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E-business
Electronic Business, commonly referred to as ‘e-Business’ may be defined
as the utilization of Information and Communication Technologies (ICT) in
support of all the activities of business. Commerce constitutes the
exchange of products and services between businesses, groups and
individuals and can be seen as one of the essential activities of any
business.
E-Business (electronic business) is, in its simplest form, the
conduct of business on the internet. It is a more generic term than e-
commerce because it refers to not only buying and selling but also
servicing customers and collaborating with business partners.
Electronic business methods enable companies to link their internal
and external data processing systems more efficiently and flexibly, to
work more closely with suppliers and partners, and to better satisfy the
needs and expectations of their customers.
International Business Machines (IBM), in 1997, was one of the
first to use the term when it launched a campaign built around the term.
Companies are using the web to buy parts and supplies from other
companies, to collaborate on sales promotions, and to do joint research.
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Benefits to Entrepreneurs
The internet and the emergence of e-Business, has provided
entrepreneurs with many new advantages and opportunities. The internet
has created a business environment in which time and distance are less
important, people have access to more information to help them make
decisions and consumers have better access to a broader range of
product and services.
A significant benefit to entrepreneurs is that the initial
investments for starting of an e-Business is generally lower than the
costs associated with starting an equivalent business using a traditional
model.
What is e Business requirement?
Full integration between all internal organizational processes and
elements of the value network.
Scope across the enterprise and beyond
Requires transformation, a change to business culture and linking
of processes with all business partners
It should be incorporated as part of traditional marketing
strategy.
Useful e-Business Terms
Business-to-Business (B2B)
Interaction between businesses either in an established supply chain, or
with trading partners. The ability to electronically link your business with
that of your suppliers could lead to faster restocking times, lower stock
levels, and lower costs. If you have been considering engaging in business-
to-consumer, e-commerce, give some thought also to ways in which you
could lower costs or increase your efficiency by engaging in business-to-
business e-commerce.
Business Automation
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A contact manager, job activity and job tracking system that allows fast
and flexible communications with a mobile workforce.
Content Management System
A software package that creates and maintains content on a website by
providing a set of tools for creating. Editing and publishing the web pages
and directories that makes up a website.
e-CRM (Electronic Customer Relationship Management)
An integrated sales, marketing and service that is used to identify,
attract and retain an organization’s customers through innovative
Internet technology.
e-Marketplace (Electronic Marketplace)
An online trading forum where companies buy and sell products and
services using different trading and purchasing mechanisms, including
catalogues, auctions, reverse auctions, requests for quote (RFQ) and
requests for tender (RFT).
e-Procurement (Electronic Procurement)
A business-to-business (B2B) purchasing system that offers electronic
purchase order processing and enhanced administrative functions for
buyers and suppliers.
Extranet
A worldwide network of computers that facilitates data communication
services such as remote login, file transfer, electronic mail, newsgroups
and the World Wide Web.
Intranet
An intranet partially accessible to authorized outsiders. Whereas an
intranet resides behind a firewall and is accessible only to people who are
members of the same company or organization, an extranet provides
various levels of accessibility to outsiders.
Local Area Network (LAN)
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A network of computers communicating over short distances in restricted
areas, such as a campus of a university. Many LANs have connections to
larger networks.
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E-Business Model
The e-Business mode, like any business model, describes how a company
functions; how it provides a product or service, how it generates revenue,
and how it will create and adapt to new markets and technologies. It has
four traditional components as shown in the below figure as the e-
Business Model. These are the e-Business concept, value proposition,
sources of revenue, and the required activities, resources, and
capabilities. In a successful business, all of its business model components
work together in a cooperative and supportive fashion.
E-Business Concept:
The e-business concept describes the rationale of the business, its goals
and vision, and products or offerings from which it will earn revenue. A
successful concept is based on a market analysis that identifies
customers likely to purchase the product and how much they are willing to
pay for it.
e-Business Model
e-Business Concept
Value Proposition
Sources of Revenue
Activities, Resource,
Capabilities
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Value Proposition :
The value proposition describes the value that the company will provide to
its customers and, sometimes, to others as well. With a value proposition
the company attempts to offer better value than competitors so that the
buyer will benefit most with this product.
A value proposition may include one or more of the following points:
I. Reduce price
II. Improved service or convenience such as the “1 click” checkout
III. Speed of delivery and assistance
IV. Products that lead to increased efficiency and productivity
V. Access to a large and available inventory that presents options for
the buyer
Sources of Revenue:
Depending on the business model, several revenue sources may be
available to an e-business. Many online businesses will have a three or
four of these sources. A mix of revenue sources is often referred to as a
revenue model but may be mistakenly called a business model. Some of
these sources of revenue are:
Advertising
Affiliation
Agent commissions
Licensing
Sales commissions
Sales profits
Sponsorship
Subscription
Syndication
Use Fees
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For large public-private or government projects revenue sources might
also include:
Bonds usually for large capital expenditures
Taxes, primarily income, property and sales taxes
Use fees and tolls
With small fast-growing companies such as e-Business start-ups,
investors often track expected revenues and revenue growth and may
make changes to increase revenue. However, after the Dot-Com boom
ended, more traditional measures such as cash flow and earnings have
came back into favour as means of evaluation.
