Technology and Competitive Advantage - Coursework Example

work - Individual Report Strategic Information Systems (E-COMMERCE) Table of Contents Discuss the characteristics and competitive advantages that e-commerce enables within each industry sector, providing a case study illustration of one company in each industry sector. 3 Computer Hardware Industry 3 Case Study- Dell 4 Banking Sector: 5 Case Study - HSBC 6 2- For each industry sector, select two companies (to include the companies chosen in 1- above) and compare and contrast the way in which each company is applying an e-commerce strategy. 8 Retail Sector: Dell and HP 8 Banking Sector: HSBC and RBS 11 References List / Bibliography 14 http://phx.corporate-ir.net/phoenix.zhtmlc=97664&p=irol-newsArticle&ID=1215901&highlight 14 Introduction - The advent of the Internet has changed the way the world conducts business. Ecommerce has become one of the primary sources of sales for a majority of companies. Ecommerce in UK alone has been witnessing a massive growth, and as much as 13.9 percent of all sales has been completed through the Internet (National Statistics, 2006). This statement goes onto an explanation of the dramatic and explosive growth of ecommerce all over the world. To be successful in selling products or services online, a company needs to take into consideration of a great deal of things more than just the product/service quality. Therefore, the most important element among those perquisites is a secure, well designed and well managed website. It is through a user friendly website that a firm can attract more traffic to the website. This report presents an investigation into the extent to which e-commerce is currently being used in the computer hardware and the banking industry. Main Body - 1. Discuss the characteristics and competitive advantages that e-commerce enables within each industry sector, providing a case study illustration of one company in each industry sector. Computer Hardware Industry The Computer Hardware industry is as much a commodity market as it is a technology market. It is somewhat misleading to assume that research and development alone decides the success of a PC manufacturing company. R&D is most definitely required for future improvements but perhaps is not the sole determinant of a company's success. In the PC industry, apart from excellent R&D and customer care, it is marketing of the product that would matter. Case Study- Dell Dell has been one of the prime examples of success in e-commerce. The business objective of Dell is to eliminate the retailers and sell directly to the consumers. By eliminating the middle layers, Dell has brought about epochal changes in the PC industry. Communicating directly with the consumer helps the business become more agile, and also helps cut cost of sales. In this endeavor, the only tool in the hands of Dell is the Internet. Dell has unique business strategies and models to support the growth process of the organization. From $1000 to $30 billion, the growth rate of Dell has been phenomenal. Dell mainly concentrates on activities that would add more value to the organization and also result in good-looking market returns. Over the years there have been many companies in the PC/server industry following the footsteps of Dell. However most of them failed in their endeavor (Woodgrange Technologies Ltd., 2005). Simply replicating the business model never serves the purpose of making something successful. Dell has a competitive advantage in its cost advantage and greater efficiency. As such it emerged as the cost leader in the market. Dell was the first one to offer world-class PCs at dream prices to the consumers. However selling directly to the consumers were more of a revolution than a religion. As such Dell has continued to surprise their customer base with unique and intelligent offers. Recently Dell has signed up Best Buy as a retail partner (Dell, 2007c). This is a major historical shift for Dell who had been preaching the values of direct selling for more than two decades. With the market getting flooded with PC manufacturing and assembling companies, it became necessary to stay ahead of the game. Most people buying computers are as much interested in hardware as other details. They are now equally interested in finding out, for example, what all colours a notebook comes in, how durable or heavy it is and similar things. Having done this, Dell will be able to see customers' point of views (Hong Kong SAR government, 2006) The tried and tested formula for ecommerce success is clear, unambiguous and crisp communication. The pioneer in ecommerce, Dell computers still occupies the number one position when it comes to the most popular online retailers. The most powerful equipment of Dell is their set of localized websites. Dell UK experienced a massive 52% growth in web traffic and as such emerged as the fastest growing site in UK. (Comscore Networks, 2007) A detailed comparative analysis of the dell website will assist in understanding the areas improvement is possible. The layout of Dell's website is fine tuned and perfectly synchronized with their core objective of disintermediation. The Dell site is primarily a hybrid of selling and branding site where the consumer is given information about the product that will help decide the item when doing the purchase research. Banking Sector: Ecommerce in the last two decades brought about the second revolution in the banking sector. UK's high street banks like Barclays faced unpredicted branch closures and a falling customer base. Surveys showed that there was a fall in the levels of customer satisfaction and confidence. It did much damage to the banking and the financial sector. It was at this juncture that ecommerce was introduced. It provided the much relief to the banking sector. Efficient ecommerce helped banks to revive their performance by raising customer service standards, increasing the choice of retail financial products, reducing charges and giving consumers newer and better ways of managing their money. (Patterson J., July 2000) Case