Table of Contents:
Impact of e-business………………………………………………………………………………6
The future of e-commerce………………………………………………………………………..12
The increase and expansion in the use of the internet as a way of conducting business has ineradicably marked the dawn of the current century. Currently e-business has emerged has a major way of facilitating business transactions in all parts of the world. Even with the economic downturn and the different problems experienced in different countries around the world, e-commerce has continued to grow. E-commerce has already become a mainstream operation. Many consumers have in the recent past adapted to shopping online. The all-encompassing development in broadband connections to the internet has fuelled new generations in the use of the internet in carrying out business operations. Electronic business entails the complete digitization of business processes and value chains. E-business has the promise of assisting traditional organizations in creating new value and also be able to attain the previously unattainable heights of financial and operational excellence (Duray and Vering, 2001).
According to Beynon-Davies (2004) electronic business otherwise referred to as e-business or e-commerce is the use of information and communication technology in conducting business. In an e-business environment, some or even all business operations are supported by the information and communication technologies. Commerce is the exchange of goods and services between businesses, organizations and individuals. It can be viewed as one of the major activities in the business world. E-commerce focuses on the utilization of information and communication technology to enable the activities as well as the relationships between the business and its customers. The term e-business was suggested by IBM’s internet and marketing teams in the year 1996. Tools and methods used in electronic business enable businesses to connect their internal and external information processing systems more effectively and flexibly. With the use of information technology, the business is able to effectively connect with its stakeholders, including suppliers, customers and partners. E-business plays a major role especially in the relationship between the company and its customers. Being able to satisfy the needs and expectations of the customers is the driving factor behind the increase in the use of information technology in the business world. In practice, electronic business is more than simply electronic commerce. While electronic business is focused on strategic operations with a special emphasis on the activities that take place using electronic abilities, electronic commerce is a sub-set of the general electronic business strategy (Beynon-Davies, 2004). E-commerce tries to increase the revenues for the business with the use of the internet or the World Wide Web to develop and enhance relationships with customers and other stakeholders as well as to enhance efficiency through the employment of Empty Vessel strategy. In most cases, e-business involves the use of knowledge management systems. E-business involves entails business processes that span the whole value chain. Such processes include electronic purchasing, processing orders electronically, dealing with customer service electronically, electronic supply chain management, and relating with stakeholders online. Companies that have realized value in the use of e-business have realized that e-business is more than simply the use of technology. It is the streamlining of processes in the business that allows ease in finding new markets (Duray and Vering, 2001).
Literature is stuffed with articles related to the benefits, success stories and limitations of e-business. Recent researches have revealed an increase in the use of computers and the internet to conduct business. The United States Census Bureau is one of the organizations that have reported an increase in e-commerce. The internet and e-commerce are still feasible in presenting opportunities for businesses. It is important to have an understanding of what makes it possible for businesses to use e-commerce. Pratt (2002) suggests a very significant research question: “Will success or failure in e-business depend upon technological factors, market forces, financial availability or policy” (cited in Bharadwaj and Soni 2007: 502)? Veeramani (2000) in a white paper that suggests the role played by the public-private partnerships in advancing e-business reveals four groups of barriers to e-business: “knowledge, human resources, financial resources and initiatives, technology, and business development infrastructure” (cited in Bharadwaj and Soni 2007: 502). Levy and Powell (2003), in a research of small and medium enterprises in the United Kingdom, reveal the difference between the businesses that identify value in the e-mail and marketing elements and those that use technology more strategically ” (cited in Bharadwaj and Soni 2007: 502). From the same study, it is also revealed that not all businesses can get value from the use of information technology. It is demonstrated that the businesses that can get value from the technological elements are those that use them strategically. Based on a different study carried out on 167 small businesses, it is revealed that technical “bells and whistles” on e-business websites do not necessarily enhance performance in sales development, instead, it is the interactivity between the customer and the company that enhance the general performance of the business. It is suggested that sometimes sophisticated information technology cause reduced customer participation (Beynon-Davies, 2004).
