How the Internet Is Changing Organisations, Porters Fourth Generic Strategy - Assignment Example

?2. Critically examine how the Internet (world wide web) is changing organisations and the business models they employ. The Internet is one of the most excellent demonstrations how technology revolutionizes and benefits business organisations. It is characterized by two important elements that are crucial in the success of a business organisation in pursuing its objectives in the modern times. First, it can drive its goal to create innovations and, finally, it is critical in gaining competitive advantage. The Internet connects people in a networked environment. The result is that numerous people are connected in such a way that they form a digital community wherein information can be relayed to Internet users and accessed by users immediately and simultaneously regardless of time and geographical locations. Because of this capability, the buying and selling of goods and services are expedited and streamlined. Producers and consumers could now directly transact with each other, making it possible to eliminate middlemen, in the process. This is called e-commerce or e-business and it could take the form of several models. The businesses that operates an internet business model primarily to establish and maintain relationships with other businesses is called B2B business model. Here, the emphasis is for the Internet to facilitate transactions between business organisations. For instance, there is the case of Dell, who manufacture computers according to specifications provided other business organisations. Through the Internet, sales transactions between the company and its corporate clients take place, beginning with the placement of order details, the manufacture according to the specifications and the delivery of goods. Pride, Hughes and Kapoor (2011, p.484) explained that in this B2B process, Dell reduces storage and carrying costs and avoids unsold inventory while consumers who directly transact with them eliminate costs associated with wholesalers and retailers. This latter aspect in the model receives more emphasis on the other business model called B2C or business to consumer model. Business organisations such as Amazon.com and Landsend.com are examples of companies using the B2C model. They primarily cater to individual consumers. In addition to product and service offering provided 24 hours every day and 7 days a week, B2C firms often attempt to build long-term relationships with their consumers (Pride, Hughes and Kapoor, p. 484). This is the reason why a core element in the online strategies of these organisations is customer services and extensive analysis of consumer data. The above models demonstrate how the Internet can provide innovations. The transactions that transpire over the web are electronically documented, which makes it easily organized and accessed for consumer analysis, market research among other initiatives to determine consumer behavior and needs. These data inform business organisations to create new and effective products that can be successfully marketed and sold to the market. The information gathered over the web could help address emergent consumers needs and requirements as well as solve problems and challenges. For example, back in 1990s, Wal-Mart introduced its Retail Link system, an integrated and store-shelf data made more powerful by the Internet in automatically triggering manufacturing orders to its suppliers when stocks were low (Wailgum, 2007, p.50). Since then, Wal-Mart was able to introduce pioneering systems in supply-chain management such as the evolution of its revolutionary point of sale system and the communication of information therein. The above variables are just some of the many instances wherein Internet contributes to the competitive advantage of a business organisation. The fact is that this technological breakthrough is a fundamental component in the manner by which it can create consumer value. Because of this platform, the organisation can respond immediately to problems and challenges in the trading process. In addition, the Internet is an integral part in the customer support capability of organisations. To say that the Internet is just an additional feature to any business organisation’s strategy is an understatement. This is because the Internet plays a crucial role in the business operations of organisations today. It is both a channel or platform and a tool. As depicted in the e-commerce models cited by this paper, firms are able to sell goods, market products and provide consumer assistance in conjunction to such activities. In addition, firms also tap the Internet in order to expand and maintain their consumer base as well as develop innovative and marketable products. Finally, the organisations are modifying their business strategies according to the Internet technology. For some, the transition is far reaching, with doing business in the Internet dominating business operations. Also some smaller companies have been set up and are able to hold their own and compete with bigger players. It is clear, hence, how the business landscape today, has been transformed into a more effective, fast and diverse ecosystem because of the Internet. 