Postgraduate Diploma
in Information Technology Management
E-BUSINESS
Module Guide
Copyright © 2021
MANCOSA
All rights reserved; no part of this module guide may be reproduced in any form or by any means, including photocopying
machines, without the written permission of the publisher. Please report all errors and omissions to the following email
address: modulefeedback@mancosa.co.za
Postgraduate Diploma
in Information Technology Management
E- BUSINESS
List of Contents ....................................................................................................................................................... 1
Preface .................................................................................................................................................................... 2
Unit 1: E-Business Environment ........................................................................................................................... 10
Unit 2: Digital Business Models ............................................................................................................................. 24
Unit 3: The Value Chain of E-Business ................................................................................................................. 38
Unit 4: Digital and Social Marketing ...................................................................................................................... 49
Unit 5: E-Supply Chain Management .................................................................................................................... 61
Unit 6: E-Business Infrastructure .......................................................................................................................... 74
Unit 7: Enterprise Resource Planning and Knowledge Management ................................................................... 86
Unit 8: Issues, Challenges and the Future of E-Business ..................................................................................... 98
Answers for End of Chapter Revision Questions ................................................................................................ 115
Reference List ..................................................................................................................................................... 126
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List of Contents
List of Figures and Illustrations
Figure 1: Difference between E-Commerce and E-Business. Source: Singh, P, (2019) ................................. 13
Figure 3: Pillars of E-Business .......................................................................................................................... 26
Figure 4: B2C Process ...................................................................................................................................... 29
Figure 5. Traditional Value Chain ..................................................................................................................... 40
Figure 6. E-commerce value chain model ....................................................................................................... 41
Figure 7: Online Order Fulfilment process ........................................................................................................ 43
Figure 8: Digital Marketing Methods ................................................................................................................. 54
Figure 9. FFF Model ......................................................................................................................................... 57
Figure 10. Traditional Supply Chain .................................................................................................................. 63
Figure 11. E-Supply Chain process .................................................................................................................. 64
Figure 12. Supply Chain Management Flows ................................................................................................... 66
Figure 13. E- Commerce Platform Supply Chain .............................................................................................. 68
Figure 14. E-Procurement process ................................................................................................................... 69
Figure 15: Digital Project Management process: .............................................................................................. 78
Figure 16: Project Management Phases ........................................................................................................... 79
Figure 17: The role of ERP system ................................................................................................................... 88
Figure 18: ERP Planning: Source: Nwankpa, J. (2015) .................................................................................. 90
Figure 19. ERP to CRM .................................................................................................................................... 91
Figure 20: KM Process Framework Chatzoudes et al., (2015) ......................................................................... 93
Figure 21. Conceptual Framework for E-Government Strategy ...................................................................... 101
Figure 22: Internet of Things ......................................................................................................................... 105
Figure 23. Industrial Revolution progress ....................................................................................................... 107
Figure 24. The Benefits of Crafting a Digital Strategy ..................................................................................... 110
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MANCOSA – Postgraduate Diploma in Information Technology Management
E - Business
Preface
A.
Welcome
Dear Student
It is a great pleasure to welcome you to E- Business (EBS8). To make sure that you share our passion about this
area of study, we encourage you to read this overview thoroughly. Refer to it as often as you need to, since it will
certainly make studying this module a lot easier. The intention of this module is to develop both your confidence
and proficiency in this module.
The field of E- Business is extremely dynamic and challenging. The learning content, activities and self- study
questions contained in this guide will therefore provide you with opportunities to explore the latest developments in
this field and help you to discover the field of E- Business as it is practiced today.
This is a distance-learning module. Since you do not have a tutor standing next to you while you study, you need
to apply self-discipline. You will have the opportunity to collaborate with each other via social media tools. Your
study skills will include self-direction and responsibility. However, you will gain a lot from the experience! These
study skills will contribute to your life skills, which will help you to succeed in all areas of life.
We hope you enjoy the module.
MANCOSA does not own or purport to own, unless explicitly stated otherwise, any intellectual property
rights in or to multimedia used or provided in this module guide. Such multimedia is copyrighted by the
respective creators thereto and used by MANCOSA for educational purposes only. Should you wish to use
copyrighted material from this guide for purposes of your own that extend beyond fair dealing/use, you
must obtain permission from the copyright owner.
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B.
Module Overview
The E-Business course is designed to broaden the students' knowledge in the field of Online Business Platforms.
The module enables to develop an understanding and awareness of how entrepreneurs create and manage their
online business offerings and create and manage ventures that are digital in nature; by examining the global and
international trends. E-Business or Electronic Business is the administration of conducting business via the Internet.
This would include the buying and selling of good s and services, along with providing technical or customer support
through the Internet The module is a 15-credit module at NQF level 8. Follow the guide given in the beginning of
each unit and also pre-read the given text to get a deeper understanding of the module.
C.
Exit Level Outcomes and Associated Assessment Criteria of the Programme
Exit Level Outcomes

Associated Assessment Criteria
Apply appropriate security frameworks to be

Security frameworks are reviewed for
able to manage strategies to the information
appropriateness and applied to manage strategies
security needs of an organisation
to the organisational information security
requirements.





Critically appraise the legal process of using

technology and implement appropriate
and appropriate polices and standards are
policies, standards to curb the utilisation
implemented to curb the utilisation
Interrogate different approaches that can be

3
Diverse approaches are evaluated to understand
used for research in computing and
how these approaches are used in computing and
information systems
information systems
Assess the modern trends in information

Modern trends in information systems are assessed
systems and how their application in business
to understand how their application in business
systems influence strategic and organisational
systems influence strategic and organisational
decision making
decision making
Demonstrate the ability to independently

Skills are acquired and demonstrated to understand
acquire the skills to strategically manage a
how to strategically manage a business on the
business on the Internet platform
Internet platform
Critically evaluate the drivers of strategy

implementation.

Legal processes of using technology are evaluated
Drivers of strategic implementation are critically
evaluated to understand how to manage a business

Assess the use of applying artificial
Artificial intelligence approaches are assessed and
intelligence approaches to a business to solve
applied to understand how a business solves
problems
problems.
MANCOSA – Postgraduate Diploma in Information Technology Management
E - Business
D.
Learning Outcomes and Associated Assessment Criteria of the Module
LEARNING OUTCOMES OF THE MODULE
ASSOCIATED ASSESSMENT CRITERIA OF THE MODULE


Gain an in-depth understanding of the
concepts of an e-business
E-Business is introduced and explained in order to
understand the History and importance of E-Business.

E-Business to Brick and mortar shops are Comparing to
help understand the different types of E-Business Models

E-Business Challenges and the future of E-Business are
characterised to help forge an understanding of EBusiness Pertinent Issues

Apply the Value Chain model to an e-

business
The Value Chain of E-Business is explained to better
understand the Benefits and Limitations of E-Business;
Products Consideration for E-Business, as well as Trust
and Service Quality and their contribution to building value
for the consumers.

Demonstrate skills to manage

relationships in the e-supply chain
Supply Chain Management Components and Process are
evaluated to help understand the Importance of Supply
Chain in a Digital Business

E-Procurement and E-Business Infrastructure are
analysed on the role in building E-Business success.

Acquire the skills to apply the concept of e- 
Online Communication is explained to help better convey
marketing to an organisation
a digital message.

E-Marketing Planning; E-Business Marketing Research,
and Ethical and Legal Issues are analysed to help design
a value proposition for the enterprise products.

Consumer Behaviour Online and Branding on the Web are
explained to understand how they influence buying
behaviour online.
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E - Business


Evaluate the existence of knowledge
management within an e-business
Knowledge Management is examined as a Customer
Relation Management (CRM) objective to better serve the
needs of the customers.

knowledge management within an e-business is analysed
using Enterprise Resource Planning and Related
Technologies
E.
Learning Outcomes of the Units
You will find the Unit Learning Outcomes on the introductory pages of each Unit in the Module Guide. The Unit
Learning Outcomes lists an overview of the areas you must demonstrate knowledge in and the practical skills you
must be able to achieve at the end of each Unit lesson in the Module Guide.
F.
Notional Learning Hours
Notional Learning Hour Table for the Programme
Learning time
Types of learning activities
%
Lectures/Workshops (face to face, limited or technologically mediated)
10
Tutorials: individual groups of 30 or less
0
Syndicate groups
0
Practical workplace experience (experiential learning/work-based learning etc.)
0
Independent self-study of standard texts and references (study guides, books, journal
65
articles)
Independent self-study of specially prepared materials (case studies, multi-media, etc.)
20
Other: Online
5
TOTAL
G.
100
Acronyms/Abbreviations
4IR
Fourth Industrial Revolution
AI
Artificial Intelligence
B2B
business to business
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E - Business
B2C
Business to Consumers
C2C
Consumer to Consumer
CRM
Customer Relations Management
EB
E-Business
EC
E-Commerce
EDI
Electronic Data Interchange
EDM
Electronic Document Management
EFT
Electronic Funds Transfer
ERP
Enterprise Resource Planning
E-SCM
Electronic supply chain management
G2C
Government to Citizen
G2E
Government to Employees
G2G
Government to Government
GPS
Global Positioning Systems
IoT
The Internet of Things
RFID
Radio Frequency Identification
SCM
Supply chain management
VR
Virtual reality
WWW
World Wide Web
H.
How to Use this Module
This Module Guide was compiled to help you work through your units and textbook for this module, by breaking
your studies into manageable parts. The Module Guide gives you extra theory and explanations where necessary,
and so enables you to get the most from your module.
The purpose of the Module Guide is to allow you the opportunity to integrate the theoretical concepts from the
prescribed textbook and recommended readings. We suggest that you briefly skim read through the entire guide
to get an overview of its contents. At the beginning of each Unit, you will find a list of Learning Outcomes and
Associated Assessment Criteria. This outlines the main points that you should understand when you have
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E - Business
completed the Unit/s. Do not attempt to read and study everything at once. Each study session should be 90
minutes without a break
This module should be studied using the prescribed and recommended textbooks/readings and the relevant
sections of this Module Guide. You must read about the topic that you intend to study in the appropriate section
before you start reading the textbook in detail. Ensure that you make your own notes as you work through both the
textbook and this module. In the event that you do not have the prescribed and recommended textbooks/readings,
you must make use of any other source that deals with the sections in this module. If you want to do further reading,
and want to obtain publications that were used as source documents when we wrote this guide, you should look
at the reference list and the bibliography at the end of the Module Guide. In addition, at the end of each Unit there
may be link to the PowerPoint presentation and other useful reading.
I.
Study Material
The study material for this module includes tutorial letters, programme handbook, this Module Guide, a list of
prescribed and recommended textbooks/readings which may be supplemented by additional readings.
J.
Prescribed and Recommended Textbook/Readings
There are at least one prescribed and recommended textbooks/readings allocated for the module.
The prescribed and recommended readings/textbooks present a tremendous amount of material in a simple, easyto-learn format. You should read ahead during your course. Make a point of it to re-read the learning content in
your module textbook. This will increase your retention of important concepts and skills. You may wish to read more
widely than just the Module Guide and the prescribed and recommended textbooks/readings, the Bibliography and
Reference list provides you with additional reading.
The prescribed and recommended textbooks/readings for this module is:
Prescribed Reading/Textbook
●
Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic markets perspective. Second Edition.
South Africa: Pretoria. Van Schaik.
Recommended Readings
●
7
Chaffey, D., (2015). Digital Business and E-Commerce. Sixth Edition. Pearson
MANCOSA – Postgraduate Diploma in Information Technology Management
E - Business
K.
Special Features
In the Module Guide, you will find the following icons together with a description. These are designed to help you
study. It is imperative that you work through them as they also provide guidelines for examination purposes.
Special Feature
Icon
Explanation
The Learning Outcomes indicate aspects of the particular Unit you have
LEARNING
to master.
OUTCOMES
ASSOCIATED
ASSESSMENT
CRITERIA
The Associated Assessment Criteria is the evaluation of the students’
understanding which are aligned to the outcomes. The Associated
Assessment Criteria sets the standard for the successful demonstration
of the understanding of a concept or skill.
A Think Point asks you to stop and think about an issue. Sometimes you
THINK POINT
are asked to apply a concept to your own experience or to think of an
example.
You may come across Activities that ask you to carry out specific tasks.
ACTIVITY
In most cases, there are no right or wrong answers to these activities.
The purpose of the activities is to give you an opportunity to apply what
you have learned.
At this point, you should read the references supplied. If you are unable
READINGS
to acquire the suggested readings, then you are welcome to consult any
current source that deals with the subject.
PRACTICAL
Practical Application or Examples will be discussed to enhance
APPLICATION
understanding of this module.
OR EXAMPLES
KNOWLEDGE
You may come across Knowledge Check Questions at the end of each
CHECK
Unit in the form of Knowledge Check Questions (KCQ’s) that will test
QUESTIONS
your knowledge. You should refer to the Module Guide or your
textbook(s) for the answers.
You may come across Revision Questions that test your understanding
REVISION
QUESTIONS
of what you have learned so far. These may be attempted with the aid
of your textbooks, journal articles and Module Guide.
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Case Studies are included in different sections in this Module Guide.
CASE STUDY
This activity provides students with the opportunity to apply theory to
practice.
You may come across links to Videos Activities as well as instructions
VIDEO ACTIVITY
9
on activities to attend to after watching the video.
MANCOSA – Postgraduate Diploma in Information Technology Management
E - Business
Unit
1:
E-Business Environment
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Unit Learning Outcomes
CONTENT LIST
LEARNING OUTCOMES OF THIS UNIT:
1.1. Introduction to E-Business
●
Describe E-Business
1.2. History of E-Business
●
Understand the History of E-Business
1.3. Comparing E-Business to Bricks
●
Compare E-Business to brick and mortar shops
1.4. Importance of E-Business
●
Understand the Importance of E-Business
1.5. Limitations Facing E-Business
●
Analyse Challenges and limitations facing E-Business
1.6. Summary
●
Summarise topic areas covered in unit
and mortar shops
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook
●
Chapter 1. Chipp K, Ismail Z, Meiring E (2017). E-Commerce:
Dynamic markets perspective. Second Edition. South Africa:
Pretoria. Van Schaik.
Recommended Readings

