e-Commerce and e-Business Models

Electronic commerce, which is abbreviated popularly as e-commerce or eCommerce, is defined as the buying and selling of products or services over electronic media like the Internet or other Information Technology dependent networks. Sometimes e-commerce is also interchangeably used with the terminology e-business.

The amount of transactions and the volume of trade conducted via electronic commerce has grown exponentially with widespread adoption of the Internet and Internet based technologies. The use electronic commerce is done in applications related to electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems and automated data collection systems. Traditional electronic commerce used the World Wide Web or the internet and now is transcending the utilization of mobile platforms to optimize the application of ubiquitous computing. Very recently an emergent trend is foreseen that the Spoken Web will be the future media for electronic commerce.

The transaction wise representation of the various models of e-commerce or e-business is denoted by the following diagram.

The most singular uniform way the various e-business models can be viewed under is as follows:

It is crucial to note that the dynamics of business strategy is vastly affected by the application and adoption of web based technologies in the e-commerce domain.

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Pointers for Successful and Sustainable e-Business models

While there has been so many e-business ventures, very few actually even live to see the light of profit. A major reason for this is that business never think properly in depth before going online. There are so many aspects that the CEO needs to give time to think before going online, and not do it just because its the way others are going. Few such questions are as follows:

  • First and foremost, the top management needs to deliberate on the nature of the business and the industry. What are the core competencies of the business. Will that be enhanced by going online?
  • What about the navigational structure and the way the organization functions? Will the culture embrace such a change effectively? What are the chances of talent loss to competing firms due to the cultural changes and process changes?
  • How would the existing customers react to the change? Is there a customer retention plan in place? Will the move help to reach out to new potential customers?
  • Is the business geared with the proper technological architecture? Have the processes been remodeled to fulfill service demand?

Do keep in mind that the technological architecture has to be designed keeping the service planned, in mind. The architecture preferably needs to be custom fit with your business process. If you are doing the reverse, i.e. fitting your processes to the architecture, do try to weigh out the pros and cons of the switch of the business model to the new business model. Then the above questions become relevant even more to ensure that the company stays healthy and safe.

Social Schooling

Today we are much more connected as a society and more and more schools are using online networks to manage classes at schools and educational institutions.  It is the time to capitalize on the popularity of social networking rather than fighting the inevitable?

A recent research (Source: Pew Internet & American Life Project) found that 73 % of online teenagers use social-networking sites. They are regularly updating their Facebook / Twitter / MySpace accounts and use social networking to keep up with the latest news from their peers.  Currently most social networking activity takes place off work schedule officially (or behind the back) and not in the classroom but a change to harness the power of social media is welcome and institutions are hoping to incorporate social networking into lesson plans. B-Schools like Harvard and Carneggie Mellon are already doing it. Its up to the rest to follow.

Today, thus it makes sense to have specialized social networking tools within the classroom, enabling educationally relevant academic matter for all students.  This is not for students to communicate with classmates but to communicate with other students from within the school, or state or country or even internationally throughout the world.  In essence, creating a broader network where students can learn from each other.

“The Web 2.0 evolution has enabled educational institutions to connect in transparent and impactful ways, achieving a greater competitive edge. However not all institutions have taken the full advantage of this movement. While over half of students report using social networking tools for educational purposes, faculty are not exploiting these tools to connect with students, instead preferring traditional methods of communication.” Next Generation Education Committee.

e-Business solution providers are now in the process of developing social networking aademics tools for usage in the schools.  The trend towards a more collaborative and open learning / open source environment has been fueled by the explosive adoption of mobile devices among both students and faculty.  This has made colleges and universities some of the most intensive adopters of wireless technologies and hence is well positioned to adopt social networking technologies for e-learning.  The aim of providing seamless and secure access to data to students is so they are able to share knowledge, manage and build content while build their social network is the goal of the future netizens. This surely looks geared to position them to make better informed decisions while they are on campus or at school.

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This Article is authored by Jake Mazan, who is a guest author at Business Fundas. He is a Senior Research Analyst cum Manager at NG-Online News.

