E-Commerce Security Issues and Solutions for Yunnan Lucky Air - Case Study Example

LUCKY AIR – CASE STUDY REPORT By Name Course Instructor Institution City/State Date Table of Contents LUCKY AIR – CASE STUDY REPORT 1 Table of Contents 2 Executive Summary 3 Problem Statement 4 Data Analysis 4 Best options for Yunnan Lucky Air 5 Factors That Should Be Considered By the Executive Team 6 Lessons Drawn from Lucky Air’s Experience 7 Recommendations 8 Actions and Implementation Plan 9 Exhibits 11 Lucky Air – Case Study Report Executive Summary Consistent with the development of Technology and Information Systems, the airline industry’s business processes has progressively changed, particularly on reservations and how tickets are purchased. Competition in this industry has turned out to be more and more stringent since the airline website quality has become strategic and important in offering services and facilities to potential passengers in purchasing its products. This report will focus on Lucky Air, which was established 2004 as one of the most economical domestic airlines. Lucky Air’s limited route license enabled the airline to become competitive and retained its monopoly in the province of Yunnan. The Airline’s main competitors consisted of China Southern Airlines and Air China, but because Yunnan is considered to be the Southern China’s most attractive destinations for tourists, Lucky Air managed to attract many customers. Therefore, the airline started making profits only 36 months after its inception. As it will be mentioned in the report, this success was attributed mainly to the company’s feasible strategy, which involved only one type of airplane with the goal of reducing costs and maintenance. The Internet can result to either blessings or worries to the airlines, but to reap the benefits associated with the utilization of the Internet, airlines must utilize other tools like e-distribution system and electronic revenue management system. Earlier adoption of technology in the airline industry exhibited that even though high technology such as e-commerce can be very beneficial, there are some potential risks such as privacy issues that must be considered and controlled carefully. In this report, the focus will be on Yunnan Lucky Air’s best options, factors that should be considered by the executive team, and the lessons drawn from Lucky Air’s experience and that of low-cost airlines. Problem Statement Currently, Lucky Air is facing a stringent competition following the entry of many low-cost airlines in a market that was already saturated. Therefore, for Lucky Air to remain ahead of the competition, it has to re-examine its business strategy and formulate a course of action, which could facilitate the company’s progress. Still, the task is extremely challenging given that the company faces scores of competitors and one poor decision can undesirably impact the future of the airline. Still, the airline industry in China is regulated heavily; therefore, new airlines’ flexibility is limited. Even so, as a new competitor, Lucky Air found became successful despite operating in a field that was increasingly crowded. By 2007, the number of low-cost Chinese airlines was 11, and two others were yet to be approved (Berenguer et al., 2008, p.1). Therefore, a possible congestion was expected, but Lucky Air was looking for more competitive advantages through e-commerce. Still, the increasing competition created a major threat to the company, while e-commerce resulted in security and privacy challenges. Data Analysis Basically, the digital revolution has led to Information Age, which has brought about more relevant pricing, more accurate production levels, as well as improved communications. E-commerce has not just become a great asset to the airline companies across the globe, but has also become the best way to achieve competitive advantage and to grow. In China, the use of Internet some years ago was fairly limited, but there was still some potential for penetrating into different areas across the country. This proves that usage of Internet so as to achieve competitive advantage was minimal. According to Sardjono I2013, p.530), information systems and technology in the airline industry has turned out to be an important factor in serving its passengers adequately. For instance, the Internet Booking Portal is system information that spearheads the airline sales. The existence of this type of website has enabled airlines such as Lucky Air to make direct selling; thus, reaping more profits. Best options for Yunnan Lucky Air The business model used by Lucky Air is great since it followed a similar model as the Southwest Airlines. Given that the airline is a domestic airline, it is economically sensible to provide high-efficiency and low-cost services to their customers. The increasing competition has forced Lucky Air to explore new opportunities such as the use of e-commerce. Adoption of e-commerce by Lucky Air facilitated digital transactions over the Web, the Internet or through mobile applications. E-commerce was beneficial because it enabled Lucky Air to reduce their reliance on sales agents or offices as well as the computer reservation systems. However, the security issues such as identity theft or online fraud have created the need for Lucky Air to come up with countermeasures in order to generate business-consumer-business model that is effective and secure. In this case, the best option for Lucky Air is placing emphasis on Web 2.0, a unique feature of the Internet and e-commerce that focused on people’s ability to collaborate as well as share information online. Importantly, Web 2.0 will enable the airline to create an improved online experience with consumer networked blogs, inter-human connections, as well as the employees. Furthermore, the Web 2.0 will be important because it facilitates the management of customer relationship and promotes. Using the Web 2.0 technologies and services will change the basic model of interaction between Luck Air and the customers from ‘sending’ to ‘sharing’. According to Kiryakova et al. (2011, p.169) this model is typified by increased influence and visibility; improved way on customers interact amongst themselves; facilitates customers’ recommendations and views; and, improves interaction between staffs. Therefore, using the Web 2.0 is the best option for Lucky Airline. Furthermore, the airline should focus on offering an online experience that allows for customer self-service devoid of the need for many customer call centers. Factors That Should Be Considered By the Executive Team There are a number of factors that Lucky Air’s executive should have considered in 2007; for instance, the executives should have considered fees and regulations imposed by the Chinese government in order to determine whether espousal of e-commerce is feasible or could result in unnecessary costs. The airline had to offer a secure way of accepting online payment and the executive team had to come up with ways of attracting consumer so as to use Lucky Air online for travel services such as purchasing air tickets. In China, people appear to be cautious about using the Internet; therefore, most