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In recent years, information and communication technology (ICT) was at the heart of transforming business processes in a way that encourages higher productivity and product innovation. It has altered the way everyone does business. Small and large businesses are attracted to the Internet by virtue of its transcendence of geographic and political boundaries. By hosting a home page from your local address, your marketing material can be accessed around the world in seconds (Stuart, 1996). The ease of global access to commerce was previously unheard of.
The introduction of technology is not always met with glee. Technology can sometimes play a major role in running the business and formulating business strategies. A lot of businesses invest heavily on technology thinking that technology alone can be a good source of competitive advantage. While it may be true on the organizational level, it may not always hold true in a global scale.
The importance of the Internet has been made much of repeatedly, and there are those that opine that paying attention to its use further affirms the value of e-commerce as a medium, something that needs to be accessible to everybody (Lahore, p. 13).
The overall effect of ICT on the entire business community is measured in terms of productivity growths and savings amounting to billions of dollars. Studying the effects of ICT on business is quite complex and very broad. At the centre of technology in trade and commerce is the Internet. The Internet has become a new niche where people are better informed of improved products and services in the least possible time.
According to Madoff (1995, p. 44), one survey found that electronic exchange was the most attractive area for potential use among organisations included in the study. Some of the topics included in electronic exchange were electronic data interchange (EDI), electronic databases, email, and electronic imaging and document exchange.
Business processes have evolved in time but the essence of doing business remains the same. Businesses processes have quietly adapted tone socio-economic and political environments. Most importantly, these different business processes have adapted to a new socio-technical environment where it constantly exceeds expectations and foresights.
We do business in a lot of ways. The products of business innovations are the products of human imaginations. Technological breakthroughs came about because of human ingenuity and inventiveness. When we feel the need to purchase a product or service, we look for them in newspaper or television advertisements. Sales people entice us to try new products and services by physically showing to us the different features of their products.
Before we purchase them, there is usually some form of negotiations with regards to the terms of delivery, guarantees, quantity, the price, and other issues. When we have purchased them, the business processes usually does not end there. Weak for support when we can hardly find our way through. We can return the products when we are not contented with them. When we are done with them, we can auction them and sell them to other interested buyers. This typical business process is almost always practiced by those who engage in any form of business transactions.
According to Miranda and Miranda (1981, p.28), modern business enterprises are not only exposed to stiff, if not cut-throat competition, but is doubtless engulfed many times in a sea of uncertainty. Sometimes, the introduction of technology in the business using time, effort, and money give rise to problems in organizational structures, policies, and strategic directions. The introduction and implementation of e-commerce to business firms may disturb the statuesque. Some might resist change.
Organisational inertia can slow down the transformation process. Transacting business in a virtual environment may frighten some customers who are not familiar with the issues and regulations that govern such kinds of activities. However, there are individuals who welcome the entry of technology into their business process and recognize the importance of strategically using technology to gain competitive advantage. There are firms who can easily adapt tone technologies while others can’t. So how does e-commerce affect the different business processes of consumers and business organisations in general?
The past two decades highlighted some of the major advances InTechnology that has enabled businesses around the world to revolutionize the art of delivering their goods and services to their customers and vice versa. The use of the web-enabled technologies has made it possible to identify new ways and new avenues of doing business. It has expanded the horizons of business transactions to abrader reach by getting through people in different times, different locations, and in different strategies (Pour, 2002).
Those who take the strategic business value of technology seriously know that time is crucial in doing business. In today’s competitive business environments, reaching out to as many customers and suppliers can spell success or failure in the business organization. Technology has played an important part of managing tasks within business organizations. It cannot be denied that every business transaction or application involves the use of information and communications technology.
Technologies have been beneficial to organizations not only in supporting their different business processes but also to their training and management efforts as well (Pour, 2002). Technology has enabled different organizations around the world to collaborate and engage in business on a new level requiring a new visions, new objectives, new set of rules and protocols, and new environment.
Although e-commerce is an Internet-based communication to support business processes, it can also refer to the use of non-Internet technologies such as telephone voice messaging systems and short messaging service (SMS) to support requests and inquiries from interested clients in different places.
What made e-commerce so intriguing among business and technology enthusiasts is its ability to play down and reduce the complexity of doing business. Traditionally, a typical business sales cycle starts with acquiring the product information through flyers, magazines, newspaper and TV advertisements, letters, and printed forms. Payments for the acquired products require a lot of paper works and endless negotiations. This business process has been quite slow and coordination is usually made more difficult by the fact that product support is usually possible through a lot of human channels.
E-commerce can make it possible to shorten the time it takes to do the different business processes. It can make the different business processes easier. Everything remains digital. Products can be advertised, ordered, and paid for electronically. Product support services can also be done electronically.
Like many new ideas, e-commerce is not totally free of controversies and challenges. There are many security concerns related to transacting business online. There are ethical considerations related to how technology is replacing human resources. There are cost issues also and the strategic direction of organizations is more geared towards improving technology, and not on improving the human resources aspect. The biggest challenge lies on how modern technology can fit into the overall corporate model of the organization. It remains to be strategic priority of organisations that are suddenly put into a fast paced environment where only those who can manage to cope up with the pace can survive. It may be a cruel new world but it is the reality all business organisations must face.