United States’ Strategic Sourcing Initiative using e-Governance

USA, the largest economy in the world is facing a fiscal crisis, even now. Ever since 2003, its major economy bearer states like California, there was a major projected budget deficit. The Government took adequate care to approach the problem and to tackle the imminent crisis, but even though the black ages are gone, the repercussions from the shock still exists. The goverment launched many programs, one of which is the majorly popular California Strategic Sourcing Initiative, to control spending and stimulate the revamp of the economy. These focused primarily on the way the state purchased goods and services.

These programs aimed to identify saving opportunities. The focus to do so was through strategic sourcing. This was achieved by establishing new contracts or renegotiating existing ones. A team consisting of key professional procurement staff was created to achieve this goal, and not only at a short term goal, but to look towards achieving this as a sustainable long term process. Rather than a one time program, these initiatives were designed as an ongoing program to save money in the long term and position the United States to com out of the economic slump.

e-Governance played a crucial role in the revamp of the economies. Information Technology was widely used to issue electronic RFPs and conduct reverse auctions. The usage of these technologies also helped to streamline processes and speeded up the savings potential. Consulting firms like A.T. Kearney helped in the processes by developing cross-agency and departmental training programs, in which the procurement staff members were taught new skills in the area of spend analysis, e-sourcing, reverse auctions and e-negotiations. This training, which took place in classrooms and on hands, ensured that the team was well positioned for the change. Change management was the crucial success factor in this initiative.

In the coming few years, these strategic sourcing initiatives are expected to create savings in the tune of billions of dollars. The first wave of the program is already completed, and thus the spend categories have been identified, addressed and initial savings have been achieved which helped to forecast future savings. This e-governance strategic sourcing initiative has demonstrated how economies can be revamped using e-governance and information technology.

E-Governance Failures – Can it be averted?

E-government, in short, allows the private sector to operate in areas that used to fall strictly within the public domain. The challenge for policy makers is to recognize that what is good for business is consistent with good government. Planners start with grand visions of on-line services but then flounder amid cross-agency squabbling. Or they fail to attract enough users or get sidetracked by expensive high-tech bells and whistles. Research on e-government efforts around the world has helped to identify three critical lessons for their proponents.

First, don’t underestimate the resistance of government employees to change. Washington State overcame this barrier by creating the Digital Information Academy. Mandated by the state’s governor, the academy helps departments map their existing services, encourages them to rethink the design of their services, and tries out new processes on focus groups. By involving government employees, the academy makes them less fearful and gives them a stake in e-government’s success. To ensure cooperation among departments, the governor required all of his chiefs to sign contracts stipulating the services they would put on-line within a specified time frame. When friction arises, the academy mediates.

Second, e-government services don’t justify the investment if citizens and businesses don’t use them. The majority of the people of almost every country don’t have Internet access (Exhibit 3), so e-government initiatives must include efforts to increase Internet penetration and usage. Most countries will have to develop channels other than personal computers in homes. In Dubai, for instance, where PC-based Internet penetration is under 15 percent but mobile-telephone penetration is over 50 percent, e-government will eventually adopt wireless applications. In Hong Kong, where Internet penetration is more than 40 percent, the government is nonetheless building e-government kiosks in shopping malls, supermarkets, and railway stations.

But access isn’t enough: e-government must also give the public financial or other incentives to use the Internet for transactions. In the United States, for example, people who file their tax returns on-line get their refunds deposited into their bank accounts within three weeks—half as long as it takes those who file paper returns to get a check in the mail. More than 30 percent of US tax returns are currently filed on-line.

Finally, e-government can be either a profit engine or a financial black hole, depending on the strategy and mind-set chosen. Its cost ranges from $30 million for department-specific efforts to over $100 million for fully integrated service portals. Unless vendors too invest at the outset, governments must justify these commitments by identifying, up front, the specific ways in which costs will be cut and users will be served more cheaply and conveniently. The National Information Consortium, for example, agreed to provide e-services to the citizens and businesses of the US state of Virginia in return for a cut of every transaction.

