E-business Strategies - Coursework Example

E-business strategies Table of Contents Table of Contents 2 Introduction 3 Competitive advantages of e-business 3 Organization strategy 4 Innovation in e-business model 4 Novel roles and characteristics of e-business models 5 Medium 5 Website 5 Location 5 Communication 5 Access 6 Delivery 6 Risks 6 Range and details 6 Value creation in network markets 6 Value creation mechanism 7 Key features of e-business model 7 Case studies 7 Amazon.com 7 RS Components 8 Conclusion 8 Reference list 9 Introduction Business models can be explained to be a method by which a company sustains itself and generates enough revenue. The business model helps describing where a business is positioned in the value chain and the mechanisms used by it to generate adequate revenue. Most small organizations have a very basic and simple business model which includes producing a particular product or service, selling it to the customer and generating adequate revenue (Johnson, Christensen and Kagermann, 2008). Under favourable circumstances the revenues earned exceed the cost of operations and the business entity is able to generate profits. Some other models however are more complex for instance the process of broadcasting which involves content creators, distributors, advertisers and their agencies, listeners and viewers. In such an outlay it is difficult to predict the amount of revenue that each component makes (Certo, Holcomb and Holmes, 2009). Internet business or e-business gives rise to many new kinds of models as the web keep inventing new models. E-business can be described as the means of doing business electronically. It includes e-commerce and e-markets. In an e-business set up, a firm conducts its commercial transactions with their business partners and other buyers over the internet. This however does not include those firms who make use of their websites and other internet platforms to display information about their products and services. In an e-business model, orders are placed for goods online whereby consumers can go through a range of products and chose what is most suitable. Payments are transferred electronically or it may also be made at the time when the goods are physically delivered. E-business also reinvents old models. For instance, in case of the auction model, the web has helped to increase its popularity and made it applicable to a wide number of goods and services (Brousseau and Penard, 2006). Competitive advantages of e-business E-business models have a number of competitive advantages to offer. The internet has helped to create a business environment that has compressed time and distance. People have access to greater information that facilitates easy decision making. They also gain easy access to a wide range of products and services. A significant advantage that this type of business model has to offer is low cost of operations. It is relatively cheaper to set up a business based on this model than the traditional methods. The technology used for conducting e-business is becoming advanced as well as cheaper to obtain. Low cost of entry enables a large number of individuals and firms to enter into this type of business environment. It also helps to maintain a round the clock connection with suppliers and partner and facilitates conducting business at any time. Competitive advantage arises out of the company’s ability to meet customer expectations, apart from being the most logical way of conducting business. Organization strategy From the view point of strategy, the corporate strategies in respect of e-business are to integrate communication and information in a manner so that productivity, reduction of costs, mass customization and greater customer participation can be achieved. The strategies in relation with e-business models are developed on two levels. They are discussed as follows. On the corporate level, administrators influence the business behaviour, the supply strategies and also the customer collaborations. This level is mainly focused upon outlining the chief goals and objectives of the business and the method that the organization undertakes in order to meet those goals (Amit and Zott, 2001). The functional level of the e-business model involves establishing suitable value chain operations for conducting the business and establishing process to process relationships. This level integrated the business model in a way so that the ultimate objectives of the business can be achieved. This level also focuses upon developing real time solutions for different customer related problems, reporting, conducting analysis, incorporating new types of technologies and developing integrated data storage. Innovation in e-business model The internet provides e-business models with relevant scope for growth and innovate its process of transacting business. The web can be utilized in different ways so as to strategically meet the needs of the consumers. Compared to the contemporary business models, e-business is highly flexible towards change and innovation. The cost involved in such change is also low in comparison with other business models. Since the internet is constantly developing itself by introducing new types of software technologies, it becomes important for e-business models to upgrade their sytems consistently. This helps the business model to transmit data more effectively. Novel roles and characteristics of e-business models Some of the characteristics of an e-business model can be discussed from the following view points (Alter, 2001): Medium The aspect that sets e-business apart from other types of businesses is the fact that it is developed and operated online. Although e-business encompasses a wide variety of businesses, they all rely upon the internet for its operations. Online media is used by the organizations to buy, sell and promote various types of products and services. Additionally through the web it is possible for the business to reach out to the whole world for selling products (Stewart and Zhao, 2000). Website An essential aspect for the success of an e-business is to have a company website that features all its products and services and gives sufficient details about the company. The website should be designed in a manner so that users can easily navigate. The payment mode incorporated with the website needs to safe and hacker free so that consumers can pay for their purchases without worrying much. E-business companies often come up with new applications and features to make their website attractive and popular. An e-business company can also use other types of social platforms for promoting their products such as Facebook and Twitter. Location Versatility is one of the key features of e-business. Traditional businesses are required to set up offices or stores at different locations for conducting business. E-business can be effectively be conducted from one single location with the access of the internet and computer networks. Many e-businesses are also seen to be operated from home. Entrepreneurs have the opportunity to control business from anywhere. Therefore lot of investment on setting up work locations and other infrastructural facilities are not required in this type of business model (Laplume, Sonpar and Litz, 2008). Communication Maintain communication with customers, clients and suppliers is an important aspect in the success of any type of business. Through the internet it is possible for an e-business to maintain continuous an easy communication. This also facilitates timely addressing of complaints. Another feature that e-business facilitates is that, by placing the business on the web, the business can gain potential clients