Electronic Commerce - Math Problem Example

Electronic Commerce Introduction E-commerce is basically buying or selling of goods and services on the internet and it may involve business to consumer trade (B2C), business to business trade (B2B) and online retail operations (e-tailing) (Peer1, 2010). It may also be described as a technique that assists in enabling commercial activities over a computerized network electronically. These electronic transactions entail transferring of business specific information. Today various enterprises across the globe have already adopted the e-commerce concept into their day to day business operations which has led their businesses into becoming more popular as a result of global internet audience. With increasing globalization coupled with cut throat business competition, organizations have been forced to deploy new techniques and strategies to keep afloat. With the myriad opportunities presented by internet and other technological advancements, e-commerce has emerged strongly and subsequently transformed itself as a new business strategy that is guiding organizations into newer and better ways of promoting their goods and delivering their services while keeping them linked with their clients 24/7/365. This initiative is providing business clients with more flexibility that enables them to make purchases from anywhere and at anytime while enabling businesses also on the other hand to sell their products and services at anytime regardless of the client’s time zone (Broadway InfoTech, 2010). The concept can be applied at various levels of business regardless of the organizations size and may range from individual selling artifacts during their free time to world class organizations supplying goods (e.g. Jet engines) and services (e.g. Cross border lead advisory services) to other companies. By organizations adopting e-commerce, they are able to generate both internal efficiencies and external coordination through changes in intra or inter organizational integrative processes. Such innovations can eventually foster improved product performance or business operations whereby the experienced business changes as a result of e-commerce come with two distinct characteristics. They represent a different performance package attribute- one that is not valued by the existing clients and secondly, the performance attributes that the existing clients value improve at such a rapid rate that could easily lead into new innovation within the business processes thereby invading the established markets, and since e-commerce technologies are openly available to business competitors and easy to replicate, adopting e-commerce will not necessarily ensure a sustainable competitive advantage for the organization. For instance Ezee plumbers may advertise its services online whereby a prospective client in Manchester, United Kingdom can inquire on their services through their official website. The client may then proceed on by selecting the desired services, making appropriate payment and finally the company through its local dealers or subsidiaries may send a plumber to the clients location for repairs in which after the plumber will leave the clients home and file his/her worksheet after a successful repairing attempt. All these procedures can be performed without the company or the client making any word of mouth communication and Ezee shopper may advertise its services regionally or globally provided it forms the right partnerships. This particular online strategy may be replicated by its competitors hence eroding its envisaged competitive advantaged and perceived shareholders value. In common with most business activities, e-commerce has to be guided by an organizational strategy whereby the business has a range of strategic options which enables it to support the achievements of some of its objectives pertaining to cost reductions, increasing prices, streamlining its operations among others and the relationship between the e-commerce initiative and the organizational strategy should be dependent on whether the business is a pure play, internet start up or whether e-commerce is acting as a strategy that offers several channels for the business to deliver it’s products and services. The decision of an e-commerce model is a strategic decision that businesses have to make when they are just about to conduct their business activities in an e-commerce environment and the businesses themselves need to have a proper understanding of on the types of models that are available for adoption. For instance in B2B model there is four generic categories; merchant models, manufacturer models, buy side models, and brokerage models (Yuantao Jiang). Fig 1.0 Basic e-commerce architecture Impacts of e-commerce to an organization Despite the apparent benefits of electronic purchases, business clients are still reluctant in embracing the concept. Some of the potential risks associated with online shopping sometimes become far much greater than its envisaged benefits and there are four most prevalent components among online consumers; financial risk, product performance risk, psychological risk and loss of time/convenience risk. Financial risk is more concerned with an online shopper’s sense of insecurity when using their credit/debit cards online and the client’s unwillingness to providing