E-governance – The way ahead

A new way to the new economy is on the cards.

E-government, in short, allows the private sector to operate in areas that used to fall strictly within the public domain. The challenge for policy makers is to recognize that what is good for business is consistent with good government.

In many countries, particularly in emerging markets, e-government efforts can benefit private start-ups. E-government, for instance, involves investments in the public Internet infrastructure that would be too costly for individual companies. These investments finance gateways for electronic payments (in coordination with financial institutions) as well as encryption-and-decryption technology that ensures the security of electronic transactions.

Furthermore, e-government forces policy makers to establish a regulatory and legal framework to protect privacy and intellectual property insofar as they are involved in e-commerce. Examples of such frameworks include the Electronics Transactions Ordinance, in Hong Kong; the Electronics Transactions Act, in Singapore; and the Digital Signatures Act, in Malaysia.E-government also gets global information technology companies involved in everything from the design of systems to the development of applications. In the course of building the necessary infrastructure, those companies make significant investments in the local economy. Their local presence makes it easier for nearby companies to utilize their services or to partner with them.

Finally, e-government benefits private Internet ventures by increasing the number of World Wide Web–savvy locals. For this electronic new regime to succeed, government workers must have sufficient IT skills to maintain the system, and the general public must have the knowledge to take advantage of it. To ensure the diffusion of the required expertise, Malaysia has joined forces with world-class IT companies, such as Hewlett-Packard, Microsoft, and Electronic Data Systems, to employ and train local people. Hong Kong offered computer training in community centers and blitzed the territory with television advertisements promoting Internet usage and with home videos on how e-government efforts work. Most governments in emerging markets also encourage Internet use by offering access through kiosks and computers in libraries and other public places.

Growth Strategies of Web Based New Generation Firms

The cyber world has really come alive with the onslaught of WEB 2.0 technologies. Today, many start ups are being formed by students and entrepreneurs across the world. The web based firms with often no brick and mortar presence have been generating enviable returns, considering the low investments made on them. No wonder, students and young entrepreneurs have started viewing these businesses as endless oceans of opportunities. Continue reading “Growth Strategies of Web Based New Generation Firms”

How the internet affects Porter’s generic strategy models

In the emerging global economy, e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development. Michael Porter (1980) has argued that a firm’s strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry dependent. Continue reading “How the internet affects Porter’s generic strategy models”

Facebook Friend Request DOs and DON’Ts

DO: Write A Personal Message To Your New Potential Friend

Tell them why you are choosing to friend them. Is it because you are in a common Facebook group? Did you go to grade school together? Did you read something interesting on their blog and decide to make a connection? Why do you want to be friends? For some, it’s pretty awkward to get a friend request from someone you’ve never seen before. A personal message will put your friend’s mind at ease. Continue reading “Facebook Friend Request DOs and DON’Ts”

How the internet affects Porter’s 5 forces model

In the emerging global economy, e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development.

Porter, the strategy guru, used concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. This model describes the attributes of an attractive industry and thus suggests that opportunities will be greater, and threats less, in these kinds of industries. Attractiveness in this context refers to the overall industry profitability. An “unattractive” industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching “pure competition”. Continue reading “How the internet affects Porter’s 5 forces model”

How to Classify e-Payment systems

The term “electronic payment systems” covers to a variety of payment mechanisms. Furthermore, this is domain is in a constant state of change with new schemes emerging and existing schemes being modified, often substantially. The principal classification of EPSs is based on the form of money representation and the principle of money transfer. Existing payment systems can be divided into two groups: electronic cash mechanisms (or electronic currency) and credit-debit systems, (Medvinsky & Neuman, 1993).

Continue reading “How to Classify e-Payment systems”

7 Tips for sustaining online business relationships

Social networking is the mantra of the day. People and organizations are increasingly getting dependent on social networks in the course of everyday life and business. It is revolutionizing the way B2C marketing is getting shaped on the web. Continue reading “7 Tips for sustaining online business relationships”