Impacts on E-commerce Process - Literature review Example

Table of Contents 1.0.Introduction 1 2.0.Economic factors and impacts on e-commerce process 3 3.0.Political factors and impacts on e-commerce process 6 4.0.Cultural factors and e-commerce process 8 5.0.Technological factors and e-commerce processes 10 6.0.Demographic factors on e-commerce processes 11 7.0.Conclusion 12 1.0. Introduction E-commerce has become one of the most influential Internet activities, especially from the perspective of market model and business. Currently, e-commerce is regarded as the key platform for streaming business activities as well as broadening product outreach. This has been made possible through significant emphasis put by managers and stakeholders. On the other hand, competitions from companies have made it essential to adopt contingency theory where an organization identifies the situational variables which can predict the most effective and appropriate outcome for a given circumstance. The solution to such problems has been seen by scholars such as James (2012) to be the adoption of e-commerce. However, there has been competitiveness in the already changing environment of e-commerce. This has made contemporary scholars assess factors that have had significant impacts on the e-commerce processes (Abdul 2010; Millmore 2007). To begin with, Abdul (2010) defines e-commerce process as online concept that has brought about a great deal of transformation in the way business is conducted across the globe. Based on the definition, he assesses how social, economic and political factors impact e-commerce process. On the hand, Millmore (2007) looked at traditional business strategies and compared them to tenets of e-commerce. According to his findings, traditional business strategies are defined as approaches that tend to restrict customers on a platform to transact or shop around comprehensively at their leisure time. Accordingly, it is seen that e-commerce replaced traditional business strategies that failed to provide competitiveness in the rapidly changing environment of e-commerce. On the same breath, actors and competitors in the market have been seen to be struggling with the increasing cost of operation, production, development and mature market. It is for these reasons that scholars have sought to find whether there are determinant factors that affect e-commerce processes. Similarly, evidence based researches have shown that the first step in understanding management of an organisation is to integrate its undertaking when it comes to e-commerce and how sustainable the organisation intends to operate with regard to the environment, competitors and specific objectives (Hamlin, 2002; Hooper and Potter, 2006; Fatimah, 2006). Based on these variables, the study intends to discuss the determinant factors that research have shown to have significant impacts on the e-commerce process, and which could lead either to the success or failure of e-business companies. The paper will be structured to assess economic, demographic, political, cultural, technological factors and how they affect e-commerce processes. 2.0. Economic factors and impacts on e-commerce process Researches available on economic factors and the influence on e-commerce process have been extensive and diverse. Much of these literatures have been focussing on business to business (B-2-B) domains. These researches focus on specific aspects such as e-payment, trust, electronic branding, privacy, and performance measures (Erwin, 2000; Millmore, 2007; Schermerhorn et al., 2014). Nevertheless, literatures focussing on e-commerce adoption and popularity have been simply anecdotal (Computerworld, 2006; Kumar, 2010). Taking a case of Saudi Arabia, Ministry of Commerce brought economic policy by establishing a technical committee including experts from Ministries of Commerce, Communication and Information Technology and Finance (Schermerhorn et al., 2014). The committee also drew members from King Abdulaziz City for Science and Technology (KACST) and Saudi Arabian Monetary Authority (SAMA). The agenda streamlined mechanisms for modern e-commerce adoption and participation. Recommendation of this committee was the starting point for present e-commerce adoption and popularity among Saudi people. Separately, economic policies in countries such as Turkey and United Arab Emirates which saw the introduction of eGovernment and mGovernment have had two positive impacts on ecommerce processes. First, Fatimah (2006) noted that the level of competition is now dictating companies towards sustainable competitive advantage. The operational structures of companies describe the extent of its operations when it comes to e-commerce. Additionally, companies are having series of restructuring measures that bring the understanding that traditional fixed operations are no longer the driving force of its revenue growth. Therefore as e-commerce become accepted and practically used it is changing the trend in distribution systems because the e-retailers are at the same time a retailer and a distribution center. It is for these reasons that e-commerce is now part of every business engagements. Baigh (2013) took a case study on how economic environment in United States of America affects e-commerce process. Baigh (2013) notes that macroeconomic environment in United States of America is characterized by incidences of still-accommodative monetary frameworks, quick improvement