Competition in business has sharply intensified as the number of firms engaged in producing similar products has increased. It has also widened the gap between those who are capable and not capable of using technology to support their different business functions. Each business tries to differentiate its product from those of its competitors. This differentiation was made possible by technology.
One firm is able to deliver its services in the quickest possible time by taking online orders and payments through the web while other firms are good at adapting their new products so that it can be incorporated through the web. Functional and non-functional applications and office suites can be rented from an Application Service Provider (ASP) instead of purchasing or developing these software applications. The business world has defined a new and strategic role for the web not just for information and message handling but for handling business the way members of a company’s value and supply chain would like it to be dealt with.
Why it is then that e-commerce covers a lot of ground in the business world? An important reason for the growth of e-commerce is that it reduces the cost of doing business. According to Alana et al(2000, p. 6), e-commerce is particularly attractive because it conserve as the ‘ great equalizer’. It enables start-up and small- and medium-sized enterprises to effectively compete with large and multinational firms in the global marketplace. It also appears tease the barrier to entry of small and large companies coming from small and large countries. This is possible because when you are online, you are given the same opportunity to ‘deliver’ your information in any way you can. The web cannot discriminate against small firms.
The study of e-commerce itself involves some degree of risk. It is often risky to rely on different studies during the decision making process. There are studies out there which tend to analyse the value of-commerce in business in different ways, perspectives, contexts, and methodologies. The bottom line however, is that technology has always played a key role in any business process. If technology is not utilized to support such processes, it will always be there to create pressures for competitive advantage.
It will also heat up the competitive environment of the different industries.
In order to maximize the customer satisfaction and also to maximize profit, businesses are constantly adopting new technologies and methods to improve various business processes. For example, automating the entire production line and the ordering and payment schemes can improve and increase the production capability of the business while at the same time, reducing the need to rely on paper works for processing the given transactions.
There are a lot of literature materials which discuss basically all the aspects of e-commerce. A lot of reviews, studies, analysis, and surveys were already formulated by market research firms and organisations with direct interests in the e-commerce business. In this research however, related literature materials which were included were those that mostly concern the business processes and methodologies employed in the use of e-commerce.
This section is structured accordingly. First, there is a brief discussion about the definition of e-commerce. Then a justification of-commerce as a business methodology and its benefits is presented. Different e-commerce applications, issues, and legal concerns were discussed next.
Definitions of E-commerce
There are many confusing definitions of e-commerce. Some see e-commerce as Internet-based activities only while others include any kinds of exchanges of resources (electronic information, applications, methodologies, and strategies). There is one thing common to all of these sets of general definitions however: e-commerce is a process where electronic connections make it possible to exchange resources.
E-commerce is a very broad term used to describe modern ways of doing business today. If we take a much broader view, we define-commerce as the use of the computer to facilitate all of the firm’s operations, many of which are internal. These operations are performed within the firm by the functional areas of finance, human resources, information services, manufacturing, and marketing (McLeod, 1998).Finance mainly deals with the financial community, stockholders and owners, and the firm’s customers. Human resources have a special interest in the global community and labour unions, and information services interface with hardware and software suppliers. Manufacturing is responsible for dealing with the firm’s suppliers and labour unions. Marketing is primarily responsible for interfacing with the firm’s customers and competitors. All of these areas interface with the government (McLeod, 1998)
E-commerce is the portion of a business that is put online, and to be accessed by anyone worldwide who has access to the Internet.. It involves advertising products on the web in order to reach out to more potential customers. It also involves purchasing products and services online. Everything that relates to how we run our business through the use of modern technology can be called an e-commerce. Because the World Wide Web presents a different environment for these activities than traditional media, conventional marketing activities are being transformed, as they are often difficult to implement in their present form. This means that in many cases, these marketing activities have tube restructured such that they can conform to this new medium (Hoffman and Novak, 1996).
Even before the widespread use of the Internet for commercial purposes, businesses were already engaged in Electronic Data Interchange or EDI.EDI is an early form of e-commerce where companies engaged in business transactions with only a selected few in a private network.
E-commerce as a modern business methodology
In order for businesses to cope up with changing customer demands, they must adapt new technologies not only to support their business functions but also to reduce paper works, reduce costs, and improve and increase productions. In this way, e-commerce is seen as a business methodology that addresses both external and internal needs of the business organization. There are facts which tend to support the theory that e-commerce will continue to play a crucial role in running business.
Most business organisations have already invested heavily on Information and Communications Technology (ICT). ICT is already in the forefront of helping the organization run some of their key business functions like purchasing, invoicing, marketing, and customer support. This has enabled the organization to have some aspect of technology needed to transform their core business functions through the use of-commerce. As a business style, at least one major aspect of-commerce is already in the mainstream of society.
While business organisations have invested heavily on ICTequipments, the prices of hardware and software equipment’s continue to fall. This was brought about by stiff competition from the different players in the industry. Microsoft, Sun Microsystems, Oracle, and other leading software giants have face some kind of fierce competition from each other and from open source advocates. Intel and Advanced Micro Devices (AMD) continued to dominate the processor and semiconductor industry by constantly developing faster processors while lowering their prices. Established computer manufacturers like International Business Machines (IBM), Dell, Hewlett Packard, and Acer tried to keep their prices within the range of clone computers. Although the IT sector is very dynamic and highly volatile and previously dominant players are giving way to other players, falling prices continue to lure organisations into investing into IT.
