PRINCIPLES OF MANAGEMENT APPLIED RESEARCH (PUT ORGANIZATIONAL NAME HERE)

INTRODUCTION

            Example: Park University is traditionally an “institution of higher learning committed to the pursuit of knowledge, to intellectual and social development and to work and serve within a non-sectarian Christian setting” (Park 1, 2010, p. 11)….. 

TRANSITION PARAGRAPH

Park University is conducting this research work related to management that includes such topics that help the organizations to improve their productivity in better way.

                                                                      BODY

            This research paper is related to management that covers lot of topics such as:  (a) diversity management, (b) ethical, social and legal responsibilities, (c) international business…,  (XXXXX & YYYY, 2009, p.  18).  

Diversity Management

Now a day’s Diversity management is become an important issue for managers. Diversity management is a strategy that is intended to foster and maintain a positive workplace environment (Google search). Usually human resource managers initiate it and department heads and supervisors try to manage it.  The idea of diversity management style is to encourage employees to feel free and comfortable their work places and develop an appreciation in particular areas such as race, gender, background, sexual orientation or any other factors that may not be shared by everyone working in the same area of the company. It can be adopted in different organizational environments and can be integrated with different management styles. For example if you are promoting recognition and acceptance of diversity among employees then hostile workplace  environment can be converted into welcoming environment where people feel free to communicate,  share and support to each other  in any task associated with job. This thing definitely helps in increasing the productivity level in an organization.

Now the question is what the benefit of diversity management program is. One of the main advantages of diversity management is that it helps to encourage the development of skills and talent among employees. Employees begin to feel valued and be ready to leave their comfort zones and enhance their skills for the benefit of departmental team and company as a whole.

                   Future leaders will define diversity management as "making quality decisions in the midst of differences, similarities, and tensions." This definition will allow them to deal with all kinds of discussions involving differences, similarities, and tensions and to see themselves as engaged in diversity management. Leaders cannot help becoming aware of the craft's ability to assist in unraveling and creatively conceptualizing complex situations. As a result, they will count on the craft when approaching any situation where diverse perceptions, purposes, people, or other differences create substantial complexity. This will be true not only when the issue is race and gender complexity, but also when the complexity is created by diversity mixtures such as customers, mergers and acquisitions, and differing geographic business locations. (R. Roosevelt Thomas Jr, source leader to leader)

               Basically what diversity do, it acknowledges and uses these inherent differences and move towards creativity and innovation for the better performances and competitive challenges. Diversity not only focuses on how people perceive themselves but also how they perceive people. This thing effects their interaction.

            Successful organizations recognize the need for immediate action and are ready and willing to spend resources on managing diversity in the workplace now. There are some benefits of workplace diversity are:

1- Increased adaptability

2- Broader service range

3- Variety of viewpoints

4- More effective execution

Some challenges are also mentioned here according to Josh Greenberg that are:

1-Communication
2-Resistance to change

3-Implementation of diversity in the workplace policies                               

4-Successful Management of Diversity in the Workplace

5-Assessment of diversity in the workplace

(By Josh Greenberg  is President of Alpha Measure, Inc. located in Boulder, Colorado.
Article Source: http://EzineArticles.com/11053)

Ethical, Social, and Legal   Responsibilities

Legal responsibility:

            Whatever the business type, All companies are bond to fulfill all the responsibilities concerned with their legal issues and must follow the law, which impact organizations planning process. Operate its functions soundly; every company needs to familiarize with its external factors that govern the industry and having impact on company’s operations. A issue presented in the HII case which is dependable on Black’s tough responsibilities of fiduciary and contractual duties by “diverting to another company a valuable opportunity that properly belonged to the corporation” (Delaware, 2004, p.1). Black and his co working companies had earned much of their decisive benefits from “Hollinger International’s sale of newspapers from 1998 to 2002” (West head and Doolittle, 2007). A report shows that to transfer HII corporate assets, Black and his associates “unable to reveal material information in required space with the SEC, that they “flimsy corporate books and records” (p.4), and “badly failed to precisely reproduce transactions”. Securities legislation acquires the representation of certain agreed information concerning the business and affairs related to public companies. This adds cyclic financial statements, trading reports the insider reports; an annual information form (AIF), press releases and material change reports (Canadian Securities Institute, 2008).

Social responsibility:

To flourish in the public’s eye, a company needs to know certain social responsibilities that are necessary for survival. It must know where it should add value beyond the products and services it offers. Let take it as example a company can fulfill the social responsibilities by aiding important causes and by doing charity work (Bateman and Stair, 2006). HII have worked a lot in charitable projects but under Black’s management, however, the chief executive’s concerns and moves are dubious as he was misusing the funds from the very company he was making donations with (Fabrikant, 2004).

Ethical responsibility

While discussing the planning process, organizations set some guiding principles in order to preside over their business’s practices and to safe guard the company’s concerns, employees and shareholders. Generally this is done by generating fair codes of conduct. The Caux ethics is a set of rules especially intended to help organizations set up basic rules for ethical practice. The first rule is to the accountability of businesses beyond shareholders toward stakeholders and states that “Businesses have a role to play in improving the lives of all their customers, employees, and shareholders by sharing with them the wealth they have created” (Bateman, Stair, 2006, p. 175). Black was unable to value the basic rule of HII’s ethical responsibility by selling one of its valuable assets, the American Trucker, to another corporation and transferring the US$ 2 million non-competition agreement payment to a related entity, because of this straightly getting benefits from the transaction at the cost of HII’s shareholders (Boritz and Robinson, 2004).

HII had a legal and ethical code of conduct set from the start but it has some drawback as it did not offer proper security to the organization and its shareholders. The concerned set of rules called the code of conduct was established on November 29, 2004 and “offers much details to employees, officers and the most important directors in the company’s ethical principles in a number of areas” (Para 2, SEC). Few of the guidelines are concerned with, regarding the transaction of party, security and proper use of assets, and reports generated by the public company. Latest amendment shows concerns with unethical manners in such a way that it is tough to influence the law in order to behave unfairly.

International Business

It describes all transactions that are doing between two or more regions, countries and nations privately or publically. Here we can take the example of multinational companies who has the big market of products and services. They are performing their functions globally. In international business, legal, political, social issues are really important. Because every country has its own culture, laws and issues related to politics. When companies are operating their function across the border they kept in mind all these issues for clean and smooth transactions. 

General Planning and Strategic Planning

                   In simple words, strategic planning determines where an organization is going over the next year or more, how it's going to get there and how it'll know if it got there or not. In strategic planning, the focus is usually on the entire organization, while in general or business planning the focus is usually on a particular product, service or program. In strategic planning, organizations used different models and approaches according to their business nature. It’s all depend on  the nature of the organization's leadership, culture of the organization, complexity of the organization's environment, size of the organization and expertise of planners. Planning is an important part of business that helps to run business operations in smooth way. As an author says:

“When a planner speaks of implementing goals rationally, he implies that it is possible to demonstrate logically and experimentally the relationship between the proposed means ad the ends they are intended to further.”

(Alan A. Altshuler, planner, The City Planning Process (1965))

Organizing Work and Synergism

Operational Synergy is a concept used to describe the state of an organization when the people and processes work together to continuously expand the ability of the organization to deliver products and services to its customers, while maintaining competitiveness (www.bottomlinesolutions.com)

The term operational is used for what is required to produce. The term Synergy used when the organization diverse skill and capabilities are fully integrated so that their interaction produce great results that are more than individuals contributions..

                                           Organization Structure and Chart

Every organization has its own structure. It has certain guidelines to run its business. It has some rule and regulation to follow the right direction. Organization chart help in understanding the roles of managers and their sub-ordinates. Who will contact to whom, who will report to whom, these things can easily understand through the charts.

Different organization follows the different charts such as hierarchal, horizontal or vertical.

Every chart has its own limitations and boundaries. So it depends on organization nature that which type of chart is suitable for it.

Work Team Utilization

In simple words work team activities are those activities that are properly organized in team  and controlled if you want to get required outputs from work. The main work team definition means that it is a group of people who share the same aspiration to common work team goals, and need to effectively collaborate in order to satisfy all points of work team plan (www.taskmanagementguide.com). In order to design good work team plan, all group members work together at the plan and with their collaboration organization get success. The main point is, building of team work.. These work team building activities include describing and assigning work team roles that mean a set of responsibilities and level of seniority that allows every work team member to take his/her specific position according to individual professional skills and ambitions(www.taskmanagementguide.com) . For proper utilization of team member’s skills, there is a need of strong leader. If leader is strong, he will definitely take good input from all team members.