Chapter 1. Chaffey, D., (2015). Digital Business and E-Commerce.
Sixth Edition. Pearson
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1.1
Introduction to E-Business
The E-Commerce (EC) concept is also defined as the process of buying, selling, or exchanging products, services,
and information via computer networks. According to Turban and King (2003), E-Business (EB) is a broader
definition of EC that includes not just the buying and selling of goods and services, but also:
●
Servicing customers;
●
Collaborating with business partners;
●
Conducting electronic transactions within an organisation;
●
Pure vs. Partial EC: based on the degree of digitisation of product, process and delivery agent.
E-commerce creates new opportunities for performing profitable activities online using the Internet. It promotes
easier cooperation between different groups: businesses sharing information to improve customer relations;
companies working together to design and build new products/services; or multinational company sharing
information for a major marketing campaign. The followings are the business uses of the Internet. These services
and capabilities are a core part of a successful e-commerce program. They are either parts of a value chain or are
included as supporting activities:
●
Buying and selling products and services
●
Providing customer service
●
Communicating within organizations
●
Collaborating with others
●
Gathering information (on competitors, and so forth)
●
Providing seller support
●
Publishing and distributing information
●
Providing software update and patches
E-commerce is the process of doing business electronically. It changes the entire business scenario due to the
powerful innovation of the Internet, which is spreading rapidly. The power of Internet as a global access was felt
with the introduction of the World Wide Web (WWW) in 1994. This global network makes global relations easier. It
is predicted that, in the near future the digital economy will overtake the traditional economy of all developed
countries.
E-commerce is a composite set of technologies, processes and business strategies that foster the instant exchange
of information within and between organizations. E-commerce strengthens relationship with buyers make it easier
to attract new customer, improves customer responsiveness and open new markets on a global scale. E-commerce
is the application of various communication technologies to provide the automated exchange of business
information with internal and external customers, suppliers and financial Institutions.
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E - Business
E-Business and E-commerce
Internationally both the terms can be interchanged and having the same concepts, that is, doing business online.
However, e-Business is the derived from e-commerce and there is little difference between these two concepts.
Electronic commerce is a business to business [B2B] initiative aimed at communicating business transaction
documents on a real time or near real time basis between known trading partners such as suppliers, customers
etc. E‐commerce might be considered as the use of the Internet as a company’s primary or exclusive portal to
communicate with its customers. Amazon, E-Bay and Wish.com, to name a few, conduct all of their business online
and their products and services are exclusively those which can be sold online.
On the other side e‐business refers to companies for which Internet is one of several channels to customers and
perhaps not even the primary one. Banks are a classic example, as are companies, which have Internet
storefronts. But all such entities have other primary channels to distribute their products. The main distinctions
between E‐commerce and E‐Business are:
1Figure 1: Difference between E-Commerce and E-Business.
Source: Singh, P, (2019)
1.2
History of E-Business
Most people don’t realize that e‐commerce and its underlying technology have been around for about forty years.
The term e‐commerce was originally conceived to describe the process of conducting business transactions
electronically using technology from the Electronic Data Interchange [EDI] and Electronic Funds Transfer [EFT].
EDI is widely viewed as the beginning of E‐commerce. Large organizations have been investing in development of
EDI since the sixties. It has not gained reasonable acceptance until eighties. EDI is a set of standards developed
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in the 1960’s to exchange business information and do electronic transactions. At first there were several different
EDI formats that business could use, so companies still might not be able to interact with each other. Electronic
Data interchange [EDI] allowed different companies to perform electronic dealings with one another.
The Internet was conceived in 1969, when the Advanced Research Projects Agency [a Department of Defence
Organization] funded research of computer networking. The Web became a popular mainstream medium
(perceived as the fourth mainstream medium in addition to print and radio) in a speed, which had never been seen
before. The Web users and contents were increasing at an accelerated rate. Besides the availability of technical
infrastructures, the popularity of the Web is largely attributed to the low-cost access and simplicity of HTML
authoring, which are the obstacles of EDI Development. The Internet and the Web have overcome the technical
difficulty of EDI, but it has not solved the problem of slow development of E‐commerce standards.
The World-wide popularity of Internet has resulted in the stable development and overwhelming acceptance of E‐
Commerce. E‐Commerce provides the user with a rich online transaction experience. Business to Business (B2B)
is the largest E‐Commerce in the present time. Peer to peer and Consumer to Consumer (C2C) are two important
types of E‐Commerce. E-Commerce and Value Chain. Typical business organizations (or parts within a business
organization) design, produce, market, deliver, and support its product(s)/service(s). Each of th7ese activities adds
cost and value to the product/service that is eventually distributed to the customer. The value-chain consists of a
series of activities designed to satisfy a business need by adding value (or cost) in each phase of the process. In
addition to these primary activities that result in a final product/service, supporting activities in this process also
should be included:
•
Managing company infrastructure
•
Managing human resources
•
Obtaining various inputs for each primary activity
•
Developing technology to keep the business competitive
Activity
Read Section 1.1 in your prescribed book and do the exercise on page 4.
Can you identify how the Internet contributes to the operations of the
listed ecommerce organisations and companies?
Visit five (5) different Websites of companies that provide goods and
services.
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1.3
Comparing E-Business to Bricks and mortar shops
E‐commerce is an extension of traditional commerce, which is concerned with the activities of business, industry
and trade including the exchange of goods, services, information and money. It has the same essential ingredients
of ordinary commerce. The major difference between e‐commerce and commerce is that with e-commerce, these
exchanges of goods and services are carried out over the Web instead of the traditional physical act of going to a
trader for goods and services. A large number of people have access to the Internet and it is a good platform for
the development of e‐commerce. Successful E-commerce strategies organizations with distinct advantages in
terms of both cost and revenues‐ the fundamentals of all business. This is because cost can be cut immensely as
retail outlets are not required. Most of the cost associated with traditional high capital business is eliminated and or
transformed into profit in the Internet environment.
Readings
In your prescribed book, study the page 17 section 1.6 for the comparison
between E-Commerce and traditional (bricks and mortar) commerce.
Here below is an outline of the major differences between E-Commerce and traditional commerce, Chipp K,
Ismail Z, Meiring E (2017).
Traditional Commerce (Bricks and Mortar)
●
All dimensions are physical such as “Bricks-and-mortar” organisations.
●
Applies to old-economy organisations (corporations) that only have offline stores.
●
Perform all business activities off-line.
●
Sell physical products by means of physical agents.
Pure E-Commerce (Clicks Only)
●
All dimensions are digital;
●
Applies to pure online (virtual) organisations;
●
New-economy organisations that only have online stores;
●
Sell products or services only online.
Partial E-Commerce (Clicks and Bricks)
15
●
A mix of digital and physical dimensions;
●
Click-and-bricks organisations;
●
Conduct EC activities;
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●
Do their primary business in the physical world.
Table 1.1: Traditional vs E-Business
BASIS
TRADITIONAL SYSTEM
E‐COMMERCE
Doesn’t involve data at multi points.
The buyer and seller create Purchase order
on their system and send it to their trading
Data goes directly from one
1.
partner.
computer to another computer
without involving human being
The receiver/seller then re‐enter the same
information on the computer, which will
Reduce Data Error
create data error
Initial cost of E‐commerce is very high Time is directly; linked to saving the money.
2. Reduce cost
as compared to paper process but
There is repetition of same work at every
over a long period of time, it is very
level and it involves a lot of wastage of time
effective.
and if the error is arisen that will lead to
more wastage of money.
E‐commerce data is usually electronic It requires re‐entry of data at each Level and
and makes it easy to share across the requires lot of time. So the peak time is
organization.
wasted in re‐ entering and printing of the
3. Reduce Paperwork
Reduce Processing
4. cycle time
5. Reduce labour
reports
E‐commerce reduces the processing
When the buyer order in a paper format, the
cycle timeof complete cycles as the
data is re‐entered into the Sellers’s
data is entered into the system, it is
computer and then only processing can take
simultaneously processed.
place.
No need to maintain large number
Need to maintain a large number of
of employees, instead there arises the employees because one‐third of labour
need to manage them more efficiently force is employed to fulfil orders from
customers.
Source: Culicut, 104
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1.4
Importance of E-Business
Through, E-commerce, operating efficiency of the business firm will definitely improve and which in turn will
strengthen the value and service given to customers and provide a competitive edge over competitors. These
improvements may result in more effective performance. The direct benefit accrue to an organization on practicing
e-commerce are better quality, greater customer satisfaction, better decision making, low cost, high speed and real
time interaction. More specifically e-commerce enables executing of information relating to the transaction between
two or more using interconnected networks (Chipp et al ., 2017).
From the business perspective with less time spent during each transaction, more transaction can be achieved on
the same day. As for the consumer, they will save more time during their transaction. Because of this, E‐commerce
steps in and replaced the traditional commerce method where a single transaction can cost both parties a lot of
valuable time. E‐commerce is the most cost effective compared to traditional commerce method. This is due to the
fact where through e‐commerce, the cost for the middle-man to sell their products can be saved and diverted to
another aspect of their business. For e‐commerce, the total overheads needed to run the business is significantly
much less compared to the traditional commerce method (Chipp et al ., 2017).
To both the consumers and business, connectivity plays an important part as it is the key factor determining the
whole business. From the business point of view, E‐commerce provides better connectivity for its potential
customer as their respective Website can be accessed virtually from anywhere through the Internet. This way, more
potential customers can get in touch with the company’s business and thus, eliminating the limits of geographical
location. From the customer’s standpoint, E‐commerce is much more convenient as they can browse through a
whole directories of catalogues without any hassle, compare prices between products, buying from another country
and on top of that, they can do it while at home or at work, without any necessity to move a single inch from their
chair.
E-commerce has proven to be more convenient as online trading has less red tape compared to traditional
commerce methods. E-commerce itself gives a boost to the global market. In short, if without any major obstacles,
E‐commerce will certainly continue to mature in the global; market and eventually, it will become an essential
business plan for a company in order to survive and stay competitive in a volatile market. Even the smallest online
retail sites can sell products and turn a profit with a very simple online presence. Web tracking technology allows
e‐commerce sites to closely track customer preferences and deliver highly individualized marketing to their entire
customer base. E-Commerce offers the following benefits to Business organisations.
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E-Commerce offers the following to business organisations:
1.
International markets
The market for a Web based business is not restricted bound by any geographical boundaries. This means that
various restrictions existing in different geographical regions in traditional business environment is avoided in ecommerce. Goods can be sold in new markets, especially geographically remote ones. Single physical marketplace
located in a geographical area has now become a borderless marketplace including national and international
markets. E-commerce enables business firms to gain access to people all around the world. In effect all ecommerce businesses have become virtual multinational corporates.
2.
Operational cost savings
The cost of creating, processing, distributing storing and retrieving paper-based information has decreased. This
has led to the savings of cost.
3.
Reduced inventories and overheads
E-commerce firms need not stock large inventory. This is based on collecting the customer order and then
delivering through JIT (just-in-time) manufacturing. This is particularly beneficial for companies in the high
technology sector, where stocks of components held could quickly become obsolete within months. For exampl e,
companies like Motorola mobile phones, and Dell computers gather customer orders for a product, transmit them
electronically to the manufacturing plant where they are manufactured according to the customer’s specifications
like colour and features and then sent to the customer within a few days.
4.
Mass Customisation
E-commerce has revolutionised the way consumers buy goods and services. In the e-commerce environment firms
are able to customise their products and services to the customer’s requirements. In the past when Ford first started
making motor cars, customers could have any colour so long as it was black. Now customers can configure a car
they wish to purchase according to their specification within minutes on-line via the www.ford.com Website.
5.
Lower telecommunications cost
The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines
for the exclusive use of the organisation and its authorised partners. It is also cheaper to send a fax or e-mail via
the Internet than direct dialing.
6.
Digitalisation of products and processes
Digitalisation of products and processes particularly in the case of software and music / video products, which can
be downloaded or e-mailed directly to customers via the Internet in digital or electronic format within 24-hour-time.
Businesses can be contacted by or contact customers or suppliers at any time.
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Benefits of E-Commerce to Consumers
E-Commerce provides many benefits to consumers as well:
1.
Easy Accessibility
E-commerce enables customers to shop or conduct other transactions 24 hours a day, all year round from almost
any location. For example, a customer can check their bank balances, making payments, obtaining travel and other
information.
2.
More choices
Customers can now choose from a wide range of products and customise their goods and services. Customers
from different locations can also sell products to one another.
3. Price comparisons
Customers can ‘shop’ around the world and can make price comparisons either directly by visiting different sites,
or by visiting a single site where prices of different sellers are exhibited.
4. Improved delivery processes
This can range from the immediate delivery of digitised or electronic goods such as software or audio-visual files
by downloading via the Internet, to the on-line tacking of the progress of packages being delivered by mail or
courier.
Benefits of E-Commerce to Society
E-commerce is also useful to the society as described below:
1. Flexible working practices:
E-commerce enables more flexible working practices, which enhances the quality of life for people in society,
enabling them to work from home. This is more convenient and provides a less stressful working environment,
since employees can access the Internet more easily.
2. Connects people:
This also helps people in both developing countries and rural areas to enjoy and access products, services,
information and other people which otherwise would not be so easily available to them.
3. Facilitates delivery of public services:
E-commerce also facilitates delivery of public services. For example, public can make use of health services
available over the Internet for on-line consultation with doctors or nurses, filing fax return over the Internet through
the Website.
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1.5
Limitations of E-Business
Electronic commerce is also characterized by some technological and inherent limitations which have restricted the
number of people using this revolutionary system. One important disadvantage of e‐commerce is that the Internet
has still not touched the lives of a great number of people, either due to lack of knowledge or trust. A large number
of people do not use the Internet for any kind of financial transaction.
Another limitation of e‐commerce is that it is not suitable for perishable commodities like food items. People prefer
to ship in the conventional way than to use e‐commerce for purchasing food products. Therefore, some industries
are less suitable for e-commerce activities. The time period required for delivering physical products can also be
quite significant in case of e‐commerce.
Other limitations include:
•
Credit card security is a serious issue if vulnerable.
•
Costs involved with bandwidth and other computer and server costs
•
Extensive database and technical knowledge and experience required
•
Customer apprehension about online credit card orders
•
Constantly changing technology may leave slow business behind
•
Some customers need instant gratification, and shipment times interrupt that Search utilities far surpasses
the speed used to find products through catalogues
•
Encourages competition between small and large online retailers
There has been much publicity on the Internet
about e-commerce over the last few years. But this type of
commerce is not free from limitations despite its potential. These limitations are further explained below.
Limitations or disadvantages of E-Commerce to Organisations
1. Security:
One of the important limitations of e-commerce is the lack of sufficient system security, reliability, standards and
communication protocols. For example, Microsoft has over the years issued many security notices for their
software. Several banking and other business Websites have experienced breaches in security where a technical
oversight or a fault in its systems led to confidential client information becoming available to all.
2. Pressure for innovation:
Under pressure to innovate and develop business models to exploit the new opportunities may sometime leads to
strategies harmful to the organisation. The ease with which business models can be copied and imitate over the
Internet increase that pressure and restrict longer-term competitive advantage.
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3. Price wars:
Facing increased competition from both national and international competitors often leads to price wars and
subsequent occurrence of losses for the organisation:
4. Problems with compatibility of older and new technology:
There are problems where old business systems cannot communicate with Web based and Internet
infrastructures, leading to some organisations running almost two independent systems where data cannot be
shared. This necessitates the form to invest in new systems which connect the different systems. In both cases
this is both costly as well as difficult to the efficient running of organisations.
Limitations of E-Commerce to Consumers
1. Financial commitment:
Computing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial
capital cost to customers’.
2. Computer literacy:
A basic technical knowledge is required of both computing equipment and navigation of the Internet and the
World Wide Web.
3. Cost of Internet:
Cost of access to the Internet, whether dial-up or broadband tariffs, is another important limitation.
4. Cost of computing equipment:
Not only the initial cost of buying equipment but additional investment to update technology regularly to be
compatible with the changing requirements of the Internet, Websites and applications is also a major limitation.
5. Lack of security and privacy of personal data:
There is no real control of data that is collected over the Web or Internet. Data protection laws are not universal
and so Websites hosted in different countries may or may not have laws which protect the privacy of personal data.
6. No personal contact:
Physical contact and relationships are replaced by electronic processes. Customers are unable to touch and feel
goods being sold on-line or gauge voices and reactions of human beings. A lack of trust exists because they are
interacting with faceless computers.
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Limitations of E-Commerce to Society
1.
Breakdown in human interaction:
As people become more used to interacting electronically there could be an erosion of personal and social skills
which might eventually be harmful to the world we live in where people are more comfortable interacting with a
screen than face to face.
2.
Social division:
There is a potential danger that there will be an increase in the social divide between technical haves and havenots - so people who do not have technical skills become unable to secure better-paid jobs and could form
underclass with potentially dangerous implications for social stability.
3.
Wasted resources:
As new technology is outdated quickly, creates the problems to dispose of all the old computers, keyboards,
monitors, speakers and other hardware or software.
4.
Facilitates Just-In-Time manufacturing:
This could potentially damage an economy in a time of crisis as stocks are kept to a minimum and delivery patterns
are based on pre-set levels of stock which last for days rather than weeks.
5.
Difficulty in policing the Internet
This means that numerous crimes can be committed, and they often go undetected. There is also a rise in the
availability and access to obscene material which can result in children being compromised.
Think point
E-business has some limitations as shown above. Can you think of many more we can add
to list?
1.6
Summary
With the emergence of Internet and the World Wide Web new methods of carrying out business transactions using
the World Wide Web began to be explored. Electronic Commerce emerged as a very important application of the
World Wide Web. Today it is easy to find goods and services that were previously not accessible due to e-business.
Students are encouraged to access the Internet
regularly as you study this module to give you a practical
perspective, especially when there are activities that require your participation.
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1.7
Revision Questions
1. Discuss the following terms as they apply to e-Business
1.1 Bandwidth;
1.2 E-Commerce;
1.3 Information Goods;
1.4 Disintermediation;
1.5 Digital divide;
1.6 Asynchronous and Instantaneous communication.
2. Discuss the key players that comprise the Internet infrastructure.
3. Identify the core difference between Bricks and Mortar and pure E-Commerce businesses.
4. Discuss the advantages of E-Commerce for organisations, consumers and society.
1.8
Answers to Activities and think points:
1.8.1 Can you identify how the Internet contributes to the operations of the listed ecommerce
organisations and companies?
Answers on section 1.4 of prescribed textbook
1.8.2 Visit five (5) different Websites of companies that provide goods and services.
No answer, this is just to get students to familiarise themselves with ecommerce sites.
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Unit
2:
Digital Business Models
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Unit Learning Outcomes
CONTENT LIST
LEARNING OUTCOMES OF THIS UNIT:
2 Introduction
●
Introduce topic areas for the unit
2.1. Business to Business – B2B
●
Describe Business to Business Model
2.2. Business to Consumers – B2C
●
Describe the Business to Consumers Model
2.3. Consumer to Consumer - C2C
●
Describe Consumer to Consumers Model
2.4. Evaluation of Business Models
●
Evaluate various Business Models
2.5. Key considerations for E-Business
●
Understand the key considerations when selecting an E-
Models
Business platform
2.6. Summary
●
Summarise topic areas covered in unit
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook
●
Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic markets
perspective. Second Edition. South Africa: Pretoria. Van Schaik.
Recommended Readings