Study - HSBC The Hong Kong and Shanghai Banking Corporation is one of the leading private sector banks with its headquarters in London. According to Forbes magazine survey 2008 it is HSBC emerged to be the largest banking group. Inspite of primarily being a European bank, HSBC has a huge operational base in the Asian countries. It has significant lending, investment and insurance activities around the globe. HSBC over the years have acquired exceptional efficiency in operation and management. HSBC provides its customers with extremely secure, robust and cost effective technology platform. It not only helps individual customers but also the business customers. The website itself is a powerful tool in the hands of the customers. It delves into newer areas of ecommerce. HSBC helps businesses explore niche and virgin markets. HSBC's prompt services help smooth out the services across a variety of domains. The ecommerce infrastructure that they provide additional distribution channel that is widely and easily accessible. HSBC provides its business clients with fast online payment methods that help give them a wider reach to the4 potential markets. HSBC ecommerce facilities add to their competitive advantage and also their business clients. (HSBC Ecommerce, April 2007) When it comes to individual customers, ecommerce has changed the face of banking. Almost all banking services can be done sitting in the comforts of one's home. Right from paying bills, buying goods on different ecommerce sites to carrying out transactions on the Internet. To make fund transfer one no more needs to go the bank and stand in long ques. Internet banking facilitated by ecommerce help customers stay safe and secure in a time efficient way. With ecommerce ruling and people becoming more and more comfortable with Internet, keeping a track of bank accounts and funds has become a lot easier. Once again as seen in the retail industry case study, even in this case the website plays a very important role. HSBC official website is extremely user friendly and well designed. (HSBC, 2008) 2- For each industry sector, select two companies (to include the companies chosen in 1- above) and compare and contrast the way in which each company is applying an e-commerce strategy. Retail Sector: Dell and HP Hewlett Packard more commonly known as HP is a technology corporation. HP in the current times is one of the world's largest technology company and operates almost in every country with its headquarter at California, Unites States. It specializes in the domains of manufacturing computing, storage and networking hardware, software and other services. The product range of HP include personal computing devices like desktop and laptop, enterprise servers, storage devices, and a variety of printers and imaging products. HP delivers its products through a combination of platforms like internet, retailers, software partners and technology vendors. (HP, 2008) Due to its seamless and smooth operation HP overtime has emerged as the largest worldwide seller of personal computers beating its age old rival Dell. According to a report by IDC, the gap between the two market competitors Dell and HP widened at the end of the year 2007. While the PC market grew at an approximate rate of 9 percent, HP managed to take a near 4 percent market share lead. (Wong M., April 2007) However when it comes to ecommerce Dell scores more than HP. For any ecommerce business it is the website which is the most critical. A detailed analysis of the Dell website (2007a) churns out some interesting facts about their home page. Dell understands that it is a good home page that serves as the blue print for a successful website. In essence, the home page of an ecommerce should be able to convey all the important information about the organization. Dell makes its objectives clear and bold in the home page itself. Too much of information can leave the customer bewildered. Dell.co.uk scores over almost all its competitors even HP for its well designed, crisp and highly user-friendly home page. The beautiful amalgamation of pictures and text makes it a treat for the eyes. Both Dell and HP have a huge product line and by highlighting their main products they have been able to ensure that that it bucks the market trend of sluggish PC sales. Notebook has been the major driver of growth, and Dell has stressed it prominently in the home page (Associated Press, 29 November 2007; Dell, 2007). HP has successfully captured the minds of the consumers and is almost a monopoly in the printer market. So much so that printer is almost synonymous with HP. Ecommerce coupled with strong brand recall provides these big players with the much-needed competitive advantage. Ecommerce helps to cater equally well to the home based consumers, business consumers, and people who are seeking information. Dell.com makes sure that consumers are not lost in the website. The whole site is logically designed and makes sure that a well-informed prospect can reach the required page within a minimal number of clicks. HP.com is well designed but on the totality Dell scores much more than HP. Dell website is a hybrid of selling of its products and brand. A clear and concise description of each product helps consumers to analyze it according to their needs and requirement. One aspect about Dell.com that any e-commerce site should get inspired by is its usability. On Dell.com one can find the relevant information regarding a product in few minutes time and complete the purchase in equally short amount of time. It is most likely that potential buyers know their problem, but are not sure of the solution. By clustering similar products together, Dell ensures that the prospect gets a range of options to choose from. This ensures that a large number of potential buyers get the perfect solution, or the best possible alternative to their problem. When it comes to navigation, it is a smooth sail for any customer. The consumer need not be a technology savvy user to carry out online transactions. A novice can also make his way through the pages