their card information becomes an obstacle to online shopping because most online customers believe that their card number can be easily compromised and later on misused. When it comes to product performance, there is the possibility of selecting down market goods from the inability of online shoppers to correctly judge the quality of online products. Psychological risks arise due to the fact that consumers perceive internet as an environment where compromise of personal privacy easily occurs due to the number of hacking reports prevalent in media and in regard to loss of time risks, concerns mainly arise from the difficulty of finding the right products in appropriate websites or delays in receiving the product (Salvatore & Colin, 2006, p.210). There is the risk of faded accountability since electronic record do not contain visible marks for identification of the party making the transactions therefore individual users cannot be held responsible for any losses, this raises the possibility of unauthorized transactions and it is also extremely difficult for auditors to identify and segregate unauthorized transactions while also accessing its impact to the organizations financial position (Kavita Gorwani, 2005). With businesses now being able to set up their own websites internally for online transactions, they are now capable of reaching audiences globally while cutting down on costs associated with traditional retailing methods. For instance, By setting up a website, Ezee plumbers will not have to spend substantial capital outlay in expensive renting and leasing of exclusive offices, this will leave them with extra money which could be re-invested on their product inventory and improving on their business services, this means that business costs is going to be significantly reduced in the long run (The times 100). There is also enhanced efficiency on the business operations because with electronic transactions, business operations become more scientific, humane and additional benefit of convenient communications between consumers, manufacturers and vendors which reduces unnecessary intermediate links hence eliminating waste of resources. SMEs such as Ezee plumbers can provide themselves a platform for fair competition because all enterprises that are conducting business electronically regardless of their size have virtually the same amount of information resources and last but not least there s timely feedback where all business negotiations can be effected instantaneously hence making the appropriate adjustments in time (Eachic, 2010). On a business perspective there are risks as well, consumer’s personal details such as the card numbers may be compromised in the company’s database by hackers remotely, and this scenario may subject the company into potential lawsuit that may seriously dent the companies reputation and possible massive financial losses arising from lawsuits which could impacting negatively on its balance sheet (Marc Epstein, 2004, p.91). There are also limitations with computer systems network, such a situation arises when the network cannot meet the rising demands of its clients subjecting the network to frequent failures or when the website features are not properly functioning indirectly misleading customers, this may eventually reduce the customer’s interest and confidence on the company hence leading the organization lose its valuable customers (Marc Epstein, 2004, p.92). With mushrooming growth, various jurisdiction have been forced to enact legislations that applies primarily to electronic commerce which requires enterprises to familiarize with legislations applying in their areas of operations because this particular knowledge will assist them in formulating their business strategies in compliance with the laws of the land. For instance, if Ezee plumbers decides to have its headquarter in Brisbane, with sales operations in California, database and web servers in London and shipping operations in Hong Kong, the first question is which laws will be applied? Traditionally it will be the in country specific laws where the transactions were performed, in addition issues such as validity of electronic and digital signatures, taxation, privacy and security, copyright will also lead into further analysis of country specific e-commerce legislation (Sam & Someswar, 2004). Electronic commerce systems currently implemented by most organizations With the e-commerce concept increasing transactional efficiency and effectiveness in various aspects of design, production, marketing and sales of products for both the existing and developing marketplaces through utilizing modern technologies, then enterprises need to move expediently to adapt information and communication technology for a successful e-commerce rollout for an efficient trade. Some of these technologies include Decision Support Systems (DSS) which enables users to make decisions in semi structured and unstructured situations whereby no one exactly knows how the decision should be handled and with a DSS in place, organizational decision making is enhanced by communicating and sharing information amongst a group of key people (Miles et al., 2000; Silverman et al., 2001). Traditionally DSS entails using models, interactive problem-solving, user controlled analyzing of business data while evaluating on the