when it comes to labor market outcomes and favorable financial conditions. This is to mean that e-commerce process is embedded on factors such as reliability, tangibles, responsiveness and assurance. Picking on reliability and assurance for instance, economic environment as is a factor that has positively affected the implementation of service excellence which has been necessitated through e-commerce processes. The United States of America’s department of Communication registered an index of positive 5 in terms of service excellence as a result of adopting economic policies that triggered ecommerce processes (Johnson et al., 2014). This compared to the case of Dubai, the Emirati engineer, Abdulrahman Alserkal argues that in the year 2012 and 2013 alone, there was improvement of service delivery index by 20% compared to 2010 and 2012 because of the introduction of favorable economic environment (Johnson et al., 2014). Telstra operating in Australia is another case that can show how economic environment affects e-commerce processes. To begin with, the best way to predict economic environment in Australian and how it is related to e-commerce process is by assessing 2013/2014 government budget. The budget noted deficits that were inherited from the previous government and this totaled to $123 billion at the 2013‑14 financial year (ResearchMoz 2013). According to ResearchMoz Telstra failed to implement its e-commerce proposals including the five programs under its Access for Everyone (the five programs included Telstra MessageBox and Bill Assistance among other three). ResearchMoz adds that this in turn derailed its response on the adoption of 4G platform. The effect of this included stiff competition for the 4G service, overdependence on Australia resources, pressurised average revenue per users (ARPUs) and failing to leverage on the growth in mobile internet through launching long term evaluation (LTE) services. Conversely, for 2014/15 financial year, the Government of Australia had an underlying cash deficit of $29.8 billion (which basically translated to 1.8 per cent of GDP) with regard to 2014‑15 (Australian Communications and Media Authority, 2013). This was indeed favourable economic environment for operation. Relating this with e-commerce processes in Australia, there was increase in revenue growth in mobile goods and services which had seen its total revenue improve by at least 4% annually as a result in participating in e-business. Therefore it is worth concluding that Telstra is enjoying the pace of fiscal consolidation which balances the need for structural fiscal repair with the shorter term impact on the economy when there is favorable economic environment for e-commerce processes. Contrariwise, the Company is seen susceptible when the government introduces policies that affect economic performance. For instance, the European financial crisis and downturn in the export market impacted negatively on the Company’s sustainability since they could not enjoy e-commerce platforms as before (Communications Report, 2013). 3.0. Political factors and impacts on e-commerce process There have been research evidences showing how political environment have been affecting e-commerce organisations especially in transacting business across borders. For instance, Hubbard (2008) argues that there have been risks factors added to business transactions that are done online when a company imposes some political policies. Taking a case study on Huawei, Nigel Bruin, Huawei Principal Consultant, National Broadband once noted that though the Company has been successful and independent telecommunication (Telco) and IT consultant firm, they sometimes struggle to carry online transactions with other telephony companies due to adjustment is government policies and in particular he cites constant tax changes and government involvement in trade unions and agreements. These factors have made it difficult for Huawei to penetrate any market where e-commerce seems to be the mode of transacting business. This has also been the case with Vodafone. While researching on e-commerce adoptions and applications by the Company, Cole (2012) reported that Canadian and Australian markets need prior consideration of prevailing political environment that may positively or negatively hinder e-commerce processes and operation. To underscore the view that Australia is a liberal-capitalistic democracy, it has been noted that government has been substantially interfering with her economy through adoption of a number of roles. In 2008 the parliament decided to set up importation taxes that were aimed at protecting the national economy. In 2005 it created environmental laws that protected its natural heritage (ResearchMoz, 2013). These factors significantly affected e-commerce operations of Telstra in 2013 and 2014. In particular the Company dragged in maintaining its operations with Ericsson for its next generation optical network. In addition, Telstra through David Robertson failed to engage in 4G platform that was to improve its bandwidth capacity and lower latency. Again, the monopoly legislation has made the Company to sell about 90% of its HFC networks to the NBN. Taking a difference case, intellectual property law (Copyright, patents) and data protection laws have subsequently impacted differently on economy which in turn affects the e-e-commerce process, exchange rates as well as rate of currency. To give practical