E-Business
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E-Business
Chapter 1
Electronic Business –
Understanding new internet
economy and business
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E-Business
Learning Objectives
To understand –
• The objectives of e-business
• Transition from traditional business to e-business
• Role of e-commerce, e-business and difference
between them
• Features and advantages of e-business technology
• Establishing e-business, different types of e-business
models
• Knowledge perspective of e-business
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E-Business
• Introduction:
All activities where products and services are
negotiated and paid for across the Internet are
examples of online business. If somebody asks
whether you are involved in online business, they want
to know whether you buy and/or sell goods or services
electronically..
• Australia’s Northern Territory Government has the
following definition of online business:
• “Online business is any kind of business activity that
happens over the internet. Running an online
business can include buying and selling online or
providing an online service.”
• When an online business refers to a company, it
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means the same as an e-Business.
• Online business includes goods and/or services
• All types of business activities that take place via the
Internet are examples of online businesses.
• Somebody who provides a service online and has
paying customers has an online business, as does
an entrepreneur who sells products over the Internet.
• In recent years, online businesses have become
increasingly popular as an alternative investment
class for investors
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• Online business grew and grew
• Since the turn of the century, online business volume
has increased dramatically. Unfortunately, many
bricks-and-other companies, such as high street
shops, have had to pay the price.
• If you walk down the high street (commercial street)
of any town or city of an advanced economy today,
you will see far fewer stores that there were a few
decades ago.
• Over the last couple of decades, consumers have
become increasingly involved in online shopping and
visited their local stores less often. Hundreds of
thousands of physical shops could not cope and
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closed down.
Introduction
• Traditionally, business is
exchange of articles, goods and
food items, a need based..
• Further, a businessman travelling
to places for selling goods /
individuals going to shops to buy
any item
• Later, many layers / middlemen
came in to play
Cont..
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E-Business
Introduction Cont..
• It reduced the pace of the transactions, loss of information
and gap between the demand and supply
• Production limitations - Simple production processes,
relatively simple technologies and low production volume
• Led to - numerous manufacturing companies, small in
size, unspecialized
• Distributed and diffused markets, lack of transportation &
communication facilities, lot of information inefficiencies
• Led to - distribution within a small locality, difficult to
balance supply and demand
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E-Business
Introduction Cont..
• Economic, technological growth, new transport,
communication means changed the business scenario
• Advent of internet & its use in business changed the
overall business
• E-commerce, e-business where end-to-end business is
empowered by electronic communication
technologies, revolutionized the business
• Made ways & means available to do business with
pace and eliminate few middle layers in transaction
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E-Business
Introduction….
• E-commerce is the smartest way of doing
E-commerce is the smartest way of doing
business.
business.
• You ask
customers
towork
doforwork
Youyour
ask your
customers to do
you. for you.
For example/such as, filling forms,
For example/such
as,and
filling
forms, checking
checking the order status
downloading
the product
themselves
so that you can
the order
status
and downloading
the product
save huge cost and man power.
themselves
so that
can
save
Furthermore
, theyyou
do not
make
any huge cost
complaint
and man
power.
Furthermore , they do not make any
complaint
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Objectives:
• A company’s business objective is a detailed
picture of the steps its senior management
plans.
• Specifically, they are steps it plans to take to
reach a specific goal.
• Scope and also directs the efforts of the
concern.
• The objectives of the organization are
expressed in relation to the future.
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The objectives
of the firm break down the
Characteristics of Objectives
As the objectives of the firm break down the
company’s strategy into a number of achievable
targets. characteristics of objectives:
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Objectives of e-business
• E-business objectives can be listed as –
– Primary objective : to use internet and electronic
communication system to deliver business value by
its effective use in business transactions
– Information analysis and access
– Penetration
– Addressing particular customer segment
– Improving user satisfaction
– Knowledge augmentation and its business use to
increase stakeholders’ wealth.
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E-Business
• Based on vision and mission: The objectives
of the organization are extracted from its vision
and mission statement.
