E Business: Concepts and Context

Electronic Business, commonly referred to as "eBusiness" or "e-

Business", which may be defined as the utilization of information and
communication technologies (ICT) in support of all the activities of
business. Commerce constitutes the exchange of products and services
between businesses, groups and individuals and hence can be seen as one of
the essential activities of any business. Hence, electronic commerce or
eCommerce focuses on the use of ICT to enable the external activities and
relationships of the business with individuals, groups and other businesses .

Many objectives are forming a model framework for the current

research, which formed the vocabulary as contained in its research
dimensions.

The interest in studying issues in the application of computing and

telecommunication technologies in business activities has been accelerated
by the growth of Internet-based business activities. However, practitioners
and academics have little interest in defining the scope of the field.

1. Introduction

As a result of development in electronic information resources and the

evolution of the "digital age" product sellers and information service
providers face many new challenges. Internet is changing the way
corporations conduct business with their consumers who are increasingly
expecting higher services, becoming time saved, and wanting more
convenience. In addition e-service quality is an essential strategy to gain
success, according to the results of previous literatures, probably more
important than a low price for online companies. Since one of the main
duties of the internet as a communication channel is how to manage service
quality, which holds a significant importance to customer satisfaction. The
daily growth of the internet and e-commerce has changed the way of
marketing and selling products and services.

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2. E-Business Concept

A simple definition, e-Business is the use of electronic, computing, and

Internet-based technologies to change traditional revenue models and
business designs to the mutual benefit of customers and vendors.

A wordy answer : e-Business is the replacement of ineffective existing

methods of information flow in the supply and value chains of an
organization, and creating new ones with Internet-based, computing, and
communications technologies. E-Business liberates resources like
manpower, materials, money and time, which can then be redistributed for
more value-added tasks, to bring incremental revenue and profits to
customers and suppliers.

E-Business, by definition, implies the usage of Internet-based

technologies, but to what end? Initially, e-Business was used to replace
current methods of information (bits and bytes) flow within and outside
organizations. Current methods of information flow to and from customers
can be slow and expensive, and contribute costs that are unsustainable in
environments of extreme competitiveness. (Anand- 1998)

For example, a typical manufacturer may receive about 20% of the

ultimate selling price to the end-user. Eighty-percent of the margin is spent
in the distribution pipeline from the manufacturer to the end-user.
Elimination of the non-value add intermediaries in the value chain (or
disintermediation) can deliver substantial benefit to both the producer and
the consumer. Pundits predict that e-Business’s disintermediation
contribution will be as significant as Henry Ford’s Model T was to the
manufacturing and production paradigm. Forecasters predict that distribution
costs will collapse substantially in the next decade, significantly altering all
methods of consumer and business buying behavior!

Prior to e-Business, automation required proprietary client-server

solutions- communicating through modems or dedicated lines. E-Business is
different from these older solutions in a significant way: the user does not
have to be provided with unique software at the desktop (or laptop)- all the

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user needs is a commonly available browser to access Web-based
information.

Thus, e-Business eliminates the resources and costs needed to distribute

and maintain software of various antiquities in the users’ domain. This was a
substantial waste. With Internet-based technology, the "info base" is written
once and can be accessed from anywhere, anytime. Also, the cost of keeping
it constantly updated and current is minimal, without incremental
distribution and maintenance costs. .( Anand- 1998)

3. Basic Benefits of e-Business e-Commerce

 increase sales - this is the first thing that people consider  when
dealing with e-commerce
 decreasing costs
 increase profits
 understanding that profits is not the same as sales
 Expands the size of the market from regional to national or national to
international
 Contract the market
 reach a narrow market
 target market segmentation allows you to focus on a more  select
group of customers
 and therefore have a competitive advantages in satisfying them

1.3 Decreasing costs

 costs of creating the product
 marketing of promotional material
 costs of distribution
o eg. Netscape allowing you to download instead of waiting to
get the CD by mail
 costs of processing (orders from the customers)
o repeat activities and information processing
o of handling customer phone calls
o of handling sales inquiries
o determine product availability (inventory management)
 costs of storing information
 lowers telecommunication costs

2.3 Other Benefits ....

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  Pull-type processing
 enables customization of products
 allows for innovative business models
 allows for a high degree of specialization
 reduces the time exposure
 supports BPR - Business Process Reengineering 
 increases productivity
 improves customer service (in some cases)

3.3 Limitations of e-Commerce (e-Business) 

- you should understand some of the limitations and be able to explain
these to a potential client because not everyone is convinced the
internet will be a major way to conduct business
- example TV has been around for a long time - but only a small
percentage of all companies advertize on TV !!
- radio - some very successful companies, like Sleep Country Canada
advertise on radio .