Activities, Resources and Capabilities:
The activities, resources and capabilities of a business are sometimes
known as its requirements. In order to perform the activities required to
carry out the mission of the business, certain resources are needed; for
example, employees with certain skills, or capabilities, are needed to
perform activities correctly and efficiently. Also, inventions, processes
and other intellectual property may add to the individual knowledge of an
employee to develop a competence in the performance of the required
activities.
Market size and growth
India’s e-commerce market was worth about $2.5 billion in
2009, it went up to $6.3 billion in 2011 and $14 billion in 2012.
[It was printed in the Hindustan Times paper in 31
December 2012] About 7.5% of this is travel related (airline
tickets, railway tickets, hotel bookings, online mobile recharge
etc.).
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Key drivers in Indian e-business are:-
Busy lifestyles, urban traffic congestion and lack of time
for offline shopping.
Increased usage of online classified sites, with more
consumer buying and selling second-hand goods
Education of the online marketplace model with sites like
eBay, Flipkart, Snapdeal, etc. The evaluation of e-
commerce has come to full circle with marketplace
models taking center stage again.
Benefits and Opportunities of e-Business
Benefits and opportunities an enterprise can have when using e-Business
are related to its e-Business strategy and commonly are multiple. The e-
Business should help the enterprise in meeting its business goals and the
needs and expectations of its customers, partners and suppliers. An
enterprise should become more competitive.
New Business Models and more Revenue: The enterprise can create
additional revenue. Some businesses are fortunate because they provide
information, goods and services that users are willing to purchase online.
Such sectors are travel, financial services, books, CDs, entertainment and
many items traditionally bought through mail-order catalogues. For many
businesses this is a whole new revenue stream. One of the great benefits
of e-Business is that it can help broaden an enterprise’s customer base at
a relatively low cost. As more and more people get access to the Internet
and become confident e-Business users, the potential to expand
customer-bases will increase proportionately. An appropriately designed
and promoted website can attract new customers and open new markets
for products and services e.g. by providing affordable access to
customers globally and offering access to products and services for
people with a disability.
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For some, their website will not generate income directly; rather it
supports their off-line activities and contributes to meeting business
goals and financial targets. The internet can be used to help businesses
research their business plans and as a tool for achieving the aims of the
plan. The Web provides a relatively cheap means of investigating
competitors, testing out the market, entering new markets and seeking
new strategic partners.
Extended Hours: 24/7/365: Increasingly today, the terms “available”
and “accessible” to a business mean twenty-four hours a day, seven days a
week access to information products and services. Customers, suppliers
and interested parties are less and less satisfied with being restricted to
the traditional opening hours of business and will not be impressed if they
cannot do such things as order items or discover information for
themselves in the comfort and their own homes and offices when it suits
them. The expectations of online audiences will not diminish over time –
they will only increase.
Cost Reduction: There are many ways in which an enterprise can save
costs and improve operation efficiency through e-Business. Data entered
online into the organizations systems bypasses staff and fees them from
unproductive tasks, giving them more time for the things that matter. It
can reduce the time from administrative tasks. Accounting systems
reduce the processing of accounts, reconciliation, banking and can improve
cash-flow. Communication also offers tools for cheaper and faster
procurements.
Advantages of E-Business
Worldwide Presence: This is the highest advantage of conducting
business online. A firm engaging in e-Business can have a nationwide
or worldwide presence IBM was one of the first Companies to use
the terms e-Business to refer to servicing customers.
E-business has resulted in improved customer service: Readily
available customer service may help in encouraging the customer to
know more about the product or service. Moreover, Payments can
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be made online, and product can be shipped to the customer
without the customer having to leave the house.
Global Connectivity: It connects the consumers and business
people from world through internet.
Time Saving: Customers can get products at their door steps by
just few clicks. This gives comfort to customers. This saves time.
This supports the elderly and disabled people who cannot go out to
get their needs
Disadvantages of E-Business
o Costly: Substantial resources are required for redefining product
lines in order to sell online. Upgrading computer systems, training
personnel and updating websites requires substantial resources.
o Data Security: To carry out online transactions the websites ask
for your e-mail address and other contact details. Customers break
at the mention of providing personal details, best defining of some
nature occurs.
o Bank frauds: some people use this e-business in wrong way. There
is a possibility of misusing the buyer’s bank details.
o E-disguise: There are many chances that customers get cheated by
not providing the products as shown in websites.
o Threats of computer viruses: The users of website might get the
viruses if the websites has some malware.
