E-Business Solutions - Assignment Example

e-Business Solutions: Management Report By YOU YOUR ACADEMIC ORGANISATION HERE HERE e-Business Solutions: Management Report Introduction ACF Botanicals is a thriving, hypothetical bricks-and-mortar organisation in the United Kingdom specialising in the sale of various perfumes, colognes, body oils, and hair care products designed for the organically-minded consumer. Over the years, the company has witnessed only a 1% growth rate year for year, considerably less than that of strategic expectations. The company maintains several key competitors specialising in similar personal care products and, since 2005, ACF Botanicals has experienced a significant drop in its market share. The problem which exists at ACF is a failure to vault forward into the 21st Century and extend the company’s reach beyond simply the bricks-and-mortar mentality and incorporate elements of e-business as a means to experience growth and to outperform competition. The purpose of this management report is to identify several factors which will assist in developing an e-business strategy and allow ACF Botanicals the opportunity to appeal to a much wider consumer audience and make the company stand out in terms of excellence in both product and customer service. Why e-business solutions? In the retail industry, many company leaders offer the argument that e-business is inappropriate because the majority of customers prefer only the tangible retail experience (bricks-and-mortar) over that of any virtual shopping experience (Bracewell & Salter, 2008). Though there may certainly be a wide variety of customers who would prefer to experience, first-hand, the products offered by ACF, in today’s technologically-savvy Western culture, customers are demanding instantaneous results and the ease and convenience of online product ordering (Brown, 2007). In fact, there is evidence that the lone bricks-and-mortar philosophy is slowly being phased out and replaced with an electronic framework, with nearly 50% of Western businesses desiring to go completely virtual within the next few years (Bardill, 2007). This drive to move products online for ease of ordering would offer competitors a significant strategic advantage over ACF as they would be able to boost sales by reaching a much broader target audience through online e-business channels. This is something that ACF cannot afford with such a trivial growth rate that is currently being achieved by in-store product ordering. Moving toward an e-business philosophy does not require a significant cost to ACF and, in the event of a radical shift toward an electronic commerce model, most of the costs of integrating an e-business solution will be absorbed by increasing sales revenues. Hence, the first rationale for moving ACF Botanicals to an on-line sales presence requires a moderate organisational transformation. ACF must ask itself the following questions: Is the company’s current method of thinking and its vision congruent with long-term growth strategies? Would a change to an e-business model impact the behaviour of organisational members and how can this be overcome for a successful shift to e-business principles? What specific systems would be required to enhance the company and how can these new processes/systems be structured to fit the needs of ACF Botanicals? What costs would be associated and how complex should this e-business model be to the firm? These questions will be addressed in the following sections of this report so as to highlight the vital importance of proceeding to a change in the current ACF business model. A path toward growth There are several low-cost methods available to ACF for shifting to an e-business model, one of which involves the establishment of a customer-oriented website in which the business shifts from the in-store philosophy to online ordering. This can come in the form of both an informational and interactive website in which product information highlighting the organically-minded aspects of the company’s diverse product line as well as allowing for one-click product ordering. The benefit to ACF of this type of e-business solution is the ease of site construction, as a wide variety of web hosting companies offer these tools for self-construction at a very low cost, offering solutions for smaller companies looking to expand by maintaining a virtual presence without the necessity to contract high-priced web construction services. In many situations, such hosting sites provide all of the technology, graphics, animations and images necessary to build a powerful and eye-catching web presence which allows companies like ACF to customise their own website to the specific needs of the firm. The informational aspect of online websites provides information about the company and its products, allowing the customer to browse through the product selection available and become acquainted with the company’s product line. An interactive website, developed at low-cost, provides unlimited opportunities to connect with the target customer audience in which browsers can communicate and share information instantaneously (Turban, King, Viehland & Lee, 2007). Such sites allow for the addition of value-added tools including currency converters (so as to receive payments from global currencies), online surveys, and feedback forums to offer testimonials about ACF products to other browsing customers (Turban et al, 2007). The importance of an online web presence fulfills the strategic goal of growth for ACF by expanding beyond the UK sales environment and into global sales markets. Additionally, from a sales and marketing perspective, interactive and informational product websites (again, produced at very low cost) boosts the company’s visibility in broader market