decision alternatives. According to Silverman et al. (2001), There are basically three levels of DSS in electronic commerce web based applications; access focused, transaction focused and relationship focused. Access focused level only entails simple user information such as searches and browsing capabilities, transaction focused level websites entail additional support for the customers mental process such as default settings, and in relationship focused there is more focus on maintaining long term relationship with clients and this particular level also draws a number of similarities with Customer Relationship Management Systems (CRMs). With e-commerce also likely to bring in significant impact on the supply chain mandated with delivering goods and services to the customers, this cost reduction initiative is also driving enterprises to interact with a large number of trading partners while forming customer specific partnerships that previously would have been costly. In order to manage such partnerships and to take advantage of the transient opportunities, business will require decision support systems to assist them identify and analyze current opportunities in terms of their business objectives. This offers SMEs such as Ezee plumbers myriad when collaborated with the internet and other associated technological advancements that easily enables them to venture into e-commerce at a relatively low price. Some of these associated technologies are; Electronic funds transfer It assists in electronic transactions which may take place in an ATM or a point of sale and a number of transactions may be performed such as sales, refunds whereby merchant refund earlier payments made by cardholders, withdrawals whereby cardholder withdraws cash from their bank account and subsequently pays for goods and services. Electronic data interchange It uses standardized formats in conducting electronic transactions such as purchase orders and invoices among two parties whereby they both benefit from lower order processing costs, short order cycle times and an electronic audit trail for conducting financial auditing. Online transaction Processing These are automated solutions that assist in managing transaction oriented applications for data entry and retrieval transactions and this concept is widely applied in electronic banking, order processing and various level of e-commerce and trading whereby some of its cited benefits include reduced paper trails, faster and accurate forecast for revenues and expenses, it provides to the online customers various payment methods and it is available on demand 24 hours, 7 days per week. E-commerce at Ezee plumbers With Ezee plumbers venturing into the online market space, there are a lot of arguments articulated to justify this shift to an electronic intermediate model of business. To begin with, there is operational efficiency arising as a result of automation and there is likely to be significant reductions in time that organizational members have to spend to complete a typical procurement transaction (Gebauer & Buxman, 2000). There is also information liquidity which is the ability of acquiring, understanding and utilizing information appropriately whenever it is needed which increases transactions value such as reducing the procurement costs for buyers (Phillips & Meeker, 2000). Ezee plumbers may also engage in new revenue streams such as transaction fees. They may start charging their suppliers some percentage on the gross amount of every closed deal that the website intermediates and this could range from anywhere between 0.1% to 0.5%. They can also introduce subscription fees for their suppliers, this could be monthly, quarterly or semi annually in order for their suppliers and customers to continue using their services such as customer support technologies such as chatting systems. The website may also generate some advertizing revenues via traditional methods such as cost per thousand impressions and if the website becomes successful in generating a huge mass of audiences then advertising revenues may become one of the company’s mainstream income (Trepp, 2000; Weller, 2000). The company may also derive some value added services revenue through credit, purchase order management, escrow account, payment settlement, material appraisal and inspection, insurance, logistics, warehousing, export documentation, letters of credit and services such as land, air and sea shipping. These services are not likely to be performed in house, however, they could be outsourced to third party providers and the Ezee plumber’s website would share revenue with third party companies offering these services to the company. Financial implications for E-commerce organization When e-commerce is properly implemented within an organization it is likely to reflect positively on the organizations balance sheet. This is so because the organization in question is immediately going to have a global audience which means more customers base hence increased revenues arising from their transaction with the company. It is this revenues that when properly utilized may be used in diversification and strengthening the companies enabling infrastructure so that it competes among the best. Business to Business E-commerce solution for Ezee Plumbers We are going to develop a B2B solution by using Biz talk