                                                                            Staffing

The managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal and development of the personnel’s to fill the roles assigned to the employers/workforce.(www.managementstudyguide.com).

As an managerial function, it is most important than other functions. Staffing is a continuous activity. It is performed by all managers. It’s also depending on company size, qualification and skills of managers. If it is small company then top managers perform this activity. Usually this sort of activity is performed by personnel department.

                                                      Employee Training and Development

In globalization, organizations need to enhance the knowledge and skills of their employees timely. Its not only necessary for new hires but also for current employees too. The basic things that cover in employee training are: Communication, computer skills, customer services, diversity, ethics, human relations, safety, sexual harassment and quality initiates. It is not necessary that all organization do the same practice. Wherever they feel lacking in their employees, they will conduct seminars or workshops relating to that issue. This thing helps their employees to enhance their skills and also motivating them to step forward in their areas.

Motivating Employees

“Motivation refers to the process by which a person’s efforts are energized, directed and sustained toward attaining a goal” (Mary Coulter).There is lot of early theories regarding employee motivation. Each person has its own desires and satisfactions. Some motivated by rewards, some are by appreciation. There is a need of to understand employee’s psychology. What they need, what they required, what are their expectations toward their jobs? It’s the sign of good manager who can easily understand his employees. But it’s not so easy to understand your employee. It may be situation that employee does not wish to do a work or he is not interested in doing challenging task. For such type of people it is necessary for manager to understand the motivational requirements of such group including diverse employees, contingent workers and low-skilled minimum wage employees.

Leadership and Management

Leaders are those people who can influence others and leadership is what leaders do. Management involves coordinating overseeing the work activities of others so that their activities are completed efficiently and effectively (by coulter). There are lot of leadership theories that define leaders in different way. There is a close relationship between management and leadership. It’s the duty of managers to overseeing the activities of their employees. What the leaders do, motivate their employees, encourage them, and provide them a proper guideline to achieve a certain goal. Basically both are performing same task. But the main difference is about skills and qualities. Every leader can be a manager but every manager cannot be a leader. It is not necessary that every manager has the leadership skills. But leaders have the management skills too, to handle their employees or subordinates in better way.

Managing Conflict and Stress

Now a day’s stress is becoming an important issue in organizations. Lot of conflicts occur among employees because of different reasons that become the reason of stress and frustration. It is the responsibility of good leaders and managers to solve the conflicts among employees to reduce the stress. In organizations, this culture reduces the productivity level. Due to stress employees could not put their efforts in completing their task that will be against the organization goals.

Managing Change

In this global environment, organizations are facing quick changes like never before. Globalization provides the opportunities of increasing markets as well as competition.

But the real task is how to manage these changes. It is today’s need to enhance the skills and abilities of leaders and managers to manage such sudden changes.

They must have the ability to manage the rapid changes easily and smoothly. There are different types of organizational change, including planned versus unplanned, organization-wide versus change primarily to one part of the organization, incremental (slow, gradual change) versus transformational (radical, fundamental), etc.. Now it’s depending on business nature. Manager must know   which types of change will help to retain scope and perspective during the many complexities and frequent frustrations during change.

Controlling

Controlling consists of verifying whether everything occurs in conformities with the plans adopted, instructions issued and principles established. Controlling ensures that there is effective and efficient utilization of organizational resources so as to achieve the planned goals. Controlling measures the deviation of actual performance from the standard performance, discovers the causes of such deviations and helps in taking corrective actions (www.managementstudyguide.com)

According to Breech, “Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure whether he is relative to a planned action, so should a business manager continually take reading to assure himself that his enterprise is on right course”

                                                Appraising and Rewarding

              If company has the good appraising and reward system then it can easily motivated its employees in better way. Motivated staff is likely to work hard and show the good performance at their end. In appraisal systems, bounces, pays and other financial incentives are included. Organizations adopt different appraisal methods to encourage their employees.

According to their employees motivated requirements, they tried to facilitate them for taking the good results from them.

Operations Management and Plans

                    It helps in running business functions smoothly. The operation plan highlights the logistics of business such as, what are the responsibilities of different team members, work division among different members, capital and expense requirements related to task. There are various elements of business plans such as Executive Summary, Products and Services Description, Marketing Strategies, Peer Analysis, Research and Development, Project Finance, Operations and Management (www.businessplancentral.net). All organizations have their different operation management and plans according to their business nature. For example, manufacturing plan is totally different than trading and so on.

Operations Control

               In simple words, it is authority that is controlled by leaders and managers. Managers who have authority to control all operations that are under their supervision and then they are bond to report to their bosses. The functions that are under controlling are organizing, task performing in right direction plus assigning task and giving authoritative direction to complete the mission.

                

CONCLUSION

            This research paper that I have completed through different journals and authors is really worthwhile for me. It helps me to better roadmap my desire goal in establishing a sense of management and lot of its topics that I cover in this research paper. 

Methadologies of researches invloved in E-commerce

This section would highlight the considerations to deduce the objectives of the document, viz., opportunities and barriers for e-commerce marketplace.

Definition of Theory

There are two types of theories that can be developed as explained by Denscombe (2003: 122) “the first is linked closely to the empirical situation that has been the subject of study. It is fairly localized kind of theory and is known as substantive theory. The other kind of theory is more conceptual, with more general coverage, and application to circumstances beyond particular settings. This is known as formal theory. Substantive theory is closely linked to practice, interaction, and specific kinds of settings, whereas when we speak of formal theory, we usually refer to those areas of generality, such as systems theory, agency theory, population ecology, and contingency theory”.

In context with the explanations given by Denscombe above, the author of this study has used a substantive theory for this research.

Framework for development of theory

There were a number of options available for the development of a theory; the author of this document chose the model proposed by Remenyi (1998), after considering the various elements of the research. The model is represented by the figure shown below.

Figure: Framework for Theory Development: Adapted from Renemyi 1998:122)

Qualitative Research Evaluation

This is the last and the most important element of the research design. This is in references to the approaches that are taken in determining the results of a study. The first question which needs to be addressed is “if the findings of this research are reliable cater a general perspective?” Both quantitative and qualitative studies have different evaluation strategies as they are both different in nature. (Henning, 2004)

In order to evaluate this study, author has to justify the conformability, dependency, credibility and transferability of the research. These factors are analyzed below with the perspective of this document.

Dependability: This is achieved by keeping a record of the recordings and notes made for this research, to be made available for the evaluators.

Transferability: Contains description of all the findings so that other researchers can use and analyze this information

Credibility: Using multiple research methods and sources, maintaining record of evidence and confirming the evidence gathered with the academic community.

Conformability: The report should be consistent with proposed theory and should give account of all the deductions.

This author has taken multiple steps to ensure that the report complies with all four counts.

Chapter 3: Scenarios and Case Studies

In this chapter, in total four case studies would be discussed of actual businesses. With the use of these case studies the opportunities and limitations for businesses in e-commerce would be judged.

The four scenarios are:

·         Creating a new e-commerce business model

·         Converting a physical business model to a virtual one.

·         Hybrid model: use features of both physical and virtual business presence.

·         Analysis of a failed e-commerce business model

Creating a new E-commerce business Model

Researchers believe that e-commerce has a lot of potential for new entrants in the market. The primary reason for this is the low investment needed to start a business, compared to setting up a physically existing store. This business can even be run from home. This section will analyze a case study of a new entrant specializing in online book selling. And with the help of this case study the advantages and disadvantages of upcoming and new business owners in e-commerce would be highlighted.