segments and provides customers with the satisfaction of understanding how other customers feel about their product purchases. This is an element of successful marketing which has been known to act as a catalyst for high volumes of customer purchases (Boone & Kurtz, 2007). With the purchase of a single desktop computer and a small, monthly invoice for web hosting services, ACF can instantaneously transform the company to an e-business leader in the botanical and organic personal care market environment. Further enhancing ACF’s growth expectations, maintaining an online website for ordering maintains the potential to alter current inventory-ordering procedures, avoiding the necessity to carry large (and costly) volumes of in-store merchandise. This is accomplished through a relatively simple strategic partnership or other agreement with various botanical vendors in which product can be shipped directly from the manufacturer on-demand, thus decreasing the company’s expenditures for multiple product transport directly from the vendor to the bricks-and-mortar facility. Customer service, another crucial element to establishing consumer loyalty and building a positive reputation for ACF Botanicals, is yet another element in which e-business can radically change the growth rate currently being experienced by the company. According to Barnes & Davison (2006), customer service ranks among the highest percentage of customer expectations when deciding to make future product purchases. A rather generic add-on feature to the interactive product website could include the addition of a sign-up mailer in which customers can quickly enter their personal information in which various coupons and special promotions can be sent directly to the customer’s registered e-mail, thus eliminating the need for special in-store flyers or other direct mailing advertisements which are currently costing ACF a significant amount in terms of marketing budget. This enhanced customer service feature will provide customers with a total service-oriented experience, bringing ACF to the forefront of consumer minds’ in terms of outstanding customer service and overall product value. The organisational improvement and transformation Because ACF is classified, technically, as a small business, labour costs are a tremendous issue in regards to profitability expectations. With the company currently open six days per week, it is necessary to house several salespersons to work on a 12 hour operating schedule as well as payments made to various managerial staff. The transformation to e-business could potentially eliminate excess salespersons and allow the company to operate on a 24/7 basis without the need for physical labour. In the near future, should the company experience significant sales growth with its new e-business model, the bricks-and-mortar stores could even be eliminated in favour of an electronic supply chain and online ordering model, allowing the company the opportunity to further omit costly leasing payments and in-store inventory storage and taxation. This small and low-cost change to electronic ordering maintains the opportunity to radically change the fixed costs within ACF and enhance profitability by a significant margin simply by moving the company to the Web. In a time where the economic stability of the nation is in crisis, eliminating various fixed and variable costs associated with the bricks-and-mortar facility is of paramount concern and the new e-business model can offer peace of mind that the business can continue to operate, on budget, through this financial emergency in the UK today. There are, however, several costs involved in transforming the organisation to an e-business model, one of which involves the training of various employees to think virtually. New systems will need to be created which allow in-store salespersons to adapt to online ordering guidelines, which will require a time investment on behalf of ACF leadership to ensure that all members of staff are equipped to handle both in-store and online shopping orders. However, the training investment will alter the behaviour of organisational staff, making the company stronger in terms of a more competent sales team who will be equipped to offer suggestions and solutions to complex business problems, generating a larger pool of ideas by which to improve ACF Botanicals as it shifts to an e-business mentality. In essence, ACF would be strengthened through these training exercises, making it more equipped to compete in the growing botanicals and personal care market. Currently, ACF senior leadership incur significant cost to the company to attend various business meetings in the UK and abroad. As leadership is aware, new product developments in botanicals as well as relationship-building with various product vendors requires extensive travel, impacting the operating budget. E-business solutions can virtually eliminate the costs associated with excess travel by establishing two-way interfaces with clients and customers abroad, taking the physical meeting environment and transforming it into a virtual initiative. In essence, the new e-business model allows for instant transfer of information regarding a new product and its advantages while still securing the positive relationship-building aspects of vendor-to-seller (Business to Business) interaction. Again, at a time where economic stability is of crucial importance, it is clear that the e-business model can secure long-term profitability and still allow ACF leadership to be in the know regarding changes to their product line. In terms of software, many of the aforementioned web hosting services maintain online interactive programmes which, with the click of a button, turn ACF offices into a virtual meeting environment at no additional