Different researches give different results as far as the use of information technology is concerned. According to Duray and Vering (2001) small and larger companies differ from the way they utilize information technology in their business activities and thus the results. There are two main applications of information technology in business. While larger companies use information technology to create effective relationships with their customers, small businesses use it to support their daily operations. Internet security remains a major issue in as far e-commerce is concerned. Regardless the arguments that internet security is very important for e-commerce to add value to a company, internet providers have not been able to provide completely secure internet services. Many countries around the world as well as many states in America are encouraging businesses to make use of information technology in their operations. One of the ways that these countries and state have encouraged the use of technology is through tax breaks (Beynon-Davies, 2004).
Impact of e-business
There are many companies that have realized more value through the use of information technology. Companies like Cisco Systems, Dell Computer and GE have reported more value in the use of e-business. This has made more and more companies to pursue more value through the use of the internet as a major element in their business models and strategies. The value of e-business to companies is evident from various case studies like Boeing. This is a company that has embraced e-business in its operations. As a result, the company has been able to construct almost 80 percent of its 777 aircrafts because of the ability to assemble outside its plants through electronic collaboration. Another case of a company that has been able to benefit from the use of electronic business is Starbucks. This is a company that has been able to gain value and improve the customer base through the use of e-business. Its customers are able to get services from the company effectively and leave behind important information that the company is able to use in improving quality. Payment for products and services with the use of cashless debit or visa cards given by the company is one element of electronic business that has enhanced operations and information management in the company. From the various case studies, it is revealed that electronic business has emerged as an important tool in reducing the costs of operations and making it possible for companies to reduce the past mistakes. Most of the companies, especially those running in North America have agreed that electronic business has become a very important business strategy. There are many advantages for businesses that choose to invest in innovative information and communication technology for their business operations (Duray and Vering, 2001).
In the course of the discussion, Tesco plc will be used in discussing the benefits of e-business. This is one of the companies that have realized a lot of benefits in the use of e-commerce in the management of customer relations and in receiving and processing orders from the customers. This is a company that has developed operations in different parts of the world. It is a multinational company that has realized a lot of advantages through the use of electronic commerce. Tesco plc specializes in grocery and general merchandise. According to Potter (2011), the company whose headquarters are in Chestnut, United Kingdom, has come up to the third place in the business world following Wal-Mart and Carrefour in terms of the revenue, and second place following Wal-Mart in terms of profits. The company is leading in the United Kingdom and has other stores in the US, Europe and Asia. Through electronic business, the company is able to cater for a wide range of clientele. Potter (2011) claims that the business would not have come this far had it not taken advantage of electronic business.
Communication has been enhanced in businesses due to the use of e-business. Information and communication technology make it easier for companies to communicate with their business partners and customers. One of the areas that e-business has impacted on businesses is in the enhancement of customer relations. Blais (2011) suggests that management of the relationships between a company and its customers is a strategy that businesses use in making sure that the company is able to maintain positive interactions with its most important element, the customers. With the implementation of e-business, this has been made easier as seen in different case studies. E-business has gained popularity in the modern-day business because of this benefit. The use of information technology in businesses has enabled organization, automation and synchronization of business operations and processes. The main application of e-business in as far as customer relations are concerned is in finding, attracting and winning customers into the business to have more revenue and thus productivity. With the use of technology it is also possible to nurture and maintain customers who are already in the business, and invite back those that the business had lost. The use of e-business in customer relationships is a business wide strategy that includes customer interface and involves all the other departments within the organization. With the internet, it is possible to link different departments to each other and to the customers to ensure that their needs are adequately met. The use of electronic business in the management of customer relationships brings value to the business. Another benefit that is related to effective management of customer relationships is customer attention (Duray and Vering, 2001).
Effective management of customer relations has made it possible for companies to stay ahead of competition. The current business world is a very competitive one and thus any strategy that can keep a business ahead in the competition is welcomed. In the present day market that is characterized by intense competition, use of ICT-related customer service management has made many companies to be able to stay ahead in the competition. Innovative means carrying out business operations and managing relationships in the business enabled by electronic business brings value to the business and makes it favorable to more customers. This is the reason why many businesses are considering the use of ICT (Potter, 2011). Proper use of electronic business has made a very big difference in the companies that use it and those that have failed to do so. Businesses have accomplished their objectives by electronic business strategies aimed at improving communications and thus relationships. Such strategies have made it possible for marketers in the company to understand the needs and preferences of their customers. This is an important way of developing products and services that are tailored to the needs of the customers. This brings value to the business and enhances its image. Customers will therefore tend to remain buying from the company putting it ahead of its competitors. Through the use of networked information systems, a company like Tesco plc has been able to stay ahead of competition in an industry that is so competitive. This is one of the companies that adopted electronic business early. Networked information management systems have made it possible for the company to manage its relationship with the customers and other stakeholders (Lior, 2005).
