Value Adding Domain Model of Amit & Zott - Assignment Example

Question 1 A) Value adding domain model of Amit & Zott Numerous theoretical approaches are in place that tries to explain possible sources that can champion value creation, one of which is Amit & Zott (2001). The e-business components can only be improved through correlating different studies and researches that deals with information technology combining it with the requirements of strategic management. However, the amount of information that is available and discusses issues associated with information technology and thus they were able to bring together different views that resulted in formulation of their own theory that is characterized by four domains that operates interdependently, and hence contributes to value creation. These domains are: Efficiency – this domain is based on the understanding of transaction theory that states that efficiency improve only when the transaction cost decreases. It generally means that efficiency can only be improved through comparing different means that allows consumers to shop e.g. web shopping. This means comparing different e-business and e-commerce components could result in reduction of transaction costs since the direct and indirect costs have decreased. This is based on the understanding that the Internet provides voluminous information that allows consumers to decide on what product to purchase and quantity; hence, it easily shapes consumer behaviour (Jelassi & Enders, 2008). Complementary – it can be defined as the act of grouping products then presented to consumers rather than traditional approach of presentation of individual products. This generally means that an organisation concentrates and maximises on customer value instead of maximisation of profitability. Sample different products that are offered in a group may result in increase in sales that translates into economies of scale (Lee, 2008). Lock-in – this is when consumers decide only to do business with single service providers. It means that the consumers are not willing to change the service products and thus retain the same transactional model. This aspect is common when a consumer understands the website and they can operate it easily; this approach ensures that consumer loyalty and retention is championed. Novelty – this are the ideas that shapes the way the business operates and brings into consideration the other three domains ensuring that consumer value is championed. B) Amit & Zott Model Porter developed a value chain theory that was able to correlate different factions in an organisation. Porter’s theory brought into consideration service, outbound logistics, marketing, inbound logistics operations and sales that formed value chain theory. The aim of an organisation is maximisation of profit and thus the Porter’s theory tries to provide means of ensuring products and service quality is high resulting in decrease in operation costs resulting in revenue generation. The fundamentals of efficiency are based on transaction governance, structure and content (Lee, 2008). The content of transaction defines constituents of transaction; the transaction structure is influenced by environmental factors while governance defines the ethics and morals that guide the entire process of transaction. Question 2 A) ERP ERP can be defined as an integrated system that brigs together different computer components allowing management of internal and external resources to ensure quality service to consumers and profit maximisation. It allows sharing of organisational resources between different entities in an organisation and also allows communication with external stakeholders. It also allows centralisation of information and thus improves organisation tasks, and hence achieving competitive advantage. On the other hand, e-business aims to improve organisation operations through taking into consideration factors such as marketing, organisation learning and hence efficiency (Jelassi & Enders, 2008). In the same view, ERP and e-business brings numerous benefits to an organisation that may include reduction of operation costs through software packages, allows designing of organisational products through integration of different departments and sectors, ensures accounting process is championed. Thus, ERP generic functionality supports and complements the requirements of e-business ensuring that efficiency is encouraged and thus the organisation benefits from numerous organisation strategies such as benefits of competitive advantage. B) Balanced scorecards Different managements systems are incorporated into organisations to ensure efficiency is championed. One of such strategies is the use of balanced scorecards that allows alignment of business activities to vision and strategy of an organisation, allows improvement of internal and external communication, all translating in monitoring and gauging the performance of organisation functions based on some predetermined indicators. This means that the constituents of balanced scorecards and its requirements are championed by utilisation of balanced scorecards (Goldenberg, 2008). Thus, balanced scorecards presents a means in which different functions of an organisation can be integrated and monitored. For example, it allows for integration of different functions that include customer relations, finance, accounting, and internal business process. Numerous tasks can be accomplished by utilisation of balanced scorecards since they also complements and champions the requirements of ERP. Some of the goals that are fulfilled by balanced scorecards include increased financial efficiency, improves on organisation process, monitors progress, information systems enhancement, and allows for convenient means of motivating/educating employees. Generally, the two components, even though they employ different strategies, are aimed at ensuring profitability of an organisation and thus its efficiency towards consumer requirements (Jelassi & Enders, 2008). Question 3 A) Reasons why organisation are against e-business Numerous organisations present different limitations and challenges that are associated to e-business. Some of the factors that prevent many organisations not to maximise on the benefits of e-business include: i. Many organisations are used to traditional means of communicating with their consumers and presence of e-business may inhibit this requirement ii. E-business brings into consideration numerous processes and tasks that may take long times before been successful. iii. Some organisations may not be able to support the requirements of e-business because of sector limits. iv. E-business brings into consideration doing business based on trust. B) Two common reasons associated to e-business Information technology – e-business requires advanced technology to be able to operate efficiency. This means that it requires huge investments both monetary and in kind. Technology changes and introduction of different aspects means that information technology requirements could continue change and thus such factors could be