E-Commerce Adding Value to the Organization - Essay Example

4. Explain how e-commerce can add value to the organization and the s and whether its e-commerce strategies are effective in reaching the segments? Providing value to Franke and its customers E-commerce can add several values to the organizations as well as their customers. Franke washroom systems can expand markets by applying EC. As E-commerce is based on the Internet, the extent of market reach is global. “Many important response activities can be greatly facilitated by EC which is the only solution to the business pressures such as market and economic pressures.”(Turban, 2006) Response activities range from the daily processes such as payroll, order entry to the critical responses concerning the supply chain. So, applying of EC may bring a global electronic market and reduce business pressures for the organization. Moreover, new sales and distribution channels may appear for Franke thanks to E-commerce. EC can reduce the cycle time to produce Franke’s washroom products. It can also enhance productivity and lessen the time needed to present the products into the market. The supply chain management of Franke will be effective with minimal delays. Moreover, the company can decrease the inventory and so can lower the cost for the inventory. The costs for administrative tasks and sometimes intermediaries in the supply chain are also reduced. The organization’s supply chain may be simplified in which the size of the supply chain is reduced. Franke can work more closely with its smaller group of suppliers in a focused supply chain evolved from applying E-commerce. “Tight coupling is a method for ensuring that suppliers precisely deliver the ordered parts, at a specific time and particular location.” (Laudon, 2007) It will enhance Franke’s logistical activities which are very important for the company to provide the right products with right quantities to the right locations at the right time. In addition to supply chain improvements, the supply chain management system of the organization can also be upgraded. EC makes SCM systems consistently linked the processes of supply chain such as purchasing, producing and distributing products from suppliers to consumers. Franke can integrate the demands for its equipment and enter them into the order entry system. A Franke worker assembles the equipment, packages them, make them tagged using RFID, etc, and then distributes them to the customer. The delivery process is monitored and tracked by Franke’s SCM system to get the latest information of order status. “Most B2B E-commerce is an adaption of EDI or is based on EDI principles.” (Deitel, Deitel & Nieto, 2001) EDI stands for electronic data interchange and it can minimize the cost, mistakes and suspensions common to the traditional ways of exchanging and recording paper documents such as purchase orders and customer information. Franke can build an EDI to increase the efficiency and effectiveness of the organization as well as coordination with business partners. For the customers, Franke provides detail information about the company, its products and services via the catalogs on the website. Customers from everywhere on the Internet can conveniently learn the contents within a few minutes. They don’t need to pay any cost for accessing the company data. Under the customer service section, the steel characteristics and cleaning tips are offered for the customers. Customers can even check their order status by entering their order number into the textbox provided for order tracking. They can get exact information about their orders in a minute. Order tracking facility greatly reduce the time spent by customers to make traditional order inquires. Evaluation of Franke’s E-commerce strategies EC strategy is a firm’s strategy for its e-commerce development. Franke washroom system had been a brick-and-mortar business which has a physical store to sell the products. It changed to a click-and-mortar company that integrates its offline operations with online facilities. Franke washroom systems are included in the five main product lines of Franke Group: Franke kitchen, coffee, washroom, beverage and foodservice systems. Under the five main divisions, the countries are categorized according to the geographic zones. Franke Sissons is a UK based subsidiary under Franke washroom system. The vision of Franke Group is “As the world’s leading provider of intelligent systems for domestic kitchens, professional food service, coffee preparation, beverage delivery and hygiene solutions, we enable enterprise and a rewarding experience for all concerned.” (www.franke.com) Franke washroom systems need to implement the group’s vision of hygiene solutions. Their EC strategies are the same principles of the strategies applied for their physical business though the Internet is a unique marketplace. The company pursues the differentiation strategy in which it focuses only on the core product: washroom equipment and accessories. As the characteristic of differentiation strategy, Franke provides its products with high quality and separate designs distinct from other brands. Because the global reach feature of EC is so strong today, it’s important for a company to differentiate and personalize its products and services to keep away from threats of substitutes. As a global organization, Franke group uses international strategy and localization strategy in which it separates the branch companies