Viability of Incorporating E-business - Research Paper Example

Viability of incorporating e-business Introduction In the competitive world of business, the existing business organisations are trying to achieve a sustainable competitive advantage that strives to ensure a sustainable growth for the organisation. The prevailing scenario of the business world is the outcome of multiple factors where globalisation plays a very crucial role. Globalisation has itself offered better opportunities for trade and commerce as it has helped to enhance international trade. Moreover, the technological advancement is another key factor that has contributed significantly towards the growth prospect. The world economies have experienced a massive development in the fields of information & communication technology, transportation, infrastructure, research & development etc. All these improvements have changed the entire social and economic arena and now the entire business world is successfully incorporating and utilising these technical improvements to gain a better and sustainable competitive advantage over the prevailing highly competitive business world. In this regard, e-business and e-commerce are two most crucial technological developments that have revolutionised the entire business world. The present day businesses have recognised the potential for e-business and e-commerce and most of them have already identified and incorporated e-business and e-commerce as an integral part of their strategic management. However, inclusion of e-business and e-commerce in strategic management process requires certain necessary criterions, and hence, still many business organisations have not been able to incorporate online business. On the other hand, considering the prevailing essence of competitive advantage, every organisation must incorporate e-business in their strategic business management. This paper will attempt to offer a plan for incorporating the e-business through a process of restructuring the entire business model. In this respect, before re-modelling the strategic business structure, number of tasks like environmental condition of the present business setup, including internal and external assessment, analysis of competitive market, financial planning etc has to be done. In order to meet these objectives, this paper will present necessary discussion through analysis. On the other hand, based on the analysis and discussion, a plausible set of recommendation will be offered in order to frame an e-business oriented strategy. A. Developing an online business expansion proposal Brief outline of the company and product Light Feet Shoe (LFS) Pvt. Ltd is primarily an India-based shoe manufacturing and retailing company. LFS has been in the shoe manufacturing and retailing industry of India for the past one and half decades. Since its inception, the company has experienced a massive growth in its domestic market and has also established a number of manufacturing plants and retailers storeall over India. One of the primary reasons for its massive success is that it has been offering better quality shoes at reasonable prices compared to its other key competitors. On the other hand, it has also targeted the customers belonging to the middle income group and has been able to develop brand preferences in their mind. The management has successfully identified the needs and tastes of Indian consumers and offers shoes in accordance to the prevailing marketing trend. In fact, it has successfully incorporated the diversity of Indian culture in its business management process like product development, and pricing strategies as well. However, in the prevailing scenario, Indian shoe market has become too concentrated as many new domestic shoe companies have entered into this market. On other hand, international shoe brands like Reebok, Puma, Nike, etc are gradually capturing a significant portion of the Indian shoe market by taking effective strategies for Indian market. “Leading international shoe brands including Reebok, Nike, Adidas, Puma and Fila have been sourcing many of their products from Indian companies for years” (Aradhana, 2008, p.4). With the increase in the disposable income of Indian consumer, they are now able to purchase and are willing to purchase the international brands at higher prices. The trend of consumers’ buying behaviours is also changing as more number of people are increasingly preferring to shop online. E-Bay has reported that during 2010, consumers from 3,296 Indian cities had purchased online where “2,234 were tier II and tier III cities, and 1,045 were from rural towns” (The Financial Express, 2011). Considering this fact, these new players are trying to increase their offered e-tailing services where consumers can choose and buy their preferred shoes online. In this process, they have developed their business model entirely backed by the e-business. Viability of incorporating e-business The term, e-business denotes electronic business that means managing a business by the means of electronic technology. Behl has defined e-business as a “method of doing business using technology” and in this process, the business organisations are tending “to mix up the two terms e-commerce and e-business” (Behl, 2009). Therefore, a business model based on e-business helps to incorporate e-commerce for multiple purposes like online shopping, maintenance of customer relationship, etc. The primary objective of e-commerce is to enable the business transaction on electronic platform. It is a very helpful tool when the expansion of market area worldwide is considered as there is no need of physical expansion. Considering the business of Light Feet Shoe Pvt. Ltd, the incorporation of the e-business model will be effective for two primary factors. Firstly, the LFS is a manufacturing business and hence, it needs to manage the entire primary task like manufacturing, supply chain and inventory management, relationship with suppliers etc. Secondly, it is also into retailing business and has to deal with a number of retail consumers. In the second case, in each retail store it has to manage the entire customer database, and supply chain. At the same time,, the importance of online shopping or e-tailing is constantly increasing and therefore, irrespective of its huge