessed by individuals.
5. Behavioral information (across multiple sites): This can potentially show how a user
accesses multiple sites and responds to ads across sites. Typically these data are
collected and used using an anonymous profile based on cookie or IP addresses which is
not related to an individual.
th Edition,
Prof. Jyoti P. Das
Slide 3.29
Type of information collected online and related technologies

The table summarizes how these
different types of customer
Type of information Approach and technology used to capture and
information are collected and use information
used through technology. The 1. Contact information • Online forms – online forms linked to customer database
main issue to be considered by • Cookies – are used to remember a specific person on
subsequent visits
the marketer is disclosure of the 2. Profile information including personal information • Online forms
types of information collection • Cookies can be used to assign a person to a particular
segment by linking the cookie to a customer database
and tracking data used. record and then offering content consistent with their
segment
The first two types of information 3. Access platform usage • Web analytics system – identification of computer type,
operating system and screen characteristics based on
in the table are usually readily http attributes of visitors
explained through a privacy 4. Behavioural information on a single site • Purchase histories are stored in the sales order
database. Web analytics store details of IP addresses
statement at the point of data against clickstreams of the sequence of w eb pages
collection and as we will see this •
visited
Web beacons in e-mail marketing – a single-pixel GIF is
is usually a legal requirement. •
used to assess whether a reader had opened an e-mail
First-party cookies are also used for monitoring visitor
behaviour during a site visit and on subsequent visits
With the other types of • Malw are can collect additional information such as
information, users would only passwords
5. Behavioural information across multiple sites • Third-party cookies used for assessing visits from
know they were being tracked if different sources such as online advertising netw orks or
they have cookie monitoring •
affiliate netw orks (Chapter 9)
Search engines such as Google use cookies to track
software installed or if they seek advertising through its AdWords pay-per-click programme
• Services such as Hitw ise (www.hitwise.com) monitor IP
out the privacy statement of a traffic to assess site usage of customer groups w ithin a
product category
publisher which offers
advertising.
Prof. Jyoti P. Das
Slide 3.30
Ethical issues with personal information
Ethical issues concerned with personal information ownership have been categorized in
four areas:
• Privacy – what information is held about the individual?
• Accuracy – is it correct?
• Property – who owns it and how can ownership be transferred?
• Accessibility – who is allowed to access this information, and under which conditions?
An alternative perspective, raising these issues of concern for both the individual and
the marketer:
• Transparency – who is collecting what information and how do they disclose the collection of
data and how it will be used?
• Security – how is information protected once it has been collected by a company?
• Liability – who is responsible if data are abused?
th Edition,
Prof. Jyoti P. Das
Slide 3.31
Data protection regulations
The General Data Protection Regulation (GDRP) -EU is the toughest privacy and security law
in the world The regulation was put into effect on May 25, 2018 . Though it was drafted and
passed by the European Union (EU), it imposes obligations onto organizations anywhere, so
long as they target or collect data related to people in the EU.
Data Protection principles: If you process data, you have to do so according to seven
protection and accountability principles
• Lawfulness, fairness and transparency — processing
must be lawful, fair, and transparent to the data subject.
• Purpose limitation — must process data for the
legitimate purposes specified explicitly to the data
subject when you collected it.
• Data minimization — collect and process only as much
data as absolutely necessary for the purposes specified.
• Accuracy — keep personal data accurate and up to date.
• Storage limitation — store personally identifying data
for as long as necessary for the specified purpose.
• Integrity and confidentiality — processing must be done
in such a way as to ensure appropriate security, integrity,
and confidentiality (e.g. by using encryption).
• Accountability — The data controller is responsible for
being able to demonstrate GDPR compliance with all of
these principles
th Edition,
Prof. Jyoti P. Das
Slide 3.32
Role of data controller