Businesses that use electronic business benefit from enhanced communications not only with the customers, but with other stakeholders. Through the use of the internet, a company is connected to different players in its productivity. The company is able to communicate effectively internally and also externally. One of the benefits accrued from this kind of communication is with the suppliers. The company that is connected to the suppliers can access information from the and also send information directly. With this kind of system, it is possible for the company to order supplies thus ensuring that they do not run out. From this perspective, companies using electronic as a business strategy are doing better in the market that the companies that have not implemented this strategy (Lior, 2005).
Development and implementation of any strategy in the business depends on the ability of the business to manage its information. With the use of electronic business management of important information in the business has been achieved. Decision making which is a very important function in the business has been enhanced through the use of information and communication technology in the management of business information. Information has become a very important factor of production. The use of electronic business strategy has made it easier for companies to gather and disseminate information effectively to its stakeholders. Provision of information to customers has made it possible for companies to receive and process orders fast and more effectively. The networked information management system used by Tesco plc maintains information on a number of registered customers. This is the information that the company uses in receiving and processing orders from the customers. According to Potter (2011), from the information, the company is able to process approximately 4,000 orders per hour.
The use of e-business had enabled reduction in the overall cost of carrying out business operations. Reduction of the overall costs of operations in the business is one of the benefits that have attracted many businesses to invest in electronic business. Reduction in the overall cost of operations is achieved in the ease in processing and delivering orders. With the use of the internet to receive and process orders from customers, it is possible to process multiple orders at the same time (Lior, 2005). This means that there is generally a reduction of cost that would be necessary in processing same orders at different times. The company also benefits in delivering orders within the same geographical area in one trip. In the past, where customers had to come to the store to purchase products, delivery of such products could mean more than a single trip to the same geographical area. With the use of networked information management systems, it has become possible to collect orders and deliver them in a single trip where possible. Reduction of cost is also achieved because of the lowered transaction costs and increased efficiency in the payment methods. Many customers are using online banking methods to pay for products and services, which is a cost-related benefit to the company. There is also less use of stationery and postage which further reduces cost. Customers always go for quality products and services that are at a cheaper price. Once a company is able to lower the cost of production and transaction, it is possible to provide products and services to customers at a relatively lower price. This is a benefit to the company as customers will always choose quality at a lower price (Duray and Vering, 2001).
The use of e-business has enabled businesses to improve the quality of their products and services and also the achievement of efficiency. Information from networked information management systems has made it possible for companies to keep track of the needs and preferences of the customers. Such information is used to address the concerns of the customers and improve the quality of products and services. It is also possible for companies to track the demands of the customers in order to find out the products that are selling and the ones that are not. With this kind of information it becomes possible to deal with the issues that make some products to remain on the shelves for a long time. From the use of e-business, Tesco plc has been able to gather two kinds of very important information. One kind of information that is gathered by the company is high-level up-to-date information regarding market patterns and trends. The second kind of information gathered is feedback gotten from customers concerning sales strategies that the company is using at a specific time (Bharadwaj and Soni, 2007).
Electronic business is a strategy that has made it possible to strengthen marketing capabilities and reach. Market research and collection of other inflation from the market is enhanced where there is use of information technology in business operations. Information as mentioned earlier has become a very important factor of production. This means that any company aiming for productivity should focus on gathering important information from the market. Marketers should always look out for information on marketing patterns and trends. The good news is that this kind of information is readily available on the internet. Additionally, a company that has a web site is able to get feedback from customers and others stakeholders. Information in different markets that are not ventured is important for a company that is aiming to extending its reach (Bharadwaj and Soni, 2007).
A company that uses e-business is able to benefit from increased hours of service. Through the use of the internet in receiving and processing orders, businesses are not limited by time or place. A company’s website will provide 24 hour 7 day information to customers wherever they are located. Eradication of the need to move around for shopping is helping businesses in that customers can place orders even in the middle of the night (Lior, 2005).