of them prefer offline cash payments. For offline cash payments to function properly there must be retail stores and call centers, and this is an extra cost that executive team was not prepared to incur. In order to offer secure payment site, the executive team must look for ways to protect consumers. This can be achieved by linking PayPal to the company’s, wherein consumers are allowed to pay for transactions. These days, security and privacy have become a key concern for e-commerce and other electronic technologies. Lucky Air’s executive team should understand that security is one of the factors that limit organizations and customers that engage with e-commerce. As mentioned by Niranjanamurthy and Chahar (2013, p.1), e-commerce applications handling payments are at high risk of alteration or data loss and also have more compliance issues. Therefore, privacy has become a key issue for consumers, especially because of the increasing impersonation and identity theft; therefore, the executive team must treat these concerns as a major issue. Security is a critical factor that must be considered by Lucky Air’s executive team since the lack of security, e-commerce may not work normally. And it is a complexity issue because e-commerce security assurance can result in trust and confidence issues between the airline and customers. E-commerce security as opined by Yanyan (2014, p.153) relies on the complex interrelationship between network and software infrastructure, database management systems, applications platforms, and so forth. Therefore, any weakness may put the e-commerce security at risk. Lessons Drawn from Lucky Air’s Experience There are a number of lessons that can be drawn from Lucky Air’s Experience as well as other low-cost carriers; for instance, success is not permanent and therefore, companies must continually remain innovative so as to be competitive in a market congested by new entrants. Lucky Air focuses on e-commerce was tactical since it managed to achieve a competitive advantage over other airlines in the market. Other airlines should learn that e-commerce may is very beneficial, but a number of factors have to be considered so as to be successful. Innovation, as evidenced in Lucky Air case, is important bearing in mind the combined impact of strict processes of certification, the growing number of passengers, increased competition, and continuous push for standardization has paralyzed ability to innovate in the airline industry. From Lucky Air case, it can be learned that successful airlines provide services beyond the flight itself; for instance, they ensure their customers are engaged from the time they book a ticket until their plan lands to the preferred destination. Lucky Air’s key to innovation was their capability to understand the customers and developing relevant and effective solutions that made their overall experience a positive and memorable one. Recommendations Lucky Air must start thinking on how to expand its business into other Chinese provinces and also the neighboring countries. Given that the number of new entrants in Chinese is progressively increasing, expansion is the best survival strategy for the airline. In order to contain complexity as well as remain relevant and focuses, the executive team must ensure that the issues associated with the security of e-commerce information system and database are reduced. Using a conceptual risk management framework, the executive team can easily identify the airline’s vulnerabilities, analyze the available security measures, and later choose the most cost-effective as well as appropriate countermeasures (see exhibit 1). Besides that, Lucky Air should apply the Web 2.0 tools and services so as to enable the company to manage and share and content with the customers and to communicate interactively. For Lucky Air to completely achieve the e-commerce benefits and also avoid the possible dilution of revenue, the company should adopt new tools like Internet distribution systems as well as revenue management systems. The revenue management system is used to analyze the booking trends so as to project the traffic demand of passengers for all flights. The system will enable the airline to understand the willingness of the passengers to pay at all price levels. This will enable the airline to know the suitable number of seats that should be allocated to all booking classes to ensure revenue maximization. Actions and Implementation Plan In conclusion, the report has focused on Yunnan Lucky Air’s best options, factors that should be considered by the executive team, and the lessons drawn from Lucky Air’s experience and that of low-cost airlines. The e-commerce rapid development has resulted in security issues; therefore, the transaction security is the key and core issues of the e-commerce development. The report has discussed the security issues that Lucky Air would possibly face while utilizing the e-commerce, and some feasible solutions have been recommended so as improve the environment wherein the airline operates. Lucky Air case proves that there is need to maintain for airlines, especially the low-cost carriers to become more innovative because the airline industry is becoming more and more competitive. Owing to the changing market trends, it is not easy to remain competitive in the market, unless the mode of operations is expanded. Given that technology is the key to success in the future, it is imperative for airline companies like Lucky Air to devise their business strategy so as to focus on this aspect. Even when the required infrastructure has been set up, e-commerce still requires supporting tools like e-distribution systems and revenue management system so as to ensure maximization of revenue. The Lucky Air’s executive team should be wary of the possible risks associated with e-commerce such as privacy and security issues. As recommended, Lucky Air should expand its operation so as to survive in the Chinese airline industry that is becoming more and more competitive and congested with new entrants. Besides that, the airline should remain innovative and ensure that all issues associated with e-commerce are solved. The executive team should use the conceptual risk management framework as shown in exhibit one to ensure efficiency in its e-commerce activities. References Berenguer, I. et al., 2008. E-commerce at Yunnan Lucky Air. Case Study. San Francisco, California: MIT Sloan School of Management. Kiryakova, G., Yordanova, L. & Angelova, N., 2011. WEB 2.0 IN BUSINESS. Trakia Journal of Sciences, vol. 9, no. 3, pp.169-77. Niranjanamurthy, M. & Chahar, D.D., 2013. The study of E-Commerce Security Issues and Solutions. International Journal of Advanced Research in Computer and Communication Engineering, vol. 2, no. 7, pp.1-12. Sardjono, W., 2013. Using Factor Analysis to Evaluate e-Commerce of Airline Industry in Indonesia. Australian Journal of Basic and Applied Sciences, vol. 7, no. 11, pp.530-36. Yanyan, W., 2014. Research on e-commerce Security based on Risk Management Perspective. International Journal of Security and Its Applications, vol. 8, no. 3, pp.153-62. Exhibits A Conceptual Risk Management Framework Read More