Developing A Comprehensive E-Commerce Presence

Developing A Comprehensive E-Commerce Presence

Contents

TOC o “1-3” h z u HYPERLINK l “_Toc376766585” Introduction PAGEREF _Toc376766585 h 1

HYPERLINK l “_Toc376766586” SWOT Analysis PAGEREF _Toc376766586 h 1

HYPERLINK l “_Toc376766587” Driving forces behind the uptake of e-commerce presence and Michael Porter’s 5 force model PAGEREF _Toc376766587 h 2

HYPERLINK l “_Toc376766588” Organizational change PAGEREF _Toc376766588 h 5

HYPERLINK l “_Toc376766589” Leading organizational change PAGEREF _Toc376766589 h 7

HYPERLINK l “_Toc376766590” Security issues that arise by using e-commerce presence PAGEREF _Toc376766590 h 8

HYPERLINK l “_Toc376766591” Conclusion: Personal reflection PAGEREF _Toc376766591 h 9

IntroductionTechnology can be defined as new ways of doing things. In the recent past technology has become an indispensable business tool, this has made many businesses to strive ways to adopt new technologies in order to remain relevant in the ever changing business environments. Technology has become a necessity rather than a business tool. Nevertheless to mention successful corporations have used technology to gain competitive advantage over their rivals. This has helped hem not only to gain a considerable market share but also make profits and thus remain relevant in business. The aim of this study is to conduct an in depth research on the significance of information technology (IT) and information system (IS) to businesses.

Chosen Topic: Developing A Comprehensive E-Commerce Presence

E-commerce is a general term given to doing business online with the major help of IT tools. This can range from making orders, bidding for contracts, outsourcing, commodities and etc. The list of what can be done online is endless (Neuman, Clifford & Genyady Medvinsky, 1998).

SWOT AnalysisThere is a wide impact of adopting e-commerce presence technology in a business. It has both merits and demerits. Using the SWOT analysis, this impact can be analysed as follows. Beginning with strengths, we can say that by using e-commerce you widen your market, operational costs are reduced and your business enjoys global presence. This is because e-commerce technology puts an organization’s presence in the global scene. On the other hand this technology has its own weaknesses. These include exposure to risk of internet fraud, higher initial set up costs and training manpower to run these systems. For instance to establish an online ordering system that uses credit cards, is a relatively expensive venture which most small and micro enterprises (SMEs) may find expensive to start (Raymond, 2003).

Using e-commerce presence technologies also pose a lot of opportunities to SMEs. For instance there arises opportunities to establish new markets, improve operations, develop new products and even expand. This is due to the fact that this technology opens up new markets and brings in new methods of doing things. The major threat that this new technology has brought is that one of unemployment. This is because computers have totally replaced or reduced many of the tasks that were initially performed by human beings.

Driving forces behind the uptake of e-commerce presence and Michael Porter’s 5 force modelIn the recent past, there has been an increase of uptake in new technologies by firms. This is due to various reasons that are going to be highlighted shortly here after. In doing this, lets use Michael Porter’s 5 force model. This is a strategic business planning model that was advanced by Michael Porter in the 1980s. Since then it has become a very useful business tool for managers who either want to rise to the top or those who want to revive businesses that have fallen. Porter’s model is pegged in five cornerstones; these are buyers, substitutes, suppliers, competitors and new entrants (Porter, 2008).

Figure 1 Michael porter’s 5 force model

Buyers: They include both existing and potential customers to the business. The use of new technology by businesses has been largely driven by the urge to establish new customers besides maintaining the existing ones. This is because e-commerce presence has been proved to be able to reach a wider audience over relatively short time. For instance a small store in one country can benefit from attracting customers not only from the local scenery but also internationally if it advertises its products on the internet (Porter, 2008). This will give it a competitive advantage over rivals who are crowding the local market.

Suppliers: as far as e-commerce is concerned, it can be used to source suitable suppliers to a business using relatively less costs. This is because a business just advertises bids on its websites which are viewed globally. Therefore the likelihood of having a wide pool of bidders to choose from, gives you a considerable bargaining power. And as Porter puts it “having a greater bargaining power over your suppliers is a very strong point of competitive advantage”. The weakness of relying on one supplier is eliminated and thus the enterprise is able to thrive. Through e-commerce presence, suppliers also are able to get a wide range of business opportunities. This therefore is a win-win scenario which should be encouraged. This partly explains the driving force behind the uptake of new technologies by SMEs in the recent past.