from across the globe. It also facilitates easy exchange of information (Giesen, et al., 2007). Access Customers are not required to worry about the operating hours for purchasing products. The organization remains always available for selling products and services. It is also observed that customers are more willing to provide feedback when business is conducted online (Magretta, 2002). Delivery A major disadvantage for e-business concerns is that they cannot provide instant delivery of goods or services as in traditional forms of businesses. Once consumers place an order it takes time for them to actually receive it. In most cases delivery of goods takes place in a days or two’s time. Many consumers are not willing to wait that long to obtain their purchases. This is one shortcoming that e-business concerns have to face. Risks E-business gets hugely affected by negative customer experiences and news. E-business relies a lot upon word of mouth. An unhappy consumer may spread his or her opinion to other people that may potentially harm the business. E-business is also exposed to the risk of getting hacked and website failure. Many e-business concerns are seen to send out promotional e-mails and notifications to potential consumers. This aspect is found to be annoying by many people (Weill and Vitale, 2001). Range and details E-business acts as a platform for selling a diverse range of products and services. Another benefit that e-business offer is the detailed summary regarding each and every product. In fact the details provided for different products increase the urge amongst consumers to buy them. Different e- business companies have their own methods of displaying product information which includes videos, photographs and so on (Brynjolfsson and Hitt, 2004). Value creation in network markets The web has facilitated e-business models to be able to explore new areas of business ventures. It has also facilitated developing new concepts from the existing concepts of business. This feature thereby helps in the creation of values. E-business models help to develop or create values not only in economic terms but also in terms of social issues. It develops a social interaction platform that helps in addressing many vital matters of the society. Value creation mechanism In order to develop new areas of business it becomes important to explore new ideas that strategically help in developing new concepts. The advancement of technology itself helps in this respect to develop potential areas which include innovative services and means of transacting goods. Key features of e-business model On the basis of the above mentioned characteristics, it can be stated that e-business models are highly suitable for those kinds of entities that are largely involved in transfer of information and establishing grounds for communication. It acts as a support business model for firms involved in providing services and goods to the consumers by establishing a wider reach and an easy access platform. Many business organization who are involved in the physical method of conducting business whereby goods and services are exchanged physically, are also seen to adhere to the e-business model in order to increase their efficiency and business reach. Although the e-business model helps firms to communicate with a larger number of consumers, it also incorporates the need for consistently upgrading and modernizing the business model. Case studies Amazon.com Amazon.com is an international e-business company with its headquarters in Seattle. It is the world’s largest online retailer. The company was initially started as an online book store. It soon expanded into selling a wide range of products including electronics, software, apparel, furniture, toys, jewellery and many more. While companies like Wal Mart who are brick-and–mortar retailers and very rarely change their product categories or brands, Amazon.com on the other hand firmly believes in constant innovation. The company consistently finds new ways of delivering products and attractive ways to influence customers. The product and brand range of Amazon.com is huge and is managed through efficiently through well integrated supply chain networks. The company is seen to effectively posses all the qualities that a successful e-business requires to have. The website is well managed and easy to navigate. Amazon.com is seen to sell its products at equal or lower prices than its customers. Fast delivery is also one of the specialities of Amazon.com (Afuah and Tucci, 2001). RS Components RS Components is one of Europe’s leading distributors of mechanical and electronic parts. It operates in over 22 nations and has a wide range of products from different suppliers. The company adheres to efficient cost control practices. One of the main reasons behind the organizations success is the development of well integrated supply chain network and strategic product development. Diversification into newer areas of business has been one of their main reasons for success. Being a B2B based e-business, RS Components also believes in maintaining strong ties with its clients. The company strategically forms ideas for new products by understanding and studying client needs. RS Components believe that well managed business and monitoring business transactions closely is one the most effective ways to succeed in the e-business domain. E-business model paves way for remaining flexible towards incorporating newer technologies in the manner in which businesses are conducted. This is an aspect that RS Components takes advantage of (Afuah and Tucci, 2001). Conclusion On the basis of the above study, it can be said that the e-business model provides adequate scope for different types of business concepts to grow and capture new markets. It helps in providing firms with a larger market scope. In the recent past, e-business has witnessed tremendous growth as more and more firms are adhering to this model for transacting business. Ease of establishment and low cost of implementation have been the primary reasons for the growth of such models. Reference list Afuah, A. and Tucci, C. L., 2001. Internet business models and strategies: Text and cases. New York: McGraw-Hill. Alter, S., 2001. Information systems: foundation of e-business. New Jersey: Prentice Hall. Amit, R. and Zott, C., 2001. Value creation in e‐business. Strategic management journal, 22(6‐7), pp. 493-520. Brousseau, E. and Penard, T., 2006. The economics of digital business models: A framework for analyzing the economics of platforms. Review of Network Economics, 6(2), pp. 81-110. Brynjolfsson, E. and Hitt, L., 2004. Intangible assets and the economic impact of computers. Boston: MIT Press. Certo, T. S., Holcomb, T. R. and Holmes, R. M., 2009. IPO research in management and entrepreneurship: Moving the agenda forward. Journal of Management, 35(1), pp. 1340-1378. Giesen, E., Berman, S. J., Bell, R. and Blitz, A., 2007. Three ways to successfully innovate your business model. Strategy and Leadership, 35(1), pp. 27-33. Johnson, M. W., Christensen, C. C. and Kagermann, H., 2008. Reinventing your business model. Harvard Business Review, 86(12), pp.50-59. Laplume, A. O., Sonpar, K. and Litz, R. A., 2008. Stakeholder theory: Reviewing a theory that moves us. Journal of Management, 34(1), pp. 1152-1189. Magretta, J., 2002. Why business models matter. Harvard Business Review, 80(5), pp. 86-92. Stewart, D. W. and Zhao, Q., 2000. Internet marketing, business models and public policy. Journal of Public Policy and Marketing, 19(1), pp. 287-296. Weill, P. and Vitale, M. R., 2001. Place to space: Migrating to e-business models. Boston: Harvard Business School Press. Read More