Data controllers have to be able to demonstrate they are GDPR compliant. And this isn’t
something that can be done after the fact: If you think you are compliant with the GDPR
but can’t show how, then you’re not GDPR compliant.
Steps to be taken to be GDPR compliant

are:
• Designate data protection
responsibilities to the team.
• Maintain detailed documentation of the
data being collecting, how it’s used,
where it’s stored, which employee is
responsible for it, etc.
• Train the staff and implement technical
and organizational security measures.
• Have Data Processing Agreement
contracts in place with third parties
contract to process data for the
organization.
• Appoint a Data Protection Officer
th Edition,
Prof. Jyoti P. Das
Slide 3.33
When are you allowed to process personal data
GDRP-EU lists the instances in which it’s legal to process person data.
1. The data subject has given specific, unambiguous consent to process the data. (e.g. They’ve
opted in to your marketing email list.)
2. Processing is necessary to execute or to prepare to enter into a contract to which the data
subject is a party. (e.g. You need to do a background check before leasing property to a
prospective tenant.)
3. Need to process it to comply with a legal obligation of yours. (e.g. You receive an order from the
court in your jurisdiction.)
4. Need to process the data to save somebody’s life.
5. Processing is necessary to perform a task in the public interest or to carry out some official
function.
6. You have a legitimate interest to process someone’s personal data. This is the most flexible
lawful basis, though the “fundamental rights and freedoms of the data subject” always override
your interests, especially if it’s a child’s data.
Don’t even think about touching somebody’s personal data — don’t collect it, don’t store it, don’t sell it to
advertisers — unless you can justify it with one of the above:
th Edition,
Prof. Jyoti P. Das
Slide 3.34
Consent for processing personal data
There are strict new rules about what constitute consent from a data subject to
process their information
• Consent must be “freely given, specific,

informed and unambiguous.”
• Requests for consent must be “clearly
distinguishable from the other matters” and
presented in “clear and plain language.”
• Data subjects can withdraw previously given
consent whenever they want, and the
organization has to honor their decision.
• Children under 13 can only give consent with
permission from their parent.
• The organization needs to keep documentary
evidence of consent.
th Edition,
Prof. Jyoti P. Das
Slide 3.35
Consumer data protection in India
The Indian government looks set to legislate a Personal Data Protection Bill (DPB), which
would control the collection, processing, storage, usage, transfer, protection, and
disclosure of personal data of Indian residents
India has followed the EU’s General Data Protection Regulation (GDPR) in allowing global
digital companies to conduct business under certain conditions, instead of following the
isolationist framework of Chinese regulation that prevents global players like Facebook
and Google from operating within its borders.
Indian Personal Data Protection Bill (DPB) carries additional provisions beyond the EU
regulation. Because India is a nation state, it would treat the data generated by its citizens
as a national asset, store and guard it within national boundaries, and reserve the right to
use that data to safeguard its defense and strategic interests.
There are a number of features of the DPB that will require companies to change their
business models, practices, and principles. Many others will add operational costs and
complexity.
These issues serve as a primer for what businesses need to keep in mind about India’s new
regulation. Understanding these issues will help digital companies plan ahead, address
future regulations, and decide whether to enter or exit certain markets
th Edition,
Prof. Jyoti P. Das
Slide 3.36
Key features of the Data Protection Bill
Privacy as a fundamental right: In 2017, the Supreme Court of India ruled that privacy is a constitutional
right of Indian citizens. DPB intends to protect and safeguard citizen’s privacy rights by controlling the
collection, security, storage, sale, and exploitation of these data.
User consent: DPB requires that a digital company must obtain explicit permission from a user before
collecting their personal data. In doing so, it must explain the extent and the purpose of data collection.
Explicit permission must also be obtained at each stage of subsequent data processing.
Raw data could also be transferred to a third-party data processor for analysis, creating new
information in conjunction with the data received from other data collectors. Digital companies now
become “data fiduciaries” as defined in the DPB, instead of being mere data collectors, when they
assume responsibility for obtaining user permission for both initial collection and subsequent
processing of user data
Ownership of personal data: DPB proposes that the data provider is the owner of their own personal
data. Just like a property owner can ask for return of their property. Companies in the digital world
would have to figure out how to comply with this requirement when the user demands erasure or recall
of their personal data from a digital company.
th Edition,
Prof. Jyoti P. Das
Slide 3.37

