The Strategic Implication of E Commerce for the Design and Construction Industry Article Analysis - Essay Example

The business world has evolved greatly over the last 25 years. The acceleration started with the internet era in the 1990’s and the subsequent convergence age we are currently living in the 21st century. The convergence age is defined by the collapse of media channels: broadcast, cable, radio, online, print into a value chain that creates a singular medium which become the epicenter of interconnection and activity that leads all stakeholders to the same primary provider united by broadband internet and high speed wireless networks. The architecture / engineering / construction (AEC) is one of many industries that is currently utilizing ecommerce solutions and platforms in order to obtain competitive advantages by reducing cost, integrating resources and gaining access to vast amounts of information while at the same time increasing the networking capabilities of the firm. The article The Strategic Implication of Ecommerce for the Design and Construction Industry is analyzed in this report to evaluate different aspects of the research approach as well as concepts and principles related to the application of e-commerce in the AEC industry (Johnson, et al, 2002). The main research question which is being asked by the author’s of the article by Johnson and his colleagues is if the AEC industry can benefit itself and integrate ecommerce platforms into the business plans and strategic objectives of the enterprise. If the construction industry and its participants can achieve greater integration of ecommerce it be able to raise overall profits in the industry by streamlining activities that used to take greater efforts which led to unnecessary expenses now become automated activities that provide added value services to the customers. The power of the ecommerce solution is based on the achieved growth in the utilization of the platform after the turn of the century. In 2001 ecommerce in the United States generated $7931 million in revenues (Plunkett Research, 2007). Six years later in the 1st quarter in 2007 the sales volume had grown to $27,092, an overall increase of 242% over a six year span or an average yearly growth of 40% (Plunkett Research, 2007). These figures clearly illustrate evidence of the worldwide tendency of increase ecommerce dependence by all companies around the globe. The article effectively described the industry in order to evaluate possibilities that are going to integrate ecommerce solutions to increase efficiently in the AEC industry. Various case studies of different participants of the value added supply chain that allowed the players in the industry to obtain efficiencies associated with economies of scope, integration of resources, technological advances, information technology and other competitive advantages. The literature provided a very clear and descriptive analysis of the construction industry. The construction industry is a mature fragmented industry which is closely held with less than 25 public trading companies and plenty of small and medium closed held private enterprises (Johnson, et al, 2002). The configuration of the industry created the opportunity for intermediaries to provide a specialized service in order to help this fast pace dynamic industry in which firms jump from project to project and virtual enterprises are created to facilitate the communication and functioning of a project by applying information technology solutions to guide a firm in the right direction with the help of technological advancements. A fine methodological approach was provided with solid theory and concepts of practical application into ecommerce solutions. The e-commerce topic is discussed in a way that the strategic decisions are allocated a proper discussion starting in the role of information technology and moving into strategic positioning that can be achieved through the utilization of an ecommerce platform. Porter’s five forces technique is utilized to analyze the effect of the different element on a company in the studied industry with relation to the introduction of ecommerce application into a construction, design and engineering business. Each element or force of Porter’s model which includes: bargaining power of suppliers, threats of new entrants, threats of substitute products and services, competitive rivalry among firms, and buying power of buyers were used to illustrate different examples of how IT and e-commerce can enhance the functionality of different the different business functions (Kotler, 2003). The overall approach utilized by the authors of the article to bring light to the fact that information technology has become the top branded service industry that has revolutionized the world and create business models such as India’s information technology exports from other countries around the world based on ecommerce transaction originated by the need companies in other parts of the world such as the USA have to outsource work and have connectivity to its virtual employees by signing telecommuting work arrangements in which large portions of projects are performed elsewhere in business to business e-commerce transactions. The construction industry could perform generic benchmarking into the Indian Ecommerce model to find solution applied earlier in this fast track innovation nation to then apply the knowledge to perform continuous improvement in its e-commerce platforms for both business to customer and business to business e-commerce transactions. A company that provides civil engineering services for city construction projects and other jobs related to the construction industry can increase the amount of client the company is able to handle at the same time with the same amount of labor by having an information technology infrastructure that provides tools for the employees of the firm that allows them to work with clients and shared vital information through a secure network by performing business to business ecommerce transaction inside the through a module to the IS that allows the buyer access the seller’s network to share the information related with this business deal. The best way for a company in a closed industry to open up its doors to new possibilities is by entering a new dimension into the mix that allows the players to used new forms of communication to create value by providing services such as clearing financial transaction faster by performing electronic commerce is the wave of the future in the business world and will transform business is performed in the AEC industry (Moscove, et al 1999). References Johnson,R., Mark C., Ge. X., Jeong-hang W. and Yunsik S. (2002). The strategic implications of e-commerce form design and construction industry. Engineering, Construction, and Architectural Management, 9. 241-248. Kotler, P. (2003). Marketing Management (11th ed.). New Jersey: Prentice Hall. Moscove, S., Mark. S. and Nancy B. (1999). Core Concepts of Accounting Information Systems (6th ed.). New York: John Wiley & Sons. Plunkett Research (2007). Ecommerce & Internet Industry Trends. Available from [Plunkett Research database]. [Accessed 2 January 2008]. Plunkett Research (2007). Ecommerce & Internet Industry Statistics. Available from [Accessed 2 January 2008]. Read More