Johnson, A., (2018). Digital Business and E-Commerce. Sixth Edition.
Pearson
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2.
Introduction
Electronic commerce has reached new heights in recent years. The growth around this area has been due to the
rise of different e-commerce industries. These industries have developed models associated with sound business
management including integrating different e-commerce activities. The business model involves the conversion of
a local shop into a virtual shop that exists online. The customers visit the Website, order product there and purchase
it.
The customer can either do the payment online or choose a cash on delivery option. The product is then shipped
to the consumer’s address as mentioned. There have been many technological advances that have been added to
the growth of e commerce businesses, resulting in 5 types of e-commerce business models namely: B2B, BC2,
C2C and MEB. However, according to Johnson (2018) e-commerce models typically have similar pillars and they
are represented graphically below.
2Figure 3: Pillars of E-Business
Source: Johnson, A, (2018)
2.1
Business to Business (B2B)
B2B model focuses on providing products or service from one business to another, B2B is considered to be the
largest e-commerce model (Johnson, 2018).In this model both the sellers and buyers are business entities and
usually involves transactions between a retailer or a wholesaler, or a wholesaler and manufacturer. B2B model
focuses on the niche market and software companies, digital marketers and system programmers often use this
model (Veit et al., 2014).
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Transactions between B2B are usually much higher than that of the C2C and B2C models. Benefits of B2B Model
include cheaper products of import and export, encourages online business and less price sensitivity (Veit et al.,
2014). B2B activity has also been boosted by the Internet and other online platforms because of the accessibility
and convenience they offer. More companies are taking their business to online platforms. These are the top two
categories of B2B model:
Web Development
More and more companies have decided to migrate to the digital world. Subsequently, more companies are looking
for other businesses that specialize in Web development, system programming and Web design. Also, more and
more businesses are also looking for businesses that specialize in site building software and digital marketing.
Intermediaries
These are sites that gather and provide specialized data on certain industries or commerce to companies. Usually,
this type of company acts as an intermediary between companies that provide the information and companies that
get it (Veit et al., 2014).
Some of the examples of B2B models are Amazon business, IBM and ExxonMobil Corporation.
Business-to-business market (B2B) characteristics:
●
Few buyers in relations to other business models.
●
Big orders that are usually in bulks.
●
Easy to identify potential customers.
●
More people are involved in the procurement process.
●
Well informed purchases based on research and rationality.
●
Focus is on price and cost-saving
●
Usually involves long negotiation process.
Challenges in B2B markets:
Smaller Customer Pool
One of the challenges for operating under the B2B model is the small pool of customers and customers usually
enter into contract agreements before any purchase or service is rendered (Johnson, 2018). Business operating
under this model always must seek new business to remain competitive, also customer relations remains a priority
for online businesses operating under this model.
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Marketing Challenges
B2B markets are usually made up by a small number of business who remain competitive by implementing
marketing and operating strategies such as product differentiation, lean manufacturing and extensive adverting
(Johnson, 2018). Predicting demand is difficult due to the nature of this market.
Maintaining a Reputation
Companies operating under this model also have to maintain their reputation due to the small number of customers,
damage to the company reputation has could have a negative impact on the company’s profit and could lead to a
loss of customers.
Activity 1
Briefly explain two considerations for selecting an E-business model.
What is the purpose of Classified Websites?
2.2
Business to Consumer Model (B2C)
Business to consumer (B2C) is the first type of e-commerce that is also the most common one. The basic concept
of this model is to sell product and service online to the consumers. This business model offers direct interaction
with the customers and the Internet users, where they can purchase goods online, pay for subscriptions and
provide feedback to customers (Veit et al., 2014). Payment for most of the transactions completed on these online
platforms are done through credit cards and other payment gateways like PayPal. B2C companies divide into three
categories: direct sellers, online intermediaries and fee-based models (Veit et al., 2014). Each type is so different
from the others that they are not directly comparable. In fact, some B2C businesses utilize more than one type to
reach different audiences.
Direct Sellers
Direct sellers, such as online retailers, sell a product or service directly to the customer via a Website. You can
further divide direct sellers into E-tailers and manufacturers. E-tailers are electronic retailers that either ship
products from their own warehouses or trigger deliveries from other company’s stocks (Taylor and Murphy, 2004).
Product manufacturers use the Internet as a catalogue and sales channel to eliminate intermediaries.
Online Intermediaries
Online intermediaries are entities, which provides services that enable people to use the Internet. There are two
different kinds of Internet intermediaries namely conduits and hosts (Taylor and Murphy, 2004). Conduits are
technical providers of Internet access or transmission services. Conduits do not interfere with the content they are
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transmitting other than for automatic, intermediate or transient storage needed for transmission. Hosts are providers
of content services for instance, online platforms and storage services (Taylor and Murphy, 2004).
Fee-Based Models
Pay-as-you-buy or paid subscription services fall under fee-based models. The most common of these are online
subscriptions to journals or movie sites such as Netflix. These companies rely on the quality of their content to
convince consumers to pay a usually nominal fee.
Some examples of B2C models are Wal-Mart, Staples, Target and REI.
3Figure 4: B2C Process
Source: Jiang et al., 2016
2.3
Consumer to Consumer (C2C)
The C2C model involves a transaction between two consumers. A common example of this model would be an
online auction, where a customer posts an item for sale and other customer bids to purchase it. However, the third
party generally charges a commission. The C2C model facilitates online transactions of goods and services
between the individual net users (Jiang et al., 2016). But in this both the Web users and both the parties cannot
carry out any transaction without the platform that is provided by an online market maker such as the eBay and
Wish.com.
The main advantage of C2C business is that sellers and buyers are reachable and also possible for one customer
to be a seller as well as a buyer.C2C model attempts to simplify the way we sell and buy goods and services but
may be subject to fraud and theft of personal information. There are two methods of implementation of C2C model
namely the classifieds and auctions (Jiang et al., 2016).
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Online auctions - Online auctions are conducted on Websites that enable users to purchase goods from other
users (Jiang et al., 2016). These auctions offer platforms for trade and give buyers access to different types of
goods from around the world a variety of goods and services an enormous platform for trade. They provide buyers
with a virtual flea market, with an endless range of merchandise from around the world. There are two types of
Internet auctions namely business-to-person and person-to-person. Business-to-person auction store and
control physical merchandise being auctioned and accept payment online, without the customers actually seeing
the product (Jiang et al., 2016). In person-to-person auctions occurs when individual sellers offer their goods and
services directly to consumers (Jiang et al., 2016).
The Classified - Classified Websites are online platforms in which sellers and buyers try to sell or buy new and old
products (Taylor and Murphy, 2004). Classified Websites allow sellers to post information about the product
including product description, images, e-mail and expected delivery dates (Taylor and Murphy, 2004). Classified
advertising is typically cheaper than advertising through traditional means such as newspaper, radio and TV.
Advantages of B2C Models
●
Buyers enjoy reduced prices
●
High profitability due to direct sales
●
Low transaction cost
●
No intermediary
●
Wide reach due to the Internet
Disadvantages of B2C Models
●
Payment made has no guarantee
●
Vulnerable to fraud
●
No standardization
MEB– Mobile E-Business
Mobile E- Business is a term that describes online sales transactions that use wireless electronic devices such as
hand-held computers, mobile phones or laptops (Veit et al., 2014). These wireless devices interact with computer
networks that have the ability to conduct online merchandise purchases. Any type of cash exchange is referred to
as an e-commerce transaction. Mobile e-commerce is just one of the many subsets of electronic commerce. In ebusiness, users interact with desktop or laptop computers usually in a stationary position, and they use keyboards
and other input devices for data entry (Veit et al., 2014).
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E-commerce improves market efficiency through several means. First, it can eliminate the middleman, or the
suppliers and distributors. It enables consumers to purchase products directly from the manufacturer, thus
eliminating added costs. Second, it provides an easy and effective way to acquire pricing information. Consumers
can easily search and compare prices on the Web. Third, e-commerce provides sellers with price elasticity
information. This means that sellers can gauge the demand for a product based on fluctuations in price.
2.4
Evaluation of E-Business Models
E-business models have different benefits to the business, these models closely integrate technology in order to
eliminate the need to have a physical presence. The role of each business model differs, however online business
owners have similar benefits despite using different business models.
●
Reduced business costs
●
More efficient marketing
●
Centralized data
●
Improved inventory control
●
Superior customer experience
●
Improvements in customer relationship management (CRM)
●
Higher revenue
Challenges with implementing e-business models
●
Hidden costs
●
Marketing failures
●
Website availability
●
Security issues
●
Payment and pricing differences
Think point
E-business involves several major components business intelligence (BI), customer
relationship management (CRM) and supply chain management (SCM). However, different
models have different limitations and advantages. Name three limitations of using B2B
models.
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2.5
Key considerations for E-Business Models
Businesses operating in E-commerce markets need to make many different choices when constructing their
company Website. These choices will ultimately define their business model. In this section we will describe the
major choices one needs to consider when selecting the E-business platform with whom to do business.
Physical goods – Online stores and businesses make up the majority of e-commerce businesses, even though
physical goods are the most common and popular product type that can be found online. However, many challenges
such as shipping, inventory storage, lead times and insurance are present.
Digital goods - Digital goods also represent the most commonly used products in e-commerce, this is because
they do not need physical delivery, intermediaries, inventory management and storage, like their physical product
counterparts. Digital goods include e-books, music, videos, images and software. However, the biggest
disadvantage to selling digital products is piracy and copyrights. This because digital products can be copied and
resold by other businesses as well as customers.
Services - Services are the third commonly used product type found in e-commerce. Online services can range
from Web design, programming, consulting, and Web development. Selling services online can build credibility for
the business but typically comes with the limitation of sustainability since services are delivered to a single customer
or person at a time.
Make/Buy Decisions - The business has to consider whether to make or outsource the product or service. If the
business chooses to make its own product or services it will have taken into consideration factors such raw
materials, labour, and the storage of inventory. The decision to buy will include supplier selection, location of the
supplier and the budget. During this process the business finds a manufacturer to produce its product. When
sourcing a manufacturer, the business has the option of sourcing domestically and internationally. Domestic
manufacturers are cheaper in comparison to sourcing or manufacturing online.
Drop-shipping- Drop-shipping involves selling products the business does not own. The process involves taking
orders from customers and forwarding them to your supplier/drop-ship partner (Veit et al., 2014). The supplier then
processes the request and ships the product directly to the customer on the company's behalf. The biggest benefit
to drop-shipping is the ability to offer a large selection of products without purchasing inventory up front and
managing that inventory. Drop-shipping can help diversify inventory, however face competition since stores sell
similar products.
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2.5.1 Gaining competitive advantage using E-Business Models:
Deciding how to compete is an important decision and can significantly shape the future of the business and dictate
key business decisions. There are several common ways in which you can compete in a crowded marketplace.
Let’s take a look at each of those options:
Price- Price plays a crucial role in creating and sun tanning profit for the business, each model is priced differently
due to the different characteristics. The business pricing strategy should be in coherence with the selected business
model.
Quality- Competing on quality comes down to having a superior or better-made product. Quality measures to be
taken will differ depending on the model chosen, each model should seek to improve quality throughout the entire
process.
Value add-One of the best ways to differentiate the business in the market is to provide additional value their
customers. Improving the Website content such product descriptions, navigation panels and customer feedback
can add value to the business customers.
2.6
Summary
It's important to keep in mind that some business model combinations will require a lot more work than others so
be cognizant of the true amount of time you have to invest in your business and the time investment required based
on your particular business model. This will not only increase your chances of success but also the amount of
enjoyment you get from building, launching and growing your online business.
2.7
Case study
Wantitall, Parcelninja execs in new e-commerce venture
The executives behind online retailer Wantitall and e-commerce fulfilment platform Parcelninja have launched a
“global sourcing” e-commerce Website promising half a million branded goods to South Africans at cheaper prices
than available through other retailers.“ Allsale Club is a members-only online shopping business that aims to save
consumers money on everything from everyday branded items from batteries, razors and cleaning products to
luxury items such as fashion, fragrances, cosmetics and watches,” the founders said in a statement on Wednesday.
Allsale Club is led by Wantitall’s Justin Drennan and Parcelninja’s Michelle Lehrer, who also serves as the new
company’s CEO. We plan to disrupt retail sales in South Africa by using a business model similar to that of Costco.
It has leveraged existing Wantitall and Parcel Ninja processes, infrastructure and IT development to facilitate the
launch. “Allsale Club works with suppliers around the world to bring more than half a million products to South
Africans, many of which are not currently available on local shelves,” said Lehrer. “With a members-only approach,
the business model is driven by membership fees and not margins. This means we pass great prices on to our
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members and we have developed internal incentives based on decreasing margins. “We believe we are launching
at a great time for consumers, as value businesses thrive in a recessionary environment.”
Membership fees
The company said it won’t “bombard” members with promotions but will rather “build trust that our best prices are
always what members pay”. “We plan to disrupt retail sales in South Africa by using a business model similar to
that of Costco, the American multinational corporation that operates a chain of membership-only warehouse clubs
around the world,” Lehrer said. “They stand for quality at great prices, and this is what we will deliver to Allsale
Club’s members.” Membership starts at R79/month, with no lock-in periods or cancellation fees. “Many of our
members will save more than the monthly fee in just one purchase,” Lehrer said. “As our membership base grows,
the better our purchasing power to seek out great offers and exclusive buys for members.” Success metrics for the
business will be membership growth and margin deflation, contrary to normal business models, the company said
in the statement. Shopping categories include health and beauty, baby and toddler, toys, fashion, homewares,
household, and consumables.
Case study questions
1. What kind of business models is Wantitall using? Justify your answer.
2. Based on the case study above, what are the key considerations that Wantitall needs to take into consideration?
2.8
Revision Questions
1. Discuss the term B2B.
2. What is a fee-based model?
3. What are the challenges of implementing e-business models?
Knowledge Check Questions
What are the factors that need to be taken into consideration in order to ensure quality in digital
supply chains?
Briefly explain three ways in which an online business can gain a competitive advantage by
using an E-Business Model.
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Answers to Activity 1
Briefly explain two considerations for selecting an E-business model.
Make/Buy Decisions- The business has to consider weather make or outsource the product or service. If the
business chooses to make its own product or services it will have taken into consideration factors such raw
materials, labour, and the storage of inventory. The decision to buy will include supplier selection, location of the
supplier and the budget.
Drop-shipping- Drop-shipping involves selling products the business does not own. The process involves taking
orders from customers and forwarding them to your supplier/drop-ship partner. The supplier then processes the
request and ships the product directly to the customer on the company behalf. The biggest benefit to drop-shipping
is the ability to offer a large selection of product without purchasing inventory up front and managing that inventory.
What is the purpose of classified Websites?
Classified Websites are purposely designed to allow sellers to post information about the product including product
description, images, e-mail and expected delivery dates in order to allow sellers and buyers to sell or buy goods
and services.
Think point questions and answers.
E-business involves several major components business intelligence (BI), customer relationship management
(CRM) and supply chain management (SCM). However, different models have different limitations and advantages.
Name three limitations of using B2B models:
Name three limitations of using B2B models:
Limited Market
Businesses selling to other businesses face a much smaller buying pool than businesses selling to consumers. The
total number of prospective buyers may top out in the low thousands, rather than the potential millions of customers
for consumer products. These limited numbers make every lead and every existing customer more valuable and
the loss of a single, large customer can devastate the bottom line. For example, if you supply parts to businesses
in mature markets, where only a handful of competitors normally operate, your business might not survive if one of
your buyers closes shop.
Long Purchase Decision Time
The majority of consumer purchase decisions involve one or perhaps two decision makers and the total time for a
purchase decision tends to run on the short side. The B2B sales cycle involves a complicated set of factors,
involving multiple stakeholders and decision-makers, with total decision times that can stretch out for months. B2B
sellers cannot depend on a fast turnaround with new clients for an influx of working capital and must maintain the
financial solvency to operate with long gaps between sales.
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Inverted Power Structure
Within limits, average consumers remain at the mercy of the businesses in terms of what products they can buy,
the available features and at what price points the products sell. In B2B, buyers wield more power than sellers. A
B2B buyer can, also within limits, demand certain customization, impose exacting specifications and drive a hard
line with pricing because the seller depends much more heavily on retaining its customers. This requires B2B sellers
to retain a level of flexibility in both product development and production not typically seen in B2C businesses.
Answers to Knowledge Check Questions
What are the factors that need to be taken into consideration in order to ensure quality in digital supply
chains?
●
Prices
●
Collaboration
●
Effective Product Display and Information
●
Accessibility and Transparency
●
Personalisation
Briefly explain three ways in which an online business can gain a competitive advantage by using EBusiness Model.
Price- Price plays a crucial role in creating and sun tanning profit for the business, each model is priced differently
due to the different characteristics. The business pricing strategy should be in coherence with the selected business
model.
Quality- Competing on quality comes down to having a superior or better-made product. Quality measures to be
taken will differ depending on the model chosen, each model should seek to improve quality throughout the entire
process.
Value Add-One of the best ways to differentiate the business in the market is to provide additional value their
customers. Improving the Website content such product descriptions, navigation panels and customer feedback
can add value to the business customers
Case study questions and answers.
1. What kind of business models is Wantitall using? Justify your answer.
The company is using a Business to Consumer Model, because the company sells branded items from batteries,
razors and cleaning products to luxury items such as fashion, fragrances, and cosmetics to its customers.
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2. Based on the case study above what are the key considerations that Wintitall needs to take into
consideration.
Physical goods- Wantitall has to take into consideration the movement of goods, including packaging, product life
cycle and tracking of orders.
Make/Buy Decisions- Wantitall has taken a decision to buy all their products and source globally this is seen by the
company making plans to expand their sourcing capabilities based on their expanding membership base.
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Unit
3:
The Value Chain of E-Business
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Unit Learning Outcomes
CONTENT LIST
3
LEARNING OUTCOMES OF THIS UNIT:
Introduction to E-Business

Introduce topic areas for the unit
●
Describe the Value Chain of E-Business
●
Analyse the benefits and limitations of E-Business
●
Evaluate product considerations for E-Business
3.5. Trust and Service Quality
●
Examine the trust and service quality of online business
3.6. Summary
●
Summarise topic areas covered in unit
3.1. Traditional value chain
3.2. Creating added value in ecommerce
3.3. Advantages and Limitations of EBusiness
3.4. Products Consideration for EBusiness
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook

Chaffey, D., (2015). Digital Business and E-Commerce. Sixth Edition.
Pearson.
Recommended Readings

Chaffey, D., (2015). Digital Business and E-Commerce. Sixth Edition.
Pearson.
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3.
Introduction
According to Curry(2016) a value chain is a model that examines the relationship between main and supporting
business operations, in order to provide value to the customer and to achieve competitive advantage. The
analysis of the different parts of the value chain enables managers to redesign the processes in order to improve
the efficiency and effectiveness of the operation. The customer perceives the value through the diversification
of the product and cost-quality.
4Figure 5. Traditional Value Chain
Source: Kumar et al (2016)
3.1
Traditional value chain
As technology is developing, companies have created value networks which include not only their own value
chain, but also the value chain of their customers, suppliers, and competitors. This development in technology
has allowed management of online value chain to integrate new technologies that provide information to customers
about the product or service (Chaffey, 2015). The value chain model, as originally demonstrated by Porter (1985),
identifies nine strategically relevant activities that create value and reduce cost in a specific business.
These nine value-creating activities consist of five primary activities and four support activities. The primary
activities represent the sequence of bringing materials into the business (inbound logistics), converting them into
final products (operations), and shipping out final products (outbound logistics), marketing, and service (Chaffey,
2015). The support activities include procurement, technology development, human resource management, and
firm infrastructure.
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3.2
Creating added value in e-commerce
Successful implementation of e-commerce in an organization should be based on a thorough understanding of the
areas in the value chain where e-commerce can add value most. More importantly, to succeed in gaining
competitive advantage, e-commerce is to be based on the overall corporate strategy. Among a host of critical areas
or factors in the value chain that major organizations have taken into consideration for establishing a sound ecommerce strategy include role of intermediaries, value pricing, logistics/purchasing, fulfilment, and value nets
among others (Kumar et al ., 2016).
5Figure 6. E-commerce value chain model
Source: Curry, E, (2016).
E-Business value chain presents several new features:
1. Advancements in technology have made the value chain shorter and more inclusive. The arrival of technology
has made the flow of information easy to handle, technological tools such as emails, blogs and company Website
makes it easier to process and facilitate information within the value chain.
2. In E-Business, information and communication is no longer restricted to personnel, space. Therefore,
departments such as procurement, manufacturing and marketing can communicate smoothly. Due to the easy flow
of information in this chain the reporting line between departments becomes blurred and management of activities
can be extended.
3. Information act as a strategic role in the process of creating value. Through collection, organization, selection,
synthesis and distribution, information itself can bring great commercial value, and the implementation of strategy
activities around information to carry out.
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3.3
Advantages and Limitations of E-Business
There are actually numerous advantages of e-Business, the most obvious one being the ease of doing business.
Some of the major advantages of e-business are as follows:
Advantages of E-Business

Easy to set up: Online business can be started while sitting at home, supporting tools such as software,
hardware and the Internet are essential.

Cheaper to start up than traditional business: Electronic business is much cheaper than traditional
business.

No Geographical Boundaries: There are no geographical boundaries for e-business, customers can order
any product from anywhere at any given time·

Flexible Business Hours: The availability of the Internet creates flexible working hours; online business
has broken down the time barriers that location-based businesses normally encounter.
Limitations of E-Business

Lack of Personal Touch: E-business lacks the personal touch and customers cannot touch or feel the
product. It is difficult for consumers to check the quality of a product.

Delivery Time: The delivery of the products takes time. In traditional business, you get the product as soon
as you buy it. However, with online businesses the delivery times are longer.

Security Issues: Due to the amount of online traffic, customers are vulnerable to cyber-attacks as a result
of their personal information being available online.
3.4
Products Consideration for E-Business
E- Business owners have to take different aspects into consideration in order to improve business performance.
However, specific considerations have to be made for products sold online because of the nature of the market.
There are both internal and external considerations to take into account:
Products Internal Consideration

Customers Inputs - Feedback allows buyers to submit their reviews and feedback easily. This will help
e-business to make improvements to the products. Positive reviews and ratings help to gain more
customers.

Security- Protecting customer confidentiality and financial transactions should be taken into
consideration. The e-commerce platform used to sell products should be robust and up-to-date security
features.
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
Content & Images- E-tailers make product descriptions short and simple in order to evoke customers’
interest. The product description has to contain product images and they should be of high-quality and
have standard sizes to get evenly displayed.

Pricing Method- competing online in a global marketplace, prices tend to fall. Add the additional cost of
shipping, not to mention the expectations Amazon’s low prices and fast, cheap shipping have created,
and you’ll have no choice but to lower prices.

Shipping & Handling- E-tailers aim to lower your shipping costs as much as possible to save buyers
money. The cheapest option involves shipping in bulk for different locations.
Products External Consideration

Taxes and Tariffs- Business have to take into consideration different tax laws and tariffs in respect of
transportation of products to different countries.

Payment Gateways - There are many payment gateways available to online businesses, e-commerce
connects multiple payment gateways and it gives suppliers and buyers different payment methods. These
include MasterCard, PayPal, Square and Stripe.

Trademarks, patents and copyrights- Copyright protects the content that the business puts online, and
business must consider protecting their products, services and processes.
6Figure 7: Online Order Fulfilment process
Source: Korpela et al., 2017
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3.5
Trust and Service Quality
According to Kumar et al (2016) quality control in e-commerce is conduction of goods sold through e-commerce.
E-commerce is considered an excellent alternative for companies to reach new customers and markets. Quality is
a vital issue in e-commerce, and the importance of measuring and monitoring quality has already been well
recognized (Kumar et al., 2016). Quality control in e-commerce will greatly increase the chances of an e-commerce
project satisfying user performance requirements for the first time. However, outcome quality is usually difficult for
a customer to evaluate since majority of e-commerce. Hence, quality of service evaluation does not depend solely
on the outcome quality of the service, but it also involves evaluation of the process of service delivery (Korpela et
al., 2017). These components have a strong impact on future expectations of a service firm but the relative impact
of each may vary from one service encounter to the other for any service because services tend to have more
experience and credence qualities (Korpela et al., 2017).
Types of Rating Methods for Quality
●
The Graphic Rating Scale
●
Checklist method
●
Grading system
●
Ranking Appraisal
Activity 1
Name and explain three external product consideration.

Ensuring Trust and Quality in E-commerce:
Service quality and overall satisfaction implicitly include issues such as price perception, which is usually only felt
rather than objectively measurable. E-service quality can help firms to differentiate themselves by offering enhanced
satisfaction, encouraging repeat purchases and building loyalty. Here are some of the key factors that will build
trust between the business and its customers.

Prices- The arrival of globalization and technology has affected customer perception on prices since
markets have become more open. The arrival of suppliers from cheaper markets has increased
competition for both local and international suppliers. Customers now perceive online store to be cheaper
in comparison to physical stores. Customers are able to procure quality innovative products at cheaper
prices (Yoo et al., 2015).
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
Collaboration- Online businesses can use e-business platforms to share data, knowledge and pricing
information about their products and services. Customers are constantly updated about new products
features on social networks, company Websites and mobile applications. This allows businesses to
promote and collaborate projects with customers’ expectations, as well as reduce their research and
marketing budgets (Yoo et al., 2015). And other resource costs, as they can eliminate redundancies and
inefficiencies in their processes while honing their core competencies.

Effective Product Display and Information- Research indicated that customers are reluctant to trust
product description without proper images. Consumer online shopping behaviour is volatile since there is
no physical location to properly assess product features (Aithal, 2015). Therefore, the Website should
effective display images of the products and provide relevant information to the customer.

Accessibility and Transparency- The company Website should be easy to access and customers
should be able to login to view different products, assess price changes, get information on new products
including discount offers (Aithal, 2015). Also the payment options provided to customers should be varied
to accept different currencies and payment gateways such as credit cards, debit cards and PayPal.