• Long term or short term:
• The growth and expansion of the business is a
long-range objective
• Whereas sales maximization, increase in the
margin are considered as short term objectives.
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• Time-bound: It is a time-bound desired end,
i.e. they must be achieved within the specified
time.
• Hierarchical: It has a hierarchy, in the sense
that objectives can be arranged according to
their importance and priority. Indeed, for each
position in the organization, objectives are
laid down.
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• Social Sanction: It should be created keeping in
mind the society’s interest and norms. Hence, it
needs social sanction.
• Forms a network: These are interdependent and
mutually supportive, however, it does not mean
that the achievement of one objective leads to the
automatic achievement of the another. Further, it
should not be assumed that one objective shall be
achieved regardless of the fact that other
objectives are achieved or not.
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• Multiple: The organizations do not exist with a single objective
and so every organization has several numbers of objective,
which they need to balance so as to run the business
effectively. The objectives can be profit generation, customer
satisfaction, service to society and nation, market leadership,
innovation, development of human resource and so forth.
• Dynamic: They are dynamic in nature as it can be reviewed,
modified and replaced according to the circumstances.
• Verifiable: Objectives must be verifiable, i.e. expressed in
numerical terms. When the objectives are verifiable they
provide standards against which actual performance of the
organization and its employees can be measured. However, all
the objectives cannot be expressed quantitatively and so in
such circumstances, these are expressed qualitatively.
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• Each department, division, levels and unit of
the organization may have its own objective. It
is in the form of a written statement of the
desired ends which can be realized within a
given period of time.
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Traditional Business to e-business
• Steps for transition of
existing traditional business
to e-business are • Document existing business
process
• Consider competitive
business advantage, ROI and
other key benefits
• Select technology to support
business process
• Roll out deployment plan
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E-Business
E-Business Layers
• Business model sits on top of layers
• Technical layers include
performance, availability and security
related issues
• Two layers interact with each other
through application development layer
• The business model and business
processes are tested against business
objectives and that drives application
development
• Every layers needs to be considered
while moving ahead with legacy
system to e-business
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E-Business
Forces Driving transformation to e-business
• Different forces drive the transformation from legacy
systems to e-business
• Some of these forces are –
 Market forces
 Technology forces
 Economic forces
 Social forces
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E-Business
Contributors for e-Business’ success
• The contributors of successful e-business can be –
–
–
–
–
–
–
–
–
–
–
Website
Knowledge about the use
Skilled manpower
Acceptance from society
Robust infrastructure
Appropriate pricing structure
Smooth internal and external information flow
Connectivity
Mass communication
Network production
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E-Business
Higher Level Contributors for E-business
Success
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E-Business
E- Business and E-Commerce
• e-business, not limited to mere monetary and outward
business transactions
• Involves internal and external communication to improve
pace, efficiency, performance, customer satisfaction and
allows a faster and more open process, with customers
having greater control
• e-commerce, function of creating financial exchange with
the use of digital medium
• Instruments and methods like, credit cards, electronic
fund transfer etc. have become commonplace
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E-Business
E- Business and E-Commerce Cont..