example Optus (telecommunication Companies in different countries such as Australia and Canada) was politically affected for alleged exaggeration of the network coverage area of Optus in a TV advertisement on January 29th, 2014 (Access Economics 2014). Additionally, National Broadband Systems in Canada and Australia is one of the political threats that have been affecting e-commerce organisations. It is reported that Optus had revenues of A$24,828 million by end of 2008 (ResearchMoz, 2013) but due to political factor where the government set that 90 percent of the household ought to be serviced by the fibre and only 10 percent via satellite, e-commerce processes of Optus was weakened thus weakening its revenues. However, some political factors tend to benefit e-commerce operations and processes in some countries. United States of America is regarded as capitalist society. This has made it to operate an economy environment where both the private entrepreneur and government dictate the economy. That is, implementations of e-commerce can be protected by the government is there is a feeling that its ability to maximize profits is affected by the regime or external political factor. For instance, the government introduced policies that sought to protect the automobile industry by "voluntary" export restrictions from Japan (Aras and Crowther, 2013). Secondly, case studies have shown that Nike has been actively involved in e-commerce processes and as a result earned high profits from growth channeled policies of United States government (Aras and Crowther, 2013). One of such policies is the maintained low-interest rates. From 2013, United States government maintained stability on currency exchange as well as internationally competitive tax process. Another benefit that was reflected in their e-commerce engagements was the government initiatives when it came to transparency in the global value chain. Aras and Crowther (2013) reports that Nike managed to transact over 2millions deals online between 1999 and 2012. 4.0. Cultural factors and e-commerce process Effects of culture on the adoption of e-commerce are varied. Companies and organizations running most of their businesses on e-commerce platform have a chance of succeeding depending the culture and willingness to adopt Internet transactions. Beginning with Arabian countries, Abdul (2010) researched on determinants of eCommerce Customer Satisfaction and noted limited access of internet accessibility, poor attitudes towards international eBusiness competition, lack of intra-regional eCommerce infrastructural developments as well as disproportionate internet penetration in rural areas which has largely been affected by Arabic culture that sees Internet as a contradiction to Islamic religion and doctrines. Taking a case of Citibank and Rak Bank in United Arab Emirates, Abdul (2010) noted that major obstacle for the progress of eCommerce by these banks was lack of customer trust in online merchants. On the other hand, reports have shown that Islamic culture view e-commerce as gambling which is not only against Islamic religion but suggests a growing fear among Saudi that merchants may sell products with defects and that once an online payment is made such transaction(s) cannot be reversed irrespective of the nature of the product. This factor has been even made complicated with Saudi cultural beliefs. Some scholars reports that e-commerce processes in some firms have been negatively hit owing to the fact that infrastructural features and designs are less conducive in the sense that some servers take too long to respond, excessive graphics and animation, less attractive aesthetics and lower transactional capabilities (Abdul, 2010). However, this case is different in other countries such as United Kingdom, Canada, Australia and Germany. Socio-culturally, there has been growth of online education and the growing demographic shift in taking up new technologies for different generations. This has positively affected the expansion of e-commerce process by some firms and a good example is the Optus (Edim, 2000). Other benefits associated with favourable cultural environment are the differentiation and introduction of products to the education field. Optus stepped into the market in 1992 to provide the basis for competition in telecommunications in Australia. In 2010, the Company was serving more than 8 million customers a day through e-commerce and championing the competition in providing value for money and choice for the clientele (Australian Communications and Media Authority, 2010). 5.0. Technological factors and e-commerce processes Understanding technological factors and how they affect e-commerce processes in an organisation has been linked with the theoretical part; technology acceptance model (TAM), TAM2 and Unified theory of acceptance and use of technology (UTAUT) (Ha and Stoel, 2009). That is, the readiness and ability of an organization to accept and use technology. Technological environment in a given organisation dictates how best e-commerce processes can be implemented. Given the growing ambitions and market penetration strategy, organization engaging in e-commerce should consider moving from its functional model to a product design model, which enables better cross-departmental communication and alignment (Ha and Stoel, 2009). Taking a case study on, they have placed technological platform for e-commerce that they used to stylistically