Table of Contents:
Introduction………………………………………………………………………………………..3
Definition………………………………………………………………………………………….3
Review…………………………………………………………………………………………….4
Impact of e-business………………………………………………………………………………6
The future of e-commerce………………………………………………………………………..12
Conclusion……………………………………………………………………………………….14
References………………………………………………………………………………………..16
Introduction
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).
Definition
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).
Review
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).
Conclusion
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.
References:
Beynon-Davies, P. (2004). E-Business. Hampshire RG: Palgrave.
Bharadwaj, P. N. & Soni, R. G.
(2007). E-Commerce Usage and Perception of E-Commerce
Issues among Small
Firms: Results and Implications from an Empirical Study, Journal of Small Business Management 45 (4) 501+.
Blais, S. (2011). Business
Analysis: Best Practices for Success. New York: John Wiley & Sons.
Duray, D. & Vering, M. (2001). The E-Business Workplace: Discovering the
Power of
Enterprise Portals, Malden MA:
Wiley
Lior, A. (2005). Understanding the
Fatal Mistakes. Passionate and Profitable. New York: John
Wiley & Sons, Inc.
Potter, M. 2011, Tesco to Outspace Growth at Global Rivals-Study, Reuters. Retrieved on
September 1, 2011 from http://www.reuters.com/article/2011/02/17/tesco-igd-idUSLDE71F1LR20110217
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