4.3 Costs of a Technological Solution

o some protocols are not standardized around the world
o reliability for certain processes
o insufficient telecommunications bandwidth
o software tools are not fixed but constantly evolving (ie.
Netscape 3,4,4.7,4.75 etc.)
o integrating digital and non-digital sales and production
information
o access limitations of dial-up, cable, ISDN, wireless
o some vendors require certain software to show features on their
pages, which is not common in the standard browser used by
the majority
o Difficulty in integrating e-Commerce infrastructure with
current organizational IT  system
o customer fear of personal information being used wrongly
 privacy issues
o customer expectations unmet
o rules and regulations (ie. Jan 2004 Bill C6 - new privacy law)
o security and privacy
 vulnerability to fraud and other crimes
o lack of trust and user resistance

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  fear of payment information being unsecure
o tactile limitations
o Schnieder, 3rd ed. added "many businesses face cultural and
legal obstacles"
 legal issues outstanding such as jurisdiction
 legal environment has many new and conflicting laws
 cultural obstacles
 linguistic challenges
o limitations of support services
 financial cost
 sourcing tech support in foreign languages
o lack of critical mass in certain market areas for sellers and
buyers
o accessibility outside of urban/suburban and areas effects
universality 
o higher employee training required to be click and mortar 
o people's resistance to change 
o people not used to  faceless / paperless / non-physical
transactions 

5.3 Pitfalls of e Business

Three particular pitfalls or mistakes that will undercut or delay the
benefits of e-commerce.  They are: 

1. Broad expectations. 
We must avoid over-expecting—or over-promising—e-commerce
lest we create a backlash when  its promises are not fulfilled.  E-
commerce will not, in and of itself, correct all the industry's problems .

2. Rote applications.
Little or no improvements will come from the rote imposition of e-
commerce techniques on bad practices.  Ensuring the appropriate
application of e-commerce requires us to ask more than whether we can
apply e-commerce to a practice and to consider whether we should...
For example, it does little good, and may even do harm, if suppliers
simply receive inaccurate information more quickly via the Internet.

3. Incomplete implementation
The benefits of e-commerce will be restricted if we do not
recognize its full system implications, and  instead implement it in
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 limited ways that only partially meet its requirements.  For example,
some  e-commerce benefits depend on replacing people with bytes.  To
the extent that we do not reduce headcount, or even worse, run parallel
people/byte systems, e-commerce’s benefits will be limited.

4. Information Technology and Business

When computer and communications technologies are combined, the

result is information technology, or "infotech". Information Technology (IT)
is a general term that describes any technology that helps to produce,
manipulate, store, communicate, and/or disseminate information.
Presumably, when speaking of Information Technology (IT) as a whole, it is
noted that the use of computers and information are associated.

This has been contributed to make all business process available to all
beneficiaries possible..As such, The United States Census Bureau defines e-
business as “any process that a business organization conducts over a
computer mediated network. Business organizations include any for profit,
governmental, non-profit entity. Their processes include production-,
customer-, and internal or management-focused business processes.” In a
shorter broader sense, e-business is the process of conducting business
electronically or over the internet. Electronic mail is e-mail, electronic
commerce is e-commerce, and following this formula, electronic business is
e-business. Every time business is conducted over the internet, e-business
takes place and as the internet grows, so grows e-business

5. Where does e-business take place?

E-business is offered to all users via the internet, to internal users via an
intranet (similar to the internet, an intranet is a smaller network of computers
usually within a single organization), and to specified users via an extranet
(an intranet partially accessible to specified users from outside an
organization via a valid username and password).

6. Main Types of E-business

1.6 Business to Consumer (B2C)
The most widely recognized form of e-business, B2C is the exchange of
information, products or services taking place between a business and a
consumer over the internet. As the internet develops, B2C is continually

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changing the way consumers acquire information, the way products are
compared against one another and the way in which they are purchased.
An example of a B2C only site is amazon.com. Ae.com is an example
of a B2C site housing a physical location as well.

2.6 Business to Business (B2B)

The largest form of e-business in terms of money spent is B2B.
Business-to-business allows trading to take place between businesses, using
a low-cost sales channel for the sale of goods and services and is responsible
for constantly changing corporate buying habits.
An example of a B2B site would be a car part company selling parts
to a car dealership, another company, rather than directly to consumers.

3.6 Business to Government (B2G)

B2G is the online exchange of information and transactions between
businesses and government agencies, also known as e-government. B2G
allows government agencies and businesses to use electronic means to
conduct business and interact with each other over the internet.
An example of a B2G site would be one that offers electronic tax
filing.

