E-commerce Organisations - Business Strategy - Case Study Example

E-commerce Organisations - Business Strategy Table of Contents Description of e-commerce organisations 3 Evaluation of each organisation’s business strategy 4 Strategic Environment Analysis 4 PESTLE Analysis 4 Critical Success Factors 8 Business Strategies 9 Business Strategy of HP 9 Business Strategy of PC World 9 Business Strategy of Comet 10 Rationale of evaluation criteria and form designs 11 Form for evaluating e-commerce service 13 Efficiency 14 User friendliness 15 Maintainability 15 Implementation of feasibility 15 Profitability 15 Involvement capacity 15 Functionality 15 Security 16 Trustworthiness 16 Content adequacy 16 Readability 16 Ease of manipulation 16 Form for evaluating legal and ethical standards 16 Privacy 17 Intellectual property 17 Free speech 17 Customer and merchant protection 17 Comparative analysis of evaluations and recommendations 18 Bibliography 20 Appendix 22 Description of e-commerce organisations HP (http://www8.hp.com/uk/en/home.html) HP was founded by two students of Stanford University Bill Hewlett and Dave Packard in 1939. ). The company is a clicks and mortar company. The first produced product of HP was an audio oscillator which was a Palo Alto garage and Walt Disney Studio was the first customer which bought eight oscillators (HP Website). Today HP is the market leader in computer industry and it has beaten Dell in second quarter of 2009 in the United States (Electronista, 2010). Appendix I shows that in 4Q of 2009, HP has the largest number of shipments both in worldwide and in the United States. PC World (http://www.pcworld.co.uk/gbuk/index.html) PC World was founded in 1990s and today it is one of the largest chains of mass market computer superstores in the UK and operates under the umbrella of parent company Dixons Retail PLC (Dixonsretail). The company is a clicks and mortar company. With the emergence of ecommerce technology, the parent company Dixon introduced online websites for ‘Dixon’, ‘The Link’, ‘Currys’ and ‘PC World’. The website has been always offering new offers to customers such as company launched Collect@Store services through which customers can collect the product from a local store which they reserve online. The company also issued its magazine to offer information on its own-in-store technology. Moreover, in 2007, PC World won Retail Week Awards Product Innovation of the Year for data recovery and also got nominated for Speciality retailer of the year category (Dixonsretail). The annual report 2009-2010 of Dixonretails shows that sales from UK and Ireland division (from PC World) were the highest at £4,013.5m. Comet (http://press.comet.co.uk/index.php?cID=12) Comet is a chain of 248 stores in the UK and offers electrical products to the customers both through stores and online (Comet). The company aims to offer best service, best choice and best price and in consideration to this, every week the company evaluates the thousands of websites of its competitors to remain price competitive. Being a click and mortar company Comet offers convenience shopping to its customers. The retail profit of company in 2010 is £11.5million as compared to £10.1million in 2009 however, this retail profit is still low because in 2008 and 2007 company generated £44.2m and £46.1million (Comet, 2010). Evaluation of each organisation’s business strategy Strategic Environment Analysis In this section as a part of strategic environment analysis, PESTLE analysis has been done to summarise the impact of external environment on businesses of three companies and to evaluate how the companies respond and come up with specific business strategies. Moreover, in an online business the risks and concerns increase because of complexity of work and exposure to diverse environment. PESTLE Analysis 1. Political To control cyber crimes, government influence in ecommerce industry has increased and laws have been defined at federal, local and state level. The websites which have geographically diverse operations have to follow foreign laws as well Political relations between the states where the firms are operating also influence their operations HP HP has its manufacturing in Taiwan for laptops and net books and assembly in Asia (HP Annual report, 2009) and labour laws, diverse workforce, industry standards, tax systems affect HP business PC World Corporate responsibility committee and compliance committee to meet government policy needs Comet UK government asked leading electrical retailers to take off least energy efficient