business structure in the domestic market, the incorporation of the e-business model has become one of the priorities for the organisation to ensure long term sustainability. The prime importance of e-business lies in the customer relationship management and it has brought a significant contribution in the field of CRM. The management of LFS has constantly been trying to develop a healthy relationship with their customer but in an unsystematic manner that not only incurred higher cost for the company but also consumed much time. Use of e-business is expected to reduce both cost and time of the management (Sawhney, 2001, p.180). Besides, since its inception, the management has been efficiently managing and constantly expanding its business without any major technological helps in management process. However, the company always keeps introducing new technologies for producing better products and increase cost efficiency. Now, the fact is that with increasing competition, its market shares are decreasing in value due to the lack of better marketing and online strategy. The company has better man-power and financial viability for the successful incorporation of e-business model. Current online competitor assessment The competitors of Light Feet Show Pvt. Ltd include big names like Reebok, Nike, Adidas and certain other shoe brands. Reebok is one of the leading global brands in the market of sports and lifestyle merchandises which is inspired by strong American heritage and increased authenticity in fitness, sports and certain other categories. This specific brand is committed to design products and the marketing programs which would reflect the creativity and desire to continually challenge the status quo. Bill Bowerman, the co-founder of Nike, realised the endless opportunities in the sports merchandises. Established back in the year 1972, the company is now able to carry a legacy of creative thinking in developing products which would help customers to use it with every level of ability and potential. At the same time, the company would create the business opportunities which would keep it away from the competition as well as offer value for the shareholders. The visionary leaders and the followers, employees of this company have transformed Nike from a U.S based footwear distributor to a worldwide marketer of footwear products. Along its way, the company has been able to establish a pretty strong brand portfolio which owns subsidiaries including Converse Inc., Nike Golf, Cole Haa, Umbro Ltd and Hurley International LLC. The global headquarters of this company is located at the suburb of Portland. However, as of now, the company operates in over 160 countries across the globe. The company has made one million people involved as suppliers, retailers, shippers and service providers. Inspiration and Innovation have been at the core of this organisation. Another brand, Adidas was established in the year 1920s. This company was also established taking its inspiration from sports and manufacturing of shoes. The story started in a small room and from there, the company has now been able to emerge as a leading supplier of sports shoes. All of these organisations have attractive websites to showcase their products and online selling of the same. Furthermore, Nike website has the option to customise the merchandises which gives enough space for the users to experiment. The website can be called user friendly. Furthermore, the indexes in the website are very much organised to increase the effectiveness of the website. It offers a comfortable online shopping option to the customers. All of these websites have separate headings for their shoe division as most of them have their presence in both sports shoes and casual apparels. The Nike website is pretty much arranged according to the sub-brands, sizes and certain other attributes. The ‘Reebok’ website is pretty much organised with product type, sport or activity, the colour, technology and special collection. On the left hand side of the website, all the merchandises are divided under four broad headings including men, women, sport and classics and a number of subheadings under the same. The customers are just required to be aware of their requirements and they would be able to buy their desired product comfortably. Hence, it seems that the e-business of these organisations is pretty strong which leads to a strong competition and tough time for Light Feet Shoe Pvt. Ltd. There is hardly any Indian shoe manufacturing company available that has a highly developed e-business and e-commerce. As discussed earlier, the foreign shoe retailers are efficient in this respect. They have realised how websites can be used to achieve a sustainable competitive advantage and so far the use of websites have been quite successful in this respect. Online marketing suggestions and strategies It is pretty much significant to start with a well built marketing campaign. A successful marketing strategy can enable any business to attract more consumers and in turn would enable the company to fetch a considerable amount of market share. For some, footwear can be just a product to walk on with while there are also others who look at it as a style statement. Light Feet Shoe Pvt. Ltd can present a story line with which the customers can identify; this would give the company an extra edge over its competitors. The storyline can consist of its products, company values as well as the innovations within the organisation. This way, the organisation can establish a better way to communicate with the target and existing customers. In online marketing, the marketing mix can provide a framework to deliver the customers enough value at competitive prices. As middle class families are now pretty much concerned about style and fashion, Light Feet Shoe Pvt. Ltd. is required to provide style statement at reasonable pricing. The product is required to be comfortable as well as fashionable to attract the customers. Online marketing is moving beyond offering an organisation website. It is rather actively seeking partnerships as well as strategic alliances with the suppliers and other significant websites which would increase its traffic and brand awareness. This consequently leads to an increase in sales volume. The website must therefore, come up with