Case Study of Penguin Books Ltd Store, Spain

Nature of Business

Penguin Books Ltd Store is a retail company, carrying a variety of books and stationery related products. It is situated at 9-7 C – Glorieta de Quevedo, 28015, Spain. They import and retail several products from U.K and U.S.A. as well apart from local products. (Penguin Books Ltd, 2011)

Business Line

Penguin Books Ltd Store has a very wide business line that includes: Books Section, Kids & Teens Section, Magazines and News Paper Section & Office, Home & Kids Stationary items. (Penguin Books Ltd, 2011)

Books Section includes books about various topics like:

• Art & Design
• Biography & Autobiography
• Business, Management, & Finance
• Childcare & Parenting
• Cooking, Food & Drink
• Current Affairs & Politics
• Dictionaries & Reference
• Health
• History
• Religion & Spirituality
• Women's Interest

Kids & Teens segment includes:

• Creative Books
• 3 to 5 years of age
• 6 to 8 years of age
• 9 to 12 years of age
• Pre-school
• Comics & Series
• Character
• Games
• Knowledge Base Books
• Books based on religion
• Story Books
• toys

Magazines & News Papers Section includes:

• Interior Design & Architecture
• Decoration
• Bridal Guides
• Business and Finance & Management
• Car & Automobile
• Current Affairs
• Men & women Fashion & Life Style
•  Men & Women Fitness
•  Recipes & Food
• Sports & games
• Media characters
• Music & Photography
• Science & Technology
• Travel
• Video, Films & Cinematography
• Women's activities
• Wrestling
• All News Papers

Stationary Items includes:

• Paper Clips
• Clamps & pins
• Pencils &Crayons
• Erasers
• Pens
• Memo Holder
• Jotter Pencils
• Cutters
• Sketch Pen
• Pins
• Paints
• Paints Brush

Business Cycle

In business, Penguin Books Ltd Store includes local and foreign books, Magazines and News Papers.

Books Business Cycle:

 

Magazines Business Cycle:

 

News Paper Business Cycle:

 

Advantages of going online for Penguin Book Ltd Store

·         More customers can be targeted; people who live in localities far away from Penguin or don’t want to come, can order books online and get them delivered at their doorsteps

·         Greater revenue generation due to increased customer base

·         Delivery charges will also be applied, minimal in the beginning, and this would result in profits.

·         The marketing for online store is also comparatively cheaper than usual billboard, print and media ads.

·         Famous books can also be made available for bid, time and again. This would lead to obtaining best price for the book.

·         Customer demand for a particular book can also be catered to by adding features such as “books to add in the inventory” polls, availability checks, etc.

·         Customer feedback can be obtained online. Customers who come to the store just shop and leave but with online customers, a feedback survey can be sent to regular customers. Then, according to that feedback, the physical and online store can be improved.

·         Sponsorships from local companies and showing their ads on the website can lead to extra revenue generation.

·         With additional features such as discounts for regular customers, one-day-only delivery time, on time delivery, etc. customer loyalty can be achieved. This way, Spanish customers who buy from foreign online stores e.g. Amazon.com might shift to Penguin Books online book store.

·         Pre-bookings of books online will also result in greater customer satisfaction. E.g. customers flock stores to get pre-bookings for famous books such as Harry Potter. If Penguin Books can offer online pre-bookings, its customer base would increase.

Disadvantages of going online for Penguin Book Ltd Store

·         The level of personal service would not be provided by the Penguin book Ltd as its customers were used to receive before shifting online.

·         Very small or very large transactions are usually not conducted online as the transportation costs are to be managed as well. So there would be a minimum limit of purchase from online stores.

·         Mechanical failures may have catastrophic effects. And if there are any failures then a lot of business might be lost.

·         Hackers are always looking for an opportunity to spread a virus or gain access to personal information e.g. credit card information of the customers.

                                                                                                                                         

Prerequisites for Going Online

·         The products for the online business:

The products that Penguin book Ltd decided to go online are the books and the magazines; stationary items will not be included in the online business model. (Penguin Books Ltd, 2011)

·         Target market:

The geographical segment Penguin Book Ltd intends to target is the Madrid region. Other cities are not included in the business model because of the greater delivery charges and greater time of delivery. As the products are not high involvement goods, the consumers are more prices sensitive. (Penguin Books Ltd, 2011)

·         Budget needed to go online:

There will be some new costs which will be incurred in going online which include the website hosting cost, credit card processing cost, payroll of the new IT personnel needed and the advertising and marketing cost. (Penguin Books Ltd, 2011)

Steps for Going Online

 

1. Select and register Domain name, for example registering the domain at Yahoo

2. Choose Web Hosting service, for instance iPower, Yahoo, GoDaddy.com etc.

3. Design your website on Microsoft FrontPage or using html.

4. Select payment processing system, e.g. PayPal (the most popular method for startup)

5. Add the website on search engines, like adding site to Google Search or adding Site to Yahoo Search.

                                                                        Figure:Steps for going online: (Qin, 2009)

Online Transaction Cycle

In Spain there is a great opportunity for online books trading and customers are using ecommerce for their retail needs with great confidence. To deal with competition from other online book stores it is compulsory to improve and provide number of services to consumers like broad range of products and vendors online, along with secure convenience of online shopping. Multiple payment options including cards (credit and debit) and mobile payment services should be provided to customers. To supply these services, merchants need to be expectant to commence and / or expand online services. (Penguin Books Ltd, 2011)

The online purchase for Penguin Books Ltd Stores will be made by selecting items to purchase and after selecting the item the customer can do the payment through three mediums one is the payment through credit cards, the second one is through PayPal and through bank drafts and the cheques. The delivery of the purchased books and magazines can be of two types; one which will take one day to be delivered through courier service and the other which will take three to four days using postal service. Another option for the consumer is to pick the purchased items by themselves. The reason they will opt for this is because there are discounts on online purchases. (Lee & Lin, 2005)

Another method of payment could be through mobile. Customers’ mobile phones can be used to complete transactions, online as well as this facility must be for to retailers and / or vendors. A simple Java based application that uses SMS to allow transactions can be used. These services acquire a push payment methodology as contrasting to the pull methodology used by different Figure: E-commerce internal Transaction procedure:

transaction options like credit and debit cards. In an era of increasing privacy and security apprehension about Mobile SMS based payments facilitates consumers to keep hold of personal information while permitting vendors to accept payments into their accounts directly. (Eisenmann, 2002)

Figure: The process of e-commerce: Lee & Lin, 2005

Final Word on Penguin Books Ltd

The case study of Penguin Books limited emphasizes the impact of e-commerce on new businesses. The company is very profitable and is a well reputed online book store that serves the whole of Europe. Penguin Books are now looking to enhance their delivery system to make it more efficient and faster due to high number of sales.

There is no doubt that Penguin Books Ltd is an example of a successful e-commerce business. Theorists say that for a non-virtual business to be as successful as Penguin Book Ltd, they would need a lot more investment than needed by Penguin Books Limited. They serve as an inspiration for many prospective business owners to invest in an e-commerce business.

Hybrid Model: Keeping both a retail outlet and electronic business

In this section, the researcher is going to analyze the advantages and disadvantages of keeping both a physical and virtual presence. Neither of the two would have 100 per cent operational capabilities alone.

The chosen case study for this model is of a car dealership. As researchers believe, that products like cars do not sell online with as much success as other models. So the example of Toyota of Easley dealership is taken, who have integrated e-commerce in to their business plan without compensating on the benefit of a physical outlet for selling cars.

Case Study Toyota of Easley

Nature of business

The Toyota of Easley is a local vehicle distribution company placed in Easley, South Carolina that sells new and/or used Toyota cars at the retail level. The dealership is being run by according to the agreement signed by Toyota headquarters in the United States of America. This is a very competitive market. The dealership has employed salespeople to sell the cars to the customers and cater to their needs. Toyota of Easley also provides a workshop for maintainance of cars, so has employed automobile mechanics as well, sell spare car parts, and maintain a department for claiming warranties.  (Toyota of Easley, 2011)

Business Line

Toyota has the reputation of being the flag ship company in car manufacturing for a long time now. Toyota started from Japan and has now formed into a large multinational corporation and has tapped automobile markets all around the world. Toyota of Easley has aligned themselves to serve the Toyota’s management philosophy by implementing on the lean manufacturing and just in time concepts

A number of value added services are provided by the Toyota of Easley dealership. And to serve their customer base in Easley, they felt they should implement an on line setup to go along with their physical outlet. (Toyota of Easley, 2011)

With the advent of Internet distances are becoming irreverent. Toyota of Easley planned to launch a website, to serve their customers even before they enter the dealership. The website would have information on the car and other services available and the procedures of how to make use of them

A robust framework for stating the advantages of implementing both the click and mortar  and  an online imprint for a car dealership can be derived from the competitive advantage principal taken from the transaction cost theory and inter-organizational network theory.  