TV off the shelves and Comet was one of the retailers (Comet, 2010) 2. Economic Economic weakness and environment uncertainty has affected the financial performance of HP such as inventory management, revenues etc. Declining consumer and business confidence, decreasing access to credit, increasing unemployment and reducing consumer spending has also affected operations of HP HP Ensuring right forecast has become difficult for HP however, to reduce economic uncertainty, company focuses on historical forecasts. However, currency exchange rates, interest rates etc impact HP PC World Finance and executive committee regularly review portfolio of business In 2008, defined Renewal and Transformation plan of business (Dixonretails, 2010) Comet Revenues of company have severely affected during the global financial crisis 3. Social Changing social patterns Changing living styles Changes in income patterns HP Company believes that its revenues will be affected negatively if customers’ expectations are not met; therefore, new products are developed to meet their needs PC World Monitor mystery shopping, collects customer exist data and purchase data for analysis FIVES customer service training for all staff Continuous innovation Easy navigation on website (Dixonretails, 2009) Comet Customer oriented operations as evident from business strategy so that needs of customers could be met 4. Technological The technological developments and their trends are particularly high in this industry The increasing demand of technology is offering more and more opportunities to companies operating in this industry HP The business strategy of HP focuses on designing and manufacturing products which are according to latest trends in technology and changing needs and desires of the customers To meet the changing the needs of customers, a significant amount is being spent on research and development by HP. In 2007, 2008 and 2009, HP spent $3.6 billion, $3.5 billion and $2.8 billion on research and development (HP Annual Report, 2009) PC World Good supplier relationship such as partner with Apple iPads (Dixonretails, 2009) Store transformation and new tech in processes Emphasis on ecommerce Comet Online services, phone services and chat services Focus on ecommerce 5. Legal A strong legislature framework has been defined for the companies operating in this industry The legislature usually covers laws related to manufacturing and use of technology and impact both the operational and financial performance of companies HP Product take-back legislation has the potential to have significant impact of HP operations In some countries proprietary rights are not as protected as in the U.S. which impacts HP competitive position in such jurisdictions PC World In-house legal teams Group ethical conduct policy Quality checks to meet legal needs (Dixonretails, 2009) Comet Follows all legal formalities as evident from the actions of taking least efficient TVs off shelves 6. Environmental Liability of HP and other related companies to environmental regulations increases their environmental costs Restrictions on use of few hazardous substances in electronic products increase material capital expenses HP The operations and activities of HP are with respect to federal, state, local and foreign laws. The environmental laws which have become an important part of HP’s business strategy include discharge of pollutants in environment, disposal of harmful materials and cleaning up of operations site of the company (HP Annual Report, 2009). When using chemical, the laws related to manufacturing, distribution of chemicals and laws related to restricted use of certain chemicals, are carefully observed. PC World CSR Committee meets regularly to fulfil environmental challenges (Dixonretails, 2009) Comet Charity partner with Cancer Research UK Recycle 400,000 products a year (Comet, 2010) Critical Success Factors Based on PESTLE analysis, I have analysed following critical success factors. Innovations and developments which can meet needs of customers Customer loyalty To practice legal and ethical policies to ensure compliance to government policies and to offer security and protection to users Strong financial position and market leadership to cope with weak economic conditions Business Strategies Business Strategy of HP HP has set some corporate objectives based on which the organisation is seeking to improve its performance and efficiency. These objectives have supported the organisation to conduct its business since 1957 when the founders of the company defined its corporate