The future of e-commerce
Information technology is a field that keeps on changing, which means that the current electronic business models will not cater for the future needs and demands in the business world. According to Lior (2005), it is important for business leaders to look beyond seeking to fix the past and instead concentrating on developing electronic commerce models that will equip the company for the future demands. As the use of electronic commerce will increase in the future, companies that will fail to develop effective e-commerce models will be left behind in the competitive world of business. Business need to continue taking advantage of the development in technology and the opportunities that are developing in the electronic business. There are different issues that the leaders will have to deal with in order to take advantage of the future opportunities in this area of operations in adding value to their companies. The way forward is an important element in as far as implementation of electronic commerce is concerned. With the major components of electronic business becoming mature, the quality of information technology in use in a company will be a significant factor on the productivity of companies. This is what will make the difference between the companies that will perform and those that will fail to perform in electronic commerce. The focus in future will not only be in the use of technology in the electronic business, but its use in gaining a competitive advantage (Bharadwaj and Soni, 2007).
The challenge in the implementation of e-commerce to achieve productivity will be on how the company is prepared for innovation. Almost all companies will go electronic in its operations. If this is the case, the question will remain on what will bring the difference. The answer to this question lies in the use of information technology innovatively. The business leaders should be focused on the electronic business models that will help the company in achieving its objectives. This means that the business leaders should find a way of using information technology in supporting the goals and objectives of the organization. This is a value beyond reduction of cost, generation of more revenue, and the use of information and communication technology in supporting the daily operations of the company. Effective use of information technology will help companies in achieving greater productivity in future. It is thus important for the resources of the organization to be focused on the technologies that will help the organization in meeting its goals and objectives (Bharadwaj and Soni, 2007).
It is important for the business leaders to understand that not all components of electronic business add value to the business. There are those components or technologies that work from the background to support the daily operations of the business. There are those components or technologies that contribute to the competitive advantage as well as enhance customer relations. All these technologies will continue to develop into the future. This means that it is important for business leaders to tell the different lest they invest in technologies and models that will lead to the failure of the business. It is important to have an understanding of the kind of electronic model to implement, when and where. It is therefore important to group the technologies or components according to their purpose in the business. This will be beneficial to the company in different ways. One of these ways is to increase operational efficiency. The other benefit is to improve the core value of the business. The second benefit will be achieved through the use of tools that enhance the core operations of the business (Bharadwaj and Soni, 2007).
Bharadwaj and Soni (2007) suggest that innovativeness will help companies in the future operations. This is by the use of electronic business models that are aimed at attaining innovative breakthrough to achieve competitiveness. By grouping the components of electronic business, business leaders will be in a position to manage then more effectively based on the kind of value they bring to the business. For example, the technologies in the operational-excellence category can be outsourced because they offer base services. Through concentrating on innovation, businesses are able to add innovative business capabilities as well as save a lot in terms of operational costs. Companies will also be able to benefit from standardized package and business processes. Businesses that are embracing electronic business innovatively will also be in a better position to manage future merger and acquisitions. E-commerce will be a significant factor for companies to shift from product to customer-focused strategies. Equipped with analytical tools, optimized processes and effective IT infrastructure companies will be able to gain leading service and cost places in the market. Use of electronic commerce to add value to the company should be the major focus in the future of businesses (Lior, 2005).
From the discussion, it has emerged that there is an increase in the use of computers and the internet in business operations. This is a major trend in all parts of the world. This is the idea behind electronic business or e-business. This concept has been defined as the use of information communication technologies in conducting business. E-business entails the management of business processes internally as well as the management of external processes. There are various activities that are included in the electronic business strategy. They are such activities as trading in products and services, e-retailing, website marketing and online communication among others. Various benefits of using e-business have emerged in the discussion. Improvement of customer relationships is one of the benefits of using this kind of business strategy. Others include reduction in cost, enhanced communications with customers and other stakeholders, enhance management of information, enhanced decision making, and improvement of marketing capabilities among others. The future of the world of business will see increased use of information and communication technology. More and more companies will implement electronic business. However, the use of these technologies innovatively will make all the difference.
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