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e-business

Many firms now see developing e-business as a key part of their business strategy.

Definitions

E-commerce is described as 'all electronically mediated information exchanges between an organisation and its external stakeholders'. An e-commerce transaction can thus be considered from two perspectives.

 E-business has been defined as the transformation of key business processes through the use of internet technologies.

So, e-commerce is a subset of e-business. The most generic description of e-commerce is trading on the internet, buying and selling products and services online.

Porter

Porter suggested three ways in which IS/IT in general can affect the competitive environment and an organisation's ability to compete.Though these points apply to IS/IT in general, they are particularly important when considering e-business.

  • New businesses might become possible. For example, auction sites and photo-album sites.
  • The industry structure can be changed. For example, in the music business it can be argued that the large CD publishers have less power because music can be self-published on the internet.
  • IS/IT can provide an organisation with competitive advantage by providing new ways of operating. For example, airlines save money by encouraging internet bookings.

Different types of e-business

Categories of e-business

The categories of e-business functions are shown below:

  • B2B (business to business). For example, a supermarket IS system automatically placing orders into suppliers' IS systems.
  • B2C (business to consumer). Selling over the internet - books, flights, music, etc.
  • C2B (consumer to business). Some internet sites display a selection of suppliers' offerings from which the user can choose. A model that largely depends on the internet.
  • C2C (consumer to consumer). Auction sites, such as ebay, putting consumers in touch with each other. Amazon does the same by offering second-hand books. This model largely depends on the internet.
  • 'Buy side' e-commerce focuses on transactions between a purchasing organisation and its suppliers.
  • 'Sell side' e-commerce focuses on transactions between a purchasing organisation and its customers.

The stages of e-business

The stages of e-business can be described as:

This model helps businesses to understand where they are in the process of e-business, and this will help them to decide where to go next with further development.

Pros and cons of e-business

Benefits of e-business

Most companies employ e-business to achieve the following:

  • Cost reduction - e.g. lower overheads, cheaper procurement
  • Increased revenue - e.g. online sales, better CRM
  • Better information for control - e.g. monitoring website sales
  • Increased visibility
  • Enhanced customer service - e.g. via extranets
  • Improved marketing - e.g. e-mailing customers with special offers
  • Market penetration - e.g. even small suppliers can gain a global presence via the internet
  • The combination of the above should be to enhance the company's competitive advantage

Barriers to e-business

Barriers to e-business can be seen in both the organisation itself and in its suppliers and customers. They include:

  • Technophobia. Senior managers are distrustful and sceptical about the alleged benefits of e-business
  • Security concerns about hackers and electronic fraud
  • Set-up costs. Simple, static pages are cheap to set up, but dynamic pages, linking to e-commerce systems and databases, with impressive design values are expensive to set up
  • Running costs. Renting space on a web-server. Also, maintenance of websites is very important as most users are very unforgiving about out-of-date sites. Updating, say with special offers, is also needed to encourage return visits, perhaps linked to email campaigns
  • Limited opportunities to exploit e-business. Some businesses (such as selling books) are more suitable for e-business than others (such as selling carpets)
  • Limited IT resources in house (e.g. a lack of staff skills creating staff resistance) so recruitment is needed or all development and maintenance has to be sub-contracted
  • Customers not likely to be interested in e-business (e.g. firms targeting retired pensioners).

Further detail

 Two key areas where IT/IS have impacted firms are supply chain management and customer relationship management. Click on the above links to explore these concepts in more detail.

Created at 10/10/2012 10:57 AM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London
Last modified at 9/11/2013 12:21 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London

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ACCAPEDIA - e business