expensive for the organisation to maintain. Moreover, introduction of e-business means that new personal, and experts in different information technology field would be employed (Jelassi & Enders, 2008). This could result in increase in operation costs and thus decrease in margins. Hence, the technologic requirements and supporting factors may inhibit the demand for e-business and thus many organisations do not want to introduce e-business. Moreover, other requirements that are expensive and required by e-business include centralisation of information and data, security, and privacy considerations. Bringing together these numerous factors result in undesirable requirements in an organisation. Trust – trusts is a fundamental requirement in any business transaction. In traditional ways, trust was improved by physical appearances and direct communication with the seller or consumer. Many consumers believe that if any problem can occur after purchase, they can easily identify the seller and thus rectify the issue. However, in the case of e-business, there is no physical communication with the consumer and hence the values and requirements of trust are not supported. Many business are based on trust meaning that if a problem may occur, the reputation of an organisation may completely be spoilt. Question 4 A) E-business and outsourcing Starting a new business or diversifying is usually associated with numerous costs. This may include factors such as technological requirements, span of tasks, and human resource requirements. Thus, some factors that can make e-business be in a better platform to perform outsourcing requirements include: Technological requirements – outsourcing is an important requirement that enables most organisations to sustain in current turbulent market - a market that is affected by globalisation and diversification. This means that traditional methods of doing business are becoming obsolete and thus many organisations especially those based on e-business champions the use of outsourcing. This is because the tools and equipments for outsourcing are readily available for outsourcing. Some equipments and technology that is required to support the fundamentals of e-business and also outsourcing includes security measures, centralisation of data, and reputation of the said organisation. However, a conventional business has no provisions for information technology and they could be forced to start from scratch (Jelassi & Enders, 2008). Human resource requirements – information technology requires human resource who are proficient in different fields. Thus, this is an important requirement to ensure that an organisation succeeds in its operations. An organisation that utilises e-business has the appropriate human resource that can support organisation requirements and thus can easily fulfil the requirements of outsourcing. However, for an organisation that does not support e-business could be forced to recruit and hire human resource that is versed with information technology. These two are example of reasons why organisations that are currently utilising e-business can succeed in outsourcing business. B) Limitations against outsourcing as an ERP approach Some limitations or factors that inhibit the success of an organisation include: Loss of managerial control – accepting a deal with another organisation to perform certain duties of a department results in transferring the organisation control to the new organisation. This means that the contract stipulates the limits of the managerial team. Generally, it means that the organisation will not follow standards and quality that has been cultivated into organisational culture. Security and confidentiality threats – data and information are important requirements for organisations and thus consideration to its confidentiality or security should be encouraged. Thus, transferring the information to a new organisation means that these requirements are not support and hence may place the organisation in undesirable position. Quality issues – the new organisation is usually determined by the contents of the contract and not the ideologies or principles of an organisation. This means that the new organisation main goal is maximisation of profit rather than ensuring quality since they will tend to utilise low quality raw materials to decrease operation costs and hence resulting in profitability (Goldenberg, 2008). Thus, the reputation of a business may be spoilt y outsourcing of services and products. Costs – many new organisations operate based on the requirements on the contract. Thus, any additional expenses or costs will be forced to be covered by the organisation. An example of such cost is lawyer bill; a lawyer could be employed to read the contract and determine whether the contents of the contract are favourable. Question 5 A) Importance of CRM software in e-business Organisational information should be properly maintained to ensure efficiency and effectiveness can be obtained. Some of the main factors that champion utilisation of CRM in e-business environment include: Introduction of CRM ensures that better service for consumers is ensured. This is because CRM has numerous technological capabilities such as storing personalised information of consumers and thus personalised relationship can be encouraged. Understanding the customer means that services can be tailored to suit their changing requirements (Goldenberg, 2008). Employees can operate efficiently and effectively because they can access information of consumers will at the same time checks out the consumers process. For example, a consumer may require new stock, which means that the information can be obtained from warehouse without physically travelling to the warehouse or they can easily update the consumer on process or requirements that they had requested (Jelassi & Enders, 2008). Operation costs could decrease because of benefits and capabilities of CRM. This is because information can be accessed easily while consumers can be satisfied with the services offered. Moreover, other activities such as marketing can be targeted and thus reduce the cost of marketing campaign. B) Limitations of e-business CRM may posse numerous risks to an organisation. Some limitations that are associated to CRM include: Some information or records may be lost because of technological availability CRM is associated with numerous overheads that range from purchase of information technology up to employing the appropriate staff. Training and developing staff may inhibit the success of CRM. References Amit, R. & Zott, C. 2001.Value creation in e-business. Strategic Management Journal, vol. 22, no. 6/7, pp. 493-520 Goldenberg, B. 2008. CRM in Real Time: Empowering Customer Relationships. New York: Information Today, Inc. Jelassi, T. & Enders, A. 2008. Strategies for e-business: creating value through electronic and mobile commerce, 2nd Ed. New York: FT Prentice Hall. Lee, I. 2008. Emergent strategies for e-business processes, services, and implications: advancing corporate frameworks. New York: IGI Global snippet. Read More