• The broadest definition of e-commerce is ‘the
conduct of transactions by electronic means’
• e-business is a superset and it can be defined as
‘conducting business and all business related
activities, internal, and external transactions along
with communications using electronic means’
• In short, e-business is the business that is empowered
by e-commerce
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E-Business
Difference Between e-commerce / e-business
e-business
Superset of e-commerce
e-commerce
Subset of e-business
Deals with all aspects of business and not More about monetary
limited to just business transactions
transactions, buying &
selling
Internal processes such as production,
inventory management, product
development, risk management,
finance, etc., are also part of e-business
Focuses on the outward
facing processes and not
related to internal
processes
Other aspects of business like contacting Does not include other
the customer on-line, educating him,
business aspects like in eproviding services, and product related
business
information, that all constitute e-business
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E-Business
E-commerce in e-business : Issues
1. Lack of awareness and understanding of the value of ebusiness and e-commerce
2. Reluctance to go for the required change in environment
3. Lack of ICT knowledge and skills
4. Doubts about the capability of organizations to take
advantage of the benefits e-business
5. Assurance about security and privacy before getting
engaged in use of internet related technologies
6. Lack of legal infrastructure& legal liability on e-payments
7. Issues related to financial costs
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E-Business
E-business Framework
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E-Business
E-business Framework
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E-Business
Features of E-Business Technology
• E-business features drive the new economy
• Some of the major features of e-commerce are  Ubiquity
 Global reach
 Universal standards
 Richness
 Interactivity
 Information density
 Personalization
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E-Business
E-business technology layers
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E-Business
E-business Service Model
• ‘e’ component in each of
these transactions is a value
proposition
• This component gives easy
interface for service request
• No processing component sits
on the customer side
• All processing is done at the
end of the service provider
• Customer does not need any
special hardware or software
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E-Business
Advantages of E-business
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Provides flexibility
No need for physical presence
Cost reduction
Transparency
Personalization
End-to-end information flow
Integrated solution
Saves time
Improved communication with customers, suppliers
Online publishing
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E-Business
Benefits for the retailer
• E-business provides benefits for business houses,
customers as well as for retailers
• These benefits come from information efficiencies
and penetration, in the form of market exposure and
cost reduction
• Benefits for retailers include  Increased market exposure
 Increased sales
 Reduced costs
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E-Business
Establishing E-business
• Establishing e-business can be transformation from
traditional business or a completely new business
• Apart from the traditional parameters, other strategic
aspects that need to be considered while establishing ebusiness are –
 E-business frameworks and standards
 E-content interoperability
 Inclusive solutions
 Trusted frameworks
 Support for interoperable reference implementations
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E-Business
E-Business Models
E-business model –
• A framework with all business components to create
value and meet business objectives
• A set of business processes through planned activities to
achieve business objectives
• Aim to leverage unique properties and the strength of ‘e’
component of technology to optimize business objectives
• Create new ways of creating, capturing, and delivering
value to customers
Various e-businesses models are distinguished by the
nature of market relationship & the nature of transactions
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E-Business
Ingredients of Business Models
Various ingredients of business models are –
•
•
•
•
•
•
•
•
•
•
The offerings and value proposition
Revenue model / cash flow
Market forces and available opportunities
Competition
Positioning of product
Market strategy
Technology and information technology strategy
Organizational structure and development
Management team
Knowledge management
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E-Business
Elements of successful e-business Model
• Web technology provides a platform for building an
e-business model to improve internal and external
processes
• New business models aim to use and leverage unique
qualities of internet and in turn the World Wide Web
• A successful business model needs to address various
elements as  Value proposition
 Market opportunity
 Competitive environment
 Competitive advantage
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E-Business
Information & Financial Transactions
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E-Business
Technology Evolution in E-arena
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E-Business
Transaction based e-business Models
• e-business models are classified based on parties
taking part in transaction
• Properties of business transactions like purpose of
transactions and parties involved, are used while
deciding the type of e-business model
1.
2.
3.
4.
5.
6.
Business to business, B2B model
Businesses to consumer, B2C
Business to government, B2G
Consumer to consumer, C2C
Consumer to business, C2B and
Business to employee, B2E
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E-Business
B2B e-business Models
• Most common type of business transactions, 75 to 80% of
transactions are of this type
• Various companies and transactions coming under this model are – Transactions among providers, distributors, players,
manufacturers and other ancillary organizations
– Various logistics related transactions, distribution of material,
storage or warehousing
– Organizations providing software as a service (SAAS),
application service providers (ASP), Outsourcing of activities
related to e-transactions including project development, webhosting, security services etc. , KPOs, business processing
outsourcing(BPOs)i.e. is the practice of contacting with an
external service provider to perform an essential task, inter
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E-Business
bank transfers,
security companies etc.
B2B Transactions
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E-Business
B2C e-business Model
• Second most popular e-business model after B2B
• Uses a concept of on-line distribution / selling of
services, products or information from organizations
to actual consumers
• Advantages of B2C model –
–
–
–
–
Reduces the transaction costs
Increases the information space available to consumers
Allows smaller players to enter in the global market
Saves cost needed for setting up shops and physical
distribution channels
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E-Business
B2C e-business Model Cont..