The Internet industry has grown quite fast, beating market expectations. Internet bandwidth continues to double and triple as compared to a decade ago. The number if Internet users have grown byte millions. The number of applications developed for the Internet commerce has also grown dramatically to new heights.
Coupled with low hardware and software prices, established ICT infrastructure, and availability of the Internet to almost every member of society has reinforced the notion that e-commerce is likely to play a major role in every business functions and processes.
As a business methodology, e-commerce has allowed organisations to carry out business transactions over networks. Examples of e-commerce activities include online payment of application fees, payment of tuition and student bills, purchases of books, merchandise, materials, procurements between businesses, electronic access to institutional databases, publications, and many more.
Benefits of E-commerce
The main benefit of e-commerce stems from being able to integrate business operational processes across organizational boundaries and time zones. Operational benefits of Web use for industrial sellers are reduced errors, time, and overhead costs in information processing; reduced costs to suppliers by online bidding, submitting of bids, and awarding of bids electronically. In this manner, it encourages transparency and honesty in certain business transactions. In addition, creation of new markets and market segments, easier entry into new markets of new and small players, and faster time to market is facilitated.
The introduction of e-commerce to support business processes has largely revamped a lot of these practices and methods. It has also provided significant benefits to the organization in general and to the whole global economy.
These benefits largely revolved around the reduction of overall cost. Storing company and product information on the company database for the web has saved organisations the cost of printing catalogues while giving them the opportunity to reuse and make changes to information in real-time. Support services have largely been rendered through the posting of frequently asked questions on the web or through interactive online support services and applications. The use of data warehousing and the development of data mining applications has enabled company executives to make use of digital information for decision support and perform more complex analysis. It also allows their suppliers and customers to get a first-hand view of company data and processes and gives them the opportunity to get involved in the decision making process. Companies who outsource most of their applications to third party service providers have saved a lot of money by renting out services instead of investing heavily just to own them.
E-commerce has also allowed business organisations to keep track of customer feedbacks and how their customers are satisfied with their products. This has help companies adjust to these feedbacks in the quickest possible time and it allows them to structure their approaching the fastest way they can. E-commerce has also allowed business organisations to expand globally. It opened up a lot of opportunities for them to discover and test new markets for their products just by using the web-enabling their business processes and functions. Aside from these, it also allowed them to manage their offshore sites in virtual environment.
McLeod (1998, p.81) describes the use of the Internet in the context of data communication as a communication tool between the business organization and its immediate environment and within the organization itself.
In one article about e-commerce, applications can be classified into three classes (Tapes):
Intranet applications support the internal processes and functions of the organization using company information in a new strategic way. Extranets support electronic data interchange (or EDI)where company information can be used to support internal processes and can be used by other selected outside users. The Internet allows global computing on a wider scale and facilitates unlimited business-to-consumer electronic commerce applications.
According to Rossi et al (n. d.), e-commerce applications are particular kind of web applications with similar requirements like good navigational structures, usable interfaces, a clear domain model, and others.
Types of E-commerce Applications
E-commerce application categories or types generally indicate what is occurring during the commerce transaction (Franklin, 2002). In a Business to Customer (B2C)application, a business sells a product or a service to an end-user. These transactions are usually short-lived but the revolving process of customer contact allows the business to make promotional advertisements to their customers.
Business to Business (B2B) applications (Franklin, 2002) involve multiple businesses using electronic communications to facilitate commerce transactions between organizations. There are complex business rules that govern transactions between these organizations. B2Bapplications process orders from organizations (not the end-users) by integrating the front-end applications with the suppliers of products.B2B applications handle supply chain management, order procurement, contract processing, logistics, and other similar transactions.
B2B applications involve the following (Alana et al, 2000):
Supplier management – Electronic applications in this area helps to speed up business partnerships through the reduction of purchase order(PO) processing costs and cycle times and by maximizing the number opus processed with fewer people.
Inventory management – Electronic applications improve auditing procedures and helps reduce inventory levels, inventory turns, and eliminates out-of-stock occurrences.
Distribution management – Electronic applications make the transmission of shipping documents a lot easier and faster
Channel management – E-commerce allows for speedier dissemination of information regarding changes in operational conditions to trading partners.
Payment management – An electronic payment system allows for a more efficient and faster payment management
B2C e-commerce involves customers gathering information, purchasing, and receiving products over the Internet. B2C transactions involving customers who use e-commerce include the following (Lallanaet al, 2000):
Purchasing products and information – Electronic applications make it possible for customers to browse detailed product information online.
Personal finance management – Electronic applications help customers manage their finances especially those that involve investments and banking transactions.
New modes for electronic payment
There are different modes of electronic payments for product purchases online (Sanded Tapes). For this research however, we will consider the following: electronic cash, electronic cheque, and electronic wallet
Electronic cash or cash is a software program which uses digital signature technology based on public-key cryptography to provide authentication, nonrepudiation, data integrity, and confidentiality. With this form of payment, only the bank signs the payment data and the same bank verifies its signature and the integrity of the payment data when a payment recipient submits cash payments for validation. ECashshould still have some form of monetary value.
Electronic Cheques is another e-commercial payment scheme where it can be sent through email. When deposited, the check authorizes the transfer of account balances from the account against which the check was drawn to the account to which the check was deposited.