Personalisation- Personalisation is wide ranging and covers display of products and information, product
recommendations and reviews, user-driver customization of products and end-user’s personal data on a
Webpage. This approach can improve customer satisfaction since customers have a hand in making the
final product.
3.6
Summary
In the era of advanced information and communication technology, many businesses have started operati ons on
the Internet as its medium. Through the Internet, many commercial activities like buying, selling, auctioning is
taking place. E-commerce value chain has a series of activities like electronic fund transfer, Internet marketing,
and distribution channel and supply chain.
Think point
What are the factors that need to be taken into consideration in order to ensure quality
in digital supply chains?
3.7
Case Study: Accenture: providing expert supply chain consulting.
Accenture operates across a diverse range of industries to provide innovative supply chain strategies that allows
its clients to achieve significant profitable growth through new and existing markets and flexing its strategy, digital,
technology and operations capabilities. As a Fortune 500 company, Accenture has a multi-billion-dollar supply chain
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and has significant purchasing power that drives positive change on a global scale. As the world shifts to become
more technological, companies now rely on a greater supply network rather than a supply chain. With a drive to
help clients accomplish high performance through supply chain mastery, Accenture Strategy combines global
industry experience and skills in supply chain strategy to enable organisations to transform their supply chain
capabilities. Accenture works with its clients to introduce innovative solutions that align its operating models to
support business strategies, optimise global operations and accelerate the skills and capabilities of the supply chain
workforce.
Accenture also values its sustainability initiatives and is well-placed to enable organisations to utilise sustainability
as a lens to create value in a digitally disrupted world which drives innovation and growth. Speaking to Supply
Chain Digital in the latest edition of the magazine, Kai Nowosel, Chief Procurement Officer of Accenture, said: “With
a multi-billion-dollar supply chain, Accenture has the purchasing power to drive positive change on a global scale,
creating a more economically inclusive world and helping to shape the future of procurement.
“Our ambition is to shift the culture of buying both inside and outside Accenture, while generating long-term value
for our clients, suppliers and communities”. By improving the efficiency of our operations, harnessing the innovative
spirit of our people and developing new sustainability solutions, we aim to accelerate the global shift to a low-carbon
economy and to lessen the effects of climate change.” Accenture focuses on improving value creation from
sustainability solutions in key areas, such as:
●
Circular economy and resource effectiveness
●
Trust, transparency and traceability
●
Digital trust and responsibility
●
Sustainable value
“Accenture is using the power of new technologies such as AI, block chain and extended reality to address a variety
of complex societal challenges in areas including health, human rights, inclusion and environmental sustainability,”
added Nowosel. “We believe through these technologies we can create solutions that make a positive, lasting
impact for people and communities in ways that were not previously possible. We are going beyond responsible
buying.”
Case study Questions
1. How does Accenture add value to its global supply chain?
2. How has technology improved value adding activities done by Accenture?
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3.8
Revision Questions
1. Name and explain two internal product considerations for e-commerce.
2. What are the advantages of conducting a business online?
3. What is the role of technology in the value chain?
4. How can an online business ensure trust and quality online?
Knowledge Check Questions
Name three limitations of the traditional value chain.
Answers to Knowledge Check Questions
Name three limitations of the traditional value chain.
Responsiveness: The problem is that large enterprise planning systems are overwhelmingly complex to set up,
often taking years to configure and fully deploy throughout the company. These systems cannot be easily or quickly
re-configured to keep up with every change happening in the business, which again leads to the reliance on offline
spreadsheets and more flexible third-party tools.
Lack of visibility - Traditional technology limits the visibility of end-to-end supply chains at order, product and
shipment points. The data provided by this technology leads to inaccurate plans, higher fulfilment costs and a
difficulty in predicting when and how problems are likely to occur.
Lack of advanced cross-functional skills- Traditional value chains lack cross-functional skills that are found in
modern value chains. This has a direct impact on the business financial and operational decisions.
Answers to Activity 1
Name three external product considerations
●
Taxes and Tariffs
●
Payment Gateways
●
Trademarks, patents and copyrights
Answers to think point
What are the factors that need to be taken into consideration in order to ensure quality in digital supply
chains?
●
Prices
●
Collaboration
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●
Effective Product Display and Information
●
Accessibility and Transparency
●
Personalisation
Case study Questions and Answers
1.
How does Accenture add value to its global supply chain?
Accenture adds value by combining global industry experience and skills in supply chain. The company also adds
value by trust, transparency, sustainability and traceability.
2.
How has technology improved value adding activities done by Accenture?
Technology has allowed the company to expand their services to different countries and the use of AI to identify
social challenges faced by the company clients.
1. Advancements in technology have made the value chain shorter and more inclusive. The arrival of technology
has made the flow of information easy to handle, technological tools such as emails, blogs and company Website
makes it easier to process and facilitate information within the value chain.
2. In E-Business, information and communication is no longer restricted to personnel, space. Therefore,
departments such as procurement, manufacturing and marketing can communicate smoothly. Due to the easy flow
of information in this chain the reporting line between departments becomes blurred and management of activities
can be extended.
3. Information act as a strategic role in the process of creating value. Through collection, organization, selection,
synthesis and distribution, information itself can bring great commercial value, and the implementation of
strategy activities around information to carry out.
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Unit
4:
49
Digital and Social Marketing
MANCOSA – Postgraduate Diploma in Information Technology Management
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Unit Learning Outcomes
CONTENT LIST
LEARNING OUTCOMES OF THIS UNIT:
4

Introduce topic areas for the unit
4.1 Online Communication
●
Describe online communication
4.2 E-Marketing Planning
●
Describe E-Marketing planning
4.3 Ethical and Legal Issues
●
Discuss ethical and legal issues involving online marketing
4.4 Conducting E Business Marketing
●
Conduct E-Business marketing research
4.5 Online Consumer Behaviour
●
Analyse consumer behaviour online
4.6 Branding on the Web
●
Examine branding on the Web
4.7 Summary
●
Summarise topic areas covered in unit
Introduction to E-Business
Research
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook

Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic
markets perspective. Second Edition. South Africa: Pretoria.
Van Schaik.
Recommended Readings

Chaffey, D., (2015). Digital Business and E-Commerce. Sixth
Edition. Pearson
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4.
Introduction
The arrival of electronic media has drastically improved methods of communication, previously there were only two
kinds of communication verbal and non-verbal. Through the use of electronic media tools such as email and social
media marketers can identify their target audience more easily and the best strategy to engage with them. This
starts by understanding the difference between digital marketing and social media marketing and how the two work
together. The communication process in this team includes a daily informal meeting at which most of the team
members and the leader attend. As discussions are possible at all times the door of the team leader’s office is
always open and the telephone and email are in permanent service.
4.1
Online Communication
Online communication is any kind of communication between individuals, groups and organizations that take place
on the Internet or online. Technological innovations have enabled more people to online communication despite
them being in different locations. Most online communication is documented and saved automatically through online
servers also, online communication saves time and money compared to traditional communication.
Types of Online Communication tools.
●
Emails
●
Video conferencing
●
Social Media
●
SMS
●
Forums
●
Blogs
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Advantages and Disadvantages of online communication
Advantages
Disadvantages
Text-based: Predominantly relies on inputting text which
Flexibility: accessible anytime of the day and from
any place that has Internet connection.
can be challenging for those who don’t like to write or have
poor keyboard skills, but with the advance of broadband
connectivity and voice and video conference technology –
this will be less of an issue.
Freedom of expression-customers are free to No physical cues: without facial expressions and gestures
voice their concerns about the company and its or the ability to retract immediately there’s a big risk of
products.
Documented:
misunderstanding
unlike
traditional
discussion
documentation, online discussion I are saved and Information overload: a large volume of messages can be
can be viewed by anyone who has access to the overwhelming and hard to follow, even stress-inducing
Internet .
Relevance: provides a place for real life examples
and experience to be exchanged
Time lag: even if you log on daily, 24 hours can seem like
a long time if you’re waiting for a reply; and then the
discussion could have moved on and left you behind
Choice: a quick question or comment, or a long
reflective account are equally possible
Inefficient: it takes longer than verbal conversation and so
it’s hard to reply to all the points in a message, easily leaving
questions unanswered
Community: over time can develop into a
supportive,
stimulating
community
which Isolation: some learners prefer to learn on their own and
participants come to regard as the high point of don’t participate in the discussions
their course
4.2
E-Marketing Planning
E marketing is increasingly becoming an important factor in the business world, the Internet has become a key of
the business marketing strategy. As it has allowed modern and traditional businesses to decrease the costs of
marketing and create more effective ways to reach and interact with customers. Companies have even started
using the Internet to sell, promote and develop their products online via Websites, email, social media platforms
such as Facebook, Twitter and Instagram. Marketing planning serves as a road map to guide the business in
allocating resources and make decisions regarding the business online marketing strategies. The company’s emarketing plan provides guidance on the company will use the Internet to effectively implement the firm’s e-
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marketing strategies. Marketing managers now understand that an e-marketing plan is built exactly on the same
principles of classical plan.
Benefits of e-marketing planning include:
●
Lower cost -a well-planned e-marketing campaign can reach the right customers at a much lower cost
than traditional marketing methods.
●
Traceable and measurable results -Online tools such as google forms and Web analytic has made it
easier to assess the progress of electronic campaigns. These tools and Web analytic have allowed
businesses to get detailed information about how customers use your Website or respond to your
advertising.
●
Openness - social media presence has allowed businesses to interact with their customers more
frequently. The arrival of Twitter and Facebook has enabled business to build customer loyalty and
improve customer satisfaction since customers are now able to voice their concerns directly to the
company.
●
Social currency - A proper e-marketing plan will assist an organization in creating campaigns using
different types of electronic media. Social currency is created through viral videos and trending stories.
The Seven Step Marketing Plan
1. Situation analysis- in this step the business factors such as legal, technological and market related factors are
reviewed. The business also conducts a SWOT analysis to examine the company internal strengths and
weaknesses.
2. E-Marketing strategic planning- the second step involves conducting a market opportunity analysis in order to
determine demand. The analysis involves evaluating of the company’s target market and positioning of the
company products or service. Objectives- Most e-marketing plans have multiple objectives such as increased
market share and increased number of comments about the company product or service.
3. Objectives- may also include tasks to be accomplished, the costs of completing those tasks and the time-frame
projects are expected to be finished.
4. E-Marketing strategy- This step involves products and prices strategies used to improve the product online
presence. The strategy involves improving the Website content, packaging, marketing communication strategies
and monitoring consumer purchase behaviour.
5. Implementation plan- The implementation phase tactics to achieve the objectives of the plan are used. These
tactics involved relationships management, department structure and utilising the marketing mix(4 P’s).Marketing
managers also use information gathering tactics such as Website forums , feedback and secondary research.
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6. Budget - The plan must identify the expected returns form advertising campaigns in order to identify the return
on marketing investment, internal rate of return and costs/ benefit analysis. The budget includes costs of
technology, site design, the skills required and brand quality.
7. Evaluation plan -E-marketers must track systems in place to evaluate and measure results. This process
includes calculating return on investment on intangible goals such as brand quality and Website traffic since the
plan was implemented.
7Figure 8: Digital Marketing Methods
Source: Mazzarol, T., 2015
4.3
Ethical and Legal Issues
The new digital business world has significant changes that have changed communications infrastructure such
mobile applications, payment methods and wireless technologies. While the introduction of digital technologies has
considerable benefits to customers and business, there are some ethical issues that have emerged due to
increased use of such technologies:

Privacy issues-The expansion of communication channels has made Internet
technology more
accessible to people around the world as a result, new policies in terms of privacy and protection of
customer data are being introduced difference regulating authorities. Online privacy policies are
continually updated by businesses and policy makers in order to cope with cyber security threats.

Marketing to children - Research has shown that children are one of the biggest users of the Internet .
However, they are more vulnerable to redistricted content due to most of them accessing the Internet
without adult supervision.
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
Identity Theft and Internet Fraud -The availability of customer information online has made it easy for
cyber terrorist to steal the steal customer’s information and commit credit card fraud. Hackers are able to
trick customers into providing them with financial information and creating fake news.
Activity 1
Name and explain two tools to measure online satisfaction levels?
Name four different types of online communication.
4.4
Conducting E-Business Marketing Research
The Internet has allowed e-commerce to thrive due to the abundance of information gained through marketing
research. The wealth of information and knowledge provided by the Internet has brought about change in the
business world, therefore research methodologies have to change as well. E-commerce Market Research on the
Internet encompasses a wide variety of information gathered for e-business planning and prospecting.
There are two principal types of e-business marketing research namely quantitative and qualitative research. An
explanation of these now follow:
1. Online Quantitative Marketing Research:
Researcher often use quantitative research to gauge the market size for a particular service or product. This type
of research approach provides figures and indications that can be used to forecast and measure demand. There
are three different types of quantitative research namely banner, client and panel research.
a. Banner Research
Banner research usually involves inviting participants via we people to participate via a link or advertisement or
through social media. Surveys are normally used to collect data via link and this link can be shared on social network
and emails. However, it is difficult to control the sample population once the advertisement or link has been shared.
b. Client Research
Client based research involves selecting certain clients take part in the study. This research method assumes that
there is a large list of clients in which the target sample can be drawn upon. However, the sample size of the list
can be extended easily based on the preference on the researcher.
c. Panel Research
A panel of participants is selected to represent a particular market or audience; this method assumes that the panel
users chosen represents a broader audience. Participants are invited to register online and fill out a form that is
used to access information about participants.
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2. Online Qualitative Marketing Research:
Qualitative e-commerce research is a method of gaining consumer product information and product perceptions.
However, even though qualitative data is easily accessible, it is not always reliable due to the multiple data sources
available online. There are four methods that could be used by researchers to collect qualitative data online:
a. Bulletin Board Systems - A bulletin board is a medium that displays all messages that have been posted on it
and their respective replies. Bulletin board postings usually remain in place for some time, and archived versions
are frequently available as well.
b. Newsgroups- The function of newsgroups is to distribute all messages posted in its specific topic area to all
users who have requested to receive them. Newsgroups are categorized and organized on the basis of a variety
of interests.
c. Chat Rooms - When two or more users are signed on to the Internet at the same time and they wish to
communicate on a real-time basis, they meet on Internet sites called chat rooms.
d. Web sites - These include commercial Web sites or Websites sponsored by individual or non-commercial
organizations. Some of the commercial Web sites, such as those of Amazon.com, have become rich repositories
of customer comments and reviews of the products featured on those sites.
4.5
Online Consumer Behaviour
As more and more consumers become acquainted with the Internet and its different benefits, online shopping has
become popular with consumers seeking better value. Online stores offer convenience that is different from
traditional physical store, goods sold are described through text, photos and multimedia files. Consequently, online
consumer behaviour became an area of interest for researchers. Consumer attitudes toward online shopping
usually been determined by two factors; one is trust, and another is perceived benefits.
4.5.1 Consumer Buying Behaviour
According to Pappas (2016) online consumer behaviour involves analysing decision processes and purchasing
activities of people who purchase products for personal or household use and not for business purposes. Consumer
behaviour tracks customer’s interest in a product or service, in order to understand consumers buying patterns.
The process begins with need recognition, followed by information gathering, a purchase and finally, post-purchase
evaluation. Marketers rely on an understanding of buyer behaviour to effectively position products and services.
However, consumer buying behaviour does have limitations.
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E-tailers needs to analyse buying behaviour for:
●
Buyer’s reactions to a retailer’s marketing strategy has a great impact on the retailer’s success.
●
The marketing concept stresses that a retailer should create a marketing strategy that satisfies (gives
utility to) customers, therefore need to analyse what, where, when and how consumers buy.
●
4.5.2
Retailers can better predict how consumers will respond to marketing strategies.
The FFF Model of Online Consumer Behaviour
The FFF model takes into consideration internal and external factors affecting consumer buying behaviour. It
proceeds to discuss various filtering elements customers will apply to select a store to purchase from and revised
filtered buying behaviour based on their final selection.
8Figure 9. FFF Model
Source: Grabowski, P., 2017.
Tools to measure online satisfaction levels:
57
●
Surveys
●
Ratings
●
Reviews
●
Online Monitoring
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Think point
Why do E-tailers need to analyse buying behaviour?
Define the FFF Model of Online Consumer Behaviour.
4.6
Branding on the Web
Digital information sources provide relevant image formation and branding agents and thus, potentially impact
travellers’ image and serve as platforms to communicate perceptions. With abundant online information on places
available, the data offer insights into the brand identity communications and the image perceptions by travellers.
The Internet provides an abundance of information to learn about brand image representation and perception.
Step 1. Business should analyse and evaluate the content and the message it spreads online. It is pivotal for the
business to analyse its target audience, competitors and industry before it begins plans to brand the company
Website.
Step 2. Based on the above analyses, the business should attempt to narrow its focus and allocate resources to
attract it target audience. It is essentially for the business brand to appear how the target audience perceived it.
This includes the use of images, news and information about customer’s experiences related to the business’s
product or services.
Step 3. The business has to strategize how it intends to develop the content found on the company’s Website. The
Website has to be divided into sections according to customer’s expectations and needs, then fill each section with
the suitable content. The company’s homepage contains the most important source of information about the
business.
4.7
Summary
In conclusion online communication has increased the role of marketing, businesses that operate online use
different strategies and management systems in order to remain competitive. Both qualitative and quantitative
methods can be used to collect information about consumer behaviour, Website design and product development.
4.8
Case study
Goulburn learns nuances of digital marketing during Small Business Month
Owners of local businesses and those aspiring to start one turned up in large numbers to attend the Southern
Region Business Enterprise Centre's (SRBEC) workshop on 'Digital Fitness, Online Marketing and Social Media',
which was held at The Collective during May last year. Tanya Creer, digital business advisor with SRBEC,
conducted the workshop and spoke at length about the relationship between tradition and digital marketing and
how creating a Website is extremely important for a business.
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"A Website is important for a business. Once people are on the Website, they can find you, email you and look at
the services you provide and book them. They can also look at your social media links and get information about
the business," Mrs Creer said. The digital business advisor also told the participants the importance of social media
and using the right keywords, and how to produce effective content for social media platforms.
Mrs Creer said that she received most queries asking, 'How to conduct online qualitative market research'. She
said a few things that were helpful including how to anticipate online consumer behaviour. The conference
concluded by the guest speaker providing information sources to the local business owners.
Case study questions:
1.
Kindly advise the business owners on the need to analyse online consumers behaviour
4.9
Revision Questions
1. List three benefits of an e-marketing planning.
2. What are the ethical issues related to conducting business online?
3. What are the advantages of online communication?
4. Name three steps to branding on the Web.
Knowledge Check Questions
Name and explain four methods of collecting qualitative research online.
Answers to Activity 1
Name and explain two tools to measure online satisfaction levels.
Online monitoring Is a system that compiles all relevant information about every project in one system. These
data can then be accessed by different users depending on the user rights of each user and what they need to
know.
Rating - Is an evaluation or assessment of something, in terms of quality, quantity, or some combination of both.
Name four different types of online communication
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●
Emails
●
Video conferencing
●
Social Media
●
SMS
●
Forums
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Answers to Think Point
Why do E-tailers need to analyse buying behaviour
●
Buyer’s reactions to a retailer’s marketing strategy has a great impact on the retailer’s success.
●
The marketing concept stresses that a retailer should create a marketing strategy that satisfies (gives utility
to) customers, therefore need to analyse what, where, when and how consumers buy.
●
Retailers can better predict how consumers will respond to marketing strategies.
Define the FFF Model of Online Consumer Behaviour
The FFF model takes into consideration internal and external factors affecting consumer buying behaviour. It
proceeds by discussing various filtering elements customers will apply to select a store to purchase from and
revised filtered buying behaviour based on their final selection.
Case study questions and aanswers
1. Kindly advise the business owners on the need to analyse online consumers’ behaviour
●
Buyer’s reactions to a retailer’s marketing strategy has a great impact on the retailer’s success.
●
The marketing concept stresses that a retailer should create a marketing strategy that satisfies (gives utility
to) customers, therefore need to analyse what, where, when and how consumers buy.
●
Retailers can better predict how consumers will respond to marketing strategies.
Answers to Knowledge Check Questions
Name and explain methods four methods of collecting qualitative research online.

Bulletin Board Systems - A bulletin board is a medium that displays all messages that have been posted
on it and their respective replies. Bulletin board postings usually remain in place for some time, and
archived versions are frequently available as well.

Newsgroups- The function of newsgroups is to distribute all messages posted in its specific topic area to
all users who have requested to receive them. Newsgroups are categorized and organized on the basis
of a variety of interests.

Chat Rooms - When two or more users are signed on to the Internet at the same time and they wish to
communicate on a real-time basis, they meet on Internet sites called chat rooms.

Web sites - These include commercial Web sites or Web sites sponsored by individual or non-commercial
organizations. Some of the commercial Web sites, such as those of Amazon.com, have become rich
repositories of customer comments and reviews of products featured on those sites.
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Unit
5:
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E-Supply Chain Management
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Unit Learning Outcomes
CONTENT LIST
5
LEARNING OUTCOMES OF THIS UNIT:
Introduction

Introduce topic areas for the unit
5.1. Supply Chain Management

Describe What is Supply Chain Management
5.2. Components of Supply Chain

Analyse the Components of the Supply Chain Management

Analyse Importance of Supply Chain in a Digital Business
5.4. E – Procurement

Examine E-Procurement
5.5. Summary

Summarise topic areas covered in unit
Management
5.3. Importance of Supply Chain in a
Digital Business
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook
● Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic markets
perspective. Second Edition. South Africa: Pretoria. Van Schaik.
Recommended Readings

Chaffey, D., (2015). Digital Business and E-Commerce. Sixth Edition.
Pearson

Fahimnia, B., Sarkis, J. and Davarzani, H., 2015. Green supply chain
management: A review and bibliometric analysis. International Journal
of Production Economics, 162, pp.101-114.
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5.
Introduction
The arrival of the Internet changed the way traditional supply operated, supply chains are now more dynamic, and
customer focused. In this new digital world supply chains are smarter and more agile with new methods of
transportation such as drones and operating models including SCOR model has changed the ways in which
business is done (Chaffey, 2015). Manufactures can now transport goods from different location and track the
movement of products online (Chaffey, 2015).
9Figure 10. Traditional Supply Chain
Source: Chaffey, D, (2015).
5.1
Supply Chain Management
Supply chain management (SCM) is coordination of all supply activities of an organization from its suppliers and
partners to its customers efficiently and effectively. SCM involves the planning and execution of the process
required to optimize the flow of materials, information and financial capital needed to meet expected demand. It
functions involve sourcing, manufacturing, inventory management, logistics and return for excess or defective
products (Chipp et al., 2017).
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SCM oversees each touch point of a company's product or service, from initial creation to the final sale. With so
many places along the supply chain that can add value through efficiencies or lose value through increased
expenses, proper SCM can increase revenues, decrease costs, and impact a company's bottom line (Wang et al.,
2019). Electronic supply chain management (E-SCM) uses collaborative technology to improve operations of
supply chain management. E-supply chain is able to link the supplier with the customer by exchanging information
online (Wang et al., 2019).
5.1.1 E-Supply Chain Management (E-SCM)
Electronic supply (e-supply) chain management is the process of managing supply systems on the digital landscape
(Featherman and Hajli, 2016). E-SCM involves using the Internet to implement value added activities in order to
produce product and services based on the customers’ needs (Featherman and Hajli, 2016). E-SCM is mostly used
in manufacturing and logistics industry. The goal of E-SCM is to continuously add value to products or services of
the company by sourcing better and noting issues in the product or service. These issues are brought back to the
manufacturer to make better products.
10Figure 11. E-Supply Chain process
Source Wang et al., 2019.
The key activities of E-SCM use a variety of infrastructure and tools. The following are the major infrastructure
elements and tools of E-SCM:
Electronic data interchange (EDI). It is the major tool used by large corporations to facilitate supply chain
relationships (Featherman and Hajli, 2016). Many companies are shifting from traditional EDI to Internet -based
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EDI. Its major purpose is to support inter-organizational communication and collaboration. These are the corporate
internal networks for communication and collaboration.