4- Porter’s fourth generic strategy is to achieve customer intimacy as a way of strengthening customer loyalty and setting the organisation apart from the competition. Evaluate how customer relationship management systems facilitate interaction. Customer Relationship Management Systems of simply referred to as CRM systems is a technology initiative that is designed to strengthen the front-end operations and build a mutually valuable long-term relationship with the customers (Sheth, Parvatiyar and Shainesh, 2001, pp.82). This is achieved by various initiatives that may include but are not limited to customer assistance centers, target marketing initiatives, among other operations that enable a business organisation to provide service and customer value as well as gather data about the consumers. These initiatives should already highlight how CRM systems could achieve for a firm its competitive advantage because they serve as the front liners that interact with consumers, leading to favorable relationship. The breadth of the capabilities and jurisdiction of the CRM system can be demonstrated in the following functionalities: sales, sales management, telemarketing/telesales, time management, customer service and support, marketing, executive information, enterprise resource planning (ERP) integration, data synchronization, e-commerce, and field service support (Segovia, Szczepaniak and Niedzwiedzinski, 2002, pp.83-84). The nature of these functionalities can further be understood according to three categories by which they may be classified: operational CRM, Analytical CRM and Collaborative CRM. Operational CRM pertains to the customer-facing applications that combine all relevant organisational operations such as those in the front, back and mobile offices. Analytical CRM is composed of the tools and applications that obtain data from consumer interactions. This category also includes the tools by which such data are analyzed. Finally, collaborative CRM are the services such as personalized publishing, email, communities, conferencing and Web-enabled customer interaction centers that facilitate interactions between the customer and the fir (Segovia, Szczepaniak and Niedzwiedzinski, pp.84). This last classification is the most obvious system that can facilitate interaction. This particular solution directly leads to interaction by bringing people together as well as processes and data in order for companies to respond to consumer needs, create value for them, and, ultimately, gain their loyalty in the end. Indeed, a study was able to identify several benefits of collaborative CRM and these include: 1) efficient productive customer interactions across all communication channels; 2) it enables web collaboration to reduce consumer service cost; 3) it allows for a multi-channel personal customer interaction; and, 4) it provides a view of the customer during interaction at the transaction level (Shanmugasundaram, 2008, pp. 133). One needs to consider how studies have shown that it costs as much five times to acquire a new customer than to retain one and that customer vary in their contributions to the profitability of an organisation (Sheth, Parvatiyar and Shainesh, pp. 82). These two variables are addressed by CRM systems in two fundamental ways. The first is that the system integrates all front-end operations so that the consumers only have one contact point with the organisation. Say, a client requesting for assistance for a product he purchased will only have to call or talk with one person or department instead of being faced with numerous contacts for different aspects of the assistance required. The second and equally important both for the consumers and the organisation is the capability of CRMS to obtain data from consumers. For every contact with the client in addition to purchases, all transactions are documented and stored to be used for many purposes. For example, once the consumer talked with the front-end contact point – the one requesting for assistance – the consumer’s concern was logged in into the system so that the organisation remembers the interaction, which would then help and inform responses to similar and related requests or interactions in the future. It is easier, hence, to understand how CRM is fundamentally geared to cover interaction, those instances when the consumer and the organisation are able to contribute to each other’s experiences resulting to a positive outcome and relationship. Based on the different functionalities of CRM systems as well as its three main classifications, an organisation could formulate its own system, which focuses on specific aspects. For example, a company could emphasize the information exchange, interpersonal exchange and so forth. The idea is to come up with a solution that is congruent to specific organisational objectives. Out of all these, two important commonalities emerge in good and effective CRM systems: the improvement of customer service and the creation of value through the series of interactions that pass through the system. These two variables underscore how CRM systems – in the context of its aim and functionalities – rely on a two-way transactional relationship. Also, it highlights that emphasis given to the role of the consumer. Finally, they also point to the critical requirement of gathering knowledge so that the consumers’ wants and preferences are better addressed. These are the reasons why a CRM system – with the way it facilitates interaction – can lead to competitive advantage. References Pride, W., Hughes, R. and Kapoor, J., 2011. Business. New York: Cengage Learning. Segovia, J., Szczepaniak, P. and Niedzwiedzinski, M., 2002. E-Commerce and Intelligent Methods. Berlin: Springer. Sheth, J., Parvatiyar, A. and Shaines, G., 2001. Customer Relationship Management: Emerging Concepts, Tools, and Applications. New Delhi: Tata McGraw-Hill Education. Shanmugasundaram, S., 2008. Customer Relationship Management: Modern Trends And Perspectives. New Delhi: Prentice Hall. Wailgum, T., "How Wal-Mart Lost its IT Mojo". CIO. (21)3. Read More