Electronic wallet is a service that enables customers to store credit card information with a wallet service provider. Examples of these wallet service providers are Yahoo! and Microsoft.
Too much of a good thing can sometimes be bad. Although e-commerce provided a lot of opportunities for businesses, it also created another set of problems and challenges. According to Adams (1996), the rapid commercialization of the Internet coupled with the lack of regulation on a systematic basis makes the Internet both a potentially fruitful and possibly dangerous place to do business. Regulating the commercialise of the Internet is an almost impossible task. Since no one owns the Internet, no one can regulate it even if the outcome of e-commerce trade is not within the bounds of government policies and business ethics.
Accordingly, there are public policy issues in e-commerce (Alana teal, 2000). Among the issues of that needs to be addressed are the universal access where all people should have inexpensive and easy access to information networks, legal recognition of e-commerce transactions, consumer protection from fraud, and protection of consumer’s right to privacy.
There are instances nowadays where the Internet is used for child-trafficking and where child and adult pornography takes on a new dimension. It is difficult to put a stop to these kinds of activities because of the anonymity of those who setup and control the different web sites. Previously, controlling the spread of child pornography and pedophilia presented a lot of challenges to governments around the world largely because of the permissive socio-economic condition of poor countries. Now, the battle is also in cyberspace. The commercial viability of the Internet has made it even harder for governments to crack the whip on child traffickers because the Internet has concealed the identity of those involved.
Not all businesses are embracing e-commerce. There are constraints that limit their ability to do engage in such activities. These constraints are (McLeod, 1998):
1. High costs
2. Security concerns
3. Immature or unavailable software
Building an information systems infrastructure for e-commerce is not cheap proposition. These high costs come from purchasing hardware and software and middleware products. It also includes costs in training the IT staff and other related personnel in adapting to new business processes in the e-commerce environment.
The unusual flow of financial transactions over the web makes it pronto certain forms of attack and intrusion. Security is a paramount concern that should be immediately addressed so that small firms with limited resources will be encouraged to formulate strategies involving the use of the Internet.
Just how secure are business transactions over the Internet is everyone’s guess. Service Providers will always find a way to fortify their network connections and Internet hackers will always find different ways and means of infiltrating company data at all costs. The proliferation of trade over the web has also provided a new breeding ground for computer viruses and worms.
Information technology in general is an immature field of science. It does not have any established order where experts can readily solve problems once it occurs. The changing nature of technology requires those with the necessary skills ample time to study new technological innovations before they can propose a series of solutions to problems. Coupled with a lack of the necessary skills and manpower services to handle e-commerce activity, these constraints can sometimes lead to alternative methods of engaging in business activities.
Electronic Commerce Frame-Work
The architecture framework for the electronic marketplace has three logical layers: Access mechanisms, resources, and middle ware. These layers lie on top of the Internet infrastructure.
Access mechanism is the layer at which participants enter the marketplace from their home environment. Both computer-to-computer and interactive access must be supported. Network protocols and technologies must support information retrieval from the both computer sites. This is where the information infrastructure can also be found. It is composed of many types of transport systems. It is a synthesis of various forms of high-speed network transport systems- band-based telephony, wireless modem-based PC, or satellite-based.
The resources layer is where the procurement services and applications reside. These services cover all phases of acquisition from catalo and bid advertisements through shipping and payment.
Middleware refers to modular networks services that transform the Internet into an e-commerce hub. Most of the security concerns are addressed here. Here one finds essential functions such as directories, user authentication, access control, accounting algorithms and electronic payment mechanisms. This is where the messaging and information distribution infrastructure is found. The messaging vehicles called the middleware software which is positioned between the webservers and the end-user applications.
There are e-commerce laws and acts enacted by legislative bodies of different countries to protect the entire e-commerce process. These laws serve as legal protections of individual consumers and business organisations and help resolve issues. Protections are cantered on legal recognition of e-commerce transactions, consumer protection from fraudulent e-commerce transactions, right to privacy, and universal access. It also seeks to provide recognition for electronic documents by providing that these documents shall have legal effect, validity, or enforceability as any other document or legal writing.
Through these documents, rights may be established, obligations may be extinguished, and a fact may be proven and affirmed. Most of the provisions of these laws are primarily based on the framework of the United Nations Convention in International Trade Law or UNCITRAL. Accordingly, legal protection of intellectual property is an important element in any country’s policy and legal framework for e-commerce.
Unfortunately, there not enough laws to protect consumers and business firms who engage in e-commerce activity. In some instances, advancements in technology have enabled these laws obsolete and unable to meet the times.
Technology can also be used to protect intellectual property rights through such measures as (Qumbu and Adam, 2000):
1. Imposing access control measures to the source of the work, such as restricting web server access or individual document access.
2. Imposing controls on the manipulation of the electronic file which contains the work
3. Web server access restrictions where user identification and authentication procedures are implemented.
4. Document access restrictions which involves rendering or viewing software systems which need a particular format which can be read only by special software developed or controlled by the information provider and software that consolidates control measures limiting unauthorized viewing or use of work.
5. Secret-key Encryption and Public/private-key encryption. These techniques For the purpose of protecting the privacy, integrity, and confidentiality of business transactions and messages
Components of Privacy Control
The law regulating privacy control varies from country to country(Janczewski) but some similarities exist in most of the developed countries.