 

On line Cycle:

 

Retail Business Cycle:

 

Advantage of maintaining a physical and virtual presence

·         When the physical and the virtual channels are integrated effectively, a number of factors can account and together accumulate to lower costs. These factors are reduction in inventory costs, using less labour than before, the costs of delivery.

·         The dealership consumers can now look up service information and list of cars, fill out forms online.

·         With a bridge between virtual and physical existence in place, there are now more opportunities for Toyota of Easley to build trust with the customer. The perceived risks of the consumer can be addressed and they have an accessible location where they can register their complaints.

·         The synergies of physical and virtual channels can be used help provide value added services in a new and unique way. Orders can be booked in advance from the comfort of the customer’s home. Customers can have their personal account made on the website.

·         A net set of strategies can bring in customers from outside the vicinity of Easley to the dealership.  

·         Advertising has been made more cheap and wide spread. With lower costs for printing brochures and publishing, the saved up cost can be used in other areas.

·         strengthening customer loyalty; and provide convenience

·         client can now interacts with in-store sale people through Web-cam

·         Order generation method made more efficient.

Disadvantages of maintaining a physical and virtual presence

·         As this is a new concept in car dealerships, consumers would have to be made aware of the advantages and the procedure to make use of the virtual existence

·         The sales personal would need to be trained as well

·         Hackers are always looking for an opportunity to spread a virus or gain access to personal information e.g. credit card information of the customers.

The Challenge

Internet director at Toyota of Easley, Mark Worthy, always believed that a virtual existence would convert more on line traffic into leads for selling cars. After hiring a professional firm to try to make use of the on line traffic, Worthy hired an on line service provider to link up a website for Toyota of Easley. (Toyota of Easley, 2011)

The Solution:

The online service company worked together with Mark, to implement online marketing products for the dealership. This provided more incentive for the potential customers to come and buy from Toyota of Easley.

Mark was sure to take maximum advantage from the platform provided by the website platform. Currently Mark is himself responsible for the monitoring, updating and customization of the web site. The efforts seem to have paid off as the website received thrice as many visitors in the first four months. (Toyota of Easley, 2011)

The Results

During the first six months of implementing the co-existence of a hybrid of virtual and physical channels, Toyota of Easley made use of the online marketing and services tools by:

• Quadrupling the websites lead conversion (448%)
•  Increasing the dealerships’ daily lead conversion by over 700%

Figure: Hybrid Model of Toyota of Easley: Toyota of Easley, 2011

Final Word on Toyota of Easley

Toyota of Easley branch has increased their sales by more than three times. Just by this statistic it can be concluded that making a virtual existence proved to be beneficial for the dealership. Though the manager of sales admitted to some barriers, especially relating to training her employees, but that is mostly the biggest hurdle they had to face and now they have 3 different employees who are trained and skilled enough to manage the online traffic.

 The success of the dealership has proved a lot of researchers wrong who felt that integration of e-commerce would not work for selling cars. In a way this branch is not selling cars on line, but services related to cars. In any case the car dealership has definitely boosted their sales and image and is generating more profit than ever before.

Converting an existing business model to e-commerce market place

Both the proponents and the opponents of e-commerce would agree that e-commerce had enjoyed a lot of success. There are examples of many small companies, who have made big now like eBay and are now competing against giants like Wal-Mart.

Theorists believe that the time has come for the giants and already established ‘giants’ of the field to step in the ‘battlefield’ to acquire the global market and enhance their output. This section will use the case study of Kellogg’s to take their supply chain management on line.

 Case Study Kellogg’s

Nature of business

Kellogg’s is one of the foremost companies supplying food items (specialized in breakfast items and convenience food) to its global customers. The company was set up in 1906 in USA and since it has become leading cereal manufacturer in the world with the quality of and healthy diet they ensured in their products. It is serving globally along with fulfilling the needs of the national consumers. (Ferrari, 2011)

Business Cycle

Kellogg’s’ is spread globally and currently working in 18 countries and are sold in about 160 countries. It produces round about 40 different types of cereals and snacks including Kellogg's Corn Flakes, Rice Krispies, Special K, Fruit n' Fibre, as well as the Nutri-Grain cereal bars

Existing Supply chain at Kellogg’s

Figure: Existing supply chain of Kellogg’s: Ferrari, 2011

The primary sector is related to the lineage process and transport of raw and prepared products to the Kellogg’s manufacturing unit. Secondary sector represents the manufacturing unit in actual where products are assembled from scratch. The food related products are then reassigning to bakers for further processing. Third sector i.e. tertiary sector which is with corporate services of retailing, transportation, banking etc and it does not have any relation with production. (Blanchard, 2007)

Need for an essential presence:

One of the key functions that e-business supply chain may execute for Kellogg’s is providing information to the customers about the company’s products (Chopra and Jan, 2000). It also keeps the record of prices of the products, encourage customers in placing orders and company to follow on these orders and manage payment issues. 

E-commerce will assist the company to know about the demands of its worldwide customers and make provision to meet their varying demands. It will encourage the online sale and purchase and helps Kellogg’s to serve its customers of different regions and continue with its customer base (Johnson and Whang, 2002). Insinuation of e-commerce in Kellogg’s supply chain would help the company to grow its business online by conducting all operations over internet.

It is ensured that the whole operations from sale and payment to the end customer would be done online. E-commerce would smooth the progress of Kellogg’s to get orders online, receive payments via internet to better serve its customers. Moreover according to research that e-commerce can attract more customers by dropping price level as compared to the products available on physical outlets (Brynjolfsson and Smith, 2000). Same can be done by Kellogg’s in order to expand its customers and get more share of the market. Supply chain functions being done through internet would help Kellogg’s to introduce such programs at low prices and attract more customers.

Advantages of going online for Kellogg’s

·         Can keep a track of changing trends in customers purchasing patterns.

·         More effective with reduction in the lead time by anticipating the demands of customers

·         The e-business particularly allows the businesses to build close ties with suppliers and partners for proactive supply chain management

·         The logistics infrastructure can made fast and responsive by bringing it into the fold of the EDI

·         Cross-docking, with a combination of warehouse management software will help maintain a constant flow of goods, reduce lead times and ensure efficient distribution

·         An automated system of inventory management both at the secondary and the tertiary stage of supply chain would ensure efficient delivery at all stages, both to manufacturers and to retailers

·         IT and communication systems will help to efficiently track demand and sales from the retailers, so that supplies can be made to them whenever required, without any delay

The following flow chart indicates how an automated supply chain management system will work for Kellogg’s.

 

Figure: Flow chart indicates Kellogg’s using e-commerce in supply chain management : Brynjolfsson and Smith, 2000

Disadvantages of going online for Kellogg’s

·         The level of personal contact would be missing between Kellogg’s and its customers and business players.

·         Mechanical failures may have catastrophic effects. And if there are any failures then the whole supply chain might come to a halt.

·         Hackers are always looking for an opportunity to spread a virus or gain access to personal information e.g. credit card information of the customers or retailers.

·         There would be a large amount of transactions being taken place. Associates might complain of heavy traffic and slow processing if proper checks and a high processor are not installed.

Recently industrial e-business model with e-commerce application for Kellogg’s would shift whole supply chain management on the data interface. Maintaining the view of the elements of e-business model for Kellogg’s supply chain management, it can be anecdotal that this model would help the company to keep track of its customers demand. It is a valuable option for Kellogg’s to execute this model because it will transfer its supply chain activities online assisting the company to keep the work flow with the associated stakeholders and the end consumers. (Ferrari, 2011)

Figure: Implementation of supply chain at Kellogg’s: Ferrari, 2011

Failed e-commerce Business Model

In the earlier sections the case studies observed were of successful running businesses. There is a need to observe a case of failed business model to completely understand the limitations of e-commerce.

This section will take the case study of First Atlantic Bank of Nigeria and discuss the outcomes and the reasons for the outcomes of their proposed and implement internet banking system.