• Manufactures, distributors, information providers,
and publishers use B2C model extensively
• Includes different transactions between companies
and consumers like – Customer buying various articles like books, computers,
computer accessories, etc.
– Customer accessing information, analysing information,
and in some cases buying information or information
centric articles
– Customer seeking some sort of services from the
companies
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E-Business
B2C Transactions
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E-Business
B2G e-business model
• Transactions between private contractors and
government agencies are part of this model
• Refers to commercial enterprises selling product,
services and information to government agencies
• Connects government and private sector
• Include use of internet for public procurement and for
different government related procedures
• Increases transparency in different operations
• E.g. energy providing companies and government
energy distribution companies, infrastructure building
companies, government infrastructure authorities etc.
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E-Business
C2C e-business model
• About individuals doing business in online environment
• Allows individual auctions, individuals trying to sell old/
new articles, cars, etc. through electronic means/ website
• Slowly becoming popular
• Major hurdle in accepting C2C model is the trust factor
• The peers interact with each other by various means like– Direct transaction between individuals
– Individuals interacting through some well-known portal or the
auction site
– The individuals advertise their product through some site using
classifieds or advertisement
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E-Business
C2C Transactions
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E-Business
M-commerce and e-business
• Advent of wireless technologies and cell phones
made it possible to carry business transactions using
mobile phones
• Commerce / transactions that take place using
wireless technology (cellular phones, wireless
devices, etc.) is referred to as m-commerce
• Many of the B2B and B2C transactions are possible
over m-commerce to build m-business models
• Poses different sort of technology and usability
challenges
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E-Business
Strength / Opportunity analysis of E-business
As a part of SWOT analysis, strengths of e-business
include 1. Organization / company can reach to very
specific target group
2. Can have very specific instructions and services
for the said target group
3. Low investments within the traditional sector
4. Reputation of traditional brands can still be used
and even glorified with innovative marketing
means through electronic channels
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Cont..
E-Business
Strengths Cont..
5. E-business is easily expandable compared to
traditional businesses
6. Allows prices to respond according to demand
(direct marketing
7. Help in increasing the yield maximize revenue
8. Lowers the cost of stocks and personnel
9. Minimizes dependence on physical resources
10.Available 24 hours a day
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E-Business
Opportunities
Creates opportunities for businesses like –
1. use of ‘gimmicks’ for promotional activities on line
2. Allows dealing with wholesale trade companies as there’s
a connectivity between various companies
3. Promote brands and take those brands to global level
4. Selling well-known brands very easily, as the customers
cannot see the actual product, they prefer branded
5. Operate in niche markets at global level
6. Allows organization to improve decision efficiencies
because of integration and availability of information
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E-Business
Opportunities Cont..
7. Ability to connect and integrate with other
organizations allowing to sell complete range of
products by using partnerships
8. Allows to sell product and the related services
together
9. Help in building efficient market, as the increase in
transparency due to electronic communication
means
10. Delivers different kinds of services for different
prices
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E-Business
Proactive E-Business Strategy
• It is a framework that is about business transactions,
means, social environment and entities taking part in
business transactions
• Business model is the result of a business strategy
• E-business strategy is –
– Totality of how a company selects its customers
– Defines and differentiates its offerings
– Defines the task it will perform itself & the tasks it will
outsource
– Configure its resources
– Creates utility customers and Captures profit
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E-Business
E-Business – A Knowledge Perspective
• E-business empowers individuals, businesses and customers
with the ability to collect information & use it
• Knowledge Management (KM) is about making right
knowledge available with right person at right time
• Includes building of right knowledge and processing it to
take it to next level
• E-business makes the KM platform available for this
knowledge management to empower business
• Knowledge about suppliers, retailers, specific areas and
services empower business with knowledge
• E-businesses build and use effectively this knowledge on eplatform © Oxford University Press 2012. All rights reserved.
E-Business