Define the terms e-business, electronic commerce, and mobile electronic commerce and describe how they differ from one another.
As the world enters the 21st century, the ability to access worldwide information is done merely by the click of a button. Business is not only conducted in stores or offices anymore. The electronic age of business has begun and the borders of the world have opened up. Since the invention of the world-wide web, the act of conducting business has been taken to a new level via electronic hardware and software; the possibilities seem endless. Although e-business is generally thought of as an alternative way of conducting business, Jelassi and Enders (Strategies for e-Business, 2008) dig deep and break down e-business into its own science and discuss the difference between e-business, e-commerce and mobile commerce.
Electronic business, or e-business, is a division of business where a number of actions take place via a computer such as communication, research, financial transactions, purchasing and selling. It comprises all of the elements a business can conduct electronically. Diving a little deeper, electronic commerce is a more specialized form of e-business. E-commerce is all about buying and selling goods online. E-bay and Amazon are two prime examples of e-commerce at its finest. Lastly, and more specific yet, is mobile e-commerce where sales are conducted via portable electronic devices with internet capabilities. It used to be that only the wealthy, jet-setting executives were able to utilize this amazing technology. In 1983, when the cellular phone service went public, it cost each consumer $3,500 (About.com, 2010). Now, just about anyone can have the capability and convenience to conduct business in just about any setting.
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Most, if not all of today's successful firms operate with some form of electronic business. Interestingly, some firms in certain industries must incorporate electronic business into their daily operations or they will not survive. Record stores, newspapers and camera film manufacturers have to somehow adapt (Williams, 2007). Unfortunately, for these companies, the internet has not been a blessing.
Outline the main elements of strategy formulation. Does the perspective chosen in this module correspond to your own experiences and observations? How?
Strategy formulation constitutes a detailed process of making educated decisions for long term business goals. Organizational resources are analyzed to ultimately set the company apart from its competitors and to maintain an advantage in the long run (Jelassi and Enders, 2008). The strategy direction depends on the overall company goals and values. Industry history and current trends aid in making tough decisions and trade-offs. Strategy formulation helps a firm decide if they want to explore new markets or if they want to concentrate their efforts with existing brands or services. The difficulty lies in that it is always so hard to predict the future, especially in this day and age where advancements and novel ideas are commonly observed.
Currently, I do not have a vast amount of experience with this topic; however, I will be happy to share my observations and opinions. I will start off my saying that I do believe there is a logical and sensible approach to the authors' view of strategic formulation. Do the homework, look at what is out there and decide what path to follow depending on goals and resources. Utilizing the world-wide web effectively can open up so many options; it has revolutionized the way we live and conduct business. My veterinary clinic uses our website to advertise our clinic and services, communicate and gain feedback from our current clients and answer questions from potential clients. Unfortunately, I am not a clinic owner. I am the managing veterinarian for a national veterinary corporation. The corporate strategy is to acquire as many "profitable" veterinary clinics as possible and increase their market share in the industry, whereas my strategy is to increase the number of new clients to my clinic and increase revenue. This goal requires marketing. Regrettably, marketing is an impossible task with no corporate money allocated to the cause. Perhaps one day I will own and have the pleasure of formulating my own clinic strategy. This economy has made it tough on everyone, and certainly, a well thought out plan of action should help with future profitability and success.
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Give the four time periods of the internet evolution and the peculiar characteristics of each period. Project what you think the next period will look like.
As history has observed, there are 5 distinct stages which occur when a brilliant and novel technology is invented. The internet is no exception. It is no secret that the internet was originally designed for the United States military in 1973 for a method of superior communication between commands. It went public ten years later (Idea Finder, 2010). It wasn't until the 1990's that the technology truly found its way into society. This is known as the Grassroots period of e-business; the irruption, the beginning (Jelassi and Enders, 2008). In the beginning, technology is new and slow to catch on; businesses are comfortable with current practices. Once the technology becomes noticed and appreciated, businesses and entrepreneurs flock to the scene. Those who know and understand the relevance of the technology invest heavily and the internet becomes the next best thing since sliced bread. Once the internet became noticed, everyone wanted to become part of the dot-com sensation. The internet market enters the second period known as the "Frenzy" period which lasts for about 5 or 6 years. In 2001, it all came crashingâ€¦ literally. Many of those who invested in dot-com companies did not do their homework. Tons of dot-com companies failed and investors lost a lot of money (Wisegeek, 2010). This lead to the third reported period, the "crash". It wasn't until several years later that internet technology began to bounce back and stabilize due to the success of the established business leaders in the industry. This leads us into to the Synergy period; the fourth period, and where we are now. The days of exploitation are finished and we now work to find ways of making the internet technology easier and reliable.
Who knows how long the synergy period will last. The text illustrates periods for several major technological advances and it seems that the synergy period lasts on average for about 10 years. According to history, at some point e-business will enter into the last period of "maturation". Perhaps the period should be termed "saturation". 5 years from now e-business market opportunities may be difficult to uncover as there will be no appreciable market; we can see this with VCR's. Who, in this day and age, would purchase a VCR player? The maturation phase is all about providing a product to more people and for less cost and it will, ultimately, make way for the next technological advancement. Perhaps the next communication breakthrough will involve biological cognitive functioning!