cost to the firm. The e-business bottom line Currently, the only feedback received by ACF leadership involves in-store discussion about the product line. As mentioned previously in this report, customer feedback is an important element to securing the customer perception of service. However, it is crucial to ACF’s operating future to understand exactly what customers feel about various products. The establishment of a virtual discussion forum, an area where customers can post questions and comments, will allow ACF leadership the opportunity to gauge which of the company’s products are receiving poor recommendations, allowing these products to be quickly phased out of inventory and replaced with higher-quality products. Currently, ACF maintains a very high ratio of excess, unsold inventories, which is highly costly to the firm. In many instances, these products are simply disposed of with little explanation as to their unsold status. However, the addition of the e-business model would allow real-time discussion about product satisfaction, perhaps eliminating the invoice from multiple vendors who are delivering inferior product varieties. By understanding exactly what drives the customer in terms of personal satisfaction, the e-business model has provided the company with vital information to rapidly alter the product line it carries and save extensively on wasteful excess inventories. Further in terms of cost, e-business allows the company to take electronic payments which are instantly credited to the account of choice. ACF Botanicals currently relies on physical deposit which occurs on a daily basis, creating a delay between when the deposit posts and the funds become available for operating use. The e-business solution will, at very little cost, accept a wide variety of credit payments and guarantee that funds are available to ACF leadership in the event of any instant changes required of the company. This is a significant limitation facing ACF currently which has, historically, allowed the company to miss out on various sales and product promotions offered by vendors for bulk purchases due to lack of operating funds. This will offer ACF a strategic advantage over its other bricks-and-mortar competitors. It should also be recognized that ACF Botanicals currently does not maintain enough cash capital to expand the business into other areas of product sales due to its bricks-and-mortar limitations. For instance, ACF leadership has been investigating various business opportunities in the household cleaning product marketplace, however the company is limited by its lack of inventory storage space to begin this new business venture. E-business is the solution to expansion! Through the creation of a web presence, the company can establish an online, secondary business by which customers can place their orders and secure payment, completely avoiding the costs associated with the creation of a second bricks-and-mortar cleaning facility. Rather, through an initial contractual agreement with various vendors, the product can be shipped directly from the manufacturer but payment is made through the online website. Though this is only an example, it does tend to illustrate the vast opportunities that e-business can provide for rapid expansion and diversification of ACF Botanicals. Conclusion Clearly, e-business is the most viable solution for ACF in terms of profitability increases, streamlining of internal functions and labour-related issues, as well as creating a positive relationship with both domestic and foreign consumers. As was clearly indicated in this management report, ACF Botanicals simply cannot afford to remain in its current bricks-and-mortar business model but must quickly adopt an e-business model so as to secure long-term growth and expansion according to the company’s strategic goals. The business is currently operated on a strongly manual system of labour, cash receipts, customer service elements, and management-related expenditures which serves to cost the company a significant amount of its operating profit. The establishment of an e-business model will serve to radically redesign the business allowing it to achieve a more noticeable competitive advantage, boost the range of its sales strategies, appeal to a wider consumer audience, and overall create a new image of a modern and progressive botanicals business. During a time period where customers are being lured by the ease of online shopping and the convenience that such services provide, avoiding the transition to an e-business model will only serve to limit ACF, forcing the company to remain concerned about whether it can achieve longevity in a rapidly changing, electronic market environment. This is something that ACF cannot afford in this difficult economic climate and it is strongly urged that senior leadership consider this transition to an e-business model. All of the developmental tools necessary for this transition come at relatively low cost to the firm and these costs will be absorbed through the creation of a wider customer base. It is time for the revolution. Bibliography Bardill, Ann. (2008). “More than 50 percent of companies want to go completely virtual in the next five years”. Business and Finance Week. 14 Apr 2008: 670. Barnes, C. & Davison, R. (2006). Marketing Strategies for the 21st Century. Thomson South-Western: 109. Boone, L. & Kurtz, D. (2007). Contemporary Marketing. 12th ed. Thomson South-Western: 314. Bracewell, Victoria & Salter, Guy. (2008). “Web remains a world away for big brands”. Financial Times. 29 May 2008: 4. Brown, A. R. (2007). The Modern Consumer. Hamish Hamilton Publishers, Oxford: 88-89. Turban, E., King, D., Viehland, D. & Lee, J. (2007). Electronic Commerce: A Managerial Perspective. Prentice Hall: 116-117. Read More