according to their locations. Localization strategy is applied to Franke washroom systems in UK market because it’s so important to produce the items that meet with the local taste. The phrase “think globally, act locally” reflects the nature of global and local strategies. Their target markets are customers around UK and the company website provides comprehensive information about the equipment available to the UK market. Franke Sissons takes its place in the market as producers and distributors of stainless steel and composite sanitary wares. It offers industrial and retail stainless steel, catering equipment and non-residential sinks. Although the main business nature of Franke Group is a B2B E-commerce, Franke washroom systems also present a retail option for local market. The retail price list is provided for the retail segment. It can be concluded that Franke washroom systems can anticipate and set the appropriate E-commerce strategies to achieve the greater long-term return on investment capital (ROIC). 5. Review Business-to-business e-commerce literature (begin with chapters 5, 6, and 7 in Turban’s book) and apply these concepts on the case study company.  B2B EC stands for business-to-business e-commerce in which business deals are carried out electronically through the Internet. The transactions are also conducted via virtual private networks, intranets or extranets. In B2B, the two parties may be two business partners or a business and its supply chain members. “In this context, a business refers to any organization, private or public, for profit or nonprofit.”(Turban, 2006) B2B involves many participants with higher purchasing powers, complicated rules and a variety of products. According to the statistics in 2005, over US$1.5 trillion in transactions are carried out in B2B e-commerce of the United States. Franke Sissons, a part of the Franke Group within the Washroom Systems division, applies a B2B e-commerce business model aimed to sell products to other businesses. Franke washroom systems’ website provides comprehensive information about washroom and toilet facilities for potential business partners. Franke utilizes a sell-side transaction, a B2B transaction in which one seller and many buyers are participated, and these types are sometimes called company-centric e-commerce. Sell-side markets are regarded as private e-marketplaces because there is no third person such as an intermediary who takes cares the selling and buying processes on behalf of businesses. These markets are sometimes referred as private industrial networks in which a single firm possesses its own company network to coordinate supply chains with a limited group of partners categorized geographically. “Private industrial networks occupy 94% of overall B2B E-commerce revenues by 2006.” (Laudon, 2007) As a private industrial network, Franke coordinates with its small number of business partners to establish an efficient supply chain and satisfy customer needs. “B2B can make supply chains more efficient and effective or change the supply chain completely, eliminating one or more intermediaries”. (Turban, 2006)The systems connect the downstream supply chains such as distributers from various locations and offer a drop down menu for selecting a desired distributer in a specific area. Franke is a supplier of many steel made products such as shower chairs, sinks and drinking fountains. Between the two different types of B2B transactions, spot buying and strategic sourcing, the washroom systems adapt the latter to maintain long-term contracts and to work out the negotiations with the suppliers more effectively. Franke washroom systems focus on indirect materials or finished products such as taps, showers and flushing. A company’s revenue model, sometimes called a financial model, consists of the steps that clearly state how the firm is going to earn its revenue, ROIC and profit. In B2B, there are five primary revenue models namely, advertising, subscription, transaction fee, sales and affiliate models. (Laudon, 2007)The revenue sources are varied depending on the type of models. Franke uses a sales revenue model which achieves returns in the form of sales of goods, washroom facilities. 6. How can the company build an effective customer relation mechanism?  Keeping good customer relationships is mandatory for the organizations looking for progress and profit in the global market. Customer Relationship Management (CRM) has become an important issue in dealing with customers in E-Commerce. Today, the global market is very competitive and so only effective and good relationships with customers can achieve their loyalties and bring success for the company in the long run. In the concept of CRM, all methodologies, strategies, tools and other technology-based capabilities that help an enterprise to organize and manage its customer relationships are encompassed. (Murtaza, Mirza B) CRM also support the analytical software necessary to analyze and utilize user or customer information. The organization can apply CRM to achieve premium customer values via pre, post and current sales activities. Franke may provide the required customer information before the actual sales processes are taken placed and respond customer inquiries promptly. In an effective CRM, post-sales support strategies must be improved. “There are several factors in implementing successful Customer Relationship Management systems including corporate vision, global view and building the customer