objectives (HP UK Website). Before evaluating the strategy of the company, it is very important to consider the major focus of corporate objectives of company. The business strategy of HP covers all the critical success factors therefore, HP strategy is very effective. Business Strategy of PC World PC World is a brand of Dixons Retail and it shares the same business strategy, which Dixon Retail has defined for all of it brands. The current business strategy has been proposed on 15 May 2008 as a five action plan to renew and transform business (Dixons Retail). The business strategy of company covers all critical success factors, which also reflect the strength of company’s business strategy. Business Strategy of Comet Comet’s business strategy is customer focused and company considers it as best way to compete with its competitors. To ensure ‘best price’ thousands of competitors are evaluated in every week by the company. To ensure ‘best choice’ the company is offering its products through its stores, click and collected service, phone service and click and chat service (Comet). The business strategy of company is very vague and reflects customer orientation. Moreover, it only has one critical success factor in common and that is customer orientation. Rationale of evaluation criteria and form designs Evaluation and analysis of ecommerce websites is being conducted by not only the websites themselves but users, academicians, competing websites and ecommerce authorities have also been evaluating websites. Albuquerque and Belchior have proposed a qualitative evaluation methodology through which the quality of ecommerce websites can be evaluated. Their methodology is also based on literature and significance of factors for website analysis. El-Aleem, El-Wahed, Ismail and Torkey (2005) has also defined the website measurement factors. The website measurement factors they have proposed include performance, usability, design & maintenance, web technology employed, user transaction, content updates and security. The analytical structure proposed by has two major perspectives including e-marketing evaluation and e-quality evaluation. The evaluation factors for e-marketing perspective of website include price, place, product and promotion whereas; the e-quality determinants include information quality, service quality and system quality (Wen-Hsien, Jun-Der & Wen-Chin, 2009). The quality criteria for best website award has been categorised into five groups include functionality (20 percent), design (20 percent), content (20 percent), originality (20 percent) and professionalism and effectiveness (20 percent) (World Best Websites). There are various other models and criteria that have been previously defined to analyse the evaluate ecommerce websites. Out of all the models that have been mentioned in the literature review, I have found the model proposed by Albuquerque and Belchior as most suitable for this research report. The first reason because of which I have selected this model is that it almost covers all the major attributes of a website. Secondly, the criterion also matches with the criterion defined for the title of Best World Website. Thirdly, analysing the three selected websites in consideration to the mentioned criteria is also possible and easier. In order to analyse the legal and ethical aspects of the selected ecommerce websites, the research methodologies and criteria of early researchers have been evaluated. Mason et al (cited in Mackrodt, 2004) has identified few aspects which can be used to analyse the ethical and legal aspects of ecommerce websites and these determinants include privacy, intellectual property rights, free speech, censorship, and protection of consumers and merchants against fraud. In the academic notes published at ECIS website, the major legal and ethical aspects of the ecommerce websites have been highlighted including privacy, individual property rights, taxation, free speech, computer crimes, consumer protection and others. Some other research studies have also been evaluated however, more or less the same criteria has been used. Therefore, the factors based on which the legal and ethical behaviour of the three selected ecommerce websites will be evaluated include privacy, intellectual property rights, free speech and consumer and merchants protection. These factors usually cover major ethical and legal aspects necessary for ecommerce websites. In both forms, a scale has been used, through which each feature of the website will be rated from 1 to 5 where 1 is strongly disagree