The Challenges of E-business - Term Paper Example

Outline In the modern times, electronic commerce has gained significant importance in every sector of business and is an essential element of businesses these days. This paper discusses how e-businesses have taken over the traditional businesses and how the technological developments have affected the supply chain and the customer’s demands. Further, it also discusses the challenges faced by e-business at organizational and global levels. Introduction E-business is a broader area of E-commerce which doesn’t deal in buying and selling of things only but also facilitates customer relationships, supplier’s relationships and transactions within the organization. New technologies have been introduced through e-commerce to give a wider exposure and innovate new ways of conducting businesses, which has introduced a new dimension in technology known as E-business. E-business’s presence is important for expansion in business, dissemination of information and access to physically inaccessible markets. In today’s dynamic world, companies spent heavily on their IT departments for the technical support to smoothly run their e-commerce activities. Companies even develop strategies through e-business to reduce cost of the business, expand sales and increase customer services and satisfaction in the long run. E-business is widely used for many business purposes like product research, order entry; customer’s related matters like support, services, communication, inquiry, invoicing etc., outbound and inbound logistics. E-commerce has revolutionized not only businesses but every aspect of life; the world is now a click away. (Ray, 3) Challenge from the Competitor in E-Business Environment including Supply Chain Due to increased e-business services and advancement in IT related matters, competition has geared up in every sector tremendously. Nowadays, competition has intensified due to e-business activity like business to business (B2B) or business to consumer (B2C) transactions or transactions that incur after sale. These facilities and easiness to conduct business has caused cost efficiency which has attracted more competition in every sector. Increased Competition Due to Low Entry Barriers Due to tremendous benefits offered by the e-business, the competition has increased, which has affected business in many ways. The e-business has lowered market entry barriers and it is now comparatively very easy to enter business than it was previously. Initially, large investments and established contacts were needed to start up a business which is now replaced by easy entry in to the markets which is now a click away. This has made competition severe and is a threat to many established business. The internet as a medium to exchange information has made customers close to the businesses which has brought great challenges to the existing businesses. Now there is a continuous threat to every business that another business established in no time can take away its customers. Thirdly, globalization has added to the increasing competition. Internet allows the customers to exchange information anywhere in the world, which has made the businesses of the world compete with each other. (United Nations, 142) Continuous Cost Reduction Due to e-business, the markets now seem to be more of a perfect market where there are many competitors striving to gain their positions. In such a market, cost leaders prevail. Due to closed links of customers and suppliers in the supply chain, cost reduction is an achievable task in today’s business and many business strategies are based on this. In this cost reduction race, every business has to continuously work on its cost reduction strategies in order to compete effectively. Secondly, the transaction costs are reduced for the customers due to extensive information available over the internet. This also puts up a pressure on the businesses to increase their presence over the internet. (United Nations, 143; Qui, 361) Continuous Improvement in Product Development Unlike the traditional businesses, the e-businesses (B2C) offer wide range of products to its customers. It not only allows them to pick up products already available over the internet, but also allows them to design and specify their own product. This feature of the e-businesses has put up a lot of pressure on other businesses which are constantly trying to improve their customer base. Businesses, like Nike and Dell, have benefited from this feature of e-business and have created increased competition for its competitors. The implementation of this feature also requires close links in the supply chain and process reengineering to deliver the right product on the right time to the customers which is another challenge to the businesses. The need to manage cost and at the same time be customer oriented is one the biggest challenges of business today. (Qui, 360-361) Global Challenges to E-Businesses Business execution is already difficult when it is being conducted globally. Similarly, e-business has equal level of challenges to face when it operates. Due to its presence in internet, most of the e-businesses operate globally, which creates many cultural, geographical, economical and political challenges to the e-businesses due to their differences in geographical regions. Every business needs to take into account these challenges when formulating a global e-business strategy. Political Challenges Conducting global e-business can be a daunting challenge to the businesses. Political conditions in every country vary and so do the laws operative in that country. In some countries, there is a limitation on exchanging specific information outside their county. In few counties, there are certain conditions, for instance, the business has to spend a certain portion of their revenue within their county. Trade agreements and trading conditions between few countries prohibit trade between certain regions. These issues cause problems to the e-businesses and become a hurdle in smooth running of their operations. (O'Brien, 435) Geo-economic Challenges Geo-economic challenges refer to problems caused by differences in the geographical regions and the differences in the economies prevailing in different