E Business Ctd

What forces are fueling e-commerce?
There are at least three major forces fuelling e-commerce: economic forces, marketing and customer interaction forces, and technology, particularly multimedia convergence.

Economic forces.

One of the most evident benefits of e-commerce is economicefficiency resulting from the reduction in communications costs, low-cost technological
infrastructure, speedier and more economic electronic transactions with suppliers,lower global information sharing and advertising costs, and cheaper customerservice alternatives.

Economic integration is either external or internal. External integration refers to theelectronic networking of corporations, suppliers, customers/clients, and independentcontractors into one community communicating in a virtual environment (withthe Internet as medium). Internal integration, on the other hand, is the networkingof the various departments within a corporation, and of business operations andprocesses. This allows critical business information to be stored in a digital formthat can be retrieved instantly and transmitted electronically. Internal integration is best exemplified by corporate intranets. Among the companies with efficient corporate intranets are Procter and Gamble, IBM, Nestle and Intel.

Market forces.

Corporations are encouraged to use e-commerce in marketing and promotion to capture international markets, both big and small. The Internet is likewiseused as a medium for enhanced customer service and support. It is a loteasier for companies to provide their target consumers with more detailed productand service information using the Internet.

Technology forces.
The development of ICT is a key factor in the growth of ecommerce.For instance, technological advances in digitizing content, compressionand the promotion of open systems technology have paved the way for the convergenceof communication services into one single platform. This in turn has made communication more efficient, faster, easier, and more economical as the need to set up separate networks for telephone services, television broadcast, cable television, and Internet access is eliminated. From the standpoint of firms/businesses and consumers, having only one information provider means lower communicationscosts.

Moreover, the principle of universal access can be made more achievable with convergence. At present the high costs of installing landlines in sparsely populated rural areas is a disincentive to telecommunications companies to install telephones in these areas. Installing landlines in rural areas can become more attractive to the private sector if revenues from these landlines are not limited to local and long distance telephone charges, but also include cable TV and Internet charges. This development will ensure affordable access to information even by those in rural areas and will spare the government the trouble and cost of installing expensive landlines.

What are the components of a typical successful e-commerce transaction loop?

E-commerce does not refer merely to a firm putting up a Web site for the purpose of selling goods to buyers over the Internet. For e-commerce to be a competitive alternative to traditional commercial transactions and for a firm to maximize the benefits of e-commerce, a number of technical as well as enabling issues have to be considered.
A typical e-commerce transaction loop involves the following major players and corresponding requisites:

The Seller should have the following components:

● A corporate Web site with e-commerce capabilities (e.g., a secure transaction server);
● A corporate intranet so that orders are processed in an efficient manner; and
● IT-literate employees to manage the information flows and maintain the e-commerce system.

Transaction partners include:

● Banking institutions that offer transaction clearing services (e.g., processing credit card payments and electronic fund transfers);
● National and international freight companies to enable the movement of physical goods within, around and out of the country. For business-to-consumer transactions, the system must offer a means for cost-efficient transport of small packages (such that purchasing books over the Internet, for example, is not prohibitively more expensive than buying from a local store); and
● Authentication authority that serves as a trusted third party to ensure the integrity and security of transactions.

Consumers (in a business-to-consumer transaction) who:

● Form a critical mass of the population with access to the Internet and disposable income enabling widespread use of credit cards; and
● Possess a mindset for purchasing goods over the Internet rather than by physically inspecting items.
Firms/Businesses (in a business-to-business transaction) that together form a
critical mass of companies (especially within supply chains) with Internet access and the capability to place and take orders over the Internet.

Government, to establish:
● A legal framework governing e-commerce transactions (including electronic documents, signatures, and the like); and
● Legal institutions that would enforce the legal framework (i.e., laws and regulations) and protect consumers and businesses from fraud, among others. And finally, the Internet, the successful use of which depends on the following:
● A robust and reliable Internet infrastructure; and
● A pricing structure that doesn’t penalize consumers for spending time on and buying goods over the Internet (e.g., a flat monthly charge for both ISP access and local phone calls).

For e-commerce to grow, the above requisites and factors have to be in place. The least developed factor is an impediment to the increased uptake of e-commerce as a whole. For instance, a country with an excellent Internet infrastructure will not have high e-commerce figures if banks do not offer support and fulfillment services to e-commerce transactions. In countries that have significant e-commerce figures,a positive feedback loop reinforces each of these factors.

How is the Internet relevant to e-commerce?

The Internet allows people from all over the world to get connected inexpensively and reliably. As a technical infrastructure, it is a global collection of networks, connected to share information using a common set of protocols.