Corporate portals. These provide a gateway for external and internal collaboration, communication, and
information search.

Work-flow systems and tools. These are systems that manage the flow of information in organizations.

Identification and tracking tools. These tools are designed to identify items and their location along the
supply chain.

Groupware and other collaborative tools. Many tools facilitate collaboration and communication
between two parties and among members of small as well as large groups. Various tools, some of which
are collectively known as groupware, enable such collaboration.
5.1.2 Role players in E-Supply Chain Management:
●
Manufacturer
●
Logistics companies
●
Distributors
●
Regulatory Authorities
●
Suppliers
●
Retailers/ Online Stores
●
Customers
SCM flows can be divided into three main activities Product, Information and Financial flows
1. Product Flow: The product flow includes the movement of goods from a supplier to a customer, and also any
goods returned by customers.
2. Information flow: The information flow involves transmitting orders and updating the status of delivery.
3. Financial flow: The financial flow consists of credit terms, payment schedules, consignment and title ownership
arrangements.
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11Figure 12. Supply Chain Management Flows
Source: Wang et al., (2019)
5.2
Components of Supply Chain Management
Supply chain components are different for every organization, this is because each product or service has different
supply chain needs and challenges. In general supply chains span a fairly common set of functions that are
accomplished in very different ways.
a. Supply Chain Planning - Supply chain planning helps the business stay ahead in the marketplace. Functions
of this component include demand forecasting, product scheduling and sustainability.
b. Procurement - Procurement involves buying the goods and services that enable an organisation to operate in
a profitable and ethical manner (Chipp et al., 2017). Responsibilities of procurement vary from sourcing raw
materials and services to managing contracts and relationships with suppliers.
c. Manufacturing – Manufacturing includes all processes that transform raw materials into final products (Chipp et
al., 2017). Managers have to ensure that raw materials consistently arrive at production facilities on time.
d. Product Lifecycle - Product lifecycle management enables the business to improve, innovate, develop and
commercialize profitable products to grow the business (Fahimnia et al., 2015). This is done through research,
product testing and quality assessment.
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e. Logistics - This component is responsible for all warehousing and transportation needs. The functions of
logistics include inventory management, mode of transportation and order management.
f. Reverse logistics – Is the process of returning products to the original manufacturer or distributor, it functions
include product warranty, packaging and recycling.
Think point
Do you think organisations that currently operate in Bricks and Mortar shops can tap
benefits from E-Supply Chain Management?
Knowledge Check Questions
What is reverse logistics?
Discuss the three main flows of SCM flows.
5.3
Importance of Supply Chain in a Digital business
E-supply chain is able to link the supplier with the customer instantaneously by exchanging information. The Esupply chain strategy employed by the company will decide the direction that the online business will take. The
arrival of E-commerce and other supporting technologies has accelerated the supply chain process and increased
the customers' expectations in terms of product or service quality and lead times (Fahimnia et al., 2015).
Digital supply chain carries out traditional supply chain functions with the aid of digital technology such as radio
frequency identification (RFID), global positioning systems (GPS) tracking, smart labels, and barcodes ( Nurmandi
and Kim, 2015). However, digital supply chains are highly reliant on supply chain partners playing an active role in
the digital supply chain network. For digital supply chains to be success information has to be processed effectively
throughout the supply chain (Nurmandi and Kim, 2015). There are many benefits as companies digitize their supply
chain processes, these benefits include:
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●
Enable a demand-driven supply chain.
●
Optimize supply chain lead times.
●
Reduce markdowns and Stock outs.
●
Improve cash flow and cost management.
●
Connection of data sources and outlets.
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Activity 1
What is Supply Chain Management?
12Figure 13. E- Commerce Platform Supply Chain
Source: Nurmandi, A, & Kim, S, 2015
5.4
E-Procurement
E-procurement involves moving the procurement process online in order to reduce costs and increase productivity
(Nurmandi and Kim, 2015). Traditional procurement involves getting quotes and then approval, probably from
finance, as well as a purchase order, which could take more than a week. E-procurement simplifies and speeds up
the procurement process considerably, this is done through real-time interactions with pee-approved suppliers and
trading partners (Nurmandi and Kim, 2015).
E-procurement has brought greater transparency in procurement through electronic publishing of tender notices
and contract awards. However, implementing e-procurement carries certain risks for the business and one of the
primary risks includes missing opportunities such as over-investment in e-procurement tools that do not deliver the
expected benefits.
E-procurement tools and applications
Some e-procurement tools and applications include:
●
EDI (electronic data interchange)
●
ERP systems
●
Internet support
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electronic mail (e-mail)
●
Web enabled EDI
●
world wide Web (www)
13Figure 14. E-Procurement process
Source: Chomchaiya, S, & Esichaikul, V, 2016
5.4.1 Types of E-procurement
E-sourcing - Involves finding potential new service providers using the Internet, the Internet is used during data
collection on supplier prices, location and lead times.
E-tendering - Is the process of screening suppliers based on their prices and quality online. The screening process
is guided by requested for information and requests for price.
E-informing - Is the process of qualifying suppliers based on their sustainability. E-informing does not involve
electronic transactions but instead handles information about the supplier’s financial status, quality, environmental
policies and delivery capabilities
Web-based ERP -Involves using procurement software's to purchase goods and services. The software is used to
manage the procurement process by creating and approving purchases, placing orders and receiving goods or
services ordered.
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Benefits to E-procurement.
1.
Reduced Costs
E-procurement saves you money by preventing duplicate spending, leveraging volume buying, and
saving you costs associated with paper-based systems (for example, the cost of stamps to mail your
paperwork).
2.
Transparent Spending
Electronically conducting your procurement makes it easier to write and analyse reports on your
procurement systems, meaning you can ensure that your procurement procedures conform to your
policies.
3. Increased Productivity
Once you’ve learned the system, e-procurement is less time-consuming than traditional procurement.
Having your records stored electronically makes it easier to submit reusable tenders. Meanwhile, use of
templates means paperwork can be filled out more quickly.
4. Eliminating Paperwork
Tired of finding new space to store all that paperwork? With e-procurement, everything can be saved
and stored electronically. This not only saves you from needing more room, it also makes the process
of finding older tenders simpler.
5.
Increased Transaction Speed
E-procurement is both time-saving and efficient. As the electronic handling of tasks supports and
simplifies the purchasing process, transaction speed is increased. Also, because of e-enabled
relationships with suppliers, procurement cycle times speed up. The e-procurement process eliminates
unnecessary activities, allowing you to focus on more valuable tasks.
5.4.2 E-Procurement in South Africa
The South African Constitution requires procurement to be equitable, fair, competitive, transparent and cost
effective. Section 24 of the Constitution also states that any kind of procurement that happens in the country must
be governed by principles of ethical behaviour and accountability. This relates to both public and private
procurement. However, section 24 of the constitution does not make any specific reference to e-procurement.
Currently the government policy makers have been working on amending the 24 of the constitution to introduce
new regulations specifically designed for e-procurement processes.
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The new act will focus on promoting and governing the use of electronic transactions between private and
public bodies and e-government services. The objectives of the new act include:
●
Improve the use of inconstant-messaging during and after the e-procurement process through the use of
audio, text and visual information.
●
To add value through the use of technological tools such as the Internet of Things (IoT) and supplier database
in order to enhance service delivery to South African citizens, business partners and employees.
●
The use of information and communication technologies continuously improve procurement process for both
public and private companies.
Revision Questions
Discuss the different types of E-procurement.
5.5
Summary
Digitization of supply chain and logistics is imperative in improving efficiency, reducing costs and providing end-toend visibility of operations. Technology has provided unparalleled access to information leading to innovation and
this new supply chain gives businesses the advantage of better collaboration with their suppliers, shippers, and
other third-party resources for success.
5.6
Case Study
BHP & Klaveness Digital partner to develop maritime platform to optimize digital supply chains
BHP’s, Maritime and Supply Chain Excellence team and Klaveness Digital are working together to drive the
development of new shipping and logistics platforms to improve the way the industry collaborates and shares
scheduling and vessel information, BHP said in an emailed statement.
The concept will enable BHP and its partners to access the same shipping information in real-time, and customers
on the platform can also see the shipping schedule and calculate impact on their inventory and production.
Furthermore, this platform will provide information about the supplier’s financial status, quality, environmental
policies and delivery capabilities.
The proof of concept has provided them with actionable insight into their raw material flow, with real-time updates
on unexpected deviations to the schedule, allowing them to better forecast inventory, manage safety buffers and
plan production. “By partnering with Klaveness Digital, we get to explore new ways of delivering value to our
customers, Rashpal Bhatti vice president, Maritime and Supply Chain Excellence BHP, said in the media release.
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“The Cargo Value solution developed by Klaveness Digital provides a new way to securely share cargo and vessel
information with our customers around the globe, changing the way we interact with our clients.”
Case Study Questions.
1. What type of e-procurement process will the online platform use?
2. Which SCM flows will be covered by the BHP and Klaveness online platform?
5.7
Revision Questions
1. Discuss five e-supply chain players and stakeholders
2. Compare and contracts traditional procurement to e-procurement.
3. What is the role of reverse logistics in supply chain management?
4. Briefly explain the objectives of the new E-procurement Act.
5. What are the major infrastructure elements and tools of E-SCM?
Answers to Revision Questions
Name the different types of E-procurement.
F-sourcing- Involves finding potential new service providers using the Internet, the Internet is used during data
collection on supplier prices, location and lead times.
E-tendering-Is the process of screening suppliers based on their prices, quality and online. The screening process
is guided by r requested for information and requests for price.
E-informing-Is the process of qualifying suppliers based on their sustainability. E-informing does not involve
electronic transactions but instead handles information about the supplier’s financial status, quality, environmental
policies and delivery capabilities.
Web-based ERP -Involves using procurement software's to purchase goods and services. The software is used to
manage the procurement process by creating and approving purchases, placing orders and receiving goods or
service ordered.
Answers to Activity 1
What is Supply Chain Management?
Supply chain management (SCM) is the process and activity of sourcing the raw materials or components an
enterprise needs to create a product or service and deliver that product or service to customers. Effective supply
chain systems help both manufacturers and retailers reduce excess inventory.
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Answers to Think Point
Discuss E-SCM
Electronic supply (e-supply) chain management is the process of managing supply systems on the digital
landscape. E-SCM involves using the Internet to implement value added activities in order to produce product and
services based on the customers’ needs and specializations. Companies who are not online yet can benefit by
keeping track and have easy access to their buying data that will help them make smarter buying decisions.
Answers to Knowledge Check Questions
What is reverse logistics?
Reverse logistics refers to all procedures associated to product returns, repairs, maintenance, recycling and
dismantling for products and materials. Overall it incorporates running products in reverse through the supply chain
to gain maximum value.
Discuss the three main flows of SCM flows.
Product Flow: The product flow includes the movement of goods from a supplier to a customer, and also any
goods returned by customers.
Information flow: The information flow involves transmitting orders and updating the status of delivery.
Financial flow: The financial flow consists of credit terms, payment schedules, consignment and title ownership
arrangements.
Case Study Questions and Answers
1. What type of e-procurement process will the online platform use?
The platform uses E-informing because the platform will provide information about the supplier’s financial
status, quality, environmental policies and delivery capabilities.
2. Which SCM flows will be covered by the BHP and Klaveness online platform?
Product Flow and Information flow
Information flow- Because the platform will develop new shipping and logistics to improve the way the maritime
industry collaborates and shares scheduling and vessel information.
Product flow- This is because the platform will help managers with actionable insight into their raw material flow,
with real-time updates on unexpected deviations to the schedule, allowing them to better forecast inventory,
manage safety buffers and plan production.
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Unit
6:
E-Business Infrastructure
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Unit Learning Outcomes
CONTENT LIST
LEARNING OUTCOMES OF THIS UNIT:
6.1. Introduction to E- Business
●
Describe what is E-Business Infrastructure Components
●
Manage digital business issues and applications
●
Analyse and Design for digital technology projects
6.4. Elements of site and mobile design
●
Evaluate Elements of site and mobile design
6.5. Focus on security design for digital
●
understand security design for digital business
●
Summarise topic areas covered in unit
Infrastructure
6.2. Managing digital business issues
and applications
6.3. Analysis and Design for digital
technology projects
business
6.6. Summary
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook
●
Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic markets
perspective. Second Edition. South Africa: Pretoria. Van Schaik.
Recommended Readings