New entrants: As far as the business environment is concerned, new entrants to the market is always a potential threat that can not be ruled out. Whether there are many or less barriers to entry and exit, new firms will always get there way into the market. Thus if an enterprise does not prepare in advance, chances of loosing a market are high. By using new technologies businesses are able to create competitive advantage which helps them to fight off threats of new entrants to their market. This is made possible through such advantages like creating artificial barriers to new entry, locking in customers, achieving operational efficiencies and etc (Porter, 2008).

Substitutes: Unless a business enterprise is a monopoly, the type of services and goods it offers will always have substitutes elsewhere. Thus if your customers feel dissatisfied they will easily move out. Many SMEs provide goods and services that have high substitutes hence this is a great threat to their existence. Developing an e-commerce presence therefore goes along way into propelling an SME into profitability. Having an e-commerce presence helps a business have a competitive advantage over its rivals. For instance a business preparing Pizza can develop a competitive advantage over rivals by developing an online ordering system where customers place order to the business directly. These orders are prepared in real time and delivered to the customer’s premises, office or even home. This saves the business from unnecessary wastage, space and even promotional costs. Moreover customers are also able to customize their orders to their own desires. In the ever increasing competition in the business world, SMEs have found use of this new technology to gain competitive advantage very useful. This explains the increased uptake of new technology in doing business (Fleuriet & Michel, 2008).

Competitors: In terms of competition, technology is a double edged sword. It can build or destroy a business in a flash. It all depends on your strategy. After analyzing the strategies which competitors are using, a business can use e-commerce presence to gain an advantage over your competitors. For instance if the local market is exploited, an enterprise can resort to use e-commerce presence to scout for new markets both locally and internationally. This has partly encouraged uptake of new technologies in the recent past by SMEs (Fleuriet & Michel, 2008).

Discussion

This is the right time for SMEs to adopt new technologies in there operations because of the ever changing and competitive business trends, increased use of IT/IS by households, developed systems and transferability of resources. Besides this the urge for customized products, need for diversifying into new markets and need to reduce operational costs also can be seen as indicators that this is the ripe time for adopting e-commerce presence by SMEs. This explains why there is increased uptake of this new technology by businesses (Hayes & Wheelwright, 1984).

E-commerce presence is a mature technology because it has fully fledged systems to facilitate its usability. For instance we have well developed online payment methods to facilitate payment options. They include PayPal, money booker, alert pay, Google credit among others. There are also other well developed methods like the traditional credit cards, wired transfers, and SWIFT global electronic money transfers. This has undoubtedly propelled successful online business like Amazon, eBay, E-lance just to mention but a few (Neuman, Clifford & Genyady, 1998).

In terms of customer base of individuals using e-commerce it is a bit little when compared to customers using traditional methods i.e. brick and mortar. The customer base statistics is even worse in developing countries like Africa. However, this not withstanding, the good news is that it is growing and it is doing so at a very high rate. Thus it is a worthy venture for any SME to invest in hoping that there is positive growth potential (Neuman, Clifford & Genyady, 1998).

Organizational changeResistance to change is one of the biggest hurdles that organizations face in their efforts to implement new technologies. This greatly hampers the uptake of new technologies by these organizations. According to Osborne & Brown the following are some of the reasons that have been advanced as to why people may resist change (Osborne & Brown, 2005).

Feeling that management or colleagues are not competent enough

Loss of control or authority that they have been enjoying

Belief that change initiative is a temporary fad

Lack of faith in themselves

Loss of social standing

Feeling of change overload

Lack of trust and goodwill in managers

Feeling that job security may be lost

Therefore as the CIO, the starting point to bring change is to identify and anticipate reasons as to why employees may be against a particular IT/IS system change. It is only by identifying these challenges that management can come up with practical and workable solutions. One sure way of handling a problem is to know what causes it in the first place.