Case Study: First Atlantic Bank of Nigeria

This case study observes First Atlantic Bank’s experience in Nigeria. The plan was to introduce internet and mobile banking to Nigeria, while doing so they wanted to become the first bank to offer these services to their customers. The example of First Atlantic Bank will provide an ideal examination for the chosen research topic as an opportunities and barriers for First Atlantic Banks’ step towards e-commerce is analyzed. (First Atlantic Bank of Nigeria, 2011)

This case would highlight the importance and the impact of a new technology, in this case e-commerce, on the general public. Being a first mover in any sector is a very important step, not just because of the commercial benefit associated with the business plan but the first mover also has the responsibility and the opportunity to generate a level of trust amongst their customers. Creating this trust is key for future development in the chosen area.

This case study also demonstrates the difficulties to demonstrate the failure or success of a new technology. the case illustrates the problematic nature of evaluating the success or failure of an innovation. Marketing

First Atlantic’s journey to electronic banking

The Bank entered the 1990s with a new philosophy and wanted to reposition itself from the title of a merchant bank to being called a universal bank. The next step was to shift to electronic banking. (First Atlantic Bank of Nigeria, 2011) The two major reasons provided by the bank officials for choosing to form a virtual existence are mentioned below:

·         To take advantage from the advancement of technology like other banks, all over the world have done

·         Forming a foundation for such a technology would allow for the development of new services and distribution channels.

“The management of the First Atlantic Bank was so motivated to implement the set up that they admittedly did not allow a proper timeframe. An employee of the bank states “we signed a contract with Infosys in June 2000 that we will buy their suite of products, together with the Internet banking application. We had a plan to launch us by November 2000 and that in itself was a striving time frame for the deployment of the project especially for a banking application that had never been introduced before in Nigeria. Generally this sort of implementation takes approx from few months to 2 years to go on live, but we were in a hurry. We believed in ourselves and have faith in our goals and we knew exactly what we had set out to do, within the time frame from June to November” (First Atlantic Bank of Nigeria, 2011)

By the November of 2000, the hardware and software installation was complete and the testing phase was almost done and by December of 2000 all branches of First Atlantic Bank got the new system installed and with that it became the first bank to provide the Nigerian public the facility of online banking.

The haziness between promoting and opposing forces

The utility providing in form of Internet Banking was measured as a technical success and a method effective in cost cutting, this ability was not able to generate the excitement among latent consumers as the Bank akin to. The primary reason for the failure of internet banking was the lack of a proper infrastructure for Internet in Nigeria. Nigeria at that time ( and even now) is underdeveloped and the not many people having access to the Internet.

The management of First Atlantic Bank understood that the infrastructure was not in place for the public to be fully attracted to this service but they still decided to go ahead with this proposal. The reason for the faith in the proposal was the hope that the infrastructure would improve with time. (First Atlantic Bank of Nigeria, 2011)

Researchers believe that the experiment of the Bank teaches to consider the perceptions of the consumers before launching a new and unique service or product on to them. In this case this perception became a disabler rather than an enabler for e-commerce in banking.

The research conducted by the bank before making the decision showed that institutional clients were not in favor of this idea as they had reservations regarding flow of sensitive information flow and its security. Generally the survey did not come back with positive response about e-commerce, as most of potential consumers were not even aware of Internet Banking. (First Atlantic Bank of Nigeria, 2011)

Final Word on First Atlantic Bank of Nigeria

Researchers conclude after observing many examples of failed businesses by the ‘first movers’. In this case, First Financial Bank of Nigeria even had the majority market share but still was unable to generate the required awareness. This clearly demonstrates the difficulty judging the success or the failure of a new technology.

Even though the Internet Banking failed to generate results, but the facility of mobile banking got popular with time. This trend is explained by the theories of Markus (2000), a short- term commercial failure may well prove to be an eventual success in the long run, especially with an innovative development. And, it may be possible, to construct a new element on the back of an unsuccessful one, this addition may reap success.

Markus says that the success of the new element was only made possible by the failure of the first. So even if technology does not succeed at first, it should be let its course as slowly but surely and economies striving for success and people are becoming more open minded

Chapter 3

Survey Analysis

Before analyzing the different scenarios of an e-commerce business, it would be beneficial to present the results of the data collected through surveys. A total of 20 respondents were selected by random sampling from three headquarters of successful e-business firms operating in United Kingdom to represent the issues related to e-commerce launch. Questionnaires would be passed on to managers of the following company and their response would be recorded.

“eBay UK Ltd., 50 Victoria Embankment, London”

“Amazon.co.uk Ltd, 1-9 the Grove. Slough, Berkshire”

“e- Business UK. Capricorn House, Blake water Road, Blackburn, Lancashire

The survey focused on five different sections:

·         Dimension of the Company

·         Channel of distribution

·         The benefits of e-commerce

·         Barriers and limitations associated with the implementation of e-commerce

·         Enablers towards the implementation of e-commerce

In the first section, the strength of the company in terms of number of employees, their salaries and their market growth is determined. The next section determines the effectiveness of the distribution channel, currently in place. The third section analyzes the actions taken by these companies. The fourth section analyzes the barriers and limitations currently faced. Lastly, the fifth section, determines the enablers that have been and are being employed to aid e-commerce. (Garrity, Glassberg, Kim, Sanders & Shin, 2005)

1-     

How many employees does your company have?

Between 1 to 50                 between 51 to 100                         between 100-200               

Between 200-500                    over 500           

2-      How would you define the future of this business in terms of geography?

Local               National                       Regional                      International               

Global                                     

3-     

What is the range of sales made by your company?

Less than 500k                  500k to 1M                 between 1M to 10M                          

Between 10M to 50M               between 50M to 200M              

Channel of Distribution

1-      How the distribution of product is is done from your company to end users?

	6 replied that they use distributor and contractors 5 replied that they use independent individuals for distribution 9 replied that direct sales to reach dealers

 

2-     

7 answered that ‘we don’t know’ 8 answered that ‘it won’t change at all’ 5 answered that ‘we expect to increase our sales with new and innovative methods

How will this mode of distribution change in the next 10 years?

3-      According to you what will be the economic impact of e-commerce on leaders of this industry?

	4 answered ‘we do not know’ 12 answered ‘initially the impact would not be too great but with time only the key distributors will survive’ 1 answered that it would be a small impact 3 answered impacts on revenue generation would be even more significant

 

4-      Once e-commerce becomes well established, what changes do you see occurring?

	5 answered “We do not know” 4 answered “Only intermediaries with value added services will survive” 6 answered “Contractors will always have a place in the supply chain” 5 answered “New intermediary would be needed to sell more over the web

 

\

5-     

7 answered “No further activities will be internalized” 2 answered “We do not know” 6 answered “There would be more advertising” 5 answered “more sales”

Which activities performed by the distribution channel personnel would you expect to perform yourself using the Internet?

6-     

7 replied “we do not know” 2 replied “current activities will always be necessary” 5 replied “distributors would be less burdened by warehouse management” 6 replied “inventory management would be reduced”

Which activities do you think would become non-existent once e-commerce becomes well established?

Benefits of e-commerce

1-     

5 replied “technical information and product enhancement” 9 replied “Technical information, advertising and on line catalogs” 6 replied “Product enhancement, on line catalogs, better customer service and customer feedback through questionnaires”

What activities are being planned to be implemented by your company in the next year?

2-     

7 replied “it speeds the flow of information” 8 replied “it speeds the flow of information, helps brand awareness and reduces a lot of overheads 5 replied “it increases the speed of information flow, reduces overhead costs, increases sales, and targets customers with more effectiveness”

What are the expectations by your company in terms of advantages of e-commerce?

3-     

All 20 replied “e-commerce is what their organization thrives on. The impact is directly related to the success of e-commerce”

What impact do you see e-commerce having on your company?

4-     

All 20 replied “100% sales”

What % of total sales is accounted from e-commerce?

5-     

2 replied “we do not know” 1 replied “costs are more or less the same” 5 replied “distribution, labor cost is reduced” 7 replied “advertising and distribution cost have been reduced” 6 replied “costs in almost every department have been reduced”

What costs are expected to be cut down by using e-commerce?

6-     

8 replied “information and price customization is being considered 4 replied “we do not know” 8 replied “pricing, products and services are all being considered to be customized

How do you customize your products using the internet?

7-      What is the customer service provided by your company?

4 replied “we do not know” 7 replied “on line assistance is provided” 9 replied “answering customers’ questions, on line assistance and customization according to user feedback”

 

Barriers to e-commerce

1-      What are barriers with the implementation of e-commerce inside your company?