and accomplish his task of buying. However the aspect in which HP wins over Dell is the 'How to Buy' section of their website. This section guides a new visitor in the right way to make online purchases. The best thing about ecommerce is that it aids exchange of goods and services without barriers of time and distance. HP through this makes sure not to loose any of its prospective clients. One very important aspect of ecommerce is online payment options. Apart from a very well designed and user friendly website, a company dealing in ecommerce needs to have flexible online payment methods. Keeping this in mind HP incorporated the option of payment through PayPal at the HP Home & Home Office Store in the year 2006. HP thus joined Barnes & Noble, Dell, iTunes, Starbucks, Buy.com, People and Walgreens as large retailers and organizations that offer PayPal. (Steiner I., October 2006) Banking Sector: HSBC and RBS RBS or Royal Bank of Scotland is one of the retail banking subsidiaries of the Royal Bank of Scotland Group plc, along with Natwest and Ulster Bank. RBS provides branch-banking facilities in UK with its branches spread mainly in Scotland and larger cities of England and Wales. RBS despite being in the banking business for decades has not been able to widen its spread over countries. RBS is yet to make use of technology at its fullest. Technology is a prime driver of organisational competitiveness. Timely adoption of the right technology helps an organisation to gain a competitive edge over its fellow competitors. However high technology does not always guarantee effective increment in productivity and efficiency. Thus it is not the scale or level of technology that is important rather it is the identification of the technology according to business needs. (Porter M., n.d.) RBS needs to invest heavily on ecommerce keeping in mind the recent market trends. It does offer digital banking and ecommerce services to its customers but the scale of operation is very small. It also needs to redesign its website to make it eye catching yet user friendly. However despite the scale ecommerce is a core part of the distribution channel at Royal Bank of Scotland. One of the best features of the RBS is its Financial Markets ecommerce Product Suite. It meets distinct customer requirements across the globe. However it is HSBC which has evolved as the best bank for individual customers as always as business customers. Years of experience coupled with state-of-the-art technology enables HSBC deliver seamless and timely service. Conclusion Ecommerce has changed the ways of doing business. It has brought in more efficiency and productivity. Almost all sectors and industries are influenced by ecommerce be it banking, retail, electronics or shopping malls, everyone uses ecommerce to the greatest extent possible. However these industries use ecommerce as a support function whereas there are firms that use ecommerce as their primary business model. Amazon is the biggest example in this regard. Amazon.com has been one of the pioneers in the world of e-commerce. Its net income increased 48% to $118 million in the third quarter 2008 compared with net income of $80 million in third quarter 2007. (Amazon Investor Relations, September 2008) New age consumers are also much more open to the idea of online shopping. However to be successful in selling products or services online, the company needs to take care of not just product or service quality but also a number of other factors. The most important element in this regard is a powerful and highly user friendly website. For ecommerce, the website serves as the interface between the customers and the company. Therefore for clear and unambiguous communication, it is crucial from the company perspective to have a user friendly and well designed website. References List / Bibliography Amazon Investor Relations, (September 2008), Press Release, Retrieved December 4, 2008, from http://phx.corporate-ir.net/phoenix.zhtmlc=97664&p=irol-newsArticle&ID=1215901&highlight Comscore Networks (2007), Press Release, Comscore Networks, Retrieved December 4, 2008 from http://www.comscore.com/press/release.asppress=1188 Dell (2008), Dell: Coming Soon to Best Buy Stores in U.S.. Dell. Retrieved December 4, 2008 from http://www.dell.com/content/topics/global.aspx/corp/pressoffice/en/2007/2007_12_06_rr_000c=us&l=en&s=corp Hong Kong SAR government (2006), Presentation of Survey on Digital Products and Self-image, Hong Kong SAR government, Retrieved December 4, 2008, from http://www.esd.gov.hk/about_us/eng/press/digitalproductsurvey_Eng.pdf HP, (2008), About Us, retrieved December 4, 2008, from http://www.hp.com/hpinfo/abouthp/ HSBC, (2008), Home Page, Retrieved December 4, 2008 from http://www.hsbc.co.uk/1/2/ HSBC Ecommerce, (April 2007), Online Payments Powered by HSBC eCommerce, Retrieved December 4, 2008 from https://www.hsbc.com.mt/1/PA_1_2_S5/content/en/pdf/ecommerce_brochure.pdf National Statistics (2006), Information and Communication Technology (ICT): Activity of UK Businesses, 2006 Based on the results of the 2006 e-commerce Survey of Business, National Statistics. Retrieved December 4, 2008, from http://www.statistics.gov.uk/downloads/theme_economy/ecommerce_report_2006.pdf Patterson J., (July 2000), Ecommerce: the online banking revolution, Retrieved December 4, 2008 from http://www.vnunet.com/vnunet/specials/2127549/ecommerce-online-banking-revolution Porter M., (No Date), The Journal Of Business Strategy, Technology and Competitive Advantage, Retrieved December 4, 2008. Steiner I., (October 2006), HP Adds PayPal as Payment Option in Online Store, Retrieved December 4, 2008, from http://www.auctionbytes.com/cab/abn/y06/m10/i27/s06 Woodgrange Technologies Ltd. (2005), E-Commerce within Dell and how this new way of doing business is managed, Woodgrange Technologies Ltd., Retrieved December 4, 2008 from http://www.business2000.ie/cases/cases_7th/case8.htm Wong M., (April 2007), Gartner Says HP No. 1 in Worldwide PC Shipments, retrieved December 4, 2008, from http://www.physorg.com/news96191134.html Read More