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Introduction to digital business

and E-commerce

MBA Global – Spring 2020-21

Instructor: Abid Mehmood
(aafzal@kfu.edu.sa)
 Objectives
• After completing this chapter you should be able
to:
– Define the meaning and scope of digital business and
e-commerce and their different elements.
– Summarize the main reasons for adoption of
digital business and barriers that may restrict adoption.
– Outline the ongoing business challenges of managing
digital business in an organization

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 Topics
• The impact of electronic communications on
traditional businesses.
• Difference between digital business and e-
commerce.
• Digital business opportunities.
• Risks and barriers to digital business adoption.

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 Emergence of New
Technologies and Innovation
• The Internet, World Wide Web, Wireless
communications?
• Disruptive digital technologies
– Change the bases of competition
– Offer opportunities for businesses to:
• Add new products or services
• Transform internal business processes

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 Impact of electronic
communications on traditional
businesses
• Digital business transformation
– Continuous emergence of new technologies makes
innovation persistent.
– Organizational processes, structures and system need
significant changes.
– Needed often:
• To remain competitive, or
• To manage ongoing risks such as security and performance.
• Two key opportunities of digital transformation:
– Inbound marketing
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– Mobile marketing
Electronic Communications and
Consumer Behavior
• Inbound marketing
– Consumer is proactive in actively seeking out
information for their needs (i.e. Pull of info).
– Zero Moment of Truth (ZMOT)
– Interactions with brands are attracted through content,
search and social media marketing.
– Good visibility in search engines becomes vital
– Powerful because advertising wastage is reduced.
– Weak because marketers have less control.

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Electronic Communications and
Consumer Behavior
• Inbound marketing
– May involve different approaches:
• Search marketing
• Content marketing
• Social media marketing

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 Search marketing

• Sometimes called Search Engine Marketing

(SEM).
• Involves promotion of websites by increasing
their visibility in search engine result pages.
• Primarily done through paid advertising.

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 Content marketing

• The management of text, rich media, audio and

video content aimed at engaging customers and
prospects to meet business goals
• Published through print and digital media
including web and mobile platforms
• Content is repurposed and syndicated to different
forms of web presence such as publisher sites,
blogs, social media and comparison sites
• Content can be presented in a variety of formats
• News, video, white papers, e-books, blogs, …
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 Social media marketing

• Underlying idea:
– Gaining attention through social media sites
• Focuses on:
– Facilitating customer interaction and
participation to positively engage with company
– Creating content that attracts attention and
encourages viewers to share it across their
social networks
– Electronic word of mouth (eWOM)
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Social media marketing

Social media is NOT all

about social networks!

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 Mobile commerce

• Referred to as m-commerce
– Electronic transactions and communications
conducted using mobile devices
– Makes use of mobile apps
– Location-based use of mobile device

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 e-commerce
• Often thought to refer to buying and selling
using the Internet
• In fact:
– Should be considered as all electronically
mediated transactions between an
organization and any third party it deals with.
• Your opinion:
– Would customer requests for further
information be considered to be part of e-
commerce?
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 e-commerce
• Different perspectives of e-commerce:
– Communications perspective
– Business process perspective
– Service perspective
– Online perspective

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 e-commerce
• Formally defined:
e-commerce is the exchange of information
across electronic networks, at any stage in the
supply chain, whether within an organization,
between businesses, between businesses and
consumers, or between the public and private
sector, whether paid or unpaid.
• Buy-side e-commerce
• Sell-side e-commerce

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 Digital business
• Formally defined:
Marketing, buying, selling, delivering, servicing,
and paying for products, services and
information across networks linking an
enterprise and its prospects, customers, agents,
suppliers, competitors, and allies.
• OR: All aspects of business (using IT)
• IT-infrastructure, Internet and other distributed
digital technologies

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Digital business and e-
commerce

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 Intranets and extranets
• Intranet
– A private network within a single company
using Internet standards to enable employees
to access and share information using web
publishing technology.
• Extranet
– A service provided through Internet and web
technology delivered by extending an intranet
beyond a company to customers, suppliers
and collaborators.
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Intranets and extranets

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 Types of sell-side e-
commerce
• Sell-side e-commerce is not only about selling
products online.
• Types of online presence vary based on product
types.
• Broad functions
– Transactional e-commerce sites
– Service-oriented relationship-building websites
– Brand-building sites
– Publisher or media sites
– Social network sites
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 Different models of e-
commerce transactions

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Digital business opportunities
• Digital business introduces new opportunities for
organizations to compete in global marketplace.
– New ways of transmitting and transforming information
can be used for competitive advantage.
– Building closer relationships with existing customers
and suppliers online can improve customer retention.
– Encouraging use of online, digital business services by
customers and suppliers can reduce costs.
– Increased use of online services can help achieve soft
lock-in.
• Customers or suppliers continue to use online services
because of the switching costs.
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 Digital business opportunities
• Business adoption of digital technologies for e-commerce
means that as managers you need to assess the impact of
e-commerce and digital business on marketplace and
organization.
• Important questions to ask here:
– What are the drivers of changed consumer and business behavior?
– How should we respond?
– How much do we need to invest?
– What are our priorities and how quickly do we need to act?

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 Drivers of digital technology
adoption
• Cost/ efficiency drivers:
– Increasing speed with which supplies can be obtained.
– Increasing speed with which goods can be dispatched.
– Reduced sales and purchasing costs.
– Reduced operating costs.
• Competitiveness drivers:
– Customer demand.
– Improving the range and quality of services offered.
– Avoiding losing market share to business already using e-
commerce.

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 Risks and barriers to digital
business adoption
• Digital business opportunities must be balanced against the
risks of introducing digital business services.
• Strategic risks:
– Risks such as making wrong decision about investments.
– Impact of the Internet and technology varies by industry.
• Minor for some companies, significant for others.
• Practical risks:
– Risks such as poorly managed services leading to bad customer
experience.
– Bad experience often results in customer switching to other online
options

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