	2 replied “we do not face any barriers” 2 replied “liaison with administrators is sometimes time consuming” 4 replied “internet is still considered to be a non-important means of communicating amongst users” 6 replied “Lack of training and knowledge” 6 replied “hackers cause a lot of trouble”

 

2-     

6 replied “we do not want to reveal this” 5 replied “50,000 pounds, salary excluded” 9 replied “200 pounds per month paid to a third party”

What do you think is the implementation cost for e-commerce?

3-      What skill set is needed in your company for implementation of e-commerce?

5 replied “we should invest in training employees” 4 replied “internet operations should be outsourced to third parties” 5 replied “new employees would need to be hired with advanced skills” 6 replied “I.S.D has the required knowledge to cater internet operations needs”

 

4-      What senior management involvement is observed in e-commerce?

	7 replied “there is no involvement” 5 replied “they approve the budget when it exceeds a certain limit” 5 replied “they are committed to e-commerce” 3 replied “they are committed and directly involved”

 

Enablers for implementation of e-commerce

1-      Who has the responsibility of internet operation in your company?

	6 replied “an internet specialist has this responsibility” 3 replied “an internet officer from corporate liaison with employees to manage this task” 11 replied “a cross functional team with a member from the engineering, senior management and marketing are all responsible for this operation”

 

2-      What are drivers for e-commerce implementation?

	4 replied “understanding of advantages of e-commerce” 4 replied “better understanding of e-commerce and senior management involvement” 5 replied “presence of a group which is responsible for e-commerce 6 replied “better understanding of benefit and low investment”

 

3-     

3 replied “we do not know” 5 replied “developing a business plan” 6 replied “invest in the growth of the internet culture” 6 replied “create a cross functional team”

What planning is needed to conduct e-commerce operations?

As already mentioned, in total three companies were given this survey. This does not give an exact direction to form a quantitative analysis but still it is possible to draw a few conclusions from this.

1-      The companies contacted were already well established and successful in the field of e-commerce.

2-      Generally, the results show that users and employees are satisfied with the economic impact of e-commerce on distributors, competitors and customers.

3-      The distribution benefits are not completely clear over an electronic network as some of the comments received showed some skepticism about this phenomenon.

4-      These companies, which were used in the survey, have a definitive strategy and this is the reason for their success.

5-      All companies have experienced reductions in overall costs.

6-      Some barriers are faced, with respect to training and coping with hackers.

7-      Better understanding of the benefits of e-commerce, commitment by senior management, training,

Chapter 4

Barriers and Opportunities for E-commerce

Barriers Towards the implementation of E-commerce

Researchers believe that the fundamental step is to implement a chosen strategy into something practical. The basic concerns should be not to focus too much on the financial and operating issues rather should primarily focus on the competitive positioning.

E-commerce based on the Internet, besides it advantages, has imposed many threats and comes with its disadvantages. Researchers say that the biggest obstacle is its perception of being faceless media with no limits. (Laudon & Traver, 2004)

The issues have been constructed in a form of headings with some explanation of that specific issue. The following are all examples and barriers created and related to the e-commerce.

Ethical issues

According to Jackie Gilbert Bette Ann Stead (2001), the ethical issues listed below are direct consequences of e-commerce.

1) Privacy

Privacy, over the internet, has been and continues to be a cause for concern for not just the current consumers but also for general internet users alike. Web interactions should be done with the following two points:

(1) “Privacy consists of not being interfered with, having the power to exclude; individual privacy is a moral right”.

(2) Privacy is "a desirable condition with respect to possession of information by other persons about him/herself on the observation/perceiving of him/herself by other persons"(Laudon & Traver, 2004)

An e-commerce business would need personal information of their customers. This information would include credit card number, name, address, etc. There is no certain way of knowing, unless it is very clear in the ‘terms and conditions’ section of the company that if this information would be used in any other way than just the delivery of the ordered goods. This information may be passed on to advertising agencies for promotional newsletters or for other reasons. There is no doubt that internet is a rapidly expanding arena but it is another reason that it is largely unregulated. This has raised concerns about both privacy and data security. (Eisenmann, 2002)

2) Consequences of faceless business

E-commerce is disadvantaged by not doing business face to face. This may give rise to a lot of ethical implications like selling cigarettes and alcohol to minors or selling weight reduction pills to someone who is already underweight, over the internet. These practices are not only illegal but also unethical.

There is no way of determining if the customer is eligible to consume the product or not. E-commerce web sites work on the honor system and expect the user to be truthful about his needs and if he or she is legally allowed to purchase it. (Eisenmann, 2002)

3) Other ethical issues

Manufacturers Competing with Intermediaries Online

Disintermediation is the process of removing intermediary such as wholesalers, retailers, external sales representatives by setting up a Website to sell to the customers directly.

Few examples of disintermediation are songs being downloaded directly from producers and book’s author distributing her work from her Web page or through her agent and not through conventional means.

So intermediaries have lost their jobs through the process of e-commerce. Now a lot of jobs are being abolished and very few being created by this method. (Garrity, Glassberg, Kim, Sanders & Shin, 2005)

The term dinosaur is used for executives of organizations and university professors who reject to realize that the modern infrastructure has changed the lives of people forever. When an executive calls the Internet as the "wave of the future," it is a certain sign of "dinosaur”.

 Perceptions of risk in e-service encounters

Many researchers firmly believe that organizations should not only step into a race to digitize their outlet-based products and services, but it becomes progressively more important to gain the knowledge how their customer would perceive the digitized e-commerce, they are striving to implement. To some consumers the replacement of traditional and conventional service method with an arena of e-service may seem daunting, artificial and a failed attempt to change a workable idea.

These perceptions are mainly geographic. Not all the countries have the infrastructure in place to make use of e-commerce. For example, PayPal, a leading internet payment method is not even available in some third world countries like Pakistan. Consumers may still have their reasons to believe that e-commerce could be bad for them and carries a lot of risks. (Lee & Lin, 2005)

Along with that other factors like some businesses do not seem to be workable by using e-commerce. For example if a rug selling company decided to use e-commerce then it will restrict its customers to judge their products through a picture and some description. This data for most customers (purchasing rugs) is not enough as they might want to feel the material as well. And all this might actually impact in loss in sales. (Eisenmann, 2002)

E-commerce Integration

To implement an e-commerce business and organization needs to have the skilled personal at their disposal to help structure and run the web site. Finding the technical personal required to do the job requires a change in the education system.

 Theorists believe that one of the obstacles imposed on a successful e-commerce environment is by the education system and its unwillingness to change. It’s one thing to have the drive and the idea but in order to implement e-commerce in its truest form, technical support is needed. (Qin, 2009) The barriers are a consequence of the following reasons

·         The curriculum has already been established with the necessary modules and content. Adding extra material to cover e-commerce to existing business courses will surely put extra burden on professors and students alike. So the option would be to replace the current content with e-commerce. That poses another issue.

·          Researchers investigate that there are a lot of professors who themselves do not wish to add these new e-commerce modules to their course curriculum as they are not too comfortable or lack knowledge about this technology-intensive business method.

·          Lastly, for this to be properly implemented, a lot of coordination would be required between the faculty personals and employers for outlining all the necessary points.

Legal Barriers: IT act 2000 and legal system

Few barriers have been imposed by the legal system on e-commerce as well. As this is a new phenomenon, the legal implications of this have not been fully realized. Researchers insist that the existing provisions are not sufficient to cater to the legal issues that can and would be raise due to inflexible contracts.

Farooq Ahmed(2001) reports that the IT acts up till now are yet to formulate a proper code for e-contracts. Some of the concerns predicted by Farooq due to the inexistence of specific global laws have been listed below:

 1. Formulation of electronic contracts

a) E-data interchange Contracts

b) Cyber contracts

2. Electronic transactions validity

3. Communication of offer and acceptance

4. Human error in e-commerce

a) Mutual mistake
b) unilateral mistake

5. Jurisdiction: The web is limited to activities within a country. It caters to a global market and there is no defined jurisdiction. Even if laws are formed then regulation of those laws would be nothing like regulating them in the 3- dimensional world. The application and the enforcement of the ruling have to be done at an international level. Generally the issues raised are global and should be resolved and dealt with a global perspective.

