From e-Business Support to Strategy - Essay Example

?INTRODUCTION Social networking in the simplest term is the way with which the 21 century communicates. Rise in social media users; for instance, thepopulation of Facebook is growing at pace with ranking next to population of India and China (Divol, Edelman, and Sarrazin, 2012); and this has sparked revolutionary change in business. Social networking management has taken up the priority position among the aspects given considerate attention while devising business strategy. Hence, companies are inclined to promote and protect their brands by integrating social channels as mandatory part of their business strategy (Oracle, 2012). Furthermore, businesses are to develop strategy to compete on a broader spectrum with all components of information society as well as the entire network economy. This report, hence, develops detailed view of the various levels of networking from social to information society; and from e-business tools to entire network economies. SOCIAL NETWORKING Technically, there has been debate on channels that are eligible for inclusion in the category of social networking. Kaplan and Michael (2010) presented two-factor model for the eligibility and categorization of the of social media channel within following categories: (Kaplan and Michael, 2010) Hansen, Shneiderman, and Smith (2011) provide definition that takes off pressure of technicalities and refers social media as set of online tools that enable connectivity for social interaction. In addition to the connectivity, social networking also benefits users in finding, creating, sharing and evaluating mass information accessible online in a variety of forms. Growing importance and dominance of socialization through social media, organizations have also adopted this medium for staying connected with their entire customer base virtually. The new spectrum has provided companies with ways to attract the potential customers along with strengthening bond with existing company customers (I-News Wire, 2012). Martinka (2012) refers to Mead’s theory of symbolic interactionism which discusses the influence on consumer purchase decision from social media (Facebook). One of the dominant factors that lead to this change is the fact that social media enables two way communication that considerably distinguishes it from traditional marketing mix (Mangold, & Faulds, 2009). (Mangold, & Faulds, 2009) This two way connection benefits customer to pass the requirement and views direct to company whereas businesses are also able to get direct insight about customer’ likings and disliking; perception etc. Extracting insight from social networking and consumer response pattern, companies can also strategize to direct consumer purchases in desired direction (Divol, Edelman, and Sarrazin, 2012). (Divol, Edelman, and Sarrazin, 2012) Some other factors distinguishing it from traditional medium that leads to increase in adopting are: Connectivity of almost the entire world (Divol, Edelman, and Sarrazin, 2012) Prompt response from the company, as well as customers (Hanlon, & Hawkins, 2008) More direct insight than other forms of research etc (Divol, Edelman, and Sarrazin, 2012) Large number social networking websites are operational. Leading ones including Facebook (over 845 million active monthly users in 2012 (Sebastian, 2012), Twitter (over 465 million accounts in 2012 and growth (Larson, 2012)), LinkedIn has 147 million members with growth of 45% as compared to year 2012, Google plus which has 400 million user in one year (BGR, 2012) and YouTube (expected to take up 90% of the web traffic by year 2014 (Nalts, 2012)) being the leading channel of video content (eBiz MBA, 2012). Surveys also count the growing number of companies making use of these channels and networking mediums and are intended to increase their presence t exploit greater benefit (Stelzner, 2012). With acceptance of the social media as well as the fact that it is changing consumer behavior, businesses are still in learning phase to strategically adopt this medium. Moreover, understandings related to developing strategy capable of providing the customer service with social media integrated is still in learning phase that sometimes results in hodgepodge mix of activities. Oracle (2012) states the current business’ social media activities as the early adoption model and suggest businesses to move ahead to transformational state with Mature Enablement Model providing more reliable, ready and relevant connection of the company with customer through social networking. SOCIAL MEDIA BUSINESS STRATEGIES Growth in social networking has moved from socializing only to the exploiting the knowledge economy opportunities. All big brands such as Apple, Toyota, Pepsi, Starbuck, Next and Burberry etc are now present on social media (Mangold, &Faulds, 2009). All these mentioned companies and others are constantly striving to exploit the benefit of social networking. NEXT Plc, the UK based retailer (offering clothing, footwear, accessories and home products), has developed social networking as one of its three the segments of operations. Titled as Next Directory, this division is catalogue based with almost 3 million active national and international users. The segment has generated ? 