E-Business and Value Chains - Essay Example

E-Business and Value Chains Introduction It is not possible to over the influence of globalization on modern enterprises. Its effects triggered massive supply chain upheaval and forced organizations to transform how they conduct businesses. The environment of transforming businesses is complex and maximizing on value of shareholder requires organizations to master wide improvements across the entire enterprise including its trading partners. Maximizing the value of chains requires organizations to master combining internal and supplier competences in order to meet market demand in every part of the globe (Gale, 2005:55). This paper will seek to develop e-value and e-customer chains in terms of e-business to show the means by which information technology (IT) has been influencing the Virgin Atlantic Airways apparel business innovation, transformation, and development among other benefits (Godwin, 2009:4). Additionally, this paper will focus on opportunities brought about by electronic business and asses strengths as well as weaknesses experienced by this organization due to information technology. Changes in supply chain management practices of Virgin Atlantic Airways Virgin Atlantic Airways is an acclaimed leader in the aviation industry. Being the first airline to introduce or launch customer for the Airbus A340-600, it accords its name a great deal of success and innovation (Buhalis, 2003:7). This airline revolutionized the business when it created the Upper Class ‘Suite’ and started offering regular services to 25 destinations globally. With development of internet, the supply chain management and practices of this airline transformed. This is because; information communication technologies transformed the entire business world of aviation. In particular, the airline industry fostered its dependency on technology due to its strategic and operational management. Virgin Atlantic Airways was an early adopter of information communication technology and has a long history of technological innovation, compared to other airlines and travel and tourism businesses. Research findings demonstrate that, this airline initiated use of internet services in order to improve its distribution strategy and reduce costs (Gupta, 2004:128). In addition, change to electronic business helped Virgin Atlantic Airways attain use of internet and internal systems to develop strategic management and tactical customer service. This in turn gave rise to gradual use of extranets used for communicating with partners and for supporting business-to-business relationships (Magrath, 2001). At this point, it is recommendable to understand that, Singapore airlines own fifty percent of Virgin Atlantic Airways (Jennifer and Wei, 2005:2). The effort depicted demonstrates that information communication technologies are critical for the operational and strategic management of Virgin Airlines and will critically influence the future competitiveness of this airline (Khosrowpour, 2004:641). Documented evidence assert that information technologies can provide powerful tactical and strategic tools for businesses, which, when applied properly can result to great merits in strengthening and promoting competitiveness. The proliferation of internet as the mainstream communication tool of Virgin Atlantic Airways and as, an information structure for its business transactions is generating a wide range of strategic implications for its customers as well as for the whole airline industry. Due to introduction of internet and the subsequent deployment of electronic business, Virgin Airways interacts more efficiently and effectively with its customers. As such, it is able to provide distinguished level of customer service and compete healthily with other business globally. The revolution of electronic commerce is evident on a global basis, despite the level of success frequently depends on a broad range of factors. Due to information communication technologies, there is tangible evidence of increased productivity, efficiency, and competitiveness within intra-organizational and inter-organizational systems of Virgin Airways. Even though there is complex and indirect casual relationship between information communication technology and profitability, it appears difficult to quantify or generalize the fact (Caner, 2006:141). However, there is evidence that well-managed information communication technology can result to tremendous value generation. With reference to Virgin Atlantic Airways, emergency of electronic business opened up use of low input cost in almost every part of their operations. This transformed the company’s system of managing its supply chain practices. As a result, the company was in a position to realize online booking, electronic or paperless tickets, transparent and clear pricing as brought about by reactive, and proactive yield management. Furthermore, electronic business, as made possible by the internet, witnessed valuable changes in chain supply management and practices due to establishment of powerful customer relationship management and control systems (Gottschalk, 2007:283). There was also introduction of commission capping, publication of fares on net, auctions, and online promotions. These benefits led to increased volume of customers and increased net profits. Moreover, with introduction of internet, the supply chain management and practices of this airline changed to incorporate financial incentives for self-booking online. To add on that, this company introduced online and context-relevant advertising which in turn borne the airline increased transparency and clear pricing. This reduced the number of theft cases and a decline in queues at the ticketing booking offices. Airline Information Technology Trend survey revealed that, Virgin Atlantic Airways moved fast to introduce Internet Protocol (IP) based systems (Hubner, and Elmhurst, 2007:24). The company modernized legacy systems and invested in new technological solutions. This helped the airline get closer to customers and cut costs. Estimated range of internet protocol benefits place online sales and e ticketing at the top of the major distribution of aviation mechanisms worldwide (Gunasekaran, 2002:191). New opportunities brought in by ICT Through electronic business, this airline was able to employ technology strategically in developing and managing as well as monitoring the external environment and competition. Additionally, use of e-procurement facilitates the undertaking of revenue analysis, forecasting, and maintenance of historical data (Ghent, 2009:6). Information communications technology opened opportunities such as designing of new and desirable products as well as predicting demand. Consequently, the company formulated ways of dealing with any future expectations. Information technology presented organizations with a critical opportunity of monitoring and forecasting the performance of strategic business units and for deciding on which markets to venture (Gottschalk, 2006:4). This facilitated time and place regarding routes, crew planning, frequency of service, and choice of aircraft. This enhanced strong rapport with strategic partners whereby, information communication technology