There are acts of the local parliament regulating the distribution of information related to individuals. Usually, individuals have rights to verify information about them and to set up limitations related tithe spreading of this information.
Illegal access to computer records
This law is usually labelled as ‘anti-hacking law’. These acts introduced penalties for individuals attempting unauthorized access to computer-stored information.
These are the rules of running telecommunication networks. Among these laws are clauses related to the rights of organisations managing networks to monitor or control the content of transmitted messages.
In some countries, there is no separate law for regulating access to computer networks and parts of the ‘anti-hacking law’ are incorporated into this type of legislation.
This is a descriptive type of research. More specifically, it is descriptive-analysis type of research. This research methodology tries to understand the nature of things (Calm Orin and Calm Orin, p. 48). Titres to identify the different e-commerce business processes and how these individual processes are affecting the overall business operations. This method helps us to better understand the different forces, issues, and constraints that tend to tear down or hold the different processes together and what makes it work in a particular business environment. Descriptive research is concerned with conditions and relationships that exist, practices that prevail, beliefs and processes that are on-going. From the point of view of continuing research into e-commerce, what new questions are brought out to light by analytical work which will give directions to future researches(Calm Orin and Calm Orin, p. 48)?
At the centre of this study is the web. Due to its commercialization, the web offers a lot of benefits which can be examined from two perspectives: the consumer side and the business organisation side. Even though the web is not the sole medium for e-commerce transactions, it is still considered an important medium due to its accessibility and commercial viability nowadays. It is not, however, a technology which can address a lot of business and consumer concerns. E-commerce is not the quick solution for start-up companies to be known globally. Certain issues involving business processes, practices, and risks need to be known and addressed so that the commercial viability of e-commerce can be incorporated into the overall business plan of organisations.
The solution methodology in analysing the way e-commerce affects business processes is structured based on issues, advantages and disadvantages of using e-commerce in helping the business improve its business processes. Different marketing and business issues facing business organisations today will be presented. Based on these issues, a discussion of how e-commerce is being used to help solve these issues will be presented. Furthermore, the use of e-commerce applications will be presented as an alternative to solve and address the different issues in business today. Since this research would be presenting both sides of e-commerce issues in business processes, the system employed by this research in generating the results of the analysis will also be based on the pros and cons of e-commerce in the context of the different business issues. Further analysis will be supported by statistical data and other important facts derived from e-commerce studies around the world.
E-commerce is considered a broad topic because it covers nearly all sectors of business-from education, manufacturing, airlines, hotels, IT, and many more. It also covers a lot of business processes like inquiry, purchasing, payments, and customer support services. In view of these facts, the data gathering tool needed for this research is the document analysis method. As such, relevant information and statistics were taken from web sites of different e-commerce organisations. Some statistics included used in this research were taken from the US census office, E-commerce surveys from the UK Office for National Statistics(ONS), and from Internet indicators website.
Before we can evaluate the research findings, it is important to identify some key business processes and some e-commerce applications that are applied to these business processes. From there, we can identify and relate some relevant issues that affect the business process. These key businesses processes are marketing and payments
1. Business organisations are pressured to adapt their business strategies and processes in a changing social, economic, political, technological, and cultural environment in order stay competitive or maintain their competitive advantage.
Transforming a business in order to easily adapt to changing environments is one of the best ways to stay competitive. Transformation involves restructuring the organizational staff and human resources, cutting production costs, fast tracking information dissemination; streamline the information distribution schemes, and improving payment and customer support services. There is no question about the role that information technology plays here. Although the definition of e-commerce varies accordingly, most people support the idea that every transaction that uses the Internet as a medium is already leveraging technology.
According to Grant (1999), many small business entrepreneurs have not even had much time to browse the web. They might have been doing quite well in their current business situation that they don’t see the need to web-enable their business processes. Some view the application of technology in their business as risky and unproven.
Grant asserts that the successful introduction of technology has never been risk free and it follows that business organisations need to adapt their business processes to new systems development methodologies. An introduction of-commerce to a small business is not the same as previous approaches to information technology. There have to be fresh new approaches to systems development. This bluntly characterizes the ever changing nature of a business environment.
Small businesses eventually grow in time. But at this point, they need time to build on their finances. Today might not be the right time to invest on technology and embrace e-commerce as way of jumping into the global bandwagon. These businesses need to develop their infrastructures first before they can eventually think of engaging in electronic trade.
Small businesses are not the only ones pressured to make electronic transformations in their business processes.
The more established ones are forced to compete on a more global scale and showcase their innovations such that they view the Internet as the only means of getting there. However, the reality is that very few businesses are capable of using the Internet on a worldwide basis. These limitations are brought about by a lot of social and economic factors that act as a means of undermining their competitiveness.
There is the issue of time. Different countries are in different time zones. When a customer calls for support services, it is expected that the organisation should respond in real time. On the part of the business, this entails the need to provide the necessary manpower to man help desk support systems in night shifts.
There is also the issue of language. Although English is predominantly the language used in the Internet, not everyone understands it. Non-English speaking countries may ask for their own language versions of web information but for a business organisation wishing to goon line, this is another story, another major issue, and another deviation from their original business goal.