innovations which are customer oriented. Internet and some more digital media have provided companies with enough freedom, convenience and flexibility. As of now, digital technologies are also available in the mobiles and PDAs. Companies must understand the fact that these consumers are pretty much concerned about their time and would only be interested in the desired contents (Gay et al, 2007). As the company is targeting middle class families, the price is required to be reasonable. With increase in the income level, people may not bother to spend some extra money on the footwear; however, in this case they would demand quality products along with desired styles. Regarding the promotional activities, it would be better to make its links indexed on the successful websites which experience increased traffic. Furthermore, the company is required to be present on the social sites which would increase its communication with its target audiences. Adding to it, it would help the company to increase consumer awareness about the brand. At the beginning, the company can offer limited discount on its products if they are sold online. This would increase the company’s sales online. The company can send direct emails to its existing as well as prospective customers to fetch their attention and increase their awareness about the brand. The target audience of Light Feet for online marketing includes the young generation that is tech savvy and likes to visit websites rather than stores. The primary strategy for online marketing will focus on offering a wide range of knowledge regarding the offered product. The website consumers must perceive online shopping as a value added-services offered by Light Feet Shoe. Search engine considerations and optimisation strategies As Light Feet Show Pvt Ltd would be focusing on online web store to display its merchandises as well as to sell off the same, it is pretty important that more and more people would visit the store and browse through its merchandises. This would not only increase the sales, but also would help to establish the brand name in the market. Search Engine Optimisation is one practice to create, incorporate the changes or repair the website so that the websites can be fully read and indexed by the significant search engines. The major search engines which are required to be considered are Google, Bing and to some extent, Yahoo. SEO activities may be broadly categorised as Onsite and Offsite optimisation strategies. Onsite optimisation strategies: Onsite optimisation activities primarily involve tweaking the website to make it easier for search engine bots to crawl and index webcontent. Since the website for Light Feet Shoe will be built new, the developing agency will ensure that the site is lightweight, is W3C standards complaint and has all the proper header, title, Meta and image attribute tags. The web content will be written to ensure that it offers usable information to visitors, and also maintain required keyword densities. Additionally, a blog will be actively maintained by a professional content writer thereby ensuring the website is frequently updated. Additionally, free tolls like Google Analytics, Google Webmaster Tools and Google Optimizer will be extensively used to track and understand visitor behaviour, identify weak spots in the website, and generally optimize the website for a better performance. Offsite optimisation strategies: Offsite strategies primarily aim to develop a gradual and diversified link profile. Backlinks are viewed by Google and other major search engines as editorial votes to a website by other webmasters, and these backlinks are one of the most important factors that lead to a better positioning in a SERP (Search Engine Result Page). Apart from normal link building strategies like directory and article submissions, the company will also extensively use smarter link building strategies like link baits and viral campaigns. Social media integration Social media has emerged as one of the significant medium to showcase one’s products and make them visible to the customers. It would not be wrong to say that social media has moved into the mainstream of any business. The entire social market integration is not expected to happen in only one phase; rather it would have to pass through different stages. As said earlier, Light Feet Shoe Pvt. Ltd. can look forward for keywords associated with its web store of footwear. The tools such as Twitter Search, Google Alerts etc can be used to track the conversations. It would be useful to incorporate the same in exploring the social media and utilising it for the benefits of the organisation. The company can make its official presence in one or more social networking sites which would give the site enough exposure. However, this would be pretty much experimental rather than strategic. Eventually, the website can pay more attention to the reaction of target audiences and respond accordingly. This would also help the organisation to understand the customer requirements and as a result, the company can enhance the content, strategise future engagements and encourage the communication. In the process, the company must review the activities of the visitors, their opinions including both neutral and negative commentary and observe various trends to foster innovation which would earn Light Feet Shoe Pvt. Ltd. the admiration from its prospective and existing customers. Observation of the trends and final behaviour would contribute to the intensive understanding of marketing, service, PR and sales. Once the company is able to understand the customers better, it would be able to influence the markets as well as introduce a persona resembling affinity and attention. A socialised adaptation of any branding style channel is required. Another strategy for social media integration will be to promote the brand name of Light Feet and its product through social network sites. The young generations of India are intensely connected with multiple social networks. Specifically, the social networking sites like Facebook, Twitter, Blog, Orkut etc are quite famous among Indian people. Numbers of internet users in India are increasing and among these internet users nearly 84% of people are regular visitors of social networking sites (Marketwire, 2011). Therefore, the