1,088.7 m in year 2012 accounting almost 32%, i.e. nearly one third of entire sales. Further, it has grown by 16% in comparison with previous year. With almost one third of share in sales, the segment has generated 42% of the total profit for 2012. To mention, growth in directory based business only accounts for the 10 to 15% fixed cost in terms of fixed investment as compare to other segment (retail) that accounted for almost 70% of to total fixed investment while generating 52% of the profits. Therefore, the transformed model of NEXT plc generates 42% of total profit with only15% investment in fixed assets as compare to 52% profit generated by 70% of fixed investment (Next, 2012). This one aspect comparison reflects the change in the business models from high cost and low profit to high profit and low cost. Another dominant example of the social networking that has increased sustainability as well as profitability of business especially in times of financial crises is IKEA. IKEA is one of the largest global home accessories and furniture retailers from Sweden and it has been able to maintain its profitability, customer loyalty and confidence, especially in the years of financial crises with strategic used of social networking. An example of IKEA offerings in the social networking domain is its offer to plan kitchen with using IKEA’s 3D tool kit. This product innovation leads to increased real experience without actually making purchase while providing customer to make changes and reach the final best option without investing in appliances actually. Moreover, the list of offerings on its website for sale at the most reasonable prices makes it the most successful furniture option for the people in many parts of the world (IKEA, 2012). Such social networking connectivity also increases convenience for customer, reduces business cost, increases profits and above all provides opportunity to business to develop database and hence; provide more personalized services to large number of customer base. Activity of these firms on social sites such as Facebook, Twitter is apart from these above mentioned segmentation. For instance, Marks and Spencer (leading British retailer) generates customer responses regarding innovation by posting various dressing combination on social sites etc (Marks & Spencer, 2012). Moreover, these and other businesses develop companies’ channels on YouTube uploading adverts and generate insight about the customer preference from hits count. Hence, increased dominance of social networking on business operation results in increased profits; provide more direct insight about the customer preferences etc. However, future is not as green as it appears and businesses are counting this huge growth as a risk factor as well (Emarketer, 2012) Social media are now being regarded as the third largest source of risk. Risks from social media to business arises from chances of leak of information about under development of a new product, customer sharing god or bad experiences are open to all affecting reputation, employees leaking information and increased transparency etc (Moreno, 2012). Hence, decline in the cost of fixed investment has alongside increased cost at virtual risks. (Emarketer, 2012) SOCIAL MEDIA AND PUBLIC GOVERNANCE Among large number of changes that have happened with the turn of century; evolution of society as information society has been one of the leading ones. Information society has the following characteristics: Utilizes information as the most important economic resource. Has intensified use of information in every aspect of life Develops information resource for facilitation to its public. With the technological evolution; the definition of IS has also been changed greatly and newer interpretation is more connected with technologically generated medium than from other aspects. In order to drive the societal change, information society strategies are regarded as the most important tool by policy makers and stakeholders and requires integrated elements of general and information society based tools (OECD, 2012a). (OECD, 2012a) OECD’s developed Information society’s model for Spain and provided plan Avanza for public governance with sustained economic growth with integrated information society elements; hence societal challenges met with information based model (OECD, 2012b). The plan accounted for the impact and alignment of Spain on central, regional and local levels. (OECD, 2012b) Though plans had certain implication related to new model such as concerns about the level and the quality of information dissemination; readiness of sectors to respond to newer model as well as the awareness related to the availability of the government services online; model’s effectiveness etc but all such concerns are addressed with further use of information (OECD, 2012b) (OECD, 2012b) Hence, technological evolution has not only impacted individual lives; business opportunities and risks but also the entire society including public governance matters. Thereby, all requires well devised plan and strategy to incorporate the changing parameters of every sector individually as well collectively with changes of information technology. E- BUSINESS TECHNOLOGIES E- Business technologies encompass much more than generally accounted as website and product offerings that are part of e-commerce. In fact, as the name signifies, business and technology remain hand in hand as well and inseparable (Harrington Group, n.d.); therefore, E- Business is the revolutionary connection and way of communication of business stakeholders including both internal and external ones. Hence, combination of information sources and techniques to develop plans for profitability as well as business growth is e-business (Rodgers, Yen, and Chou, 2002). Technologies, such as web1.0, web 2.0 web 3.0, are broadly buzz words assigned to developing levels of web with respect to the growing interaction level such as web 1 being read only interface while other incorporating the growing level of interaction (Getting, 2007). Grid computing combination being user of the middle ware that enables distantly located IT resources connected enabling them to work as one unit in virtual world (Educause Learning Initiative, 2006) etc. All these are technical terms related to IT specialization while offering various set of benefits to the growing connectivity needs of business (Gardner, 2012). Despite the fact that they are present in all the systems of corporations to ensure inter, intra as well as external sources connectivity, people (stakeholders) connected with these technical terms are more concerned with their function than title. Moreover, managers are and must be concerned with the fact of developing strategies that makes sense in alignment with e-business factors. These strategies ensure alignment with firm itself and the changing business circumstances with respect to the business and technology combining as e-business (Coltman, Devinney, Latukefu, and Midgley, 2000). This alignment, however, does not require business strategy makers to be technically informed of all versions of technological advancement. Instead successful businesses are more concerned with the implementation of innovative connectivity among stakeholders. Moreover, awareness of the critical success factor of e-business is more relevant. Critical success factor for business to move to an e-business stage requires firm to have following (Rodgers, Yen, and Chou, 2002): Well defined vision. Sound technical staff with capability to transform vision into reality and developing flexible solutions for the functions of e- business. Company culture with adaptability, growth and innovation elements well ingrained. Well devised plan to develop in e-business. Suitably designed and implemented corporate communication strategy. Hence, for firms to develop successful e-business, an enterprise requires business to develop entire firm in strategic manner with all aspects and dimension aligned with company’s vision while gaining support from all aspect along with technical development. Organizations such as GM, PricewaterhouseCoopers, Ernst & Young, KPMG, Ford, and Dailmer Chrysler etc have moved greatly to e-business formats. Stated car manufacturers have provided option to their supplier to bid on website and hence decreasing the procurement cost to a great extent. Moreover, stated car corporations have planned to move to virtual (web) market place moving all purchase online. Similarly, stated accounting firms have also moved to e-business in contrast to their traditional consulting practices. The challenges faced by these new mechanisms are present such as moving to online trading reduce the personnel requirement and firms move to downsizing leaving their trained staff to be their competitor at cheaper price. Moreover, implementation of e-business incurs high cost but the level of benefit the technology oriented mechanism reaps much higher as it connects entire levels of stakeholders virtually. Hence, based on the level of complexity involved in the e-business the firms must evaluate their capacity and litmus test their strategy for suitability (Rodgers, Yen, and Chou, 2002). NEWTROK ECONOMY As stated earlier, technological evolution has encompassed entire spectrum; to mention, this spectrum incorporates the entire economy simply as the connectivity of rail-roads. Stanoi (2011) has stated that growing online businesses at huge pace are expected to account US $250 billion by 2014. This value accounts business that completely moved on to web as well as ones’ that have employed combination of both traditional as well as newer technological business driving elements. This transformation has brought benefits as well as challenges to the business world. For instance, supply chain management aspect conducted online usually leads to the supplier winning contract with the lowest bid; though not always but in most instances, hence, raises question about the quality compromised for cost saving. Moreover, going online reduces the need of personnel forces organization to adopt lay off policy raising social challenges. Moreover, such technological facilitation has also increased the level of competition. Small businesses have gained competence to at least stand in a window (web page) next to big corporation offering customer almost similar product at price with sizeable difference. Network economies are running with every passing day with increased connectivity. This connectivity benefits business with greater information related to various aspects of business from supply chain to product innovation, from marketing to sales etc. This network economy, along with power of business, has also increased power of consumer. In the current era, consumers are enjoying greater power even to the extent that business account impact of these powers in their strategy development as risks. For example, customer component of the network economy has gained power to criticize business on open forums such as social media leading business to greater risks than ever. In addition to this, advertising and business on social networking has increasing pressure on businesses to develop strategies exploiting benefits of each social medium to the most where the spread of each medium is also increasing day by day. Hence, overall evolution of network economies as strengthened connectivity with stakeholders but at the same time power this web work has rested are also posing immense pressure on the entire business. CONCLUSION Since evolution of web world, businesses are required to update and upgrade their status with increased connectivity. 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