view. “ (Murtaza, Mirza B) Franke can build strong customer relation mechanisms by observing their customer behaviors and setting the rules or standards in interacting with customers. The corporate views must be customer-oriented and clear guidelines are required to carry out the corporate vision. The top management also needs to keep up with the global waves and concerns for customers. It’ important to pay the customers the core products promised as well as the actual products. The former concerns with the core benefit that customers achieve from the product while the latter represents a set of benefits regarding after sales support, delivery, warranty, etc. There are many e-commerce tools to establish an effective customer relation mechanism. Electronic catalogs are very useful for B2B e-commerce while they can rarely be found with B2C commerce. They are constructed with product databases, search methods and directories. Electronic catalogs can be categorized into three aspects: dynamic or static, standard or customized and degree of integration with business processes. (Turban, 2006) A customer can easily find the information about a specific item by typing in the search textbox connected to the e-catalog database. Moreover, some electronic catalogs are combined with other customer-oriented mechanisms such as shopping carts and payment forms. Electronic shopping carts are special items that assist customers to gather all the items they are going to buy before the actual buying process is taken place. They are prevalent on most B2C e-commerce websites such as amazon.com. For B2B e-commerce websites, the concept in building shopping carts is quite different because a B2B customer has to search several companies in the same industry to choose the most suitable one to shop. So, the shopping cart should be existed on the customer or buyer’s website. Personalized web pages play a vital part in creating effective customer relations. These pages help customers a lot in recalling their shopping history, checking current order status and making future buying decisions. Customers can learn the company’s latest products and services relevant to their preferences provided depending on their previous purchases. The company can provide its customers with user accounts and passwords to access their own web pages on the company website. But, it’s very important to include the authentication with the customer login for all the critical information about the B2B partners are provided in each of their personalized web pages. A customer profile is simply a set of rules that describe the typical behavior of a customer or a group of customers at a website. It helps to identify the pattern in group and individual behavior that occur online. (Laudon, 2007) Keeping a customer profile can help Franke to realize their needs well and to offer more personalized information on the specific customer account home page. The idea of creating personalized web pages also makes customers feel part of the company. 7. Evaluate the website of the organization and suggest improvements? Evaluation of the existing website Advantages for the organization Franke group can effectively differentiate its business segments, coffee, kitchen or washroom systems, and provide a simple and user friendly website for its business partners and customers. The site uses the red color as standard color and represents a professional website’s features. Franke washroom systems can also characterize its niche, washroom equipment, well with complete information about products, product descriptions, price lists, services and policies. A predefined detail catalog is provided on the website. The catalog is sub-divided into several catalogs each with specific products such as commercial catering and hotel products, stratos, chronos, etc. In addition to the formal catalog, an e-catalog with search method is bestowed to find the preferred products in a few seconds. The order tracking process can be done online and it’s a good attribute for a B2B business in which the ability to spot the locations of the products or containers is so important. A detailed price list covering all products and terms of purchasing is impressive. Franke also presents a good image value as a 225 year-long firm. The fact that Franke Sissons Ltd is one of Europes largest manufacturers of stainless steel sanitary ware and the UKs leading manufacturer of industrial sinks and catering equipment also contributes a lot in building a good brand name and customer trust. The hyperlink to its corporate website is also provided to learn more about Franke washroom systems around the world. Weak Points There’s no user account facility to collect customer preferences and present customers most appropriate products on their homepages. Frequently asked question part is not included to assist the customers with predefined questions and answers. B2B websites should provide the steps needed in sending orders. The customer feedback form or response form is not provided to effectively and immediately know the customer’s comments. Online ordering cannot be carried out via Franke washroom systems. Suggestion for improvements Membership with well-known associations is important for a B2B business to make exchanges among industry members. There are two kinds of members: observing and trading members. The former has interests in the latest news of the community while the latter dedicates to trade using its membership. Franke Sissons