Three classes of data: DPB has identified three categories of data from which a principal can be
identified:
• Sensitive data includes information on financials, health, sexual orientation, genetics, transgender status, caste,
and religious belief.
• Critical data includes information that the government stipulates from time to time as extraordinarily important,
such as military or national security data.
• General category which is not defined but contains the remaining data.
All sensitive and critical data must be stored in servers located in India. Sensitive data may be processed
outside but must be brought back to India for storage. Critical data cannot be taken out of the country
at all. There are no restrictions for general data.
Data sovereignty: DPB reserves the right to access the locally stored data to protect national interests.
This implies that DPB would treat citizens’ data as a national asset, no different than control over
citizens’ physical properties.
National interests: While placing a large emphasis on citizens’ privacy, DPB disregards privacy rights in
certain cases. It states: “All or any of the provisions of this Act shall not apply to any agency of the
Government in respect of processing of such personal data…” Public sector entities of the government
of India will not require individuals’ consent to obtain their personal data when responding to the
security of the state, detection of any unlawful activity or fraud, and epidemic and medical
emergencies.
th Edition,
Prof. Jyoti P. Das
Slide 3.38
Verification tag: DPB requires that all digital companies must identify their users and tag them into
three categories to reduce trolling:
• Users who have verified their registration and display real names;
• users who have a verified registration but have kept their names anonymous;
• and users that have not verified registration.
This would be a first regulation of its kind in global social media. This implies that digital companies
must put in place procedures for collecting and verifying the real identities of their users.
Compliance and enforcement: DPB proposes steep penalties for noncompliance. In case of a data
breach or inaction by the fiduciary upon data breach or a minor violation, the penalties could reach $
700,000 or 2% of a company’s global revenues, whichever is higher. For major violations, such as data
shared without consent, the penalties would double.
Other issues: The DPB applies to all businesses that collect personal data, not just digital businesses.
For example John Deere and processes data obtaines from its farm equipment. Whether DPB applies
to tractors with sensors, whether the collected data belongs to the farmers, and how the benefits of
farm data are shared becomes a debatable point.
th Edition,
Prof. Jyoti P. Das
Slide 3.39
Economic and competitive factors
•E-economy is a dynamic system of interactions between a nation’s citizens, the businesses

and government that capitalize upon online technology to achieve a social or economic good.
The health of the e-economy and competitive environment in different countries will
determine the e-business potential. E-economy is driven by factors such as
• inflation,
• interest rates,
• labor
• government monetary policies
The outcomes of e-commerce activities are affected by economic forces, as was evidenced by
the 2007-2009 global economic crisis. According to the Census Bureau of the U.S.
Department of Commerce, e-commerce declined by 5.5 percent in the fourth quarter of 2008
compared to the same period in 2007. This clearly shows that economic factors affect e-
commerce.
The economic health and competitive environment in different countries will determine the
e-business potential of each. Managers developing e-business strategies in multinational
companies initially target the countries that are most developed in the use of the tech-
nology and have favourable economic and market conditions
th Edition,
Prof. Jyoti P. Das
Slide 3.40
Framework for assessing e-economy
A comprehensive framework
for assessing an ‘e-economy’
has been developed by Booz
Allen Hamilton .
The framework is based upon

four layers of environment,
readiness, uptake and use, and
impact, and three major
stakeholder groups: citizens,
businesses and government,
Globalization can insulate an

organization from fluctuations
in regional economy markets,
but is no protection from a
global recession.
th Edition,
Prof. Jyoti P. Das
Slide 3.41
Impact of globalization
Globalization refers to the move towards international trading in a single global market-
place and also to blurring of social and cultural differences between countries. Some
perceive it as ‘Westernization’ or even ‘Americanization’
Electronic communications gives the opportunity for increasing the reach of the company
to achieve sales around the world.
Organizations that wish to compete in the global marketplace must have:
• a 24-hour order taking and customer service response capability;
• regulatory and customs-handling experience to ship internationally;
• in-depth understanding of foreign marketing environments to assess the advantages of its own
products and services.
Language and cultural understanding present a problem and many organizations are
unlikely to possess the resources to develop a multi-language version of its site or employ
staff with sufficient language skills.
However, growth of the use of the Internet for business has accelerated the trend of
English becoming the lingua franca of business
th Edition,
Prof. Jyoti P. Das
Slide 3.42
Need for localization of e-business services
Tailoring e-commerce services for individual countries or regions is referred to as

localization.
An organization may need to support customers from a range of countries with:
• different product needs;
• language differences;
• cultural differences.
Therefore, the e-business system must vary:

• The language that content is provided in.
• Tone and style of copy.
• Site design – certain colours or images may be unsuitable or less effective in some countries.
• Range of product offerings.
• Product pricing.
• Promotional offers used to encourage acquisition of customer e-mail address (see Chapter 9).
• This may be affected by local data protection, taxation and trading laws.
• Local contact points
th Edition,
Prof. Jyoti P. Das
Slide 3.43
Global e-business initiatives require varied level of localization
For some organizations products are similar across countries and localization simply involve
providing a local-language version o the web-site.
To be effective this often needs more than translation, since different promotion concepts may
be needed for different countries.
An example of a business-to-consumer site with extensive localization is Durex and a business-
to-business site is 3M. Durex localizes content for many countries since language and the way in
which sexual issues can be discussed will vary greatly between different countries. 3M, however,
only localizes content in local language for some countries such as France, Germany and Spain.
Localization is a significant strategic issue for e-business. The decision on the level of localization
will need to be taken on a regional or country basis to prioritize different countries according
to the size of the market and the importance of having localization.
Deciding on the degree of localization is a difficult challenge for managers since while it has been
established that local preferences are significant, it is often difficult to balance localization costs against
the likely increase or conversion rate through localization.
th Edition,
Prof. Jyoti P. Das
Slide 3.44
Framework for level of localization
Since the cost of localization is high it may only generate a return on investment for the
largest markets.
An evaluation framework is used to decide on the level of localization required:
• Standardized web sites (not localized). A single site serves all customer segments (domestic and
international).
• Semi-localized web sites. A single site serves all customers; however, there will be contact
information about foreign subsidiaries available for international customers. Many sites fall into this
category.
• Localized web sites. Country-specific web sites with language translation for international
customers, wherever relevant.
• Highly-localized web sites. Country-specific web sites with language translation; they also include
other localization efforts in terms of time, date, postcode, currency formats, etc. Dell
(www.dell.com) provides highly localized web sites.
• Culturally customized web sites. Web sites reflecting complete ‘immersion’ in the culture of target
customer segments; as such, targeting a particular country may mean providing multiple web sites
for that country depending on the dominant cultures present.
th Edition,
Prof. Jyoti P. Das
Slide 3.45
Taxation issues with globalization
Changing tax laws to reflect globalization through the Internet is a problem that many
governments have grappled with.
The fear is that the Internet may cause significant reductions in tax revenues to national or
local governments if existing laws do not cover changes in purchasing patterns.
In India the government taxation revenue from domestic consumption (GST + Excise Duty)
is around 40% with revenue from import taxation around 6%. Governments are clearly
keen that this revenue is protected when purchases are made overseas outside their
jurisdiction using e-business
Government revenue is normally protected when goods are imported. While this can be
levied for physical goods imported by air and sea it is less easy to administer for services.
Tax jurisdiction determines which country gets tax income from a transaction. Under the
pre-electronic commerce system of international tax treaties, the right to tax was divided
between the country where the enterprise that receives the income is resident (‘residence
country’) and that from which the enterprise derives that income (‘source country’).
th Edition,
Prof. Jyoti P. Das
Slide 3.46
Political factors
The political environment is shaped by the interplay of government agencies, public