and 5 is strongly agree. The averages of all main factors will be used to determine in competitive position of each website through competitive matrix. Form for evaluating e-commerce service In the given scale, 5 represents strongly agree (SA), 4 represents Agree (A), 3 represents neither agree nor disagree (N), 2 represents disagree (D) and 1 represents strongly disagree (SD). Efficiency SA A N D SD HP PC World Comet Graphic generation speed is higher 5 4 3 2 1 5 5 4 Page generation speed is good 5 4 3 2 1 5 5 4 Purchase process performance is excellent 5 4 3 2 1 4 4 2 User Friendliness (Appendix V) Understandability is good for an average person 5 4 3 2 1 5 5 1 Undo facilities are available 5 4 3 2 1 4 4 4 Business rules are available on website 5 4 3 2 1 5 4 2 Production information is available 5 4 3 2 1 5 5 5 Site is easily accessible 5 4 3 2 1 5 5 5 Website interactivity is good 5 4 3 2 1 5 5 4 Information localizability is possible 5 4 3 2 1 5 4 2 Communication facilities are available 5 4 3 2 1 5 5 4 Help and support service is available 5 4 3 2 1 5 5 4 Product comparisons are available 5 4 3 2 1 2 4 5 Multilingual communication is possible 5 4 3 2 1 5 2 2 Downloading is available 5 4 3 2 1 2 2 2 Shopping cart is available 5 4 3 2 1 5 5 5 Printing can be done 5 4 3 2 1 5 5 5 Navigability Security information is available 5 4 3 2 1 5 5 5 Links visibility is high 5 4 3 2 1 5 5 1 Link visualisation consistency is significant 5 4 3 2 1 5 5 1 Shortcuts are available 5 4 3 2 1 5 5 4 Alternative paths to navigate pages are available 5 4 3 2 1 5 4 4 Maintainability Website is upgraded regularly 5 4 3 2 1 5 5 5 Implementation of feasibility Legal feasibility is good 5 4 3 2 1 5 5 4 Market feasibility is good 5 4 3 2 1 5 5 2 Economic feasibility is good 5 4 3 2 1 5 5 4 Human resource feasibility is good 5 4 3 2 1 5 5 4 Financial feasibility is good 5 4 3 2 1 5 5 4 Technology feasibility is good 5 4 3 2 1 5 5 4 Social feasibility is good 5 4 3 2 1 4 4 4 Profitability Lucrative website 5 4 3 2 1 5 4 2 Competitiveness is high 5 4 3 2 1 5 5 2 Marketing value is high 5 4 3 2 1 5 5 2 Involvement Capacity Website design is very attractive 5 4 3 2 1 5 5 1 Website has aesthetic attributes 5 4 3 2 1 5 4 1 Client profile identification is possible 5 4 3 2 1 3 3 3 Functionality The information available is accurate 5 4 3 2 1 5 5 5 Client support is available 5 4 3 2 1 5 5 5 Information on product delivery is available 5 4 3 2 1 5 5 5 Security Website ensures payment systems security 5 4 3 2 1 5 5 5 Site authenticity is acceptable 5 4 3 2 1 5 5 5 Confidentiality is ensured 5 4 3 2 1 5 5 5 Privacy is ensured 5 4 3 2 1 5 5 5 Clients authentication is done 5 4 3 2 1 5 5 5 Trustworthiness Completeness 5 4 3 2 1 5 5 5 Correctness 5 4 3 2 1 5 5 5 Content Adequacy Updated content is available 5 4 3 2 1 5 5 4 Concise content is available 5 4 3 2 1 5 5 4 Website is user oriented 5 4 3 2 1 5 5 4 Readability Language correctness 5 4 3 2 1 5 5 4 Clarity 5 4 3 2 1 5 5 2 Uniformity in terminology 5 4 3 2 1 5 5 5 Style uniformity 5 4 3 2 1 5 5 5 Ease of Manipulation Documentation is available 5 4 3 2 1 3 3 3 Website structure is good 5 4 3 2 1 5 5 1 Ability to trace 5 4 3 2 1 5 4 1 In the following section, the analysis of websites has been done based on which they have been scored. Moreover, strengths and weakness of ecommerce websites has been also highlighted. Efficiency Efficiency scoring has been given based on the time taken by each website and the time each website took to upload its graphics. Comet website took more uploading time because of a number of pictures and graphics in hone page. The purchase process has been evaluated based on the steps involved in purchasing online. It has been noticed that purchasing steps and process of HP and PC World was easier whereas, Comet has also defined a simple purchasing process however; most of the links of shortcuts were down. User friendliness Understandability of websites have not been analysed as an absolute factors but relative to each other. Comet website does not have a good understanding for an average person relative to other websites. Moreover, support services, printing and other factors have been evaluated through the home pages in the appendix. Downloading feature is not offered by any of the website as content has been displayed on web pages. Multilingual is only offered by HP because it is an international company. Navigability Many of the Comet’s links are not visible or hidden behind the graphics whereas, navigability of HP and PC World is good. Maintainability All websites have