technology. BizTalk is integrated business process platforms that can enable an enterprise develop various kind of solutions and it can act as an integration hub between the enterprises internal applications and systems trading partners. With such features, Ezee plumbers will be able to develop business processes that seamlessly flow across the organization itself together with its partners. Biz Talk comes with several integration patterns such as the Aggregator pattern: It enables the combination of messages from multiple partners into one. Filter pattern: It selects messages for processing based on a specific criteria. Identification by location: Identifies message senders based on their location. Role link: Its an abstraction between orchestration and trading partners that will enable Ezee to dynamically determine the partner to interact with. BizTalk also comes with a component known as Business Activity Services (BAS) that enables business users to interact with their partners and business processes in a common environment such as the one experienced in Microsoft office and the BAS interface comes with combination of windows SharePoint services and other template enabling users to work more efficiently with the BAS component. BAS has also been exposed as web services enabling enterprises to develop customized internet applications that can integrate seamlessly with BAS (Michael Stephenson, 2010). Fig 2.0 A typical BAS architecture Suitability of BizTalk E-commerce solution I would recommend BizTalk because apart from being market leader, it also comes with unprecedented level of security at various levels making it very ideal for e-commerce. BAS User: He can perform simple tasks such as creating trading partners, but cannot publish them on BizTalk or take actions which otherwise would automatically invoke a BizTalk service. BAS Manager: This is meant for users who can publish trading partners to the BizTalk system and activate agreements. BAS Administrator: It is meant for users who perform complex operations between BizTalk and BAS and this may include registration on a BizTalk server with BAS or synchronizing trading partner’s management database system. Additionally some of the cutting edge features that come bundled with BizTalk include; EDI application which contains reusable schema, orchestrations and pipelines that can be used by customized applications. EDI receive application that’s passes EDI messages, splits batches and performs validation. EDI send pipeline that performs EDI and XML validation while also converting XML to X12 or EDIFACT. There is also a partner agreement manager that allows setting of partner specific properties. Visual studio design time tools which assist in developing EDI solutions. References Broadway InfoTech (2010). E-Commerce a new way of conducting online business. Retrieved December 26th 2010 from http://www.broadwayinfotech.com.au/article/new-way-of-conducting-online-business.html Peer1 Hosting (2009). Electronic commerce. Retrieved December 26th 2010 from http://i.zdnet.com/whitepapers/Peer1Hosting_E-commerceBestPractices.pdf?tag=tr-left;trwp-postdl Yuantao Jiang (2010). An analysis on the impact of E-commerce on corporation strategy, retrieved December 26th 2010 from http://it.swufe.edu.cn/UploadFile/other/xsjl/sixwuhan/Paper/EB414.pdf Salvatore Zappala, Colin Gray (2006). Impact of E-commerce on consumers and small firms. Ashgate publishing limited. The times 100 (2010). The impact of e-commerce on business activity. Retrieved December 26th 2010 from http://www.thetimes100.co.uk/downloads/theory/the_impact_of_e-commerce_on_business_activity.pdf Eachic (2010). The business impact of E-commerce for SMEs. Retrieved December 26th 2010 from http://www.iceach.com/htm_news/2010-7/212669_387148.htm Marc J. Epstein (2004). Implementing e-commerce strategies, Greenwood publishing company. Sam Ramajunan, Someswar Kesh (2004). Impact of e-commerce legislation on business. Volume V, No 1, 2004 from http://www.iacis.org/iis/2004_iis/PDFfiles/RamanujanKesh.pdf Miles G.E, Howe’s A. (2000). A framework for understanding human factors in web based electronic commerce. International Journal of Human computer studies. 52(1): 131-163. Gebauer, J. & Buxman P. (2000). Assessing the value of interorganizational systems to support business transactions. International Journal of electronic commerce. Silverman, B.G., Bachann, M., Al Akharas, K. (2001). Implications of buyer decision theory for design of ecommerce websites. International journal of Human computer studies. 55 (5): 815-844. Trepp, L (2000). Valuing the new industrial Model: B2B Internet Exchanges. Philadelphia, PA: Electronic Market Center, Inc. Weller, T. (2000). B2B e-commerce: The rise of e-marketplaces. Arlington, VA: Legg Mason Wood walker, Inc. Michael Stephenson (2010). Introduction to developing B2B solutions with BizTalk. Retrieved December 26th 2010 from http://geekswithblogs.net/michaelstephenson/archive/2008/05/05/121891.aspx Fig 1.0 Retrieved December 26th 2010 from http://www.icai.org/resource_file/10376841-846.pdf Kavita Gorwani (2005). E-commerce implications for auditor. Retrieved December 26th 2010 from http://www.icai.org/resource_file/10376841-846.pdf Fig 2.0 retrieved December 26th 2010 from http://geekswithblogs.net/michaelstephenson/archive/2008/05/05/121891.aspx Read More