Some business organisations want to operate on a global scale without first defining their business boundaries and global goals. Perhaps they should ask if the foreign market is really a good market for them. Perhaps, if it is not really a good market for them, then why should they even consider using the Internet? Aside from that, different markets in different countries have different cultures which can play big role in dealing with international customers. Some organisations may have the latest technology at their helm but their target customers might not have the same level of sophistication.
Using e-commerce without ample preparation and study may eventually lead to disaster. Strategic planning for adopting e-commerce would involve a lot of resources, time, and risks that not all organisations have and are willing to take. In this issue, e-commerce is not the solution to business problems of small and large business organisations. Embarking on e-commerce for organisations that are not best suited for this kind of environment will not only hasten the demise of the organisation in a very competitive environment but would also pull down other organisations and economies as well.
One of the great things about using e-commerce is that it provides a lot of opportunities for international exposure and business transactions never dreamed of. Organisations restructure themselves in preparation for a more competitive activity in the corporate world. Organisations today need to be engaged in some form of networking or partnerships in order to stay remain competitive. E-commerce provides an avenue for different SMEs and other small organisations to be engaged in cooperative arrangements.
By forming such structures, businesses are able to leverage their limited resources with other small firms and they tend to achieve economies of scale and create new sales opportunities that were not available prior to the introduction of e-commerce (Hettinger and Hack Barth, 1997).
According to Franklin (2002), it’s almost a requirement that companies have effective e-business strategies or their very existence could been jeopardy. He adds that an organisation’s ability to communicate and transact with customers and business partners electronically is tantamount to its success, and the inability to do so puts them at competitive risk.
Global e-commerce is less affected by economic climates. Economic climates are often characterized by hostile or friendly economic atmospheres where businesses are usually situated. One country can take advantage of great financial returns from other countries who patronize their products. Basically, the Internet provides a forum where countries can showcase their products and their ingenuity as well. Within e-commerce presence, potential customers can number to several million all across the globe. Staying competitive is staying globally competitive. The web offers the best alternative for business organisations to offer customers their own brand of solutions to their changing needs and problems.
2. Marketing of products is often a challenge to businesses because of changing customer needs and demands
Sometimes, it is also a challenge for customers on what, where, and how to get the needed information to satisfy their needs and demands’-commerce places the burden on consumers to do the searching and mining of information at their fingertips. It is never an easy task though. Allowing customers to do the searching gives them more power to choose. It also allows them to try a lot of strategies in transacting business over the Internet.
Because the Web presents a fundamentally different environment for marketing activities than traditional media, conventional marketing activities are becoming transformed, as they are often difficult to implement in their present form (Hoffman and Novak)
Marketing involves the introduction of products and innovations to these products. It aids customers in making decisions. Web-enabling this process will have an impact on the way marketing of a product is done. There are a lot of e-commerce applications and strategies which can affect this business process. Some of these applications involve online reservation, telecommunication services, electronic publishing, education and Internet-based training.
According to Press (1993), the Internet as a marketplace has the potential to make markets more efficient. It gives greater flexibility to customers since they are in control of the search process. It will enable customers to make price comparisons on a new level of price shopping. E-commerce then has the potential to lower market costs in delivering information while at the same time, improving on the quality of information.
According to an article posted by Internetindicators.com, 68% of Internet economy companies that are leveraging the Internet reported experiencing a gain in market share attributable to the Internet. The article adds that aside from an increase in market share, the hundreds of billions of dollars spent on the Internet infrastructure are now paying huge dividends to companies that provide goods and services over the web.
Delivering information to customers using traditional media can be challenging and may entail s enormous cost. The web, as a distribution channel, provides a way of reaching out to different people indifferent locations at different times and circumstances. Since the use of the web and the Internet in general is already a global phenomenon, the boundaries are limitless. Businesses do not need to engage customers in a definite time of the day (8 working hours to be exact).The web can provide continuous communication with customers provided it’s up and running 24 hours a day, 7 days a week.
Since customers know where to contact the firm for inquiries, purchases, and customer support services, there is some form of relationship that is created through these informal ways of communication. These relationships, though not really anchored on specific platform, serves to guide other future customers on where to get the needed information later on. Customer feedbacks can be easily collected (through email and comments gathered through web clickstream data).
Providing customer support can be done real-time or customer inquiries can be attended through email communications.
The web enables businesses to gather as much data needed to adjust the prices of their goods. Competing with others solely on prices is not always a sound marketing strategy. Sometimes, it is necessary to lower product prices based on reduced customer demands on certain products or increase prices while meeting new customer demands.
It is very convenient to place all the needed marketing information on the web and just let the customers navigate and read all the necessary contents there. It is another story however, if customers could freely express their sentiments and needs and let the business get a personal assessment of their actual needs. This is actually true with customer support services. Most of the time, in a web-enabled support infrastructure, you would actually let the customer do the working your behalf
People have a tendency to distrust the reliability of information posted on the Internet. It is fairly accurate to say that not everything we see on picture is what it’s really worth. The downside of relying on the web for just everything is that people will not have other opportunities to test the capabilities of the product. It is difficult to ‘see through’ people’s needs because they will not be in good position to ask different questions. Even if the web is one of the best ways of reaching out globally, it’s not always an assurance that customers will respond accordingly.
Although it was previously mentioned that the Internet gives equal opportunities for both small and large companies to compete for global markets, it is not usually the case for smaller, less developed countries. The relatively underdeveloped information infrastructure of these countries hinders their business capability to go online, much more, to compete on such a global scale.