Another law which can hamper the success of e-commerce is taxation on electronic sales. E-commerce has progressed a lot in America and several proposals are being made to impose additional taxes on the online sales of goods and services in the States. These suggestions can considerably impair the growth of this business. Other countries would, soon adopt the taxation on e-commerce, as well (Qin, 2009)

 Skills required for E-Commerce

The need to modify the education system has been represented as a barrier. The need is generated because currently there are not enough technical personal that are capable of implementing an e-commerce business.

Implementation of e-commerce is about redefining reinventing business processes, changing the dynamics of customer relation and how transactions are done. As the process of running a business is being changed then so are the job designations of employees. (Eisenmann, 2002)  The internet- enabled e-commerce has room for people who have expertise in the following fields:

 Development of Web sites

 Operating the Web Server

 Security over the web

 Catalog Processing

 Setting up a link with existing processes.

Time for delivery of physical products

The process of e-commerce includes selecting the product and then placing an order for it. That order can be delivered to the customer within a day or in months depending on the order. Whereas if a consumer visits a local book store, she would have the option of both selecting a book and gaining access to the book instantly.

In most cases electronic-commerce is used for purchasing goods that are not easily available from local businesses. So these goods, when ordered on line would take a certain amount of time to be delivered. And in some cases these goods can be held up in customs and then eventually take even longer to reach the consumer. This could get frustrating and is one of the drawbacks of e-commerce. Researcher say that after a survey some consumers say that they would prefer to bring home their products themselves rather than to get them delivered in order to save the delivery time.  (Eisenmann, 2002)

Limited sensory information

The internet is an effective means of communication in terms of visual and audio datum. Listening to music or other audios, looking at picture or text documents works very well and our senses can understand this information. However it does have a lot of short comings. Primarily, the full utilization of human senses is not integrated. Pictures of flowers can be seen but it’s not possible to smell those flowers or watching a video of the glaciers is possible but it’s not possible to feel the climate and the environment through the internet. Further, if a consumer at clothing stores picks up a shirt, she can inspect it whichever way she feels desirable. This is not the case in e-commerce. If the consumer selects an item on the web site, she would see an image and possibly some description of the products. When a consumer walks out of a store with a product, it's her. She has it; she has complete knowledge of what it is, and exactly how it looks like.  (Garrity, Glassberg, Kim, Sanders & Shin, 2005)

In some respects purchases made on line are made more on trust rather than anything else. The consumer has to trust the written description for the product to base her opinion of the product.  As not being able to see the product at the time of purchase, would restrict the expectation the consumer has from that product. If a person wants to buy a car over the web, he would see the pictures of the car, which would be carefully selected and posted by the car dealer and might hide some of the flaws and even in that case the buyer would be restricted by the images shown to him. Furthermore the other three senses do not even come into the equation. There is no way of testing the car, or listening to the sound of the engine or the smell of the leather seats installed in the car.

Internet hinders the consumers from experiences the complete richness of the product they intend to buy before they’ve placed an order for it. Researchers have concluded that  due to these limitations customers of the electronic marketplace are mostly comfortable in purchasing generic goods over the internet. Items and products they have seen or used before and which they understand completely. Unique and complex products are not preferred to be bought on line. (Garrity, Glassberg, Kim, Sanders & Shin, 2005)

Hackers & Scammers

E-commerce sites have become an attractive target for hackers according to a research by a security service. This is the biggest concern for e-commerce owners. ProWatch, a security company, claims that 80 per cent of all the companies have experienced one or more major attack every month.

This threat is not just restricted to e-commerce business owners but their customers also suffer at the hands of hackers. Purchases are mostly made through credit/debit cards, so customers stand a risk of losing their money or their personal information. Hackers might bypass input validation modules with the help of decoding software, intercepting inputs by the user, if proper checks are not placed. (McAdam & McCormack, 2001)

Lastly, as the supplying electronic businesses can be run from different parts of the world, it can become doubtful at times that if these businesses are legitimate or not. The internet is filled with scammers and conmen as well. Who might have made a website to take in money in return of promising non-existent products? And once a person is scammed it becomes very hard to trace the culprit as that might be thousands of miles away.

OPPORTUNITIES FOR E-COMMERCE

This section will focus on the advantages and opportunities created for a successful implementation of e-commerce. With the development of the Internet, the scope and marketplace of electronic transactions grew. Researchers have reported that an electronic marketplace provides a non-existent space where buyers and sellers exchange goods with one another as they would do in a conventional marketplace. This is not just limited to buying and selling of goods but information and other services are exchanged in an electronic marketplace. This has become an alternative location for sale and trading and theorists believe that in the future this would become the primary means of trading all around the world. This phenomenon also has the ability to influence the thinking process of buyers like a salesman would try to do in a retail outlet by featuring specific items on a website and writing the key features of the products. These features are changing the shape of the modern economy by directly influencing the behavior of sellers and buyers.

Achievements and scope of E-business

Electronic-business not only affects the business but also the supply chains process in which it operates. An enhanced level of integration is made possible through collaboration between the various elements of a supply chain, more than ever before. Adaptation of e-Business permits organizations to reduce costs and improve the response time with consumers. Theorist maintain  with a lot of confidence that companies that choose to convert their business practices to electronic means, will benefit from this decision greatly. (Laudon & Traver, 2004)

As it has already been established that e-commerce involves anything that requires an on line transaction. This transaction could also be the movement of money from one bank account to another. The financial services have shown a lot of positive indications since the advent of e-commerce. The main component for this factor is the online stock trading. This has seen a progressive growth in the last decade.  Electronic shopping is available for any individual who has access to a computer and an internet connection. Just in the last year, online giants like Amazon.Com and eBay have seen a dramatic growth in sales for mobile phones, fashion apparel, gifts, jewels and books. Naukri.com – India's premier recruitment site has captured around 50% of the recruitment market. (Laudon & Traver, 2004)

ICICIDIRECT.com is an online stock trading company and it performs transactions up to 0.4 B$ on a daily basis, just in India.

Irctc.com is an online travel service company and the most attractive thing about this web site is that it does not even require a credit card in order for the customer to purchase tickets. So the customers do not have reservations and concerns about theft and information misuse.

According to estimations, the online travel market in China is estimated at $350 million in 2009 and has crossed $800 million in 2010. And in 2011, this is estimated at $2.5 billion. (Kraemer, 2006)

Another researcher observed that the geographical distances seem to have diminished due to the emergence of electronic market. Communication with people from different countries can be maintained even without ever going to that country. The researcher claims that this has had a huge impact on the global economy and transportation and communication charges have been reduced all around the world. This can be done by achieving economies of scale, and generated more demand for products and services. (Zabihollah Rezaee, Kenneth R. Lambert and W. Ken Harmon, 2006)

All these factors have slowly but surely settling the fears related to on line transactions. From the above evidence that many of these businesses are flourishing just because they provide an online virtual space. Even in the third world countries, electronic market place is gaining popularity.

Comfort provided by E-commerce

The only two things necessary to be a user of e-commerce is a computer and an Internet connection. And consumers can shop without ever having to leave their homes. They can select, place orders and get their product delivered to their doorstep just by a click of a button. The rise in the price of oil and the time consumed in driving to a retail store is another reason for the success of e-commerce. And there is no time wasted in waiting in check out queues as well. The whole process is very efficient.  (Qin, 2009)

So e-commerce has saved a lot of time for consumers and has generated a lot of motivation to shop online.

Buying/selling 24/7

As the e-commerce business is on line, there are no closing times. A customer can log on to an e-commerce website at any time of the day and place an order and will get an auto generated receipt of her payment and delivery details. This not only creates an opportunity for consumers, to not be restricted by time to shop but the business owners enjoy more revenues as their business is open 24/7 without any holidays. (Johnson and Whang, 2002)

Open and distance learning

Researchers have observed that e-commerce has generated a lot of opportunities for education system. Diana Oblinger (2001) insists that demand for distance learning is growing and there is a need, small at the moment, for open learning. And this has brought on the emergence of e-learning.

