Sector_Report_on_E-Business

E-business Executive summary Since the last decade, the internet sector has become a prosperous industry. A variety of internet applications aroused, including e-business. Among others, e-business aims at optimizing business processes, with the support of internet technologies. In this paper we analyse whether this industry is sufficiently efficient and value added, for small and medium sized enterprises, to invest in. By evaluating the opportunities, e-business offers a spectrum of non-discovered possibilities within a company’s business units. For example, new marketing tools such as online advertising show up. This new type of advertising ensures the reach of a wide audience with a considerable lower cost. Not only marketing, but sales as well, have become more efficient, as products can be acquired online. E-commerce either, implies accurate data processing, a better customer service and an elimination of intermediaries, which often implies lower prices. Another vast impact of e-business is business process integration. This is accomplished by a harmonization of activities inside and outside the company. All these opportunities of e-business go together with many advantages such as: cost & time reduction and quality improvement. The merging of cost cutting and quality improvement leads to a higher business performance, more efficiency and a higher productivity, which are the core elements of any enterprise. However, it should be clear that e-business does not only involve successful implementations. Several critical success factors are indispensable in order to generate significant increase in revenues trough e-business. These factors include adjustments of the management, monitoring costs, a transformation of the corporate culture & structure and an adaption of technology. When these elementary components are taken into account, a firm should be able to see significant gains with few impediments. Table of contents 1. Introduction 4 2. Role of the internet 5 3. Opportunities 5 3.1. Marketing 5 3.2. Sales 6 3.3. Value chain 6 4. Impact 6 4.1. Advantages 6 4.2. Critical Success Factors (CSF) 8 5. Conclusion 10 6. Recommendations 11 7. Bibliography 12 Introduction The past decade, the internet as such and internet technologies have become an emerging market and a billion-dollar industry. These new technologies have created new opportunities for young and innovative enterprises, as well as existing firms. Especially the mutual influence between globalization and e-business requires a vast change in the organisation and operation of firms. E-business requires a transformation of all business processes in order to be fully productive and valuable. With assistance of recent academic journals, this report is issued with the aim to evaluate the Internet sector, or more specific, the e-business industry, with a focus on small and medium enterprises (SME’s). In this business report you will meet a wide variety of opportunities e-businesses has to offer in various business processes such as marketing, sales and customer relationship management. Subsequently, the impact of the transformation into e-business will be evaluated by exposing the benefits and critical success factors. The purpose of this sector analysis is to provide the reader of a wide view of what e-business is and to offer an evaluation whether this industry is worth investing in. Is this transformation the key to success, being an indispensable element to maintain your competitive advantage, or might e-business be just a hype' Role of the internet Previously, SME’s used self–developed systems in order to integrate business processes (internally) and to stay connected with clients and suppliers. As these technologies were very expensive to provide and because not all suppliers, distributors and clients possessed the required systems, this was certainly not a definite solution. Since the arrival of the internet, the world wide web was quickly engaged as the answer to the restrictions of the obsolete self-developed systems. The internet is an easy and universal way to communicate with other companies (and individuals) as this technology can be adopted by all enterprises, regardless their computer systems. The role of the internet has never stopped expanding since. However the dotcom bubble was a period of overestimating internet performances and returns, companies have never ceased to rely in growing order on internet technologies. The implementation of these technologies into trade and industry leads to the phenomenon of e-business, where all primary business processes are run by web technologies in order to enhance their business performance and to improve their organisational structure. Opportunities Opportunities of e-business are numerous. Therefore this paper only clarifies the enhancement of processes where the impact of e-business is most clear: marketing, sales and the value chain. * 3.1. Marketing E-business offers enormous improvements in the marketing sector. Traditional marketing tools such as billboards, television-/radio-commercials and printed press are effective, but at the same time particularly expensive. Online advertising on the other hand displays a new world of opportunities for the advertiser at considerable lower cost. Because of the internet, companies can improve their brand awareness as there are no geographical limitations. Further, advertisements can be customized to the client’s needs: small details of a certain advertising campaign can be modified, depending on the region, for instance: languages, websites, telephone numbers and cultural elements. Compared to traditional media and marketing tools, online advertising is less expensive as well, which can be an important factor in cost cutting. Besides, advertisements can be placed on a variety of websites in order to reach a major part of the target group. 1.2. Sales The impact of online sales on SME’s is immense. Providing the clients with an online website where they can purchase products over the internet is called e-commerce. This type of selling offers a wide range of benefits in order to make the company more effective and efficient: administration and paperwork will be reduced, the workforce can be reduced, less inaccuracies when inputting data, efficient after sales service,… Further, e-commerce can expand the customer database because clients don’t literally have to visit shops anymore and prices might be lower as there is a reduction of intermediaries (= disintermediation). 