7. Differences between technical terms E-commerce and E-business:

While the words Commerce and Business don't have much difference in
English and in fact are largely interchangeable as nouns describing
organized profit-seeking activity, there is a difference between e-Commerce
and e-Business. The difference is quite artificial, but different terms do
carry different meanings (www.ebusinessprogrammers.com).

Often it seems that the term of e-commerce e-business are the same, it
is not true, the electronic commerce is responsible for business relationship
with the buyer, the seller and the implementation processes of relationship in
this context, both are technical means, while the more comprehensive e-
business as it includes the conversion of all the paperwork to e-business,
financial and administrative services, and also include the control of the
work, which falls under the concept of many tasks, such as e-banks and e-
government services …etc. However, there is much more to e-Business than
selling products.

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 The term e-business is covers all the areas of business. e-business
occurs when a company or individual communicate with their clients or
customers or suppliers through email. Marketing done through Internet, Sell
Products or Services through internet, Use internet to conduct market
research, use internet to hire people, use internet for product or service
promotion etc.

However, to clearly bring out the differences between the two as both
of them are completely different phenomenon are as follows:
(www.ezinearticles.com)
1. E-Commerce is the subset of E-Business.
2. Those activities which essentially involve monetary transactions are
termed as "e-commerce". However, e-business is a much broader term.
There are many other things besides selling including but not limited to
marketing, procurement of raw materials or goods, customer education,
looking for suppliers etc.
3. To sell online is e-commerce but to bring and retain customers and
educate them online about the product or service is e-business. Having a
website to do it is not sufficient. But, having a professionally built
website loaded with latest technologies to capture the attention of the
visitor and win his/her appreciation is required. When money is involved
then the first thing which user looks for is safety and security of his/her
money. Having a website laden with such qualities is important.
4. When Dell sell computers, laptops, monitors, printers, accessories etc
online then it is not engaged in e-commerce but e-business. Let me tell
you how. When a visitor comes on the website, the first thing he see is
website design and navigation as well as those things which are going to
help him find what he is looking for and if he directly lands on the page
he was looking for, he looks for the information related to it. The
information provided should be appealing and clear maximum doubts of
the visitor so as to convert him in a client. Till now no money has been
exchanged nor been talked about. So, was this e-commerce? No, it is e-
business which guides the visitor.
5. E-commerce has also been defined as a process covering outward
processes that touch customers, suppliers and external partners while e-
business covers internal processes such as production, inventory
management, product development, risk management, finance etc.
6- In all, e-commerce can be described as the use of the Internet and the web
to transact business. More formally, digitally enabled commercial
transactions between and among organizations and individuals. On the

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 other hand, e-business can be described as the digital enablement of
transactions and process within a firm, involving information systems
under the control of the firm. Moreover, e-business applications turn into
e-commerce precisely when an exchange of value occurs.
7- In practice, e-business is more than just e-commerce. While e-business
refers to more strategic focus with an emphasis on the functions that
occur using electronic capabilities, e-commerce is a subset of an overall
e-business strategy. E-commerce seeks to add revenue streams using the
World Wide Web or the Internet to build and enhance relationships with
clients and partners and to improve efficiency using the Empty Vessel
strategy. Often, e-commerce involves the application of knowledge
management systems.
8- E-business involves business processes spanning the entire value chain:
electronic purchasing and supply chain management, processing orders
electronically, handling customer service, and cooperating with business
partners. Special technical standards for e-business facilitate the
exchange of data between companies. E-business software solutions
allow the integration of intra and inter firm business processes. E-
business can be conducted using the Web, the Internet, intranets,
extranets, or some combination of these.

8. Marketing significance of e-business vs e-commerce

Having a successful business in the real world is more than just simply
opening a storefront or factory. The same holds true in that conducting
business online is more than having just a web site. There are other
fundamental variables to consider for a business to succeed. (Greg Spaulding
2003)

It is paramount to have a solid infrastructure with great products,

superior customer service, effective marketing strategies, real-time
information systems, and efficient product fulfillment processes. The proper
planning, implementation and execution of these functions are the
foundation of any successful business. Unfortunately however, when it
comes to the Internet, many companies forgo their business plans, strategies
and infrastructure and treat the World Wide Web like a crapshoot. Many
brick-and-mortar companies get a web site simply because their competition
has one, and thus put little forethought into making the web work for them.

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 For most companies the Internet is an untapped resource. However, of
the companies that do have an Internet presence, only a small fraction will
actually utilize the Internet to it’s full potential.