List and analyze the key challenges that companies face during the strategy formulation process.
Strategy is a fundamental element of any business firm that provides a broad plan to achieve long term goals. Whether you are the CEO of Microsoft or the owner of a small veterinary practice, the strategy formulation process is an essential component for success and profitability. Developing a strategy is not an easy task as there are several challenges that must be considered during this process.
In general, strategy formulation is an action plan for a desired outcome several years in the future. This means that current day decisions will impact the future and long term direction of the business. Company objectives must be clearly defined and agreed upon; company mission and values unchanging (QuickMBA, 2010). Making correct choices and trade-offs is another major challenge. But clearly defined goals can help a firm determine between Option A and Option B. However, we all know there is always risk associated with any business decision. For instance, a local and very popular convenience store/gas station, Wawa, decided to expand and build a set of drive up stations where customers can order food and drinks. With such popularity, management thought this would be a winning decision. Unfortunately, six months later and millions of dollars into the project, the addition was taken down due to lack of interest. Perhaps their strategic analysis was flawed or their strategic implementation procedures inadequate.
Successful firms will have a unique positioning amongst rivals in the market. The difficulty here is maintaining that position. Patents are great for those with novel products, but patents only exist for a limited amount of time. Existing services or products are always being challenged by the competition, so how can a firm stay on top? Successful businesses are never complacent about their market position. It is important to be distinctive; worth paying a little extra for (Leffell, 2006). So says HBO when asked about their strategy for positioning in the market. In an effort to stay ahead of the game, HBO was the first to come out with "original programming". It was a ground breaking idea that led to millions of viewers tuning in to HBO to get their weekly fix of The Soprano's, Six Feet Under, and now, True Blood. So, is HBO worth a little more money each month? My answer is absolutely! Once a firm has a successful product or service, the key is sustaining its competitive advantage for continued profitability. One way to achieve this is by branding. Many consumers identify with certain brands and create a following; a loyalty. For example, I will purchase Heinz ketchup and Coca-Cola over competitor's products even though they may cost a little more. Continual upgrades can also help a firm sustain its place in the market. Companies that produce computers, smart phones and software do this all the time. Just take a look at Apple, Inc.
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A final issue that can heavily impact success understands how to appropriately utilize organizational resources over long period of time. Resources include human, monetary, capital and raw materials. As no one can see into the future, this presents a difficult challenge especially as the national and global economies fluctuate. Today's economy has put a wrench into practically every firm's business plan. I doubt that any company factored in a recession. As this recession has been ongoing for a good 18 months, companies face difficult decisions. Successful firms will make it through by innovation and creating value (1000 Ventures.com, 2010).
What are the key elements of the e-business strategy framework?
Successful firms always have a realistic, well thought out business plan. E-business is no exception. It is a logical process of evaluation, choosing options and setting the wheels in motion for a desired outcome. The authors of the text discuss three fundamental elements which constitute the e-business strategy framework: strategic analysis, strategy formulation and strategy implementation (Jelassi and Enders, 2008).
The first step in mapping out a business strategy is to take a close, in depth look at the environment inside and outside the firm. This is called strategic analysis and it allows a firm to better understand who they are, what they have, and how they relate to their particular industry. An internal analysis is performed to break down the organization into manageable sections to accurately identify and examine resources. An external analysis is performed to examine the industry and economy for current and future trends. What this boils down to is an overview of company strengths and weaknesses as well as what is happening in the world; how can it affect the company and what can be done (Third Sector Foresight, 2010). A very popular tool is the SWOT analysis to determine strengths, weaknesses, threats and opportunities. Other strategic analysis tools include the PESTLE analysis which is centered on examining external influences. Scenario planning "builds different possible views of possible futures". The critical success factor analysis examines areas in which a firm has to succeed in order to achieve its goals (Business Link, 2010).
Strategic formulation is the process of choosing the best business options for the pursuit of organizational goals. Long-term goals can vary from one firm to the next. Whether the goal is capturing a larger part of the market, staying on top of the market or entering a new market, the most successful companies will make good and educated business decisions based on their strategic analysis results. At times, the answers are not always clear cut. Fortunately, there is an enormous amount of information and advice that can be acquired to aid in decision making. 1000 Ventures is just one of a hundred interesting websites that contain a plethora of ideas, articles and expert referrals to aid any business in the quest for successful strategy formulation.
Once a business decision has been made, strategic implementation sets a cascade of company resources in motion. Something to always remember, success occurs from the top downward. Management must understand how to properly implement the changes necessary for a positive outcome. According to Vladim Kotelnikov, an international strategy specialist, implementation is the most difficult part of the elements in the strategy framework (1000 Ventures.com, 2010). If not carried out correctly, then even the best decisions will end in failure.