company might try to promote its product through these social networks. It can develop online communities, blogs, etc for the company. At the same time, the Light Feet Shoe Pvt. Ltd. should also partner with these sites by offering a direct link of these websites through its own. The social network integration strategy can be based on two types of network i.e. generic network and specialized network. The generic networks are the sites like Facebook, Linked-In, twitter where people’s primary aim is to keep in touch. On the other hand, specialised network are specific sites that focus on specific interests etc. YouTube, Picasa, Flixter etc are the example of specialised network. Light Feet will aim to promote their brand through generic network sites as a number of different types of people can be approached (Chard et al, 2010). Light Feet should try to develop its communities dedicated to its brands where the primary target audience will be youngster. The communities will include updated news regarding the latest fashion trend. Besides, Light Feet can also recieve feedback about the changing taste of youngsters and their response to the company’s new yet-to-be launched footwears. Moreover, social network sites are very effective platform for communication. Light Feet can use these sites and communities for availing contests and discounts for customers. In this process, for effective and optimal use of the social network sites technical services like Google AdWords and Google AdSense will be obtained from the third party (Rutledge, 2006, p.161). Online customer relationship management Customer relationship management is a significant and perhaps the strongest tool that ensures the loyalty of the customers. Fetching a loyal base of customers is not an accidental task; rather this is created with exceptional service representatives to address the customer queries, providing appropriate response to the customers in alignment with the consumer requirements, and an excellent product development needs. Customer relationship management can be seen as a comprehensive approach to create, maintain and expand the relationships with the customers. It has been noticed that marketing efforts along with the availability of the customer related information have been successful for the brand as it has helped to find new consumers as well as retain the existing ones. Word of mouth is a promotional activity which only reaps fruit if the customers are happy with the products Light Feet is offering. In this case, the company would be able to increase its sales through the referrals of the existing customers. Appropriate and timely response to the customer complaints, feedback and using the same for further enhancement of the products would help the company to have sustainable growth with continual profitability in the future. Besides, for Light Feet, the scope of maintaining its online customer relationship management through its website will be very effective as Indian consumers are becoming aware of the use of online customer services. It will help the Light Feet to communicate with its consumers by receiving feedbacks from them (Iyengar and Belvalkar, 2010). For developing online customer relationship management, Light Feet should develop dedicated team who will implement CRM strategy through four major steps. The following figure describes these four stages. Figure 1: Four Steps to Implement a CRM Strategy (Source: Renart and Cabre, 2007, p.7) In order to frame and implement the CRM strategies using above four steps, it is also necessary to consider and incorporate the certain aspect. Excellent Customers service during the sales. Must aim to develop brand loyal customers. Develop two way communications with the customers. Develop gradual relationship with customer. However, for a properly managed and systematic CRM, it is necessary to develop and maintain customer information and database. There are number of CRM software and database management software are available that strivers to track and manage those customers information (Smith, Dixon and Sherratt, 2007, p.75). The data collection application can collect the customers’ information through tracking cookies. Besides, the information about customers also is obtained through primary survey by collecting data from the customers visiting the stores and company’s website and social network sites (Woodcock, Stone and Foss, 2003, p.243). E-commerce solutions E-Commerce refers to the broad range of the online business activities including transaction in both the products as well as services. This also refers to any business transaction form which would make the involved parties interact electronically rather than using direct physical contact. This offers a platform for a company to sell off its products while enabling the customers to buy those. The significant e-commerce types are business to consumer, business to business, mobile commerce and consumer to consumer. In this case, the company would do two types of e-commerce including business to business and business to consumers. All these services would include warehousing, logistics transportation as well as distribution. Most of the business to business applications are shown in the inventory management, supplier management, payment management and channel management. The company would provide business to consumer e-commerce between the companies and the consumers which would involve the customers gathering required information, providing the consumers about the goods, purchasing the physical good and receiving the same over the electronic network. The use of e-commerce can be turned as an instrument for the Light Feet Shoe Pvt. Ltd. to maintain the relationship with suppliers and other wholesalers i.e. for B2B business. The uses of the e-commerce in daily operational activities are very effective for all size of business organisation (Al-Qirim, 2004). In order to incorporate the e-commerce through this site, Light Feet must incorporate certain applications and tools. Using these applications, the suppliers and wholesalers can easily receive and place their orders. This process is helpful in time and cost saving purposes as it increases the efficiency. Besides, for the supply chain and logistics management, e-commerce can be clubbed with the radio