E-Learning symbolizes the convergence of several factors from different fields, for instance technological drivers, alterations in society, altering corporate training and the innovative learning paradigm in the context of enduring learning which depicts the move from training to learning. On the other hand, the expansion of E-Learning has a converging effect on the organizational market. (Gay, 2000)

According to researchers e-learning will gain further popularity and will become more widely accepted nowadays children get exposure to the Internet from a very early age. This would help them to be more comfortable with technology and e-learning. Even students in developing countries can make use of this feature, to study from home at reputed e-learning institutions

For organization, key reason for e-learning is to drive business strategy. It works as a key driver and enabler of business e-culture because it has the greatest power to engage employees in the over-all e-business strategy and transformation. Big time cost saving: With a traditional model of leader-led courses, training employees cost huge. Ernst & Young has been the case of this, where employees using e-learning find themselves spending 55hrs per year in learning activities, as opposed to 70 hours previously, but reportedly with greater effectiveness.  (Gay, 2000)

Technology is accessible to revolutionize training, teaching, education, and learning in business organization

 E-commerce and Competition

The recent growth of the Internet has gave way for the development of infrastructure now the local companies now get competition from foreign markets. Prithviraj Dasgupta and Kasturi Sengupta (2002) report, the previously monopolistic markets now face stiff competition from their foreign counterparts.

So the focus of e-commerce is not just on business to consumer relation and application but it has its firm roots in the business to business processes as well.

Taking the example of the insurance industry as it combines the features of business to consumer and business to business processes. The conventional insurance method requires a certificate for all the policies made by the insurance company. However, many problems prevailed with this system, mainly loss of the certificate, forgery of the certificate and duplication. This has now been replaced with an e-certificate, which is digitally signed (name of the participants is written) by the concerned participants and this is verified by a certifying authority. 

Furthermore the process of purchasing an insurance policy online is faster and more reliable than the conventional procedure. Hence more and more insurer is attracted towards this feature and enabling foreign companies to spread their roots.( Prithviraj Dasgupta and Kasturi Sengupta 2002)

 Another enabling process for foreign companies in terms of setting up an e-commerce business, home or abroad, is the comparatively smaller investment than actually going to that country and setting up an office there. That would incur more overheads and resources and hence less profitable for the investing organization.

And depending on the form of business, an e-commerce business may be more secure than physical chain of the business. As already mentioned, e-insurance makes the insurance process more transparent and more secure, with the details of the policy being stored on a digital medium and the financial transactions carried over a secured channel. Researcher believe that many companies plan to implement an e-commerce setup in a foreign country and depending on the success and failure of that venture they decide to choose to open or withdraw from the idea of opening up a physical outlet. (Prithviraj Dasgupta and Kasturi Sengupta 2002)

Future media of e-commerce:

Many researchers believe that almost all of the e-commerce done nowadays is through a personal computer-laptop or desktop. This pattern is likely to remain the same of business to business e-commerce. But they do expect more mediums surfacing for business to consumer e-commerce. 

Other theorists have also stated that a wider range of interactive media would emerge. E-commerce is available through a satellite TV, through mobile phones and other wireless services.

The future of e-commerce would not be restricted to the use of personal computers. Though many researchers believe that e-commerce through media would never completely go away but the consumers want to do e-commerce ‘on the go’. So wireless devices, most notably cellular phones would make this possible.  (Kraemer, 2006)

Current and future B2C digital media

Other mediums for e-commerce include utility meters and games (the Xbox and play station consoles provide this feature).But IDTV are currently in the stage of development and the industry has been instructed to facilitate e-commerce. Theorists believe that this would be ready to be in place within the next five years. In summary, e-commerce through PC is still the most popular medium but other methods are emerging as well, which will provide more benefits and options to the users and hence would grow the e-commerce market even further.

 Economic issues raised by e-commerce for the WTO and developing countries

Researchers have observed that access to electronic-commerce, which means access to electronic exports, has only two elements, which need to be distinguished from one another: access to services on line and access to services that use electronic means to be traded. Access to services online means to access the infrastructure of the internet while the other is related to specific elements of the services to be used electronically. (Kraemer, 2006)

The opportunities of e-commerce are not only restricted to developed countries only. Developing countries have a lot to gain as well though in the short run, it may seem that the developed countries have a huge advantage because of the infrastructure in place. And the developing countries, which lack this infrastructure and the investment to quickly deploy this, cannot take full advantage of e-commerce opportunities.  (Kraemer, 2006)

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Re-Intermediating the Supply Chain

In the modern environment of e-commerce, only those intermediaries would survive who offer some value added services to their transactions and the rest would slowly diminish.

Some intermediaries in the supply chain of a business might be completely eliminated, while the rest could be provided internally. Theorist believes that in order to survive in the new market place new categories of intermediaries must be formed. These new intermediaries could be virtual resellers, agents, e-malls, etc.

Brynjolfsson and Smith (2000) state “the existence of cyber-mediaries is consistent with traditional marketing theory, which views intermediaries as organizations that support exchange between producers and consumers, increasing the efficiency of the exchange process by aggregating transactions to create economies of scale and scope”

Access the global marketplace

One of the many opportunities associated with e-commerce is the access to global market. If a business has a physical setup then he would only be catering to the needs of the people in and around the vicinity of his business outlet. But by setting up an e-commerce business, there is no limit on boundaries. A person living in Australia can be a customer of an Egyptian e-commerce company. It has now become possible to do business with another business or person placed anywhere in the world who is connected to the Internet.  (Lee & Lin, 2005)

Even small businesses like a music store can advertise and sell its items on an international market using e-commerce. Another reason for this global prospect is due to the fact that consumers do not have to play according to the distance of their communication, unlike in the case of conventional communications methods. Overall there is more access for customers and business owners; there are no theoretical geographic limitations. (Lee & Lin, 2005)

Chapter 5

Limitations

There are a certain limitations associated with this research. While some of the constraints were known, like a limited amount of time to conduct the study, but many other limitations emerged on which the author had no control.

Collection of Data

Many barriers were experienced while gaining access to suitable survey participants. The researcher was hampered by finances and time but other factors like, informants not having enough time to give interviews. Even though case studies of many reputable organizations was considered and survey was conducted in related e-commerce environment, but that still did not meant that the researcher was able to make contact with the most appropriate informant. Manager at some of the firms directed the researcher to lower ranked employees. The help received from them was not as helpful as the information from a manager would have been.

Initially, the researcher preferred to collect data from more than one informant for every case study and business. This did not happen in some cases, as only information on website was or other published material was used to corroborate their evidence.

The absence of data on most under developed and developing countries was also a limitation. So the outcomes of this research have been drawn from statistics provided from developed countries and selected developing countries.

The method used in this paper were accepted techniques for scientific research but it would have been possible to reach the theoretical saturation point sooner, had the list of businesses would have been more well- defined

Volatility of Electronic Commerce Marketplace

The market of e-commerce, in terms of thinking and application has always been very volatile. There were examples of failed and successful e-commerce business. The task was to analyze their practices and the reason for their success and failure.

E-commerce environment is not only a very dynamic one but the subject of e-commerce has been categorized in a lot of disciplines. So there was a need to follow a lot of different streams of literature.

Resource and Time Constraint

As the researcher is also a university student. The creativity, flow of ideas and reflective thinking was interrupted by his university commitments. Time Constraints also posed a lot of difficulties and there was an added complication of rescheduling the researcher’s study commitments with of the informants.

Conclusion

The research was conducted over a two month period. During that time, e-commerce industry practices, finances and academics were analyzed. A number of findings were observed which would be briefly reviewed in this conclusion.

The high level of internet traffic has generated a need and an opportunity for businessmen to supply services to these potential consumers. The rise of e-commerce has coincided with the development of the telecommunications infrastructure.

This report has explained in detail the various factors that have influenced the decisions of consumers and businessmen to choose or stay away from e-commerce. There were two external factors that influenced the general trend of e-commerce enablers and barriers. Firstly, even though the range of e-commerce business is very wide but some businesses have a greater tendency to succeed than other businesses. Secondly, the telecommunications infrastructure in a country provided different opportunities and barriers for e-commerce market place.

The study has analyzed four case studies for e-commerce business models, three of which were running successfully and one of them failed. Even the business that failed to deliver goods, proved to be a success after a certain amount of time.

There are a lot of other failed and successful e-commerce businesses. By conducting surveys and interview all the enabling and disabling factors for e-commerce have been provided in this report. But from the observation and understanding of the author, it is clear that the opportunities of e-commerce dominate the limitations. More examples of successful e-commerce businesses are available than of failed ones. So after analyzing the opportunities and barriers of the e-commerce marketplace it can be concluded that there are more opportunities than barriers provided an internet infrastructure is in place and the right business model is chosen.