Chaffey, D., (2015). Digital Business and E-Commerce. Sixth Edition.
Pearson
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6.1
Introduction to E-Business Infrastructure
Every business requires an infrastructure to support its customers and business operations. Choosing the correct
infrastructure to match the company’s business strategy enables business operations to run efficiently and
smoothly. Most e-commerce businesses are small in nature and normally have up to 25 employees. Online
business infrastructures are different from the traditional business structures. Online business structures tend to be
customer oriented and are designed to facilitate the flow of information and goods/services to the end customer.
6.1.1 What is E-Business Infrastructure?
According to Popa et al (2016), e-business infrastructure involves hardware, software, and networks used to deliver
the end products to the end customer. While defined e-commerce infrastructure as a collection of platforms,
networks, products, applications, and databases and the business rules governing the flow of data and work among
them, both internally and to external systems. Integration into cohesive systems is achieved with vendor-supported
customisation, pre-built adapters and gateways, and program to program interoperation technology such as XML,
Web services, distributed object protocols. Components of e-business infrastructure include:
●
Hardware- Includes Internet routers, monitors, projectors and laptops.
●
Software- Includes Webpages, servers, antivirus and google forms.
●
Facilities- Facilities can include warehousing, offices and location of facilities
●
Customer service- customer satisfaction, marketing and knowledge management systems.
●
Finance and administration-Can include order management, accounting systems and payment methods
such as MasterCard and PayPal.
●
Human Resources- Includes skills such computer engineers, business analysis and programmers
Think Point
What is the main difference between computer software and hardware?
Name three benefits of having a well-structured business infrastructure.
6.2
Managing Digital Business Issues and Applications
As organizations continue to embrace digital transformation, there have been findings that digital business is not
as simple as buying the latest technology it requires significant changes to both culture and systems. As a result,
e-business have begun to evaluate the common issues that affect their performance and some of these issues are
listed below:
A Change-Resisting Culture
Digital transformation has come with different challenges most of them have to do with company culture. Online
business culture tends to be different from traditional organizational culture. Cross-generational communication is
often a challenge for the business workforce, senior or older employees often reject the use of new technologies
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and require more training to properly use these new technologies. The culture of the company limits the people to
be receptive to change and this results as another big challenge. Therefore, it is important for companies to
deliberate if their culture is receptive to change and if not, then they should facilitate one.
The Talent Gap
The talent shortage is one of the major issues, with companies automating and transforming due to digitalization,
employers seek candidates who hold both the technical skills and human strengths such as communication,
collaboration and relationship-building. Employers need to buy skills where necessary, borrow from external
sources and help people with adjacent skills bridge from one role to another.
Cybersecurity
One of the most problematic elements of operating online, especially during periods of increased seasonal sales
like Black Friday and Christmas. Cybersecurity breaches often occur during these events and breaches include
compromise end-users’ usernames and passwords, hackers use stolen login information to engage in credential
stuffing.
Privacy and Security Concerns
The stunning growth of Internet usage has raised security and privacy concerns. Computer networks and mobile
applications work as powerful tools for improving efficiency, collect, store, or distribute data. In light of this
legislators, policy makers and consumer groups have called for new privacy safeguards for operating and buying
online in order to safe guide against cyber security and identity theft.
Activity 1
Name and explain two key issues of managing a digital business.
6.3
Analysis and Design for Digital Technological Projects
According to Popa et al., (2016), digital technological projects involve planning, tracking, delegating, and reviewing
results done using a project management software. Every project is different and requires digital project managers
to ensure that all of the necessary deliverables for a project are completed and handed over on time and on budget.
Digital projects come in all shapes and sizes and they can include:
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●
Websites
●
Mobile apps
●
Games
●
Social media
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In order to successfully implement digital projects, the personnel involved need to process the necessary skills to
properly plan, analyse and implement project. Project managers need to possess skills such as time management,
resource management, planning, organizing, and delegating of role.
14Figure 15: Digital Project Management process:
Source: Aston, B, (2016)
6.3.1 Project management
Project management is a process that sets interrelated actions or activities that are carried out in order to achieve
a predetermined outcome (Aston, 2016). The project management process refers to the planning, controlling, and
other activities involved in executing a project and achieving the project objectives (Aston, 2016).
Project management studies can be regarded as the core process that links all the other project activities and
processes together. Bigger and more complex projects usually require more formal project management processes.
The type of project, the resources available, and the environment in which the project is carried out will all influence
the processes that are required to manage a specific project (Aston, 2016).
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15Figure 16: Project Management Phases
Source: Aston, B, (2016)
6.3.2 The 5 Project Management process groups
a. Initiating: This group includes the processes that are used to define a new project or to start a new phase of an
existing project. It includes obtaining authorization to proceed with a particular project or phase.
b. Planning: This group includes the processes that are used to define the scope and objectives of the project, as
well as the plan of action for achieving the objectives.
c. Executing: This group includes the processes that are followed to do the actual work required to achieve the
project objectives.
d. Monitoring and Controlling: This group includes the processes that are necessary for keeping track of the
project progress and performance and for implementing change management.
e. Closing: This group includes the processes that are followed to finalise all activities relating to the project and
to close the project (or phase) formally.
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Project Management knowledge areas:
1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
10. Project Stakeholders Management
6.3.3 Steps in Designing a Digital Project
Step 1: Set Guidelines
The first step involves visualizing how the end user will use the system, the main objective of this step is to ensure
that all features are designed around the needs of the end customer.
Step 2: Develop Policy and Procedures
It is necessary to know the context in which a project will and to comply with standards, regulation and policy of the
project. Each phase of project development must be in a way that meets international standards and should
demonstrate integrity and sustainability.
Step 3: Apply the “Only Once” principle
Project leaders and developers should develop a system that allows end users to use one profile in order to avoid
customers from having to provide the same information more than once. However, in order to apply the once of
principle online processes must be designed to be as simple and user-friendly as possible.
Step 4: Outline a plan to launch the product completely
For large-scale projects, it is important to have a well-planned launch strategy and promotion campaigns with users
in order to promote the product or service on mailing mechanisms such as mailing lists, social media and mobile
applications.
Step 5: Communicate Effectively
Online Administrations must clearly communicate the usefulness and nuts and bolts of the service on offer. This
involves safeguarding personal information of the end user, data privacy protection and computer security.
Furthermore, a communication system has to be formed with end users, either by emails, security system updates
and password recovery stems.
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Analysis and Maintenance of a Digital Project
●
Ensure regular maintenance and upgrading of all software and systems in order to prevent security issues
and ensure software compatibility with new technologies and compliance with regulatory evolution.
●
Ensure a plan for the continuous evolution of the product, being to establish or have a strategy to improve
the product after launch, add functionality, correct issues and, more generally, allow it to be upgraded.
●
Ensure continuous verification of operating parameters, such as software monitoring (errors, requests,
latency), periodic audits to ensure its security, and so on.
●
The use of several suppliers for the creation, maintenance and launch of the product generally guarantees
a better migration capacity to another supplier.
6.4
Elements of Site and Mobile Design
1. Design and Information Architecture
Design and information architecture are quite different for a mobile site; programmers have to design the site to the
user interface for a smaller screen size. Programmers and Web designers aim to make sites simple to use and also
shows to the user on what to do, companies like Amazon and Facebook has made the user interface simple and
affordable for different customers.
2. Content
The second element content is displayed on the company Website and mobile applications. Online businesses
need to be aware of the content displayed and should make sure the content supplied is of quality and that it caters
for different Internet users. Therefore, Website administrators need to make sure that everything from spacing,
font, line breaks and images are edited properly, and the type of information provided is relevant to the business.
3. Functionality
For complex Web and mobile sites, functionality is an important element. E-businesses normally of keep Web
pages small and use a clean layout in order to make Websites functional. The functionality of the Website will
determine the performance of the e-business and will contribute to the satisfaction levels of customers.
4. Customer Experience and Usability
The fourth element is customer experience and usability, for online businesses the process begins truly when the
marketing and IT department understands your target audience. For example, by understanding your customers
an e-business can organize navigation menu, create relevant design and improve the Website performance based
on the feedback provided by customers.
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6.5
Focus on Security Design for Digital Business
The growth of the digital world and footprint has exposed customers and businesses to sophisticated cyber threats.
Today’s digital and online businesses have recognised that cybersecurity must be part of the business
transformation strategy. They have also been compounded challenges around network devices, system updates
and malware, due to perimeters further disappearing online. Therefore, online businesses need to protect data
across the extended network of the organization as a result of perimeters disappearing between online vendors
(Popa et al., 2016). There are security measures that need to be considered for an online business:
●
Security needs to be broadly and consistently deployed across all ecosystems which also includes the
ability to dynamically adapt as network environments expand or change to establish a single point of
visibility and control (Popa et al., 2016).
●
Next, security needs to be deeply integrated into the extended technology landscape to ensure complete
visibility and control even across multiple networked. Since there is an influx of data online, e-business
are encouraged to create an information system that better correlate, detect and anticipate both known
and unknown cyber threats.
●
Thirdly, security needs to be automated and integrated across devices and applications so it can respond
to threats effectively and in a coordinated fashion at machine speeds.
6.6
Summary
In conclusion e-businesses infrastructure includes a combination of technological innovations that depends on the
flow of information. Everything in the digital environment is generating, using and communicating with
immeasurable amounts of information.
Knowledge Check Questions
What are the elements of Site and Mobile Design?
6.7
Case Study
Thomas Cook: Security firm issues warning over online fraudsters
Customers and ex-employees of Thomas Cook are being urged to be on the lookout for fake Websites and phishing
scammers who may be looking to capitalize on the airline operator’s recent collapse.
Following the UK travel company’s announcement that it had gone into liquidation last month, security researchers
at Skurio have stepped up their warnings for “increased vigilance” over any digital communications that use the
Thomas Cook name. The move follows the security company’s discovery of a “flurry of Web domain registration
activity”, which could be used to underpin phishing attacks against both Thomas Cook customers and former
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employees. “Thomas Cook had contracted Skurio to monitor surface, deep and dark Web sources to provide early
data breach detection services,” the company said. “As part of this service, Skurio has been running automated
scanning for new domain registrations claiming to offer Thomas Cook services .“The service looks for domains set
up with subtle spelling errors or additional terms a customer might expect to see, in order to send phishing emails,
create fake social media accounts or capture customer details online.
” According to Skurio, in just seven days since Thomas Cook’s liquidation announcement, more than 50 new
Website domains were registered with names relating to the travel company. Although the security firm said some
of these domains have been registered for legitimate purposes, it said a “significant number” appear to have been
set up in order to “exploit ex-employees and customers of Thomas Cook, particularly those seeking advice or
compensation”. Skurio shared its list of domains with The Daily Swig. Many seem designed to dupe unsuspecting
customers into thinking they are the official Civil Aviation Authority Thomas Cook site, which offers advice to those
who have been impacted by the company’s closure. “Skurio is working with Thomas Cook to continue monitoring
the situation and to keep customers informed of important developments,” the company said. “Meanwhile, exemployees and customers are advised to treat any social media posts or emails mentioning Thomas Cook with
suspicion and avoid clicking through on the links they might contain.”
Large organizations are constantly under threat of having their brands leveraged for nefarious purposes online.
Moreover, as has been demonstrated in the wake of both natural disasters and terror incidents, it’s clear that
cybercriminals have no qualms pinning their illicit campaigns to topical events, no matter how delicate. Fortunately,
in the case of Thomas Cook, Skurio has seen no evidence of active phishing campaigns thus far, but the company
urged consumers to remain vigilant. “To date we have not seen evidence of phishing activity, although we are
aware there are reports of people being cold called and vishing,” Patrick Martin, head of threat intelligence at Skurio,
told The Daily Swig. “Our advice is basically to restrict your online research and support to the legitimate named
Thomas Cook CAA site and avoid very similar looking domains/URLs.
Case study Question
What are the security measures that need to be considered by Thomas Cook?
6.8
Revision Questions
1. Why is communication important for an online business?
2. What are the risks of cyber security to the business?
3. Name and explain 3 types of digital projects.
4. What are the security measures that need to be considered for an online business?
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Answers to Think Point
What is the main difference between computer software and hardware?
Computer hardware is any physical device used in or with your machine, whereas software is a collection of code
installed onto your computer's hard drive. While software refers to the operating system and applications installed
on a computer. The software enables smartphones, tablets, PCs, embedded systems, and other devices to perform
useful functions such as GPS navigation, video live streaming, Internet
browsing, photo editing, and virtually
anything else that can be imagined.
Name three benefits of having a well-structured business infrastructure.
●
Improve Employee Performance
●
Improve Decision Making
●
Focus on Customer Service and Sales.
Answers to Activity 1
Name and explain two key issues of managing a digital business.
1. Increased need for education, skill building, and culture change.
The increase use of technology components and equipment has stressed the importance of new digital skills.
Therefore, businesses have seen the need to train and educate already existing employees. Businesses are then
required to change their business culture in order to survive in the digital environment.
2.
New regulation of digital markets
The arrival of new digital regulations has reduced digital transformation efforts, especially global digital markets.
Some businesses may decide simply to ignore these new regulations, however the implications of failing to apply
these new regulations may have severer consequences for the business.
Answers to Knowledge Check Questions
What are the elements of Site and Mobile Design?
1. Design and Information Architecture
Design and information architecture are quite different for a mobile site, programmers have to design the site to the
user interface for a smaller screen size. Programmers and Web designers aim to make sites simple to use and also
shows to the user on what to do, companies like Amazon and Facebook has made the user interface simple and
affordable for different customers.
2. Content
The second element content is displayed on the company Website and mobile applications. Online businesses
need to be aware of the content displayed and should make sure the content supplied is of quality and that it caters
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for different Internet users. Therefore, Website administrators need to make sure that everything from spacing,
font, line breaks and images are edited properly, and the type of information provided is relevant to the business.
3. Functionality
For complex Web and mobile sites, functionality is an important element. E-businesses normally of keep Web
pages small and use a clean layout in order to make Websites functional. The functionality of the Website will
determine the performance of the e-business and will contribute to the satisfaction levels of customers.
4. Customer Experience and Usability
The fourth element is customer experience and usability, for online businesses the process begins truly when the
marketing and IT department understands your target audience. For example, by understanding your customers
an e-business can organize navigation menu, create relevant design and improve the Website performance based
on the feedback provided by customers.
Case study Questions and Answer
What are the security measures that need to be considered by Thomas Cook?
● Firstly, security needs to be broadly and consistently deployed across all ecosystems which also includes the
ability to dynamically adapt as network environments expand or change to establish a single point of visibility and
control (Popa et al., 2016).
● Secondly, security needs to be deeply integrated into the extended technology landscape to ensure complete
visibility and control even across multiple networked. Since there is an influx of data online, e-business are
encouraged to create an information system that better correlate, detect and anticipate both known and unknown
cyber threats.
● Thirdly, security needs to be automated and integrated across devices and applications so it can respond to
threats effectively and in a coordinated fashion at machine speeds.
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Unit
7:
Enterprise Resource Planning
and Knowledge Management
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Unit Learning Outcomes
CONTENT LIST
LEARNING OUTCOMES OF THIS UNIT:
7.1. Introduction: Enterprise Resource

Describe ERP and Related Technologies
7.2. ERP Planning and Implementation

Describe ERP Planning and Implementation
7.3. ERP: A CRM Perspective

Evaluate ERP from a CRM Perspective
7.4. Knowledge Management

Describe Knowledge Management
7.5. Knowledge Management as CRM

Evaluate Knowledge Management as a CRM Objective
Planning and Knowledge
Management in E-Business
Objective
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook

Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic markets
perspective. Second Edition. South Africa: Pretoria. Van Schaik.
Recommended Readings

Bansal, V. and Agarwal, A., 2015. Enterprise resource planning:
identifying relationships among critical success factors. Business
Process Management Journal, 21(6), pp.1337-1352.
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7.1
Introduction: Enterprise Resource Planning and Knowledge Management in E-Business
ERP came into sharp visibility in the mid-1990s and was still energetically developing in the mid-2000s a decade
later. ERP enjoyed a great deal of popularity among large manufacturers in the mid- to late-1990s. Most early ERP
systems consisted of mainframe computers and software programs that integrated the various smaller systems
used in different parts of a company.
Throughout the 1990s, most large industrial companies installed enterprise resource planning systems massive
computer applications allowing a business to manage all of its operations finance, requirements planning, human
resources, and order fulfilment (Bansal and Agarwal 2015). The arrival of the Internet and other technologies has
allowed ERP to become much more closely associated with Web-based system (Nwankpa, 2015).
7.1.1
What is Enterprise Resource Planning?
Enterprise resource planning (ERP) is a method of using computer technology to link various f unctions—such as
accounting, inventory control, and human resources—across an entire company (Nonaka & Toyama, 2015). ERP
is intended to facilitate information sharing, business planning, and decision making on an enterprise-wide basis.
The arrival of new technologies such as mobile applications, java and social media has made ERP more effective
because of the rich amount of information they offer (Nonaka & Toyama, 2015). ERP provides an integrated and
continuously updated view of core business processes using common databases maintained by a database
management system. ERP systems track business resources cash, raw materials, production capacity and the
status of business commitments: orders, purchase orders, and payroll. The applications that make up the system
share data across various departments that provide the data. ERP facilitates information flow between all business
functions and manages connections to outside stakeholders (Nonaka & Toyama, 2015).
16Figure 17: The role of ERP system
Source: Bansal, V, and Agarwal, A, (2015)
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ERP systems automatically integrate core business processes such as customer orders, scheduling operations,
inventory management and financial records (Nwankpa,2015). ERP systems have multiple direct benefits to help
improve the business overall performance this is done by providing intelligence, analytic, visibility and efficiency
across every aspect of a business(Bansal and Agarwal 2015). ERP systems can be divided into three main levels
namely level 1-3.
Level 1: These systems are mainly designed primarily for large and multinational companies. These companies
can have thousands of employees who access the system daily and also process millions of transactions at the
same time.
Level 2: Level 2 systems are designed for medium-size organizations and companies that operate in a single
location or multiple locations. This ERP level is complex and usually expensive.
Level 3: The third level is designed for small- to medium-sized companies that rarely operate in multiple countries
and markets. Level 3 suppliers are usually smaller Enterprise that are not as well-known, however larger vendors
are able produce ERP systems for small, medium and large companies.
Benefits of ERP
•
Boosts efficiency by automating data collection;
•
Enables business growth by managing increasingly complex business processes;
•
Fosters collaboration using data sharing and integrated information;
•
Provides better business intelligence and customer service capabilities.
Think Point
How has the arrival of technology affected the ERP?
7.2
ERP Planning and Implementation.
Before implementation the EPR, online businesses should focus on selecting the right ERP system software
provider. The expected results of implementing the correct ERP technology should be streamlined operations,
easy-to-use functionality, and a real-time view of your business anytime and anywhere on any device, and an ERP
platform that is not only secure but adaptable to the ever-changing needs of your company (Nwankpa, 2015).The
steps of implementing the ERP are further explained below.
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17Figure 18: ERP Planning:
Source: Nwankpa, J. (2015)
Step one: Need Assessment
First and foremost, the company’s needs are to be identified properly. The process begins with searching and
documenting important business processes, inflection points and KPI, i.e. Key performance indicators so as to
outline perfect ERP solutions.
Step two: Hire a team of specialists
Next, in the process of implementation, experienced professionals or experts are hired or contracted so as to direct
the organization through the implementation process.
Step three: ERP system evaluation and selection
The choice of right ERP software is the most difficult task in the entire process, which depends on various factors
like business needs, industry type, and preferences and so on.
Step four: Prepare for Change
Implementation of ERP throughout the organization is one of the biggest changes, and that too when the company
is not used to such system. So, make sure that the management, staff and other members are ready for such a
change.
Step five: Data Preparation:
All the data cannot be converted into the new system. Data should be analysed and ascertain the pieces of data
which are required to be converted. Once the data is entered in the system, it should be cleaned up properly.
Step six: ERP Implementation
Once all the above steps are performed properly, then the ERP system is introduced. The ERP specialists design
a particular plan for installing, configuring and optimizing the system for the working environment. Plans can be
changed if required so the major business objectives and needs should be given preference.
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Step seven: Testing
After implementation process is completed, testing is to be done, so as to ensure that work is performed in an
intended way.
Step eight: Training & Education
When the system is properly launched in the organization and verified, the next step is to train and educate the
employees with respect to using the program.
Step nine: Go Live
Finally, when the system is configured, tested and employees are trained, then ERP program is activated.
Step ten: Ongoing Support
Continuous support about upgradation and maintenance is available to the customers, by the manufacturers, for
better working.
7.3
EPR: A CRM Perspective
ERP and CRM systems use different approaches to increase business effectiveness and profitability. According
Chipp et al (2017) to ERP focuses on reducing overheads and costs for the business. ERP aims to make business
processes more effective and also reduces the amount of money paid on these processes. While CRM works to
increase profits by producing greater sales volume. Majority of ERP systems contain components of CRM
components such as marketing and product development, but lacks features such as call centre support,
community management and social media management (Chipp et al .,2017) .
18Figure 19. ERP to CRM
Source: Nonaka, I. & Toyama, R., (2015)
However, the failure of ERP and CRM to communicate with one another can become problematic for the business
due to the fact that CRM cannot track all customer interactions and obtain information about customers. As a lack
of integration creates an inefficient workspace, businesses need a robust CRM and ERP integration solution in
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order to streamline their business processes. For an online business with a high sales transaction integration of
CRM on the business ERP could save a lot of time compared to the current process of, for example, the sales
department emailing new customer information to the accounting department and then someone in accounting
manually entering each new customer into the ERP system.
7.4
Knowledge Management
According to Bansal and Agarwal (2015) knowledge is the ability to make decisions and take action effectively. KM
system also contribute to organizational goals while enhancing job performance and increasing the satisf action
levels of employees. Knowledge Management is management framework that facilitate accountabilities, processes,
technologies and governance that have been strategically put in place to create and maximize value (Bansal and
Agarwal, 2015). The application of knowledge will provide a managed approach to developing and building business
goals.
Therefore, Knowledge Management involves systematically making use of the knowledge in the organization and
applying it to the business problems. Knowledge management ask questions like "What the company knows and
How do we know it" in order to help the business deliver results (Nonaka and Toyama, 2015). It focuses on
eliminating the business past mistakes and ensures that the same mistakes are not repeated twice and ensures
that every decision is made with full knowledge about the possible ramifications. The management of knowledge
needs to be part of your business practices, just like the management of finance and the management of safety
(Bansal and Agarwal, 2015).
5 types of Knowledge Management (KM) software tools:
●
Intranet-Based Systems
●
Electronic Document Management (EDM)
●
Groupware
●
Knowledge Map Systems
●
Competitive intelligence tools
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19Figure 20: KM Process Framework
Chatzoudes et al., (2015)
7.5
Knowledge Management as a Customer Relations Management Objective.
According to Chipp et al (2017) stated that knowledge management involves the information assets associated with
keeping customer’s satisfaction. Knowledge management can make or break your organization’s customer relation
management. Not only can knowledge management it improves the business revenue but can also be used to
assess customer behaviour by looking at customers spending patterns and the level of income customers. For
most online businesses, knowledge management is about creating the best self-service experience for customers
obtained from the feedback provided by customers through online surveys, video interviews and blogs (Chatzoudes
et al., 2015). The feedback provided by customers can help the business build strong online presence and content.
Knowledge Management for Customer Support can:
•
Increase the business competitive advantage
•
Improve innovation
•
Sharing of knowledge
•
Provide feedback for continuous improvement
Benefits of Applying Knowledge Management to Customer Relations
1. Knowing your customers increases customer loyalty.
2. Having a deeper sense of customer knowledge will create growth opportunities.
3. Constant Improvement, thanks to collected data and knowledge management.
4. Increase in customer satisfaction.
5. Increases the company's revenue.
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The Rise of Customer Online Communities
A powerful knowledge management tool can be used to enable forums or communities such as social media and
online gaming. Knowledge obtained from online community has the potential to drive sales, build trust, significantly
improve loyalty, and reduce service costs (Chatzoudes et al., 2015). Due to the rise of online communities,
customer service representatives are trained to know the right answer to common customer problems, but it’s not
always the best possible answer.
How online communities have improved customers

Online communities engage customers throughout the customer journey

They provide self-service tools for customer support

They create a network for customers

They give customers direct access to staff

They generate a personalized experience

They build a better product
Customer success-focused companies invest in online communities, because they know that customer retention
will impact far more than just customer loyalty. Benefits from the community trickle down to increase satisfaction,
revenue, and help grow entire businesses. They can focus on and support their customers’ most urgent and
pervasive problems, early. They’re differentiating themselves, forging strong relationships with customers, and
recognizing potential losses much earlier.
Activity 1
Name and explain a source of information that online businesses can use to obtain information
about customers.
Define the term Enterprise Resource Planning?
7.6
Case Study
Network Rail cloud migration project recognised as industry leader
Network Rail’s programme to migrate its enterprise resource planning (ERP) software to the cloud, in partnership
with Cognizant, has been widely recognised across Britain’s technology industry as it celebrates a fourth award win
this year. The two-year project was awarded top position in the Best Overall Use of Cloud and Best Cloud Project
categories in the Cloud Excellence Awards 2019. It follows the project winning IT Team of the Year in the Tech
Leaders Awards, and Innovative Use of Cloud Technologies at the Real IT Awards earlier this year. The challenging
and complex transformation involved migrating Network Rail’s ERP software Oracle e-Business Suite, which
underpins core business processes in areas as varied as finance, HR, procurement, supply chain and project
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management. Furthermore, this software will record electronic data and uses an electronic documentation system.
Supports almost 40,000 Network Rail employees, more than 4,000 suppliers and 150,000 business affiliates.
The result is better functioning ERP infrastructure for users inside and outside of Network Rail, with performance
improved by 50% and reduced provisioning lead times. The new design has saved money by reducing annual
overhead costs by £2m and cutting the size of Network Rail’s ERP estate by 60%, as well as paving the way for a
more digitally focused culture at Network Rail to enable further transformation and efficiency. Aidan Hancock, chief
information officer at Network Rail, said: “The transformation of our Oracle e-Business platform is a tremendous
achievement given the size, complexity and strategic importance to Network Rail. It has been completely rearchitected from the ground up, providing a performant and modern platform while reducing our ongoing costs. This
work is part of our drive towards increased efficiency and flexibility in service provision and is part of our ongoing
digital transformation."
Case Study Questions
1. Which level of EPR system is the Network Rail’s programme using?
2. Identify and explain the Knowledge Management tool to be used by the Network Rail’s programme.
7.7
Revision Question
1. What are the benefits of ERP?
2. What are the benefits of applying knowledge management to customer relations?
3. Define the term Knowledge Management
4. What are the steps to implementation ERP?
5. What are the three of ERP systems?
Knowledge Check Questions
How have online communities improved customers participation?
Questions for Reflection
Name and Explain 2 types of Knowledge Management (KM) software tools
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Answers to Think Point
How has the arrival of technology affected the ERP?
Technology has allowed ERP systems to be designed around data structures such the company database and
including physical storing devices like USB flash drives. Technology has helped ERP provide information across
the enterprise using normalized data such as graphs and reports. ERP, interconnects information across business
departments such finance, human resources, engineering and marketing
Answers to Activity 1
Name and explain sources of information that online businesses can use to obtain information about
customers.
Online Government documents: are sources that detail the official positions of federal, state, or local governments.
Blogs: are similar to homemade Websites in that they are vehicles for a single person’s worldview and opinions.
Define the term Enterprise Resource Planning?
Enterprise resource planning (ERP) is a method of using computer technology to link various functions such as
accounting, inventory control, and human resources—across an entire company. ERP is intended to facilitate
information sharing, business planning, and decision making on an enterprise-wide basis.
Answers to Case Study Questions
1. Which level of EPR system is the Network Rail’s programme using?
Level 1- Since the programme supports over 40,000 Network Rail employees, more than 4,000 suppliers
and 150,000 business affiliates.
2. Identify and explain the Knowledge Management tool to be used by the Network Rail’s programme.
Electronic Document Management (EDM)
EDM (Electronic Document Management) is the management of different kinds of documents in an
enterprise using computer programs and storage. An EDM system allows an enterprise and its users to
create a document or capture a hard copy in electronic form, store, edit, print, process, and otherwise
manage documents in image, video, and audio, as well as in text form.
Answers to Knowledge Check Questions
How have online communities improved customers participation?