Changes that may occur include total failure, half-hearted efforts to change, sabotage of management’s efforts or even intentionally breaking down the systems. It is important to note that some individuals resist change due to multiple of reasons. Nevertheless to mention you should not take at face value the individuals stated reasons because sometimes the stated reason hides the real reason. Individuals work through a psychological change process as they give up the old and embrace or still reject the new (Mintzberg, Quinn & Ghoshal, 1998).

Individuals may experience an initial denial, and then start to realize that the change can not be avoided. Strong feelings may emerge e.g. anger, fear, frustration and helplessness. At last the person may accept either negatively, with feelings of resignation or positively with renewed enthusiasm to capitalize on the changes. In the meantime take note of those employees who get stuck in one point. Offer them your support and give room to work through the stages. Give them time to breath and listen to them genuinely with empathy (Mintzberg, Quinn & Ghoshal, 1998).

The ever changing technology changes job roles and responsibilities of individuals. This organizational change have many and varied impacts on stakeholders. This may include the staff, management, shareholders, customers, suppliers among others. The impact can be direct or indirect depending on an individual’s relation to the firm. New technology can either increase or decrease the staff productivity depending on how they perceive the new system. If, for example, the new system has retrenched some people from their jobs, the remaining employees may feel insecure and sabotage the whole system. This means reduced productivity, narrow profit margins and finally low returns to the shareholders.

On the other hand if the new system that has been introduced is perceived to be beneficial may be by bringing around efficiency, job enrichment and gives employees new interesting challenges, may be embraced. These will translate to increased output thus more profits and finally increase shareholders value through such benefits like dividends, bonuses etc (Osborne & Brown, 2005).

Leading organizational changeThis is a field that has been of great interest to scholars for a long time. The most notable of them is Harvard professor John P. Kotter. He has been observing the process of change for almost three decades. Kotter came up with a list of factors that he believed can lead to successful changes and those that led to failure in implementing change. Kotter devised a step by step methodology which he believed if well applied can lead to successful implementation of organizational change. This should be followed systematically if you anticipate getting positive useful results (Kotler, 1998).

The beginning step is to establish a sense of urgency. This is done by examining competitive and market realities. Then identify and discuss crises or major opportunities that come up.

Second step is to form a powerful guiding coalition team. Assemble a group with enough energy and authority to lead the change.

Thirdly create a clear vision expressed simply and in an understandable manner. This is achieved by creating a vision to direct the change effort besides developing strategies for achieving the required vision.

Management should communicate the vision. Use every available method to communicate and market the new vision and strategies appropriately.

Next is to empower the other members of the group to act on the vision.Get rid of obstacles to change and change systems or structures that seriously undermine your vision.

Also plan for and create short-term wins. This can be done by planning for visible performance improvements and creating those improvements.

The second last step is to consolidate improvements while still producing more and more change.This can be done by using increased credibility to change systems, structures, and policies that don’t fit the vision.

Last but not least institutionalize the new approaches and dimensions. Articulate the connections between the new trends and behaviors and corporate success (Kotler, 1998).

Security issues that arise by using e-commerce presenceLike all other technologies, e-commerce presence also comes with its own share of security concerns. In fact the need for security is even greater owing to the fact that we are now dealing with money. This is on two frontiers i.e. the consumers and the e-commerce service providers. Whereas consumers are concerned with loosing their money, e-commerce sites are concerned with bad publicity, break-ins and etc (Ackerman, Mark, Lorrie & Joseph, 1999).

The first security threat that confronts home based e-commerce users is the risk of loosing their personal data to online hackers. This happens when a user has to identify or authenticate him/her before using a website. For instance bank details stored in cookies in the users computer is an easy target for hackers. They steal this e-commerce personal data and use it to fleece unsuspecting customers. This is even made worse by the fact that it is not all e-commerce users are experts in internet or IT/IS related issues (Ackerman, Mark, Lorrie & Joseph, 1999).

The second threat that confronts e-commerce is the risk of merchants loosing customer’s credit card information to hackers. This is made possible by the fact that most merchants store client’s information in the archive of recent orders. This makes it easier for criminals to access this information. Hackers have been known to target insecure web servers to harvest crucial data for their heinous acts.

The last security risk is based on the merchant and back end and database. This is possible because a company’s network can be weakened by site’s servers. This is hard to control because servers require administrative intervention in order to be connected to the internal network yet software of web servers tend to have buggy security. Past data has shown that failure rates in this case are very high with customers and companies loosing crucial data (Culnan, Mary, Pamela & Armstrong, 1999).