opinion, consumer pressure groups such as CAUCE (the Coalition against Unsolicited E-
mail), and industry-backed organizations such as TRUSTe that promote best practice
amongst companies.
The political environment is one of the drivers for establishing the laws to ensure privacy
and to achieve taxation, as described in previous sections.
Political action enacted through government agencies to control the adoption of the e-
business include:
• promoting the benefits of adopting the Internet for consumers and business to improve a
country’s economic prosperity
• enacting legislation to protect privacy or control taxation
• providing organizations with guidelines and assistance for compliance with legislation
• setting up international bodies to coordinate the Internet such as ICANN (the Internet
Corporation for Assigned Names and Numbers) and other independent organizations controlling
Internet technology described
th Edition,
Prof. Jyoti P. Das
Slide 3.47
Approaches used by governments to encourage e-business
Booz Allen Hamilton reviews approaches used by governments to encourage use of the
Internet. They identify five broad themes in policy:
• Increasing the penetration of ‘access devices’. Approaches include either home access through
Sweden’s PC Tax Reform, or in public places, as in France’s programme to develop 7,000 access
points by 2003. France also offer a tax incentive scheme, where firms can make tax-free gifts of
PCs to staff for personal use.
• Increasing skills and confidence of target groups. These may target potentially excluded groups,
as with France’s significant €150 million campaign to train the unemployed.
• Establishing ‘driving licences’ or ‘passport’ qualifications. France, Italy and the UK have schemes
which grant simple IT qualifications, particularly at low-skilled groups such as the long-term
unemployed.
• Building trust, or allaying fears. An example of this in the US is the 1998 Child Online Protection
Act which used schemes to provide ‘kitemark’-type verification, or certification of safe services.
• Direct marketing campaigns. According to the report, only the UK, with its UK Online campaign,
is marketing directly to citizens on a large scale.
th Edition,
Prof. Jyoti P. Das
Slide 3.48
GoI’s initiative for promoting e-business

The National e-Commerce Policy aims to create a framework for achieving holistic growth
of the e-business along with existing policies of Make in India and Digital India.
Consumer protection, data privacy and maintenance of a level-playing field are some of the
crucial issues. The Policy takes into account interests of all stakeholders, be they investors,
manufacturers, MSMEs, traders, retailers, startups and consumers.
The strategies envisages should provide a basis for unlocking productivity, generating new-
age jobs, protecting critical personal information, enhancing consumer awareness and
facilitating onboarding of domestic producers, manufacturers, traders and retailers.
In light of the increasing importance of data protection and privacy, the National e-
Commerce Policy aims to regulate cross-border data flow, while enabling sharing of
anonymised community data (data collected by IoT devices installed in public spaces like
traffic signals or automated entry gates).
With an aim to develop capacities of the domestic industry, the Policy takes forward the
core components of the Digital India initiative:
• the development of secure and stable digital infrastructure;
• delivering Government services digitally; and
• universal digital literacy.
th Edition,
Prof. Jyoti P. Das
Slide 3.49
Technology factors
One of the great challenges of managing e-commerce is the need to be able to assess
which new technological innovations can be applied to give competitive advantage
No one can predict the future, there are lots of examples of companies that have mis-
understood the opportunity for introduction of new technologies
When a new technology is introduced organizations face a difficult decision as to
whether to:
• ignore the use of the technique, perhaps because it is felt to be too expensive or untried, or
the manager simply doesn’t believe the benefits will outweigh the costs;
• enthusiastically adopt the technique without a detailed evaluation since the hype alone
convinces the manager that the technique should be adopted;
• evaluate the technique and then take a decision whether to adopt it according to the
Depending on the attitude of the organization technology adoption behavior can be

summarized as:
• Cautious, ‘wait-and-see’ approach.
• Risk-taking, early-adopter approach.
• Intermediate approach.
th Edition,
Prof. Jyoti P. Das
Slide 3.50
Diffusion-adoption process
The diffusion–adoption process who classified organizations as innovators, early
adopters, early majority, late majority, or laggards This process can be used in two main
ways as an analytical tool to help organizations.
• First, it can be used to understand the stage

customers have reached in adoption of a
technology, or any product. For example, the
Internet is now a well established tool and we
are into the late majority phase of adoption
with larger numbers of users of services. This
suggests it is essential to use this medium. But if
we look at 5G it can be seen that we are in the
innovator phase, so investment now may be
wasted since it is not clear how many will adopt
these services.
Figure 4.12 Diffusion–adoption curve
• Second, organizations look at adoption of a new
technique by other businesses. For example, an
Successful technology-predicting is based
online supermarket could look at how many
other e-tailers have adopted personalization to on detecting discontinuities and
evaluate whether it is worthwhile adopting the predicting the trends that will flow from
technique
them.’
th Edition,
Prof. Jyoti P. Das
Slide 3.51
Gartner hype cycle