Online communities engage customers throughout the customer journey

They provide self-service tools for customer support

They create a network for customers

They give customers direct access to staff

They generate a personalized experience
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Answers to Questions for Reflection
Name and Explain 2 types of Knowledge Management (KM) software tools.

Intranet-Based Systems - Is used to describe activities that are done on the Internet . It uses
Internet Web technologies to deliver information and services.

Electronic Document Management (EDM) - It an electronic document management system used for
organizing and storing different kinds of documents. This system handles digital documents
specifically rather than paper documents.

Groupware- Is a class of computer programs that enables individuals to collaborate on projects with
a common goal from geographically dispersed locations through shared Internet interfaces as a
means to communicate.

Knowledge Map Systems- Is a guard to the organization’s internal and external repositories or
sources of information.
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Unit
8:
Issues, Challenges and
the Future of E-Business
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Unit Learning Outcomes
CONTENT LIST
LEARNING OUTCOMES OF THIS UNIT:
8

Introduce topic areas for the unit
8.1. E-Business and the Law

Describe E-Business and the Law
8.2. Ethical Issues

Describe Ethical Issues in Digital Businesses
8.3. Core Trends in Digital Era

Analyse Core Trends in Digital Era
8.4. Internet of Things and the 4IR

Describe Internet of Things and the 4IR
8.5. Digital Strategies

Evaluate Digital Strategies for going digital
8.6. Summary

Summarise topic areas covered in unit
Introduction
Prescribed and Recommended Textbooks/Readings
Prescribed Reading/Textbook

Chipp K, Ismail Z, Meiring E (2017). E-Commerce: Dynamic markets
perspective. Second Edition. South Africa: Pretoria. Van Schaik.
Recommended Readings

Chaffey, D., (2015). Digital Business and E-Commerce. Sixth Edition.
Pearson
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8.
Introduction
Most e-commerce businesses function by collecting and retaining sensitive user information, therefore online
business owners have prioritized both security and customer privacy. Modern policy makers and legal authorities
have also emphasized information security since different online business owner have to transport their products
overseas. E-business owners have to understand different taxes, custom laws and consumer protection
rights required to operate globally.
8.1
E-Business and the Law
Online business laws are related to traditional business regulations, but with particular considerations due to the
nature of operating online (Meijer, 2015). These considerations include strict regulations related to copyright,
privacy, sales tax and security. Depending on the type of information that an e-commerce business collects from
customers, online businesses are subject to government and state privacy laws (Meijer, 2015). However,
implementing such laws has not come without and online businesses have to adapt to progressively demanding
legal and regulatory authorities. Failure to comply with the laws set by online regulatory authorities has often led to
product recall, lawsuits and even closures in some parts of the world (Johnson & Iyamu, 2019).
South Africa Electronic Communications and Transactions Act, 2002 (Act 25 of 2002)
The purpose of this act is to guide digital transformation in South Africa and facilitate the introduction of a digital
society that benefits from the opportunities offered by digital transformation (Johnson & Iyamu, 2019).The act
includes the protection of South African citizens when using communication technologies such as Websites,
software’s ,mobile devices and applications.
Strategic objectives of the Act include:
●
Ensure that all South Africans can access quality public service and government information from
anywhere at any time.
●
Reduce the cost of public administration in South Africa.
●
Establish institutional mechanisms that will advance the coordination and facilitation of e-Government
services;
●
Manage the development of frameworks addressing skills development;
●
Deliver integrated electronic services which will ensure one stop service portal;
●
Develop capacity and skills programme that will ensure sufficient service delivery.
8.1.1 The role of E-Governance
The growth of digital information and communication technologies has continued to grow and expand, in light of
this growth the role of electronic governance has increased. E-governance is the application of information and
communication technologies for delivering governance services, it is often linked to office processes and
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interactions within the entire government framework (Ebbers et al., 2016). Through e-Governance, government
services are more accessible to citizens, the aim is to enhance government's ability to address the needs of the
general public. Through e-governance, the government plans to raise the coverage and quality of information and
services provided to the general public. The process is extremely complicated which requires, the proper
arrangement of hardware, software, networking and indeed re-engineering of all the processes to facilitate better
delivery of services (Ebberset al., 2016).
20Figure 21. Conceptual Framework for E-Government Strategy
Source: Meijer, A, (2015)
Types of Interactions in E-Governance:
●
G2G (Government to Government): This type of interaction occurs when government entities exchange
information and services within government structures. The interaction can be both horizontal and vertical
(Meijer, 2015). For example, interaction between the national defence, government departments, provincial
and local government entities
●
G2C (Government to Citizen): The interaction between government and the general public, this interaction
occurs when the government set up a platform where citizens can access a wide variety of public services.
Also, citizens are free to express and share their views and grievances on government policies and services
at any time (Ebberet al., 2016).
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G2E (Government to Employees): Research has shown that government is the biggest employers in South
Africa. Therefore, ICT systems have to be developed in order to communicate and interact with employees
on a daily basis (Ebber et al., 2016).
Advantages of E-Governance
Speed: E-governance means using electronic technology by the government. Electronic technologies make
communication better, and faster. It will take very less time for any policy, or scheme to reach to the people. As you
yourself can see that Internet, cell phones and mobile communications have these capabilities.
Transparency: Democracy is all about transparency. Since independent we have come to know that, it has become
difficult for citizen of India to get information about the policies of the Government. Or In other words, it has become
easier for wrongdoers to hide the wrong deeds done by them from the eyes of the citizens. But, by using the Internet
, all the information of each and every policy will be directly available to the citizens, hence strengtheni ng
democracy.
Reduction in Cost: For implementing various policies and schemes of the government, crores of rupees are
invested in stationery materials like for buying pens, papers, and printers. But with the use of Internet
the
government will be able to save these expenditures, which can be further used for other developments.
Disadvantages of E-Governance
Hyper-surveillance: Increased contact between government and its citizens goes both ways. Once e-government
begins to develop and become more sophisticated, citizens will be forced to interact electronically with the
government on a larger scale. This could potentially lead to a lack of privacy for civilians as their government obtains
more and more information on them. In a worst-case scenario, with so much information being passed electronically
between government and civilians, a totalitarian-like system could develop.
Inaccessibility: An e-government site that provides Web access and support often does not offer the "potential to
reach many users including those who live in remote areas, are homebound, have low literacy levels, exist on
poverty line incomes.
False sense of transparency and accountability: Opponents of e-government argue that online governmental
transparency is dubious because it is maintained by the governments themselves. Information can be added or
removed from the public eye. To this day, very few organizations monitor and provide accountability for these
modifications.
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8.2
Ethical Issues
E-commerce has become a major channel for selling products and services around the world, however operating
online has resulted in numerous ethical issues between sellers. Understanding online ethical issues is critical for
developing a respected online brand and dealing with the ethical issues related below:

Business Structure - An e-business can take different forms such as a sole trader, partnership, limited
liability partnership and a limited liability corporation. Each e-business form different ethical issues that
often lead to legal and tax consequence when e-business owners fail to comply.

Trademark Protecting- Ethical issues arising from intellectual property violations often rise due the easy
to information available online businesses. In most cases these violations are a result of poor legal advice
and other violations are deliberate.

Tax Implications- Most online businesses face ethical issues due to different tax laws and requirements;
online businesses are required to pay income tax, sales tax and tariffs similar to traditional tax laws.

Information Security-online companies are required by law to protect customers as well as the
company’s information. Threats to sensitive information include Security software attacks, theft of
intellectual property, information extortion, identity theft, insider trading and sabotage.

Product Quality- Companies often misrepresent their product quality to customers and product quality is
not what it is supposed to be.
Think Point
Explain the role of ethics in e-commerce.
Name and Explain three ethical issues faced by e-businesses
8.3
Core Trends in Digital Era
The mass adoption of the Internet by both private citizens and businesses alike have affected how business is
done. Businesses are now interconnected by a worldwide network of customers and suppliers. Currently, digital
technologies used to communicate, translate and transfer information, technologies such IoT and mobile
applications, have been used to understand customers new digital customers.
Trends in the Digital Era:
1. Big data - Big data involves the use and storage of digital information, big data focuses on text-based information
that can be stored on cell phones, DVD’s, USB-flash drives, Google drive and on company Websites (Kim, 2019).
New discoveries in data recording and storage technology made big data a new and irreplaceable resource for
marketing departments. After the arrival of the Internet, emphasis was then placed on inbound marketing strategies
that can be used to share information by creating user- cantered platforms such as LinkedIn (2002), Facebook
(2004), Twitter (2007) and Instagram (2013). These platforms made it more possible as Internet users started
sharing more and more personal data online.
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2. Personalization - The arrival of the Internet
has improved how content is shared and personalized.
Personalization can be achieved through using user-generated content and customers can now create unique
experiences through customization of applications, online profiles and gaming avatars. Marketers use
personalization as a marketing strategy to attract customers to their Websites, mobile applications and social
networks.
3. Transparency -The digital era has made information available to anyone and everywhere. Customers are more
informed and smarter, since they are able to research products prices, specification and quality. Both traditional
and modern businesses now realize the need for transparency.19% of social media users are operating businesses
and use social media as a marketing strategy to communicate business activities online.
4. Digital skills - The growth of the digital economy has given rise to the demand of digital skills such as
programming, digital marketing and hacking. In order to survive, organizations have had to adapt their marketing
strategies and methods in order to survive in the new digital world.
5. Smartphones - Arrival of these new devices has changed business and social interactions, marketing
departments around the world are still catching up to the changes brought by these smartphones. Today, smart
phones have overtaken the use of traditional devices cameras, laptops and telephones as the primary digital
devices. Smart phones are able to perform functions like Web browsing, e-mailing, text messaging and phone calls.
8.4
The Internet of Things (IoT)
The Internet
is becoming widely available in different places such as restaurants, shopping malls and public
libraries (Kim, 2019). The cost of connecting to the Internet use to be high, however the increasing usage of the
Internet has the prices of the devices and software related to the Internet. More devices are being created with
Wi-Fi capabilities and sensors; these devices are referred to as Internet of things. The Internet of things (IoT) is
a computing concept that describes the idea of everyday physical objects being connected to the Internet and
being able to identify themselves to other devices (Kim, 2019). This includes everything from cell phones, lamps,
coffee makers, headphones, washing machines and wearable device.
The Internet of Things are proving to be essentially to the digital appliances, devices, vehicles and equipment that
have the ability to connect, collect, and transfer data over a wired and wireless network (Whitmore et al., 2015).
The integration data exchange between physical devices and digital devices has brought a new wave of
technological devices designed to simply human life. Examples of the Internet of things include:
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21Figure 22: Internet of Things
Source: Lee, I, & Lee, K, (2015)
Advantages of IoT
1. Communication- IoT supports communication between devices, cell phones and other wireless devices are
connected through wife, Bluetooth and headphones.
2. Monitor-The second most obvious advantage of IoT is monitoring. Knowing the exact quantity of supplies or the
air quality in your home, can further provide more information that could not have previously been collected easily.
For instance, knowing that you are low on milk or printer ink could save you another trip to the store in the near
future. Furthermore, monitoring the expiration of products can and will improve safety.
3. Efficient and Saves Time- The machine-to-machine interaction provides better efficiency, hence; accurate
results can be obtained fast. This results in saving valuable time. Instead of repeating the same tasks every day, it
enables people to do other creative jobs.
4. Better Quality of Life-All the applications of this technology culminate in increased comfort, convenience, and
better management, thereby improving the quality of life.
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Here are some disadvantages of IoT:
5. Compatibility-Currently, there is no international standard of compatibility for the tagging and monitoring
equipment. I believe this disadvantage is the easiest to overcome. The manufacturing companies of these
equipment’s just need to agree to a standard, such as Bluetooth, USB, etc. This is nothing new or innovative
needed.
6. Complexity- As a result of complex system requirements there are more opportunities of Internet of Things
failure. System and software update requirements are required for better performance and efficiency.
7. Privacy/Security: With all of this IoT data being transmitted, the risk of losing privacy increases. For instance,
how well encrypted will the data be kept and transmitted with? Do you want your neighbours or employers to know
what medications you are taking or your financial situation?
8. The unskilled workers- Unskilled workers may end up losing their employment as a result of these new devices.
Organisation and government entities are required to offer further training to their employees in order to reduce the
risks on retrenchment.
Activity 1
Name and explain the advantages of the business using IoT.
Explain four trends of the digital era.
The Fourth Industrial Revolution (4IR)
The Fourth Industrial Revolution represents underlying changes in the way human beings work, live and relate to
one another. The 4IR represents a new chapter in technological and human development, these advances in
development merge biological, physical and digital attributes in order to make human life more comfortable and
simpler (Lee and Lee,2015). The speed in which technology has changed over the past decade has forced
organizations to rethink how they create value for their customers.
According Chipp et al (2017) to the fourth industrial revolution is the current and developing environment in which
disruptive technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR) and artificial
intelligence (AI) are changing the way we live and work. The Fourth Industrial Revolution is a way of describing the
blurring of boundaries between the physical, digital, and biological worlds. It’s a fusion of advances in artifici al
intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and
other technologies (Whitmore et al., 2015).
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22Figure 23. Industrial Revolution progress
Whitmore et al (2015)
Technologies that are driving the (4IR):
a. Artificial intelligence (AI) - AI describes computer systems and software that can think like humans. These
systems and software are able to recognise patterns in data, processing and analysing information and drawing
conclusions, in order to make recommendations.
b. The digital currency - The arrival of digital currency like Bitcoin and Forex trading has been followed by mass
increase in digital currency usage. Customers are now able to trade these digital currencies for real currencies in
many different countries.
c. Virtual reality (VR) - VR offers immersive digital experiences (using a VR headset) that simulate the real world,
while augmented reality merges the digital and physical worlds.
d. Robotics - refers to the design, manufacture, and use of robots for personal and commercial use. They are
mostly used in manufacturing, health and safety industries. For example, the use of 3D printing allows
manufacturing businesses to print their own parts with less tooling and at a lower cost.
e. The IoT - The rise of IoT has drastically increased the usage of digital appliances, devices, vehicles and
equipment. Their ability to connect, collect, and transfer data over a wired and wireless network makes IoT essential
for the fourth industrial revolution.
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8.5
Digital Strategy
The digital strategy is the strategic analysis (external environment, internal resources), strategic objectives (vision,
mission and objectives), strategic definition (platform, market, business model) and strategic implementation of the
digital business (Chaffey, 2015). A business digital strategy represents how the business strategy is influenced by
leveraging digital resources in order to create value. A successful digital strategy requires a cross-functional team
with executive leadership, marketing and information technology (IT) members (Chaffey, 2015). Companies invest
large amounts of money and resources into their digital strategy in order to remain competitive. For example, Nike’s
digital marketing strategy has adopted targeting customers on different social media channels Nike mostly uses
Twitter and Instagram to unveil new shoes.
A well-constructed digital strategy allows the business to reach their target audience more effectively, using
different platforms such as desktop computers, tablets and mobile phones. The company digital strategy will have
an impact on the competition and other relevant stakeholders. A good digital strategy will use a variety of online
engagement methods, from email promotions, social media and app management to SEO, blogs and content
generator (Whitmore et al., 2015).
8.5.1 What should a Digital Strategy Include?

People- The business digital strategy depends on the available skills level within the company. This is
because the company digital strategy involves an integration of skills such as Web developers, graphic
designers, marketers and content writer.

Platform - Platforms enable a data-driven world rather than a process-driven world. The business digital
platform handles an end-to-end business process necessary to achieve the improved experience for
customers, employees, and partners.

Products - Once platforms have been identified, then the individual products that make up your digital
strategy are identified. These includes the usage of mobile apps, responsive Websites and the
interpretation of IoT to the business digital strategy.

Channels - The business has to decide how it will connect its product to their customers. These channels
can include in-person shopping experiences, email, social media, workplace networking, intranet and
Websites.