According to Rankin (2003), a survey of 130 US companies in 2002estimated that consumers spent about $76 billion shopping online. Although shoppers spent a lot of money online, it would have been greater if customers have not abandoned their shopping carts (Rankin2003). According to the same survey, 41% of these shoppers abandoned their shopping cart because they found the checkout process too long and another 21% abandoned their shopping cart because of confusion with the checkout process. These figures are staggering and reflect the unresolved issues that need to be taken cared of by e-commerce retailers.
In another e-commerce survey made by the Office for National Statistics (ONS) of UK, only 16% of businesses in the UK used a computer-mediated network for sales with a smaller percentage (12%)planning to start doing so the succeeding year. On top of this, nearly70% of these businesses have no intention of using computer-mediated networks for sales in the same year. Such a low e-commerce participation in the UK might have been brought about by the structure and size of organisations. Small and Medium Enterprises (SMEs) in teak represent about 95% of all businesses registered for VAT, employ 65%of the work force, and produce 25% of gross domestic product(Ballantine et al., 1998).
There is now the argument of whether e-commerce is really the ‘in ‘thing in business since not all businesses are into this bandwagon. There is little proof to support the fact that a business will close shop if it will not open up its business processes through the web.
3. Most businesses find it hard to protect their intellectual property rights and their privacy
Businesses handle large volumes of data and information that are critical to their business operations. With the introduction of-commerce as a distribution channel, businesses were able to reach out to a large segment of society in different locations. At the same time, it opens up threats to their intellectual property and privacy. While-commerce has hastened the time it takes to market their products, it also opened up the possibility of intruders invading corporate privacy and stealing sensitive information. It should be kept in mind that as network security improves, so does strategies and techniques in breaching these defences. In this section, we will examine the main issue of what e-commerce has contributed to the protection of intellectual property rights and privacy.
E-commerce technologies can be used in any environment where documents are exchanged between organisations, including procurement, purchasing, finance, trade, transport, and health, law, and revenue/tax collection.
Electronic documents and forms, though they can contain the same sets of information as a traditional paper document, can be interpreted in a lot of ways. In electronic transactions, electronic mediums are usually relied upon to transmit orders, purchases, or perform sales transactions. One disadvantage of using electronic documents is the uncertainty surrounding the treatment of these documents in legally binding contracts. The issues and questions involved here are more legal than business in nature.
In legal proceedings, documentary evidences are “those which consist of writings or any material containing letters, words, symbols, figures, or other modes of written expression offered as proof of its contents.” Electronic documents and forms will always be subjected to some degree of risk during the transmission process.
In another setting, opening up a corporate computer system so that online transactions can be performed can increase the risk that corporate privacy may be invaded and corporate information may be accessed by unauthorized users. The infrastructure for setting up an-commerce structure is not always perfect due to the changing nature of technologies that handle these e-commerce activities. In short, the art of doing business has become rather complicated and a lot of interweaving forces are making it more difficult to resolve different issues.
While it may be good that governments around the world have taken notice of the risks involved in doing business online, it eventually boils down to the fact that these risks associated with privacy and intellectual property issues are part of the game of business. Legislation has provided some degree of protection and imposes penalties for those who violate provisions of the e-commerce laws and regulations of their country.
The proliferation of business on the Internet has largely grown unnoticed and unregulated. Different forms of businesses emerged-some legal and some illegal and unethical. While e-commerce has helped speedup the communication process, it is now also used as a medium to transact covert and illegal activities at a faster and more sophisticated manner. Child trafficking and pornography is easily consummated through electronic transfer of images. Terrorists have largely used the Internet for channelling funds, making communications, and spreading propaganda materials.
Countries around the world have made progress in enacting laws that protect consumers and businesses who are engaged in e-commerce. Though not all provisions of these e-commerce laws address all of the concerns, it has provided a way for governments around the world to recognize the valuable contribution of technology in the world of business. Governments have not only enacted laws.
They also provided packages of measures needed to protect the whole e-commerce activity. This proactive approach tends to put businesses well within government reach and fosters a favourable political and social business environment. For example, in recognition of the potential impact of-commerce on the UK economy and its competitive in global markets, the government set itself the aim to make the UK the best environment in the world for e-commerce (Williams and Gibbons, 2000). Such noble aim can only be accomplished by all sectors of society who would be working towards that goal.
There are debates and issues related to intellectual property rights especially if it pertains to documents in electronic form. How will these issues be resolved when the source document came from one country with another interpretation of intellectual property, downloaded and used the electronic document in another country which does not have a law protecting electronic data? As if these issues were not enough, there is a more pressing question of who would provide and who would handle the legal framework for doing business transactions over the Internet. Shouldn’t Internet users that do business online be protected in the same way as people who do business in the traditional way?
There are different laws that can protect the rights of consumers and businesses. Most countries enacted laws for these purposes. There is the anti-wiretapping law, the bank secrecy law, and most importantly, the E-commerce law. Sometimes though, these laws are not always free from discrepancies. They are not always capable to handling sensitive issues in today’s changing environments. Sometimes, these laws tend to be outdated and could hardly adjust to new conditions. But if these laws are non-existent, how would everyone be protected? Protection such as these is better than not having any protection all.