1.3. Value chain Besides the effects e-business has on individual processes, e-business also helps the integration of separate business units and links them together. Hence, information between all segments (sales, production, finance and human resources) can be shared in order to avoid severe fluctuations in demand or errors and uncertainties because of miscommunications. Not only will units be linked internally, business partners such as suppliers and distributors can take advantage of this system as well trough data interchange. Impact * 4.1. Advantages As the above opportunities demonstrate, investing in e-business for an SME can have a large impact on the operation processes of the company. E-business allows enterprises to add value in a variety of ways. It is however important to notice that it is e-business that adds value, not the internet. The internet is the initial concept on which e-business is based, but it is e-business itself that makes companies unique in their own way. E-business also enables enterprises to expand their customer base and to improve customer relationships because of their “one to one”-approach. These are crucial elements, as customers are considered to be the foundation of the existence of a company. Other benefits such as information management, the expansion of geographical coverage and improved integration of processes & external companies have already been listed above. The combination of these benefits will lead to three main advantages that will ensure the company’s added value. (Manecke & Schoensleben, 2004): - reduction of general costs - improvement of overall quality - decrease in time needed to complete a process When e-business is implemented in a correct way, these three key elements will lead to a higher business performance, both quantitative and qualitative. source: Johnston, D., Wade, M., & McClean, R. (2007). Does e-Business Matter to SMEs' A Comparison of the Financial Impacts of Internet Business Solutions on European and North American SMEs. Journal of Small Business Management , 45 (3), 359 1.4. Critical Success Factors (CSF) These are factors that are crucial to succeed your goal. However the corporate culture of an organization should be maintained for the most part, the transformation of a company into an e-business demands some sincere changes. In consequence, there have been successful launches as well as dramatic failures. It is therefore essential that a when a company considers to implement e-business, she closely watches particular processes that are vital to any enterprise in order to survive (Li & Huang, 2004): Leadership & management E-business should be fully understood and supported by the executives. That way they are able to adapt their e-business strategy in conformity with the external environment. Not only the executive management should be entirely aware of the changes this new system will bring along. Specific team managers from the different business units will be indicated as well. That way, e-business applications are empowered to a fixed group of people. This is of crucial value for the successful implementation of the entire transformation. Organizational Structure & technology Both the business processes and structure have to be adapted in accordance to the new system’s requirements. Ensure that the e-business knowledge is integrated in the corporate culture. Make sure that technology- and IT-staff are aware of how the system operates. External relationships Maintain good relationships with external companies such as suppliers/distributors and with your customer. Make sure to take feedback into account, especially when you are in the start-up phase. Costs On the short term, the implementation of e-business will involve large costs. However it is presumable that higher revenues can be realized and better business performance will be made. The company should be conscious of the fact that the return on investment will be made on a long term basis. As can be seen in the figure below, there is a certain pattern that should be followed when implementing e-business transformations: the first step is to see what the system requirements are in order to be successful, while taking all external and internal factors into account. Subsequently, the company should choose an appropriate e-business model. The third step is to test different business units, test the e-business model and test its acceptance within the company. Then the conversion can be made. This should involve additional information for employees and training of the required staff. Make sure that e-business system should be maintained and updated after implementation in order to stay accurate and effective. (Laudon & Laudon, 2006) source: Manecke, N., & Schoensleben, P. (2004). Cost and benefit of Internet-based support of business processes. International Journal of production Economics , 87 (3), 225 Conclusion At the start of this sector analysis the question was stated whether investing in this sector would be value added. It became clear that this is indeed the case. Even more, it will become a necessity in order to maintain a competitive advantage in the future. E-business aims at getting more out of traditional business processes for the purpose of optimizing business performances. Because of the internet, e-business has been able to extend the impact of marketing tools, mainly by expanding its geographical coverage and reducing advertising costs. Sales are influenced by adding online websites, which is administration- and time-reducing for the company, and offers an additional service to the customer as well. E-business has also a vast impact on the whole of business processes, namely the value chain. The system ensures a complete integration of all internal and external systems, in order to optimize productivity. That being said, a wide variety of advantages can be added to the concept of e-business. Of course not each case of implementation was a success. Therefore investors and companies have to monitor several critical success factors that are vital for a firm’s prosperity. The management of the high implementation cost is a crucial factor. On condition that all these factors are taken into account, the way to success in this sector is within arm’s reach. Recommendations * Choose a sector in which you would like to implement e-business. * Make sure you cooperate with a company that has a high growth-potential. * Before implementing e-business, the workforce should be well posted of all possible changes in the business processes. * When implementing e-business, choose a model which is customized for the company’s needs and business processes . * Once e-business is implemented, management and employees should be closely monitored to prevent potential problems. * After implementation, make sure to keep the system up-to-date, in order to maintain flexibility. * Bibliography Barua, A., Konana, P., Whinston, A., & Yin, F. (2002). Managing E-Business Transformation: Opportunities and Value Assessment. Sloan Management Review , 34 (1), 36-44. Dubelaar, C., Sohal, A., & Savic, V. (2005). Benefits, impediments and critical success factors in B2C E-business adoption. Technovation , 25 (11), 1251-1262. Johnston, D., Wade, M., & McClean, R. (2007). Does e-Business Matter to SMEs' A Comparison of the Financial Impacts of Internet Business Solutions on European and North American SMEs. Journal of Small Business Management , 45 (3), 354-361. Laudon, K., & Laudon, J. (2006). Bedrijfsinformatiesystemen. Amsterdam: Pearson Education Benelux. Li, J., & Huang, J. (2004). An exploratory Study of E-business Success Factors. Journal of Electronic Science and Technology of China , 2 (3). Manecke, N., & Schoensleben, P. (2004). Cost and benefit of Internet-based support of business processes. International Journal of production Economics , 87 (3), 213-229. Phillips, P., & Wright, C. (2009). E-business's impact on organizational flexibility. Journal of Business Research , 62 (11), 1071-1080. Soto-Acosta, P., & Merono-Cerdan, A. (2009). Evaluating Internet technologies business effectiveness. Telematics and Informatics , 26 (2), 211-221. Souitaris, V., & Cohen, M. (2003). Internet-Business or Just Business': Impact of `Internet-Specific' Strategies on Venture Performance. European Management Journal , 21 (4), 421-437. Yip, G., & Dempster, A. (2005). Using the Internet to Enhance Global Strategy. European Management Journal , 23 (1), 1-13. Zeng, Q., Chen, W., & Huang, L. (2008). E-Business Transformation: An Analysis Framework Based on Critical Organizational Dimensions. Tsinghua Science and Technology , 13 (3), 408-413.