Customers - An effective digital strategy includes delivery the final product or service to the customer and
the evaluation methods used to further develop the product or service. Customers are able to track the
progress of their products and provide rating of the services offered by the business.
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Structure of a Digital Strategy
Digital Strategy should consist of 4 main parts:
1. Insights and Analysis: Companies should aim to understand the needs, wants and priorities of all relevant
stakeholders will be the core of the digital strategy, these stakeholders include customers, employees, suppliers
and executives.
●
External Digital Analysis
●
Customer Experience Mapping
●
Digital Value Chain Analysis
2. Digital Framework: During this process strategists and planners create a framework that will help the business
achieve its digital goals and objectives.
●
The Iteration Model
●
Big Idea / Mission / Vision
●
Digital Objectives
3. The Digital Scope: The strategy should address how the company will approach key digital areas such as
marketing, customers and technologies.
●
Website
●
Online Content
●
Digital Advertising
●
Customer Relations management
●
Social Media
4. Execution & Governance: The strategy planners should assign roles and establish procedures to be followed
during the implementation phase. The strategy should take into account most recent needs as well as the
resources, timeline and available budget.
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Project priorities
●
Project team
●
Accountabilityy
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23Figure 24. The Benefits of Crafting a Digital Strategy
Source: Consulting, (2015)
8.6
Summary
Statistics show that e-commerce is growing every day and as more customers are visiting online retailers, therefore
the number of challenges and issues are bound to arise. E-businesses must develop digital strategies to deal with
ethical issues that rise due to the rapidly growing technological environment.
8.7
Case Study
Digital skills are Africa’s ticket to prosperity
Higher Education and Training Minister Naledi Pandor says South Africa must up its game to drastically increase
the numbers of Occupations in High Demand (OIHD) so it can participate in the Fourth Industrial Revolution (4IR).
Occupations in High Demand are defined as jobs that show relatively strong employment growth and/or are
experiencing shortages in the labour market, or which are expected to be in demand in future. There are 11
universities in the country offering programmes and modules in 4IR and related fields of artificial intelligence and
robotics. Pandor said currently, there are 11 universities in the country offering programmes and modules in 4IR
and related fields of artificial intelligence and robotics. “If we intend to take full advantage of 4IR, all our universities
and colleges should be offering such courses,” Pandor said.
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Pandor was speaking at the official opening of the National Skills Conference underway in Boksburg.
Hosted by the National Skills Authority (NSA) under the theme ‘Building a demand-led skills development system
that focuses on inclusive economic growth’, the two-day conference seeks to find solutions to the challenges and
blockages experienced in the implementation of skills development interventions. Pandor said as part of its
responsibility to identify skills needs in South Africa, the Department of Higher Education and Training (DHET) has
developed a list of OIHD for a wide range of reasons, mostly to support enrolment planning at universities and
Technical and Vocational Education and Training (TVET) colleges, as well as macro-planning at national level. The
list of approximately 370 occupations specifically helps young people to make informed decisions regarding their
subject choices in grade 10, which they can use to make informed choices regarding fields of study for further and
higher education.
The list also assists the National Skills Fund (NSF), Sector Education and Training Authorities (SETAs) and other
organisations that provide bursaries and scholarships to allocate resources directed to occupations that are in high
demand. The 2018 list of OIHD identified white-collar occupations in information and communications technology,
including ICT project manager, data management manager, application development manager, information
technology manager, information systems director, ICT systems analyst, software developer, ICT risk specialist,
programmer analyst, developer programmer, and applications programmer. The list also identified blue-collar
occupations requiring an intermediate level of skills as being in demand such as carpenter, plumber and pipe fitter,
welder and sheet metal worker.
Pandor said skills training must be linked to local economic development priorities. “We are here to identify and
discuss practical steps to improve our skills training sector. The NSDS III [National Skills Development Strategy]
and the White Paper for Post School Education and Training are the policy documents that set our targets and
shape our planning. Our goals are to ensure skills training of a high standard. “We have made credible progress in
our efforts to improve skills and to give young people the opportunity to meet their aspirations. Our colleges and
universities and the SETAs are receiving significant budget support to address their distinct mandates,” Pandor
said. Pandor will in the evening address the National Skills Awards, which are conferred on organisations and
institutions that promote training programmes and widen access to work placement opportunities.
Case Study Questions
1. Which technologies are driving the 4IR for South Africa?
2. How can the 4IR improve the level of skills in South Africa?
Knowledge Check Questions
What are the types of interactions that happens between governments?
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8.8
Revision Question
1. Which technological innovation are driving the 4IR?
2. What is a digital strategy?
3. What should the company digital strategy include?
4. Name and explain 4 main parts of a digital strategy structure.
5. Briefly explain the term Internet of Things (IoT) also provide examples of existing (IoT).
Questions for Reflection
What are the objectives of the Act South Africa Electronic Communications and
Transactions Act, 2002 (Act 25 of 2002)?
Answers to Knowledge Check Questions
What are the types of interactions that happens between governments?
Types of Interactions in E-Governance:
●
G2G (Government to Government): This type of interaction occurs when government entities
exchange information and services within government structures. The interaction can be both horizontal
and vertical. For example, interaction between the national defence, government departments, provincial
and local government entities.
●
G2C (Government to Citizen): The interaction between government and general public, this interaction
occurs when the government set up a platform where citizens can access wide variety of public services.
Also, citizens are free to express and share their views and grievances on government policies and
services at any time.
●
G2E (Government to Employees): Research has shown that governments are one of the biggest
employers in South Africa. Therefore, ICT systems have to be developed in order to communicate and
interact employees on a daily basis.
Case Study Questions and Answers
1. Which technologies are driving the 4IR for South Africa?
The IoT - The rise of IoT has drastically increased the usage of digital appliances, devices, vehicles and equipment.
Their ability to connect, collect, and transfer data over a wired and wireless network makes IoT essential for the
fourth industrial revolution.
The digital currency - The arrival of digital currency like Bitcoin and Forex trading has been followed by mass
increase in digital currency usage. Customers are now able to trade these digital currencies for real currencies in
many different countries.
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2. How can the 4IR improve the level of skills in South Africa?
● By providing technology that could improve the skills in the country.
● By providing strategic partnership with higher education institutions.
● By improving cooperation between relevant stakeholders in both the public and the private sector.
Answers to Think Point
Explain the role of ethics in e-commerce.
Since most e-commerce happens online, ethics ensure customers are not misled pricing, product description, and
advertisement. The role of ethics in e-commerce is to goes beyond facilitation of sales but also protects customers
private data is secured. Ethics also ensures that proper return policies are followed by both customers and the
business.
Name and Explain three ethical issues faced by e-businesses.
Trademark Protecting- Ethical issues arising from intellectual property violations often rise due the easy to
information available online. Businesses. In most cases these violations are a result of poor legal advice and other
violation are deliberate.
Tax Implications- Most online businesses face ethical issues due to different tax laws and requirements; online
businesses are required to pay income tax, sales tax and tariffs similar to traditional tax laws.
Information Security-online companies are required by law to protect customers as well as the company’s
information. Threats to sensitive information include Security software attacks, theft of intellectual property,
information extortion, identity theft, insider trading and sabotage. Product Quality- Companies often misrepresent
their product quality to customers and product quality is not what it is supposed to be.
Answers to Activity 1
Name and explain advantages of the business using IoT.
Communication- IoT supports communication between devices, cell phones and other wireless devices are
connected through Wi-Fi, Bluetooth and headphones.
Monitor-The second most obvious advantage of IoT is monitoring. Knowing the exact quantity of supplies or the
air quality in your home, can further provide more information that could not have previously been collected easily.
For instance, knowing that you are low on milk or printer ink could save you another trip to the store in the near
future. Furthermore, monitoring the expiration of products can and will improve safety.
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Efficient and Saves Time- The machine-to-machine interaction provides better efficiency, hence; accurate results
can be obtained fast. This results in saving valuable time. Instead of repeating the same tasks every day, it enables
people to do other creative jobs.
Better Quality of Life- All the applications of this technology culminate in increased comfort, convenience, and
better management, thereby improving the quality of life.
Explain four trends of the digital era.
Personalization - Personalization can be achieved through using user-generated content and customers can now
create unique experiences through customization of applications, online profiles and gaming avatars. Marketers
use personalization as a marketing strategy to attract customers to their Websites, mobile applications and social
network.
Transparency-The digital era has made information available to anyone and everywhere. Customers are more
informed and smarter, since they are able to research products prices, specification and quality. Both traditional
and modern business now realize the need for transparency.
Digital skills- The growth of the digital economy has given rise to the demand of digital skills such programming,
digital marketing and hacking. In order to survive, organizations have had to adapt their marketing strategies and
methods in order to survival in the new digital world.
Smart phones- Arrival of these new devices has changed business and social interactions, marketing departments
around the world are still catching up to changes brought by these smart phones. Smart phones are able to perform
Functions like Web browsing, e-mailing, text messaging and phone calls.
Answers to Questions for Reflection
What are the objectives of the Act South Africa Electronic Communications and Transactions Act, 2002
(Act 25 of 2002)?
● Ensure that all South Africans can access quality public service and government information from anywhere
at any time.
● Reduce the cost of public administration in South Africa.
● Establish institutional mechanisms that will advance the coordination and facilitation of e-Government
services;
● Manage the development of frameworks addressing skills development;
● Deliver integrated electronic services which will ensure one stop service portal;
● Develop capacity and skills programme that will ensure sufficient service delivery;
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Answers for End of Chapter Revision Questions
Unit 1:
Revision Questions
Define the following terms:
1.1 Bandwidth
High speed telephone lines facilitate Internet communication. The capacity of these lines is measured in bits and
is termed bandwidth.
1.2 E-Commerce
E-Commerce is a broad term that covers all business activities that use the Internet as a platform for conducting
exchanges or for forming and maintaining relationships.
E-Commerce covers a range of Internet business activities encompassing Customer Relationship Management
(CRM), e-Tailing, search engines, portals, hubs and online auctions.
1.3 Information Goods
“Information goods” encompasses any product that can be transformed into digital code, e.g. books, CDs, movies,
software. Intellectual property rights are required to protect these, in the form of trademarks, copyrights, and
patents.
1.4 Disintermediation
The bypassing or exclusion of intermediaries. Occurs because the electronic markets can perform this function.
1.5 Digital divide
The division between ICT “haves” and “have nots”, which could equate to the digital gap between first and third
world countries.
1.6 Asynchronous and Instantaneous communication.
Asynchronous communication refers to using the digital medium to communicate on a 24/7 basis. Instantaneous
communication is immediate.
2. Discuss the key players that comprise the Internet infrastructure.
Three Key Players that compose the Internet infrastructure are:
●
Users: Parties who make use of the Internet .
●
Communication services: Comprises 3 core players, namely backbone operators who own the high-speed
lines, Internet Service Providers ISP’s, and Last Mile Providers such as Telkom.
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Suppliers: Providers of hardware and software.
3. Identify the core difference between Bricks and Mortar and pure E-Commerce Businesses.
●
Cost structure of information goods permit large-scale online business to be more effective online.
●
The speed of the Internet permits cost savings online.
●
Detailed customer information can be cheaply gathered in the digital world.
●
E-Commerce can change market structures, creating opportunities for new types of intermediaries.
4. Discuss the advantages of E-Commerce for organisations, consumers and society.
Benefits for Organisations:
●
Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information.
●
Allows reduced inventories and overheads by facilitating pull-type supply chain management.
●
Expands the marketplace from local to national and international markets.
●
The pull-type processing allows for customisation of products and services which provides competitive
advantage to its implementers.
●
Reduces the time between the outlay of capital and the receipt of products and services.
●
Supports Business Process Reengineering (BPR) efforts.
●
Lowers telecommunications cost - the Internet is much cheaper than Value Added Networks (VANs).
Benefits for Consumers:
●
Enables consumers to shop or do other transactions 24 hours a day, all year round from almost any
location.
●
Provides consumers with more choices.
●
Provides consumers with less expensive products and services by allowing them to shop in many places
and conduct quick comparisons.
●
Allows quick delivery of products and services (in some cases) especially with digital products.
●
Consumers can receive relevant and detailed information in seconds, rather than in days or weeks.
●
Makes it possible to participate in virtual auctions.
●
Allows consumers to interact with other consumers in electronic communities and exchange ideas as well
as compare experiences.
●
Facilitates competition, which results in substantial discounts.
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Benefits for Society:
●
Enables more individuals to work from home, and to do less travelling for shopping, resulting in less traffic
on the roads, and lower air pollution.
●
Allows some merchandise to be sold at lower prices, benefiting less affluent people.
●
Enables people in Third World countries and rural areas to enjoy products and services which otherwise
are not available to them.
●
Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality.
Unit 2:
Revision Questions
1. Define B2B
B2B model focuses on providing products or service from one business to another, B2B is considered to be the
largest e-commerce model. In this model both the sellers and buyers are business entities and usually involves
transactions between a retailer or a wholesaler, or a wholesaler and manufacturer.
2. What is a fee-based model?
This model uses payment systems such as subscriptions, online shopping carts and pay-as-you-buy. The most
common of these are online subscriptions to journals or movie sites such as Netflix. These companies rely on the
quality of their content to convince consumers to pay a usually nominal fee.
3. What are the challenges of implementing an e-business model?
●
Hidden Costs
●
Marketing Failures
●
Website Availability
●
Security Issues
●
Payment and Pricing Differences
Unit 3:
Answers to Revision Questions
1. Name three product internal considerations for e-business.
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●
Customers Inputs
●
Security.
●
Content & Images
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2. What are the advantages of conducting a business online?
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Easy to set up
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Cheaper to start up than traditional business
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No Geographical Boundaries
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Flexible Business Hours
3. What is the role of technology in the value chain?
The role of technology has drastically in supply chain management, technology help facilitates the flow of
information, improve visibility and accountability. Technology brings transparency into the whole value process. It
allows the manufacturing companies to have better control over product flow and information flow across the supply
chain. For example, the use of RFID technology and cloud-based computerized shipping in order to reduce shipping
errors.
4. How can an online business ensuring trust and Quality online?
Prices- The arrival of globalization and technology has affected customer perception on prices since markets have
become more open. The arrival of suppliers from cheaper markets has increased competition for both local and
international suppliers. Customers now perceive online store to be cheaper in comparison to physical stores.
Customers are able to procure quality innovative products at cheaper prices.
Collaboration- Online businesses can use e-business platforms to share data, knowledge and pricing information
about their products and service. Customers are constantly updated about new products features on social
networks, company Websites and mobile applications. This allows businesses to promote and collaborate projects
with customers’ expectations, as well as reduce their research and marketing budgets and other resource costs,
as they can eliminate redundancies and inefficiencies in their processes while honing their core competencies.
Effective Product Display and Information- Research by indicated that customers are reluctant to trust product
description without proper images. Consumer online shopping behaviour is volatile since there is no physical
location to properly assess product features. Therefore, the Website should effective display images of the products
and provide relevant information to the customer.
Accessibility and Transparency- The company Website should be easy to access, and customers should be able
to logon to view different products, assess price changes, and get information on new products including discount
offers. Also, the payment options provided to customers should be varied to accept different currencies and
payment gateways such as credit cards, debit cards and PayPal.
Personalisation- Personalisation is wide ranging and covers display of products and information, product
recommendations and reviews, user-driver customization of products and end-user’s personal data on a Webpage.
This approach can improve customer satisfaction since customers have a hand in making the final product.
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Unit 4:
Answers to Revision Questions
1. List the three benefits of an e-marketing planning.
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Lower cost
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Traceable and Measurable results
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Openness
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Social currency
2. What are the ethical issues related to conducting business online?
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Privacy issues
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Marketing to children
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Identity Theft and Internet Fraud
3. What are the advantages of online communication?
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Increase productivity and efficiency
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Easy connectivity from every place in the world
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Cost effective compared to physical communication
4. Name and explain three steps to branding on the WEB.
Step 1. Business should analyse and evaluate the content and the massage it spreads online. It is pivotal for the
business to analyse its target audience, competitors and industry before it begins plans to brand the company
Website.
Step 2. Based on the above analyses the business should narrow its focus its resources to attracting the business
target audience. It is essentially for the business brand to appear how the target audience perceived it. This includes
the use of images, news and information about customers experiences related to the business’s product or services.
Step 3. The business has to strategize how it intends to develop the content found it the company’s Website. The
Website has to be divided into sections according to customer’s expectations and needs, then fill each section with
the suitable content. The company’s home page contains the most importance source of information about the
business.
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Unit 5:
Answers to Revision Questions
1. List five e-supply chain players and stakeholders
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Manufacturer
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Logistics companies
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Distributors
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Regulatory Authorities
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Suppliers
2. Compare and contracts traditional procurement to e-procurement.
●
Use of Technology: Traditional Procurement is done offline using Tender or RFQ Notice through
Newspapers, letters and other notifications etc. Offers made by Contractors are also submitted in sealed
tenders in paper form.
●
Transparency: You can have a higher grade of transparency using E procurement as it is technology
driven. Fraud and bribe can be avoided up to great extent.
●
Speed of Procurement: Traditional procurement takes longer time due to manual effort involved whereas
E Procurement can be concluded quickly.
3. What is the role of reverse logistics in supply chain management?
Reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing
value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of
reverse logistics. The reverse logistics process includes the management and the sale of surplus as well as returned
equipment and machines from the hardware leasing business.
4. Briefly explain the objectives of the new E-procurement Act
●
Improve the use of inconstant-messaging during and after the e-procurement process through the use of
audio, text and visual information.
●
To add value through the use of technological tools such as the IoT and supplier database in order to enhance
service delivery to South African citizens, business partners and employees.
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5. What are the major infrastructure elements and tools of E-SCM?
Electronic data interchange (EDI). It is the major tool used by large corporations to facilitate supply chain
relationships. Many companies are shifting from traditional EDI to Internet -based EDI. Its major purpose is to
support inter-organizational communication and collaboration. These are the corporate internal networks for
communication and collaboration.
Corporate portals. These provide a gateway for external and internal collaboration, communication, and
information search.
Work-flow systems and tools. These are systems that manage the flow of information in organizations.
Identification and tracking tools. These tools are designed to identify items and their location along the supply
chain
Groupware and other collaborative tools. Many tools facilitate collaboration and communication between two
parties and among members of small as well as large groups. Various tools, some of which are collectively known
as groupware, enable such collaboration.
Unit 6:
Answers to Revision Questions
1. Why is online communication importance for a business?
Online communication plays a vital and critical part in bringing people, society and businesses together, online
communication helps connects the business to different suppliers from different industries. Online communication
has allowed information to flow in and out of the business more efficiently, also the use of digital tools such e-mails,
blogs and mobile applications has enable business to share information with all the relevant stakeholders.
2. What are the risks of cyber security to the business?
●
Reputational damage
●
Theft of corporate information
●
Theft of money
●
Disruption to trading
●
Loss of business or contract
3. Name and explain 3 of digital projects.
Smart factories- The term describes an environment where machinery and equipment are able to improve
processes through automation and self-optimization. Smart factories use of IoT sensors and devices connects
machines and enables visibility into their condition as well as into factory processes, creating an industrial Internet
of things (IoT).
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3D printing- 3D printing, also known as additive manufacturing, is a process by which physical objects are created
by depositing materials in layers based on a digital model. All 3D printing processes require software, hardware,
and materials to work together.
Digital marketing- Digital marketing is the promotion of products or brands using electronic devices or the Internet
. It also includes text messaging, instant messaging, video, apps, podcasts, electronic billboards, and digital
television and radio channels. Digital marketing uses multiple channels and technologies that allow an organization
to analyse campaigns, content and strategy.
4. What are the security measures that need to be considered for an online business?
1. Security needs to be broadly and consistently deployed across all ecosystems which also includes the ability to
dynamically adapt as network environments expand or change to establish a single point of visibility and control.
2. Next, security needs to be deeply integrated into the extended technology landscape to ensure complete visibility
and control even across multiple networked. Since there is an influx of data online, e-business are encouraged to
create information system that better correlate, detect and anticipate both known and unknown cyber threats.
3. Thirdly, security needs to be automated and integrated across devices and applications so it can respond to
threats effectively and in a coordinated fashion at machine speeds.
Unit 7:
Answers to Revision Questions
1. What are the benefits of EPR?
●
Enables business growth by managing increasingly complex business processes;
●
Fosters collaboration using data sharing and integrated information;
●
Provides better business intelligence and customer service capabilities; and
●
Improves supply chain management
2. What are the benefits of applying knowledge management to customer relations?
●
Knowing your customer’s increases customer loyalty.
●
Having a deeper sense of customer knowledge will create growth opportunities.
●
Constant Improvement, thanks to collected data and knowledge management.
●
Increase in customer satisfaction.
●
Raises your bottom line.
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3. Define the term Knowledge Management
Knowledge Management is management framework that facilitate accountabilities, processes, technologies and
governance that have been strategically put in place to create and maximize value. Knowledge management ask
question like "What the company knows and How do we know it" in order to help the business deliver results. It
focuses on eliminating the business past mistakes and ensures that the same mistakes are not repeated twice and
ensures that every decision is made with full knowledge about the possible ramifications.
4. What are the steps to implementation ERP?
Step one: Need Assessment
Step two: Hire a team of specialists
Step three: ERP system evaluation and selection
Step four: Prepare for Change
Step five: Data Preparation:
Step six: ERP Implementation
Step seven: Testing
Step eight: Training & Education
Step nine: Go Live
Step ten: Ongoing Support
5. What are the three of ERP systems?
Level 1: These systems are mainly designed primarily for large and multinational companies. These companies
can have thousands of employees who access the system daily and also process millions of transactions at the
same time.
Level 2: Level 2 systems are designed for medium-size organizations and companies that operate in a single
location or multiple locations. This ERP level is complex and usually expensive.
Level 3: The third level is designed for small- to medium-sized companies that rarely operate in multiple countries
and markets. Level 3 suppliers are usually smaller Enterprise that are not as well-known, however larger vendors
are able produce ERP systems for small, medium and large companies.
Unit 8:
Answers to Revision Questions
1. Which technological innovation are driving the 4IR?
123
●
Artificial intelligence (AI)
●
The digital currency
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●
Virtual reality (VR)
●
Robotics
●
The IoT
2. What is a digital strategy?
A digital strategy involves analysing (external environment, internal resources), strategic objectives (vision, mission
and objectives), strategic definition (platform, market, business model) and strategic implementation of the digital
business.
3. What should the business digital strategy include:
People- The business digital strategy depends on the available skills level within the company. This is because the
company digital strategy involves an integration of skills such as Web developers, graphic designers, marketers
and content writer.
Platform - Platforms enable a data-driven world rather than a process-driven world. The business digital platform
handles an end-to-end business process necessary to achieve the improved experience for customers, employees,
and partners.
Products - Once platforms have been identified, then the individual products that make up your digital strategy are
identified. These includes the usage of mobile apps, responsive Websites and the interpretation of IoT to the
business digital strategy.
Channels - The business has to decide how it will connect its product to their customers. These can include inperson shopping experiences, email, social media, workplace networking, intranet and Websites.
Customers - An effective digital strategy includes delivery the final product or service to the customer and the
evaluation methods used to further develop the product or service. Customers are able to track the progress of
their products and provide rating of the services offered by the business.
4. Name and explain 4 main parts of a digital strategy.
1. Insights and Analysis: Companies should aim to understanding the needs, wants and priorities of all relevant
stakeholders will be the core of the digital strategy, these stakeholders include customers, employees, suppliers
and executives.
●
External Digital Analysis
●
Customer Experience Mapping
●
Digital Value Chain Analysis
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2. Digital Framework: During this process strategist and planners create a framework that will help the company
achieve its digital goals and objectives.
●
The Iteration Model
●
Big Idea / Mission / Vision
●
Digital Objectives
3. The Digital Scope: The strategy should address how the company will approach key digital areas such as
marketing, customers and technologies.
●
Website
●
Online Content
●
Digital Advertising
●
Customer Relations Management
●
Social Media
4. Execution & Governance: The strategy planners should assign roles and establish procedures to be followed
during the implementation phase. The strategy should take into account most recent needs as well as the
resources, timeline and available budget.
●
Project priorities
●
Project team
●
Accountability
5. Briefly explain the term Internet of things (IoT) also provide examples of existing (IoT)
The Internet of things (IoT) is a computing concept that describes the idea of everyday physical objects being
connected to the Internet
and being able to identify themselves to other devices (Kim, 2019).This includes
everything from cell phones, lamps, coffee makers, headphones, washing machines and wearable device.
●
Home automation
●
Smart factories
●
Smart cars
●
Hydro framing
●
Global Positioning System
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