Also, as a vast network of people and information, the Internet is an enabler for e-commerce as it allows businesses to showcase and sell their products and services online and gives potentialcustomers, prospects, and business partners access to information about these businesses and their products and services that would lead to purchase.

Before the Internet was utilized for commercial purposes, companies used private networks-such as the EDI or Electronic Data Interchange-to transact business with each other. That was the early form of e-commerce. However, installing and maintaining private networks was very expensive. With the Internet, e-commerce spread rapidly because of the lower costs involved and because the Internet is based onopen standards.

How important is an intranet for a business engaging in e-commerce?

An intranet aids in the management of internal corporate information that may be interconnected with a company’s e-commerce transactions (or transactions conducted outside the intranet). Inasmuch as the intranet allows for the instantaneous flow of internal information, vital information is simultaneously processed and matched with data flowing from external e-commerce transactions, allowing for the efficient and effective integration of the corporation’s organizational processes. In this context, corporate functions, decisions and processes involving e-commerce activities are more coherent and organized.

The proliferation of intranets has caused a shift from a hierarchical command-andcontrol organization to an information-based organization. This shift has implications for managerial responsibilities, communication and information flows, and workgroup structures.

Aside from reducing the cost of doing business, what are the advantages of e-commerce for businesses?

E-commerce serves as an “equalizer”. It enables start-up and small- and medium- sized enterprises to reach the global market.
However, this does not discount the point that without a good e-business strategy, ecommerce may in some cases discriminate against SMEs because it reveals proprietary pricing information. A sound e-business plan does not totally disregard old economy values. The dot-com bust is proof of this. E-commerce makes “mass customization” possible. E-commerce applications in this area include easy-to-use ordering systems that allow customers to choose and order products according to their personal and unique specifications.
For instance, a car manufacturing company with an e-commerce strategy allowing for online orders can have new cars built within a few days (instead of the several weeks it currently takes to build a new vehicle) based on customer’s specifications. This can work more effectively if a company’s manufacturing process is advanced and integrated into the ordering system.
E-commerce allows “network production.” This refers to the parceling out of the production process to contractors who are geographically dispersed but who are connected to each other via computer networks. The benefits of network production include: reduction in costs, more strategic target marketing, and the facilitation of selling add-on products, services, and new systems when they are needed. With network production, a company can assign tasks within its non-core competencies to factories all over the world that specialize in such tasks (e.g., the assembly of specific components).

How is e-commerce helpful to the consumer?
In C2B transactions, customers/consumers are given more influence over what and how products are made and how services are delivered, thereby broadening consumer choices. E-commerce allows for a faster and more open process, with customers having greater control.
E-commerce makes information on products and the market as a whole readily available and accessible, and increases price transparency, which enable customers to make more appropriate purchasing decisions.

How are business relationships transformed through e-commerce?

E-commerce transforms old economy relationships (vertical/linear relationships) to new economy relationships characterized by end-to-end relationship management solutions (integrated or extended relationships).

How does e-commerce link customers, workers, suppliers, distributors and competitors?

E-commerce facilitates organization networks, wherein small firms depend on “partner” firms for supplies and product distribution to address customer demands more effectively.
To manage the chain of networks linking customers, workers, suppliers, distributors, and even competitors, an integrated or extended supply chain management solution is needed. Supply chain management (SCM) is defined as the supervision of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer. It involves the coordination and integration of these flows both within and among companies. The goal of any effective supply chain management system is timely provision of goods or services to the next link in the chain (and ultimately, the reduction of inventory within each link).

There are three main flows in SCM, namely:

● The product flow, which includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs;
● The information flow, which involves the transmission of orders and the update of the status of delivery; and
● The finances flow, which consists of credit terms, payment schedules, and consignment and title ownership arrangements.

Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise, called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company. Shared data resides in diverse database systems, or data warehouses, at several different sites and companies. Sharing this data “upstream” (with a company’s suppliers) and “downstream” (with a company’s clients) allows SCM applications to improve the time-to-market of products and reduce costs. It also allows all parties in the supply chain to better manage current resources andplan for future needs.

What are the relevant components of an e-business model?

An e-business model must have:
1. A shared digital business infrastructure, including digital production and distribution technologies (broadband/wireless networks, content creation technologies and information management systems), which will allow business participants to create and utilize network economies of scale and scope;
2. A sophisticated model for operations, including integrated value chains-bothsupply chains and buy chains;
3. An e-business management model, consisting of business teams and/or partnerships; and
4. Policy, regulatory and social systems-i.e., business policies consistent with
e-commerce laws, teleworking/virtual work, distance learning, incentive schemes,among others.

To be continued.....