updated and latest information. Implementation of feasibility Through PESTLE analysis, the factors of this section have been rated and Comet’s market feasibly is not found very well. Profitability The rating has been given based on the first assumption which a visitor can make. Because of less understand ability, colour appeal and overall less relative competitiveness have rated Comet less on profitability scale. Involvement capacity The simplicity and very easy navigation and simple structure of HP have given HP good rating on this scale. However, because of lack of access to information that whether client profile can be identified or not neutral rating has been given. Functionality All websites are offering support services to clients and the information available is accurate and product delivery information is also available. Security All websites have defined good security systems and the security policies have been also defined clearly by all three websites Trustworthiness On overall correctness and completeness all websites have scored equal rates because they are all offering all required features. Content adequacy All websites have updated, concise and user oriented content. However, Comet has been rated on ‘Agree’ scale rather than ‘Strongly Agree’ because of an element of verbosity. Readability Clarity of Comet is very low as compared to HP which is very simple and straightforward website. All other factors of readability are good for three websites. Ease of manipulation As compared to other two websites, Comet websites structure is not very good and against the business strategy of company which only focuses on customer orientation. On the home page, rather than giving a view of what the company is offering, the ways to purchase products are more highlighted. Moreover, because of a number of page views have to be done to access a link, ability to trace is also low for Comet. Form for evaluating legal and ethical standards Privacy 5 4 3 2 1 HP PC World Comet Information privacy of visitors is absolute 5 4 3 2 1 5 5 5 Ecommerce website is using ethical ways to collect users data 5 4 3 2 1 5 5 5 Site is registered 5 4 3 2 1 5 5 5 Customer is made aware of the fact that his/her information is being collected 5 4 3 2 1 5 5 5 Consumers consent is taken on information collected 5 4 3 2 1 5 5 5 Consumers are assured that data collected from them is secure 5 4 3 2 1 5 5 5 Consumer can access and challenge information 5 4 3 2 1 2 2 2 Government legislations are being followed 5 4 3 2 1 5 5 5 Intellectual Property The content of the website if copyrighted 5 4 3 2 1 5 5 5 The trademarks of the websites are its own intellectual property 5 4 3 2 1 5 5 5 Free Speech The website is follows censorship rules and control published material 5 4 3 2 1 5 5 5 Customer and Merchants Protection All legal contracts made with customers are being fulfilled 5 4 3 2 1 5 5 5 Privacy The three websites have clearly defined their privacy policy and all factors have been rated accordingly. All websites are registered, takes responsibility of information collected from users and follow legal framework. Intellectual property The three websites have copyrighted material and have their own intellectual property. Free speech Any material which is against the censorship policy is not available on any of the three websites. Customer and merchant protection The three websites protect and save the interest of both the merchants and customers. Comparative analysis of evaluations and recommendations The competitive matrix compares the competitive position of three ecommerce websites based on their website features. The factors have been selected based on the information from two forms. The weights have been given based on the assumed important of each factor. User friendliness, navigability and security are considered have been rated high because they are the most important factors. The rates have been calculated from the averages derived from the form for each company. Competitive Matrix  Factors  HP PC World     Comet     Weights Rate Weights Rate Weights Rate Efficiency 0.05 4.666667 0.05 4.666667 0.05 3.333333 User friendliness 0.1 4.5 0.1 4.421053 0.1 3.571429 Navigability 0.1 5 0.1 4.8 0.1 3 Maintainability 0.05 5 0.05 5 0.05 5 Implementation of feasibility 0.05 4.857143 0.05 4.857143 0.05 3.714286 Profitability 0.05 5 0.05 4.666667 0.05 2 Involvement capacity 0.05 4.333333 0.05 4 0.05 1.666667 Functionality 0.05 5 0.05 5 0.05 5 Security 0.1 5 0.1 5 0.1 5 Trustworthiness 0.05 5 0.05 5 0.05 5 Content adequacy 0.05 5 0.05 5 0.05 4 Readability 