An alternative graphic representation of diffusion of innovation has been specifically developed by
technology analyst Gartner for assessing the maturity, adoption and business application of
specific technologies Biometric Identity
Documents
Gartner recognizes the following stages within a hype cycle, an BPM Suites
example of which is given in Figure 4.13 for trends current in P2P Vol
P Desktop
2005: Inkjet Search
Linux on Desktop f or Mainstream Business
1. Technology Trigger – The first phase of a hype cycle is the
Manuf acturing
Electronic Ink/Digital Users Micro Fuel Cells
Paper
‘technology trigger’ or break-through, product launch or Model-Driv en Intern
Really Simple Sy ndication al
other event that generates significant press and interest. Approaches Carbon
Nanotubes Web
Biometric User Speech Recognition
Peak of Inflated Expectations – In the next phase, a frenzy of Podcasting Grid Identif ication f or Serv ice
2. Text Computing
Mining Telephony and Call s
Corporate Blogging
publicity typically generates over-enthusiasm and unrealistic Augume 802.16 2004 WiMAX Centre Text-to-
nted Reality Wiki VoIP Speech
expectations. There may be some successful applications of a Business Process s Organic Light-Emitting
Business Rule Engines /
Network Web- Dev ices Mesh Networks
technology, but there are typically more failures. s Serv ices-
– Sensor
Location-Aware Speech
Sy nthes
Enabled Applications
3. Trough of Disillusionment – Technologies enter the ‘trough of Corporat
e Semantic Web
Business Trusted Sof tware as Serv ice/ASP is
Mod SO Computing Group Handwriting Recognition
disillusionment’ because they fail to meet expectations and 4G Prediction Markets
els A Videoconf erencing
Network Collectiv e RFID (Passiv e)
quickly become unfashionable. Consequently, the press Intelligence Quantum XBRL
usually abandons the topic and the technology. Computing Tablet PC
As of August
Slope of Enlightenment – Although the press may have
DNA Logic Internet
4. Micropay ments
2005
Technolo Peak of Trough of
stopped covering the technology, some businesses continue Plateau
gy inflated Slope of of
disillusionm
through the ‘slope of enlightenment’ and experiment to trigger expectatio ent
enlightenment
productivi
ns Maturit ty
understand the benefits and practical application of the y
technology. Plateau w ill be reached in:
less than 2 2 to 5 5 to 10 more than 10
5. Plateau of Productivity – A technology reaches the ‘plateau years years years years
of productivity’ as the benefits of it become widely 4G : Fourth generation SOA Service-oriented architecture
ASP Application service provider VoIP Voice over Internet Protocol
demonstrated and accepted. The technology becomes BPM Business process management WiMAX Worldwide Interoperability for Microwave Access XBRL
increasingly stable and evolves in second and third P2P
RFID
Peer to peer
Radio frequency identification
Extensible Business Reporting Language
generations. The final height of the plateau varies according

to whether the technology is broadly applicable or benefits Figure 4.13 Example of a Gartner hype cycle
only a niche market
Prof. Jyoti P. Das
Slide 3.52
Technology adoption
Requirements that are necessary within an organization to be able to respond effectively to

technological change or innovation are:
• Growth orientation – a long-term rather than short-term vision
• Vigilance – the capability of environment scanning
• Commitment to technology – willingness to invest in technology
• Acceptance of risk – willingness to take managed risks
• Cross-functional cooperation – capability for collaboration across functional areas
• Receptivity – the ability to respond to externally developed technology
• Slack – allowing time to investigate new technological opportunities
• Adaptability – a readiness to accept change
• Diverse range of skills – technical and business skills and experience.
The problem with being an early adopter is that the leading edge of using new technologies is often also
referred to as the ‘bleeding edge’ due to the risk of failure. New technologies will have bugs, may
integrate poorly with the existing systems, or the marketing benefits may simply not live up to their
promise. The reason for risk taking is that the rewards are high – if you are using a technique that your
competitors are not, then you will gain an edge on your rivals.
th Edition,
Prof. Jyoti P. Das
Slide 3.53
Approaches to identifying emerging technology
PMI describes four contrasting approaches to identifying new technologies which