The reason why is quite simple. Most companies mistakenly make use
of the Internet for just basic eCommerce, not actual eBusiness. In doing so,
other intrinsic and critical business functions found in a true eBusiness
platform are neglected. The use of an exclusive e-Commerce platform is a
common and understandable mistake. If you were to survey a room full of
senior corporate executives, almost all questioned would not be able to tell
you the difference between eCommerce and eBusiness. But make no mistake
about it; there is a difference between eCommerce and eBusi-ness, a
tremendous difference.

E-Commerce is the concept of buying and selling on the Internet.

However, the infrastructure of any business is more than just buying and
selling and this is where eBusiness begins. A strong eBusiness platform
enables a company to provide quality customer service, prompt delivery, a
strong marketing presence, maintain flexibility, have reliable inventory
control mechanisms and access to real-time information. Let’s take an
example of a fictitious company that sells widgets to distributors as well as
the general public worldwide. Widgets, Inc. has been very successful selling
their widgets for many years in which they contribute their success to a
combination of a solid product, prompt delivery, efficient management, and
excellent customer service. These variables add up to a satisfied customer
base and a profit margin to be proud of.

The president of Widgets, Inc. decides to expand business by creating

an Internet presence. However, instead of approaching the Internet division
of the business as it did the brick-and-mortar division, with planning and
careful consideration to business process management, marketing and
quality customer service, the company as an alternative puts together a web
site with just a "shopping cart" and without the necessary tools needed to
maintain Widgets, Inc.’s dominance in its industry.

The biggest mistake Widgets, Inc. made was not taking into
consideration that although their web site at first glance is only a portion of
their corporation, their site is a very visible and therefore, influential
representation of their corporation. If the site is not able to fulfill the duties
of its brick-and-mortar counterparts, then it does not properly represent the

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qualities that it should. Such a faux pas can also ruin the possibility of
increased profits that Widgets, Inc. would make, from a quality and efficient
Internet division of their business.

In actuality with the right implementation, the eBusiness faction of a

company can be more profitable than their brick-and-mortar counterparts
without comprising the same "real world" philosophies that helped propel
the company to success in the first place. All you need are the right tools and
how to make the most of them.

Now, imagine being able to maintain and manage every aspect of your
traditional business, but have access to it anywhere in the world. Imagine
expanding your business without having to build expensive storefronts.
Imagine running elaborate, expansive, intricate marketing campaigns in
hours rather than weeks and at the fraction of the cost. Imagine your RMA
and CRM satisfaction levels being either at par or higher online in
comparison to your brick-and-mortar division. In today’s e-Business world,
these concepts are not possibilities, but a reality and need to be implemented
in every Internet business structure as such.

These are just a few examples of how an expansion into the Internet via
eBusiness can vastly increase your profits without conceding the very
idiosyncrasies that made you successful in the first place.

9. E Business and Global Issue- Entrepreneurship

Entrepreneurship is currently undergoing a fundamental transformation

that reflects the rapid and radical changes that are affecting the global
market place. The emergence of the Internet and developments in
Information and Communication Technologies (ICTs) have opened new
markets and considerably altered existing ones (Brynjolfsson and Kahin
2002). From an entrepreneurship perspective, the full economic impact of
the Internet and related ICT is yet to be fully understood or empirically
tested (Martin and Matlay 2003). Nevertheless, it is increasingly obvious
that a shift in entrepreneurial equilibrium is taking place (Matlay and Addis
2003). Although some of the traditional entrepreneurial concepts still apply,
much of the context in which related activities are taking place has changed
dramatically over a relatively short period of time (Matlay 2003b).
Consequently, and in order to capture the economic value that is created

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within rapidly evolving e-Markets, a new and highly adaptable brand of e-
Entrepreneurs has emerged (Matlay 2003a).

Afuah and Tucci (2003) recommend that all organisations that are
affected by the Internet should have a dedicated “business model”. The
authors justify their suggestion by pointing at the complexity, speed and
uncertainty of Internet trading. Matlay (2004) agrees with this advice. An
effective business model often depends upon organisational aims, human
and physical resources as well as market orientations. Bakker (2005) does
the simple observation that an increasing number of people are not only
using the Internet, but who are relying on the Internet for social contacts,
purchasing goods and being informed on what is happening in the world.
The Internet is becoming a significant factor in today's society.

Because the internet has become mature and new simple techniques
make it possible for everyone to use the internet new aspects of e-Business
and e-Entrepreneurship become more important. Although much has been
written about these developments, scientifically research about the
underlying value drivers of this next stage is missing. This research attempts
to fill this theoretical gap by seeking to identify the (most important) value
drivers, features and underlying business models in Web 2.0.