0.05 5 0.05 5 0.05 4 Ease of manipulation 0.05 4.333333 0.05 4 0.05 1.666667 Privacy 0.05 4.625 0.05 4.625 0.05 4.625 Intellectual property 0.05 5 0.05 5 0.05 5 Free speech 0.05 5 0.05 5 0.05 5 Customer and merchant protection 0.05 5 0.05 5 0.05 5   1 4.840774 1 4.762879 1 3.907441 The figure 4.84 for HP represents the sum of products of weights and rates given to HP. The values show that HP has scored the highest rating and has the higher competitive position. On the other hand, PC World is a little less competent as compared to HP but the difference is very small. Comet, on the other hand, has showed the lowest rating because of low average rating of the company on various factors. Therefore, based on the analysis of the three ecommerce websites and their competitive matrix analysis, following recommendations are given to the companies. Comet should improve its purchasing process as many of the shortcut links on the website were not functional. HP Websites structure is very simple and attractive. For the ecommerce websites, using a simple user interface is very important because a messy website can negatively affect the understanding of the user. Therefore, Comet should reduce the promotional stuff which it has in graphical form on its home page. As ecommerce website can be accessed by any person around the world, therefore, multilingual strategy is very important. All the links should be clearly visible so that the user can identify them and Comet should work on its links visibility Moreover, a business strategy of an ecommerce website should be reflected in the way it operates and works e.g. Comet promises to give best service, choice and price however, to keep price competitive, evaluating thousands of companies each week is really not practical. Therefore, business strategy should be practical and realistic. Bibliography Albuquerque and Belchior. Ecommerce Websites: A Qualitative Evaluation. n.d. [Internet] Available from: http://www2002.org/CDROM/poster/155.pdf [Accessed November 6th 2010] Comet http://www.comet.co.uk/shopcomet/homePage.do?zone_id=13 [Accessed November 7th 2010] Comet. Corporate and Social Responsibility. 2010. Available from: http://press.comet.co.uk/csr [Accessed November 6th 2010] Comet. Facts & Figures. 2010. Available from: http://press.comet.co.uk/facts-and-figures [Accessed November 6th 2010] Comet. Leading UK Retailers Pledge to Stop Selling Energy Wasting TVs. 2010. Available from: http://press.comet.co.uk/index.php?cID=297&cType=news [Accessed November 6th 2010] Dixonsretail http://www.dixonsretail.com/layout.aspx?ID=fc782c9d-c3ac-43bb-a6b1-b5ed179aa902&CatID=59df4302-e3cd-4b67-9cf5-fb69c453aa26 [Accessed November 8th 2010] Dixonsretail. Annual Report. 2010 http://www.dixonsretail.com/Uploads/%7Bb1ce5112-673c-45f2-a4cd-989bab7feda2%7D/DSGi%20Bookmarked%20PDF%20for%20Corp%20Website%2015.07.2010.pdf [Accessed November 8th 2010] ECIS Seattleu ecis.seattleu.edu/.../ECIS560%20Lecture%207%20-%20Ethics%20and%20M-L-%20Commerce.ppt [Accessed November 7th 2010] El-Aleem, A. K. A., El-Wahed, F. A. W., Ismail, N. A., & Torkey. A. F. Efficiency Evaluation of E-commerce Websites. 2005 [Internet] Available from: http://www.waset.org/journals/waset/v4/v4-6.pdf [Accessed November 6th 2010] Electronista. Acer and HP Grow Market Share in Q4, Apple Holds Steady. 2010 [Internet] Available from: http://www.electronista.com/articles/10/01/13/gartner.report.places.apple.in.5th.place/ [Accessed October 26th 2010] HP Corporate Objectives http://welcome.hp.com/country/uk/en/companyinfo/corpobj.html [Accessed October 26th 2010] HP History www.hp.com/hpinfo/abouthp/histnfacts/ [Accessed October 26th 2010] HP. Annual Report. 2009 [Internet] Available from: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjgxNTR8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 [Accessed October 26th 2010] Mackrodt, M. Ecommerce Legal and Ethical Issues. 2004 [Internet] Available from: http://wiki.media-culture.org.au/index.php/ECommerce_-_Legal_and_Ethical_Issues [Accessed November 6 2010] Wen-Hsien, Jun-Der & Wen-Chin. The Development of an Evaluation Model of E-Commerce Websites for the Taiwanese Airlines Industry. 2009 [Internet] Available from: http://www.ecis2009.it/papers/ecis2009-0058.pdf [Accessed November 6th 2010] World Best Websites http://www.worldbestwebsites.com/criteria.htm [Accessed November 6th 2010] Appendix Appendix I Source: Electronista Appendix II: HP Home Page Appendix III: PC World Home Page Appendix IV: Comet Home Page Appendix V: HP Form Evidences HP Multilingual Support Drivers Read More