frequency identification (RFID) technology. This is one the most effective technology for supply chain managements. This RFID technology is also used by the Wal-Mart that has developed the most efficient supply chain and logistics management (Botha, Bothma and Geldenhuys, 2008, p.286). International considerations International considerations As the company has one and half decades of experience in the Indian market, it must look forward to its international expansion. It can buy the banner advertisements on the foreign search engines. Furthermore, the company can also index its website links on the successful websites of foreign companies. This would help the company to attract the attention of the foreign consumers. A realisation of the local markets, its population and the tastes would be pretty significant in leading to a successful web experience in the overseas markets. It is very important for the company to satisfy the duty rules, tax and customers requirements which would vary with different countries. The company must ensure classifying and noting down the origin country of all the items. Inappropriate paper work as well as failed customs would lead to the delayed shipments as well as legal action or potential fines for the company. The cost displayed to the international customers must involve calculation of the applicable shipping fees, duties and taxes in the real time which would be furthermore complicated. Projected web development and maintenance costs The projected web development cost is estimated to be of $2000 and the maintenance cost is expected to be $700 per month. The estimated cost is pretty low and one might think that the website would not be able to raise the consumers’ attraction. However, this is not the case. As the company has decided to carry out this work with the help of in-house professionals, it expects to cut on the development and maintenance costs. In India, there are a number of website services providers available who are capable of efficiently maintaining the website with proper up gradation and zero technical errors. The initial expenditure for web development is capitalised cost and the maintenance cost will include technical support cost and modification cost (Web Developers Notes, 2011). The projection cost for the web development and maintenance are given below in the table. Table 1: Cost Projection for Web Developments and Maintenance Hardware Costs     Web servers $ 130   Application servers $ 60   Database servers $ 60   Network hardware $ 125   Line rentals $ 75   Other hardware costs $ 50   Total   $ 500       Software Costs     Operating systems $ 175   Application servers $ 130   Database development $ 125   Content management system $ 105   Web reporting software -web analytics, adWords, adSense $ 90   System diagnostic software & Firewall software $ 75   Total   $ 700       Hosting & Support Costs     Hosting costs $ 450   Support costs $ 350   Total   $ 800 Maintenance Costs     Content authoring, reviews, approvals and publishing $ 150   Website reporting and evaluation $ 120   Website modifications $ 100   Application maintenance $ 110   Content archiving and record keeping $ 100   Domain name registration fees $ 95   Other website maintenance costs $ 25   Total   $ 700 As per the table of cost projection for web development, Light Feet Shoes has to incur major capital expenditure for hosting and supporting cost followed by necessary software and hardware costs. Estimated maintenance cost is around $700 and it is the most important cost the company has to bear to update operational efficiency. B. Create a website index for the online expansion you proposed A site index would refer to the interactive listing of various subjects and titles which are organised in a chronological, numerical and alphabetical order. Each of these would be linked to some counterpart location on the site itself. Site Index About Become A Fan Buy Online Brands Categories Contact Us Customer Service Exchange & Claims Gifting Home Help Desk Investors Kids Light Feet Store Light Feet Show Global Site Men Media Centre My Account New Arrival People Centre Privacy Policy Product Gallery Sales Share Shopping Cart Sign In Sports Subscribe Newsletter Track Your Order Trends Women C. Provide a design mock-up of three website pages based on the proposed online business expansion strategy The mock website pages have been created using word press. The mock pages can be found at http://lightfeetshoe.wordpress.com/lightfeetshoe/ . The snapshots of the pages are attached here. Image 1: Home Page Image 2: About Image: Product Gallery Conclusion Success in the multi-channel coordination, through the use of brand management, product offerings and customer service, can lead to the success in the e-commerce (Epstein, p. 54). Internet has become one of the desired platforms to interact with the customers, showcase the products and sell off the same based on e-commerce platform. In this case, even the cost is pretty low as the transaction and interactions with the customers are happening on a virtual platform. Furthermore, the company can cut on the cost of distribution and other land cost, maintenance of stores to work in a cost effective environment. As of now, the company is looking forward to moving into internationally on the web store. If the online store becomes successful in other countries, it would be better for the company to open up few stores in significant destinations. Successful exploration of the web waves can bring in success for the company. References Aradhana. (October 20, 2008). Fashionable Footwear. Retrieved June 21, 2011, from: http://www.ibef.org/download/Lifestyle_211008.pdf. Al-Qirim, N. A. Y. (2004). Electronic commerce in small to medium-sized enterprises: frameworks, issues, and implications. United States: Idea Group Inc (IGI) Botha, J., Bothma, C. and Geldenhuys, P. (2008). Managing E-commerce in Business. Juta and Company Ltd. Behl, R. (2009). Information Tech for Mgmt. New York: Tata McGraw-Hill. Chard’ K. et al. (April 29, 2010). Social Cloud: Cloud Computing in Social Networks. Retrieved June 22, 2011, from: http://www.ksri.kit.edu/Upload/Publications/aface0bb-d437-49dc-bf6d-a943034c9870.pdf. Flyte. (2008). SEARCH ENGINE CONSIDERATIONS II. 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