regions of the world. Geo-economic challenges need to be given special attention when conducting an e-business. Even after such advancement in technology and mediums of communication, travelling and delivery of goods still take more time than expected. If a system problem arises or an urgent delivery is required in a far away region, it will be a problem to cater it on time. Secondly, difference in the time all around the world can be a great barrier and challenge for the e-businesses. Thirdly, in few developing countries the quality of required resources to conduct an e-business like telecommunication, internet isn’t available. Additionally, in some manufacturing businesses which operate through e-business, the company might not be able to find the required labour, material and facilities to conduct business properly; simultaneously, the cost of these components also differs in various regions. (O'Brien, 435) Cultural Challenges Cultural challenges arise in e-business when the company operates in different regions and the differences are found in culture, language, work ethics, social attitudes, religions and philosophies of life. This problem isn’t only associated with the management of the company but these challenges are also faced with the customers who operate in different regions and belongs to different cultures. Many companies have addressed the problem of difference of languages by making their websites available in many languages. However, this is still a challenge as it is impossible to offer a website in all existing languages. There is another problem of difference in taste of the people of different cultures; products offered in one region might not be liked in another. Similarly, religious beliefs of people also affect the acceptability of the product. (O'Brien, 435; Milutinovic? & Patricelli, 131) The Customers- Challenges and how Emerging Technology Can Satisfy Expectation from the Customer For a business, the centre of attention is its customer. Every business’s motive is to satisfy and retain its customer for a long term. In today’s competitive world, the businesses are finding it hard to retain their customers. Due to almost nil switching cost and variety of options, customers now own great power not only to bargain the prices but also to get the best quality in minimal price. With the introduction of e-business and increased globalization, the customers keep the businesses on their toes to provide the best services in lowest prices. Increased Need to Understand Customers The biggest advantage that e-business has provided to the businesses is the increased interactivity that it has caused between the customer and the businesses. It is now possible for the businesses to understand their customers and have firsthand knowledge of the needs and expectations of the customers. With the comfort brought by this feature, there is much awareness incurred in customers about catering of their needs and among the businesses too which has further intensified competition. The biggest challenges faced by e-businesses today while dealing with customers is to protect their information and provide relevant, reliable and accurate information on the website. (Bidgoli, 167-168) The Need for Customized Products With the increased awareness the customers are now more demanding than ever. Unlike the traditional way, the customers don’t settle down for anything. They don’t only demand for high quality products but the product should be according to their exact needs. This is a growing challenge for the businesses to understand the customer and offer products which result in customer satisfaction. This is somewhat achieved by the design of your own product feature introduced by e-businesses which allows customer to design their own product. This feature is implemented by Dell, Nike, and Hummer etc. (Bidgoli, 167; Canzer, 7) Global Access and Availability In order to satisfy customers, the businesses need to be more accessible to customers. To increase the customers base, the businesses need to target global markets. The customer also demands the business to be accessible at anytime and anywhere. This challenge is also addressed by the e-businesses which have made it possible to attend any customer anywhere in the world and at anytime. (Bidgoli, 167; Canzer, 7) Conclusion E-businesses face continuous challenges from the upward and downward supply chain along with the environment in which they operate. The businesses are required to link their supply chain more closely and the sharing of information throughout the supply chain should be easy. The businesses need to work on process engineering and reduce cost wherever possible to compete with their competitors. Additionally, the company should work closely with their customers and understand their needs and expectations by inquiring about their services and ways to improve. The e-businesses sell their products through websites which is the medium to interact with the customers. Many challenges can be dealt with the improvements of these sites like making the website available in the native languages of the region, by providing accurate and relevant information to the customer that forces him to make a transaction, by adhering to strict privacy and security policies for the customers etc. E-business has given new dimension to the ways of doing business, satisfying customers and increasing profitability margins. Works Cited Bidgoli, Hossein. The Internet Encyclopedia. Hoboken, N.J: John Wiley & Sons, 2004. Print. Canzer, Brahm. E-business: Strategic Thinking and Practice. Boston: Houghton Mifflin, 2003. Print. Milutinovic?, Veljko, and Frederic Patricelli. E-business and e-challenges. Amsterdam: IOS Press, 2002. Print. O'Brien, James A. Introduction to Information Systems. Burr Ridge, Ill: Irwin, 1993. Print. Ray, Pradeep. Integrated Management from E-Business Perspective: Concepts, Architectures, and Methodologies. New York: Kluwer Academic/Plenum Publishers, 2003. Print. Qui, Robin G. Enterprise Service Computing: From Concept to Deployment. Hershey, PA: Idea Group Pub, 2007. Web. Services in Transition Economies: Round Table Held on 13 June 2001, at the Palais Des Nations, Geneva (Switzerland). Geneva: United Nations, 2001. Print. Read More