should become a trading member of British Stainless Steel Association which is redirected via Stainless Steel Information tag from Franke website. The British Stainless Steel Association (BSSA) promotes and improves the production and practice of stainless steel in the UK. It also offers marketing support, industry information, technical guidance and training in all aspects of stainless steel for its members and potential customers. Thus, by pursuing the membership with a B2B marketplace like BSSA, there will be many opportunities to meet the potential business partners for Franke. It’s critical to load the website in time before the B2B customers leave the site and switch to another site. For B2B customers are not used to spending much time as B2C customers do, Franke should make sure its website available 24 hours with minimal loading time. Time is a precious aspect in doing business online and it’s important to note that an average person only waits 8 seconds for a web page to be loaded. A metric is a measurable standard, or a target against which actual performance is compared. (Turban, 2006) EC metrics should be successfully implemented to change a brick-and-mortar business to a click-and-mortar one. Franke needs to take care of the customer response time not be longer than 24 hours and the response should contain adequate and relevant information required by the customers to make them satisfied. The downloading time of the materials, for example, catalogs should be shortened. The ability to upload the updated information concerning all aspects of the business is also important. Today, communication networks such as the Internet, intranets and extranets become very critical for B2B businesses like Franke Group. The Internet is the major network for businesses to reach its customers and other businesses. The Internet is open to all but it cannot guarantee the security and control. Internets are corporate LANs or wide area network (WAN) that uses Internet technology and is secured behind a company’s firewalls. (Turban, 2006) Franke ought to apply an intranet network to achieve cooperation among its authorized employees. The intranet can also be linked with outsiders such as customers, suppliers and partners. Franke can also utilize extranets which stand for extended intranet. The main function of an extranet is to connect the company intranets from different places and an extranet can guarantee secure transactions between Franke and its business partners. Moreover, over an extranet, a supply chain management system can be implemented. Enterprise portals can also help Franke to make its employees navigated to Franke group’s corporate contents. Franke should consider a VPN, Virtual Private Network, if it wants to have a more secure network with data encryption and authorization techniques. A VPN can provide translation between different transaction sets used by trading partners. (Deitel, Deitel & Nieto, 2001) There are many security threats prevalent for online businesses today and so it’s important to foresee the possible security problems and prevent the website away from the potential security attacks. For example, Denial-of-service (DoS) attacks are threatening the web businesses by gaining access to the administrative area to steal the critical resources and data of the firm. When this kind of attack is occurred, the customers can’t access the company’s website. So, it’s mandatory to set up security mechanisms such as firewalls and intrusion detection systems and define the access controls. Although most B2B payments are made offline, for instance, 75-85% of B2B payments in the United States are paper checks (Laudon, 2007), the possibility to change to online B2B payments are anticipated. It can be said so for there are some groups who want to make their payments online. The companies trying to substitute the traditional banking procedures with fast and convenient online methods, influential credit card companies and some financial institutions who want to extend their activities to B2B marketplaces are potential transformers for online B2B payment systems. The technologies are changing so fast and it affects e-businesses a lot. Franke needs to catch up with the latest B2B strategies, technologies and standards to stand as a B2B E-commerce company successfully. It should try the popular Visa’s Visa Commerce dedicated for B2B businesses. Visa Commerce is a non-card based payment network with member accounts, user interfaces and its underlying technology is based on VisaNet, Visa’s electronic payment network. (Laudon, 2007) The last but not the least thing to consider is to observe other B2B businesses regularly to modify Franke’s business models and processes and to avoid the frequent failures faced by some firms. References: Deitel, H.M. & Deitel, P.J., 2001. E-Business & E-Commerce. 1st ed. Prentice Hall. Laudon, K.C. & Traver, C., 2007. E-commerce: Business.Technology.Society. 3rd ed. Pearson. Rayport, J.F. & Jawaski, B., 2003. Introduction to E-commerce. International ed. McGraw-Hill Turban, E. King, D. Lee, J.K. & Viehland, V., 2006. Electronic Commerce: A Managerial Perspective. 4th ed. Pearson. The Journal of Computer Information Systems, 2005. Effective Customer relationship management through web services by Murtaza, Mirza B. The Journal of Computer Information Systems. Available at: http://www.allbusiness.com/technology/computer-software-programming/996015-1.html [Accessed 1 October, 2005] Read More