is the key supporter of these opportunities. Presence of information communication technologies opened up new opportunities whereby, this airline got a chance to reduce, like any other airline, its dependence on intermediaries. This transformation depicted direct strategic implications on the company’s strategic alliances and partners. Previously, no-frills carriers had no distribution or “technology baggage to carry forward” items in an airport. Nevertheless, introduction of information technology bechanced Virgin Atlantic Airways an opportunity to establish a network of distribution for its no-frills carriers (Schlosser, 2012:57). With this respect, most no-frills carriers admitted and acknowledged that communicating directly to consumers was more cost effective than to going through intermediaries (Napier, Rivers, and Wagner, 2006:14). Therefore, opportunity placed at hand to this airline led to general introduction of commission capping and the company ended up investing heavily in driving internet traffic to its web site for online booking. Due to business growth and service leadership, Virgin Atlantic Airways sought to grow by improving margins and increasing flight frequency, opening new routes, introducing value added services, changing aircraft configuration, and reducing costs. Hence, with information technology, an opportunity emanated and identified ways of consolidating the market leading position of Virgin Atlantic Airways in-flight services via more sophisticated management supply chain (Wilton, 2010:418). Particularly, information communication technology enabled the company to seek more ways of creating more agile and cost effective supply capability. Simultaneously, it strengthened consistency and quality of the airline’s in-flight experience. To be precise, in-flight services range from products in all above wing aircraft turnaround and support services to passenger food and non-food products. In spite of early concerns that delivered proposals might exceed supplier capabilities, the company received a number of strong and highly individual bids. This opportunity led to incorporation of e marketing where the company was in a position to advertise most of its products online. According to Nick Dobney the head of procurement Virgin Atlantic Airways, outsourcing facilitated faster entry of e procurement services via professional consultancy. Through e procurement, this company designed a platform that it uses to evaluate and provide structural approach required in ensuring that the company accords all bidders an equal opportunity and thorough testing (Dodgson, Gann, and Salter, 2008:289). This e procurement process of evaluation involves members of the joint project team assessing responses and conducting site visits as well as taking up bidder references. Assessment of the strengths of using ICT tools Airlines are major customers of air control systems, airports, among other authorities, which include customs and immigration. Therefore, they regularly exchange information with airport authorities and systems of air traffic control (Chevron, 2004:189). All these flows requires requests for landing slots and docking gates, altering slots, information about departures and arrivals, coordinating operations as well as declaring flight paths. Research findings indicate that a good percentage of airlines are constructing information communication technology enabled systems in order to support all these slots and services. With e procurement, extranets got a major force (Lancioni, Schau, and Smith, 2002:174). E marketing created an opportunity for airlines to purchase products such as aircraft parts, fuel, catering, and business-to-business applications. This allowed Virgin Atlantic Airways to enjoy huge benefits realized from cost savings and efficiency. Internet encouraged the use of information technology instruments such as the AeroXchange and ProNet transformed how this airline conducts business. For instance, ProNet offers an online system of catalogue for ordering general supplies such as office furniture, computer hardware, and forms (Ray, 2003:68). E marketing offers an opportunity for this airline to trade online and exchange specific business goods and services that range from special screws to aero-engines. Instruments of information communication technology formulated not only the company marketing mix, but also determined the strategic directions, ownership, and partnership. Moreover, information technology tools led to speedier check-in processes and higher degree of flexibility, which in turn resulted to improved customer service (Firestone, 2012:1). Weaknesses Growth of internet use and incorporation of electronic business tools in transforming businesses came with many benefits coupled with weaknesses and challenges. To begin with, introduction of online business-to-business exchange grew in importance; the system had to adjust in order to meet user demands. As online marketplaces that include Global NetXchnage and ChemComnnect transformed the airline’s business operations, it also caused dissatisfaction (Wang, 2007:78). Managers claimed that these tools did not offer adequate and vital supply chain management and practices. As a result, they were planning on to shift to other means of e procurement with an ability to customize products and exchange services. In addition, it is worth noting that, the main obstacles to electronic business are internal (Schifferes, 2006:2). Electronic business and its tools bred barriers in corporation. Fact-findings established that, many businesses including Virgin Atlantic Airways, lack electronic business skills. They also depict lack of integration between front and back end systems (Galina, Dull, and Wheeler, 2011:137). These are very significant aspects needed for greater success of electronic business. On top of that, electronic business instruments reduced senior management involvement. Cognitively, studies show that successful electronic business strategies depend highly on senior management involvement (Simon, 2005:57). This shows that failure to incorporate decisions from senior management can adversely affect the growth of this company leading to recurrent losses. Summary In summary, the use of information technology to enhance electronic business capabilities is an inevitable part of the future for Virgin Atlantic Airways and rest of the aviation industry. As globalization intensifies and this company continues to extend its operations in new destinations, it will become increasingly paramount for it to have congruent information technology systems for communicating efficiently and effectively through the electronic customer chain and the electronic value chain (Meier and Stormier, 2009:276). Nonetheless, the company should foster development in information technology and realize more accrued benefits. It should set in place measures to cater adequately for new customers and routes by increasing flight frequencies. Furthermore, it should increase business agility in order to realize cost effectiveness and top of the class customer service. Bibliography Aspray, W. and Ceruzzi, E. P., 2008. The Internet and American Business. The MTI Press. 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