In Gartner’s 2006 Emerging Technologies are experiencing significant

activity and which include new or heavily hyped technologies, where
organizations may be uncertain as to which will have most impact on their
business, are argued. One of the three key technology themes identified by
Gartner, and the corresponding technologies for enterprises to examine
closely within them, is Web 2.0 and represents a broad collection of recent
trends in Internet technologies and business models. Particular focus has
been given to user-created content, lightweight technology, service-based
access and shared revenue models. Technologies rated by Gartner as having
transformational, high or moderate impact include: Social Network
Analysis, Marsh-ups, AJAX and Collective Intelligence. Web 2.0 and it’s
concepts and technologies are now at it’s peak of the Hype and will be
adopted within 2 years (Gartner 2006).

On the other hand, according to Forrester Research, annual B2B

commerce is expected to grow from about $43 Billion in 1998 to about 1.3
Trillion in 2003. During the same period, business-to-consumer (B2C)

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commerce is expected to grow from $7.8 Billion to $108 Billion!
(www.forrester.com)

The scarce e-business theory on value creation, the increasing use and
importance of the Internet, and the emergence of Web 2.0 ask for a close
look at features of the New Internet and it’s underlying value drivers.

With this research a contribution to value creation theories and business

model theories in the field of a combination of entrepreneurship and
strategic management is delivered. This research does not only contains
value drivers derived from Strategy theories, e.g. Strategic Network Theory
(Dyer 1998), but also focuses on Innovation and Entrepreneurship theories,
e.g. Schumpeter’s theory of creative destruction (Schumpeter 1942). This
research also contributes to the scarce theories of e-businesses by looking at
new developments within the Internet, particularly Web 2.0.

Research on e-Business Value drivers are useful but probably not up-to-
date anymore with the emergence of Web 2.0. The research of Amit and Zott
(Amit 2001) for instance deals with companies before the Internet bubble of
2001. With Web 2.0 new features of the Internet transactions and
participations are taking place. More and different stakeholders add value in
e-business. This raises questions which (new) value drivers we can find in
Web 2.0 and which ones are more important. By looking at these factors we
are indirectly looking at the business models that are important in the New
Internet. Providing more insight in value drivers and business models in
Web 2.0 enables companies and entrepreneurs to adopt and prepare to take
advantage of opportunities in this next stage of the Internet.

10. Illustrative examples of e-business and e-commerce

1. 10 Charles Sturt University

Charles Sturt University (CSU) is the largest regional university in New

South Wales, Australia. It has four major campuses at Albury-Wodonga,
Bathurst, Dubbo and Wagga Wagga and operates centres at Broken Hill,
Canberra, Goulburn, Morpeth and Manly (AVCC, 2004). CSU offers its
course through its own campuses and partner institutions in Australia and
other countries. Students can complete their studies through traditional on-
campus mode, distance education mode or a mixture of both.

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 In 2003, CSU offered more than 300 courses to 40,694 students. 29,325
students were enrolled in pure distance education mode and another 3,911
students undertook their studies through mixed mode (CSU, 2003).

As the leading distance education provider in Australia, CSU had

considered the use of Internet in distance education in the mid-1990s
(Bisman, 1996). CSU recognized two key values to its students as flexibility
in delivery of higher education and well-established network of partner
institutions. To capitalize on these strengths, CSU decided to maintain its
traditional distance education system. Computing and telecommunication
technologies are applied to complement rather than replace the traditional
system.

All students who enrolled in distance education subjects receive their

study materials in printed form. At the same time, same material is available
through CSU’s online portal, my.csu. Students can access the material
through the Internet anywhere, at anytime. To communicate with their
lecturers, students can use telephone, fax, e-mail as well as online forums.
They can submit their assignments by mail, by fax or by EASTS, an online
assignment submission system.

On-campus students also benefit from the application of technologies.

My.csu is available to all students and online forums can be accessed by on-
campus students, subject to lecturer approval. On-campus students are also
allowed to enrol in subjects offered by distance education mode. This is
particularly useful for students who want to undertake subjects that are not
available at their host campus.

In addition to the delivery of education, CSU also uses computing and

telecommunication technologies in its support functions. For example, staff
members can access their personnel records and file leave applications
through the university website. Video conferencing is used extensively to
support administrative functions such as selection and promotion of
academic staff.

CSU is a successful example of transforming an existing business into

e-business. The university recognized its strengths in creating value and used
computing and telecommunication technologies to reinforce these strengths.
Technology-enabled systems co-exist with traditional system and enhance
each others’ value.

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