There are number of questions concerning marketing through the Web: validity of an electronic signature, non-reputability, legality of an electronic contract, risk, trademark and copyright violations, loss of right to trademarks, loss of right to trade secrets and liability. Ensuring that justice and fairness prevails in any e-commerce activity is next to impossible. The e-commerce environment is full of legal and technological loopholes that cannot be seen by two or more individuals who enacted e-commerce laws. These issues can only be resolved through collective and diligent work on the part of countries around the world.
This research was able to identify ways in which e-commerce affects business processes. Analysis of the findings suggests that the following variables of business processes are affected by e-commerce:
1. Marketing strategies – small and large firms are given an equal playing field. There is no definite boundary. There is also no definite strategy to follow. Since no one owns the Internet, there is no formal barrier to the entry of firms who are willing to make their presence known in the global economy. However, different organisations have different capabilities to web-enable their business processes. The high cost of transforming business processes, the security risks involved, and the uncertainty of capturing a large market share can sometimes play major roles in business strategies of these organisations. Moving your business to a new level by using technology is not enough to sustain competitive advantage. Different sets of factors, issues, concerns, and resources should be taken into account first. Formulating the right methodology by varying the degree that technology will play in the business process depending on the need is good way to start the business transformation process. It is still affect of business life that even if organisations have not embraced technology, there are capable of producing and marketing their own goods with modest returns. The technology myth sometimes tend to be bias against those who have not taken into account the value of technology in their business.
2. Time to market – There is no question that the Internet provides the fastest way to market products and services. Web-enabling your business processes will surely help speed up and simplify the business process regardless of geographical locations. However, an increase in exposure also comes with it greater responsibility to respond accordingly. Since time is crucial in any business, failure to meet immediately the concerns of customers will drive them and their other contacts away. When an organisation is online doing business, it must be prepared to operate the business 24 hours a day, 7 days a week.
3. Government policies – Governments around the world are tasked to protect consumer and business interests in general. There are at the helm of enacting electronic commerce and consumer protection laws. They are in a position to regulate the way business processes are done in an Internet economy. Based on the analysis, the proliferation and growth of e-commerce activity has encourage governments to look beyond businesses as more than revenue-generating entities in society but as major players in trying to reach out to other countries around the world. E-commerce businesses are also a way of promoting a country’s culture and identify to the international market.
4. Growth of the business – Based on the analysis, small firms who can web-enable their business processes are already perceived to be globally competitive. This is brought about by their ability to overcome start up syndromes at the earliest possible time and were able to lay out the information systems infrastructure and foundation for-commerce in the quickest time possible. Business cannot do this if they have been lagging behind in economic growth. Information system as a field has always been categorized as immature. A small and medium scale business that can use the Internet to support its business processes can already be considered ‘mature’ in the organizational perspective.
5. Partnerships and Collaborations – Previously, partnerships were limited by geographical distances and locations. The implementation of e-commerce as a business strategy involves consideration of other partners’ or players’ contribution to their business processes. These partners or players can come from the ranks of customers, business partners, suppliers, and even competitors. Engaging in these kinds of organizational setups can help smaller organisations leverage the competitive advantage of their partners.
6. Business strategy - It is also important for businesses to consider the business viability of technology before they formulate their e-business strategies and policies. Based on the analysis, it came out that technology not only supports the internal processes that occur within the business organisation. It can support various business processes specifically involving business-to-business and business-to-customer transactions.
It so happens that businesses today are caught up with the inner fixtures of the web. The Internet has grown in sophistication and in number of users. Applications that support business processes are getting bigger, better, and more complex.
E-commerce plays an important role in enhancing and transforming relationships between businesses’ customers, their governments, and their environments. Embracing e-commerce is not just web-enabling business process that is already on-going and proven to work. It is not just doing the same thing in a different setting. The success of awe-enabled business depends on how new things, new approaches, new strategies, and new improvements were made and integrated with the existing business process through the help of the technology.
It is good to look at the Information superhighway as a road where businesses can market and deliver their goods in the fastest possible time they can, in the finest quality of service they could possible offer, and in the most appropriate way to address the immediate and growing needs of customers on a global scale. E-commerce not only lessens production costs and spending but also enhances the values of products and services. In a way, e-commerce forces companies to adopt strategies which are not only consistent with current global settings but also help them to transform the organisation in a more dynamic structure capable of not only adapting to new trends in technology but in adapting to changes in general.
Although there are issues confronting the way businesses are conducted online, the reality is anything that is introduced to society that will alter the status quo in one way or the other will always generate issues.
Basically, issues against e-commerce are more anchored on its technical nature like how it can address security and how it can be implemented in the least possible cost. Issues favouring e-commerce are cantered on the way it helps in formulating marketing strategies, time to market, lowers production costs, and provide an even level playing field for all types of business organisations.
E-commerce has changed the business process. A strategy in-commerce migration of the entire or some business process into the global economic mainstream requires careful thought and assessment of prevailing social, economic, political, and technological conditions. Armature e-commerce business will have technology properly integrated with their business processes and information flow. A business process need not be automated. It just needs to be adapted to changing environmental conditions.
The important thing for any business is to clearly define what they wish to accomplish with regards to technology. It’s either they rely on their existing structure or they web-enable their business processes.
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E-commerce Charts and Graphs
First UK E-Commerce Survey
Source: Office for National Statistics