modify their Coca-Cola Zero drink. Taking a case of Nivea, Perren and Burgoyne (2010) argue that the objective of the Company in terms of strategic development is to reach even further improvement in service standards and network quality. This has facilitated their engagement in e-commerce marketing and sales. Further to this, the product design model allows focusing efforts and consolidating specific expertise around the product and not the function, which brings in a more focused set of skills and experiences. Secondly, the Company should be able to address the constantly changing business environment in a more flexible and responsible way, as the product design model concentrates decision-making authority in a “product cell” and thus enables faster response. With that in mind, a product design structure and contingency theory applied to the management approach can provide the organization with an opportunity to gather cross-functional and diverse teams under each focus segment, and provide customized and effective solution to the customers. Over the last three years, Optus had been planning to add about 1,000 new greenfield sites and introduce 3G 900 Mhz to 500 existing sites across the metropolitan. This on the one hand, shows readiness for e-commerce adoption. On the other hand, the Optus 4G Network has been fast, has had less buffering, and involves improved audio quality and streaming and gaming services with a significantly reduced lag which shows its readiness to execute its business through e-commerce. With Australia’s focus on the rapid implementation of cloud computing and the plan of the National Broadband Network (NBN) to legislate, what Optus has engaged in has shown readiness to use e-commerce (Hubbard, 2011). Additionally, technology innovation, ubiquitous cloud computing and the provision for mobile Internet devices in the context of the increasing reliance of businesses on social networking, distance working and study arrangements has also promoted e-commerce processes and this on the other hand, has been guiding Optus investments into profitable and innovative segmentation areas (Bender, 2014). 6.0. Demographic factors on e-commerce processes Factors such as age, familiarity, internet readiness, motivation, gender and structure of an organisation can dictate the level at which e-commerce can be accepted and used in an organisation. Taking a case of DHL Express, Corkindale (2011) argues that the firm has had third young generation and technology savvy generation that has quickly transformed the company towards e-commerce. Additionally, DHL Express has favourable motivation and balanced gender structure that has led to the introduction of IntraShip as a technological model to promote e-commerce process in their shipments (DHL Express, 2010). IntraShip is the main application that DHL Express B2B customers are using for shipping. It is a web-based e-commerce tool for shipping order making and their tracking. The application is used through DHL Finland’s website and it is aimed at account holders of DHL Express, so basically to “volume shippers”. DHL Express promotes the application to be automating customer’s shipping routines: preparing, tracking and managing shipments (Schermerhorn et al., 2014). Through the tracking aspect of the software, the customers are able to follow the shipments at all times during the day. This is another case where technological factors have been positively affecting e-commerce processes in an organisation. 7.0. Conclusion E-commerce application has had positive and negative financial turnaround. Starting with the positive trend, it has been noted, from management analyses that depending on a given factor, e-commerce has enabled business activities record improving revenues. Additionally, looking at support programmes and new markets established it is noted that the scale of operation across borders is increasing with increase in the demand for the services and products done online. This has not only given companies and firms competitive advantage but also evading financial position and funding options. Secondly effective management of these factors can give companies an option of changing the structure of the industry. In addition, it will help in value chain that will directly be impacted by e-commerce via possible influence especially on how to perform various business activities and processes such as sales and customer support. However, e-commerce still remains a challenge where companies are dealing with population that is yet to adopt technology. References Abdul, M, (2010), “Barrier to Putting Businesses on the Internet in Malaysia” The Electronic Acceptance Model”, Journal of Business Research, Vol. 62, No. 5, pp. 565-571. ACMA (2013). Communications Report 2009-2010 Series. Australian Communications and Media Authority. Retrieved from http://www.acma.gov.au/webwr/_assets/main/lib310665/report_4_challenges_and_response_strategies.pdf Aras, G. & Crowther, D (2013). Global Perspective on Corporate Governance and CSR. Farnham: Gower Pub. Australian Communications and Media Authority. (2013). Optus submission to Australian Communications and Media Authority public inquiry. Retrieved from http://www.acma.gov.au/webwr/_assets/main/lib311946/public_inquiry_submission_121-optus_21-09-10.pdf Baigh, H. (2013). Seven Strategies for Simplifying Your Organization. Harvard Business Review. 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