may give a company a competitive edge if they are involved in improving their supply
chain effectiveness by incorporating digital technologies. These four alternative
approaches apply to other business areas also:
• Technology networking. This involves individuals monitoring trends through their personal network
and technology scouting and then sharing them through an infrastructure and process that supports
information sharing. Novartis as an example of a company using this approach. They facilitate
sharing between inside and outside experts on specific technologies through an extranet and face -to-
face eventsnts
• Crowdsourcing. Crowdsourcing facilitates access to a marketplace of ideas from customers, partners
or inventors for organizations looking to solve specific problems. Lego is well known for involving
customers in discussion of new product developments
• Technology hunting. This is a structured review of new technology through reviewing the capabilities
of start-up companies. For example, British Telecom undertakes a structured review of up to 1,000
start-ups to assess relevance for improving their own capabilities which may ultimately be reduced to
five companies that BT will enter into a formal arrangement with each year.
• Technology mining. A traditional literature review of technologies described in published documents.
Deutsche Telekom AG uses technology to auto mate the process through software which searches for
patterns indicating potential technology solutions within patents, articles, journals, technological
reports and trend studies
th Edition,
Prof. Jyoti P. Das
Slide 3.54
Weekly assignment
1. Assess the role of different elements of an organization’s macro-environment that

impact on an organization’s e-business strategy
Submission date October 10, 2020
th Edition,
Prof. Jyoti P. Das

E-Business Macro Environment - Oct 06

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Slide 3.

MBA 7601 - Managing E-Business

Faculty of Management Studies

October 07, 2020

Key management issues with e-business environment

• What are the constraints placed by the e-environment on developing and

• Assessment of the business relevance of technological innovation.

Importance of macro factors on the e-business environment

In the session on marketplace analysis for e-business we discussed the importance of

there is not a reporting mechanism then Technological Intermediaries

The e-business environment

• It is broadly classified into two categories, i.e.

Micro environment analysis

• Customers – which services are they

Micro environment analysis

• Society – what is the ethical and moral

Micro and macro environment comparison

BASIS FOR COMPARISON MICRO (INTERNAL) MACRO (EXTERNAL)

Meaning Micro environment is defined as Macro environment refers to the

Alternatively known as Internal Environment External Environment

Elements COSMIC, i.e. Competitors, PESTLE, i.e. Population &

Nature of elements Specific General

Are these factors controllable? Yes No

Influence Directly and Regularly Indirectly and Distantly

Macro environment analysis method

Groups of factors Events Threats/ Likelihood Importance Influence on Action

External factors affecting e-business

• Changes in social culture and particularly pop

Social and cultural factors

TOTAL NUMBER INTERNET USERS AS ANNUAL GROWTH IN AVERAGE AMOUNT OF TIME

4.54 59% +7.0% 6H 43M

Social factors governing e-business adoption

1. Cost of access Includes:

Social factors governing e-business adoption

5. Fear of the unknown.

Barriers for use of Internet

Barriers for individuals include:

User access requirements

Daily time spent with media

USING THE USING WATCHING LISTENING TO USING A

6H 43M 2H 24M 3H 18M 1H 26M 1H 10M

Mobile, Internet, social media usage

TOTAL UNIQUE MOBILE INTERNET ACTIVE SOCIAL

7.75 5.19 4.54 3.80

Global e-business spend by category

Motivation for use of online services

Community Transaction Interaction

Development of Internet usage

• The figure shows that initially Internet

Variation in purchase of online products and services

• Use of digital technologies for

bought products/service online

• The extent of adoption also varies

Ethical and legal factors

 Introduction of new technologies and changes in their popularity tend to be frequent

Legal issues that impact e-business

Legal issue Digital m arketing activities affected

5. Contract law • Validity of electronic contracts relevant to:

6. Online advertising law • Similar issues to traditional media

Ethical standards and privacy

Why personal data are valuable for e-business

Information types used for e-business