This is just but a few examples of security threats faced by SMEs that have adapted or are planning to adapt e-commerce presence as a new way of doing business. Overall the business has little to play because some of these threats are external to the business. This is as far as consumers and online merchants are concerned. Nevertheless the business can do whatever possible to prevent it from these risks. Possible interventions include using secure technologies like cryptographic technologies, digital signatures and public key infrastructure (Anderson, 2001).

Conclusion: Personal reflectionFrom the foregoing discussion, it can be confidently concluded that a move by a business concern to embrace new technologies like e-commerce presence, is a wise decision. Whereas there are challenges posed by these technologies, the rewards are tremendous and worth investing in. This is the only sure way to gain competitive advantage in the challenging business environment of 21st century. What all stakeholders need to do is come up with ways and means to mitigate against all the challenges that face e-commerce. Thus the buck stops with hardware and software manufactures, e-commerce merchants and authorities to play their respective roles. This way we will move closer to better e-commerce transactions. These way businesses will achieve their full potential and use of new technologies will be embraced in doing business. They can use appropriate technologies depending on their own unique needs. Whereas it is true that some of the security issues facing businesses are out of control by SMEs, all possible efforts should be made to safeguard themselves from risks associated with e-commerce presence.

References

Ackerman, Mark S., Lorrie Cranor, and Joseph Reagle. (1999). Privacy in E-Commerce:

Examining User Scenarios and Privacy Preferences. Proceedings of the ACM Conference in

Electronic Commerce.

Ackerman, Mark S., Trevor Darrell, and Daniel J. Weitzner. (2002). Privacy in Context. Human-Computer Interaction, 16 (2-4) : 167-176.

Anderson, Ross. (2001). Security Engineering: A Guide to Building Dependable Distributed Systems. New York: John Wiley & Sons.

Bryson, J. (2004) Strategic planning for public and non profit organizations Revised edition – San Francisco: Jossey-Bass, pp. 117

Case, Karl, Fair & Ray (1999). Principles of Economics (5th edition). London: Prentice-Hall.

Clarke, Roger. 2001. Of Trustworthiness and Pets: What Lawyers Haven’t Done for e-Business

Culnan, Mary J. (2000). Protecting Privacy Online: Is Self-Regulation Working? Journal of

Public Policy and Marketing, 19 (1): 20-26.

Denning, D. (1983). Cryptography and Data Security. New York: Addison-Wesley.

Dhillon, Gurpreet S., and Trevort T. Moores. (2001). Internet Privacy: Interpreting Key Issues Information Resources Management Journal, 14 (4): 33-37.

‘Examining User Scenarios and Privacy Preferences’. Proceedings of the ACM Conference in Electronic Commerce: 1-8

Gregson R. & Andrew M. (2008) Pricing Strategies for Small Business Self Counsel Press.

Hayes, R.H. and Wheelwright, S.C. (1984) Restoring our competitive edge: competing through manufacturing, New York: John Wiley & sons

House of Commons Public Administration Select Committee 2007 ‘Governing the future: Second Report of Session ‘2006–07 Volume I: Report

HYPERLINK “http://www.publicservices.ac.uk/index.php/links” http://www.publicservices.ac.uk/index.php/links

John Zenger & Joseph Folkman (2009), “The Extraordinary Leader: Turning Good Managers into Great Leaders”. McGraw-Hill.

Kotler Philip (1998). “Marketing Management – Analysis, planning, Implementation, and Control”, 9th Edition, Englewood Cliffs: Prentice-Hall.

Michael E. Porter. (2008). “The Five Competitive Forces that Shape Strategy”, London, HYPERLINK “http://en.wikipedia.org/wiki/Harvard_Business_Review” o “Harvard Business Review” Harvard Business Review, pp. 86-104

Miles, Raymond (2003). Organizational Strategy, Structure, and Process. Stanford: Stanford University Press

Mintzberg H, Quinn J. and Ghoshal S. (1998) The Strategy Process. 2nd edition London: Prentice Hall

Mulgan, G. (2008). ‘Knowledge management’ in the art of public strategy- mobilising power and knowledge for the public good. London, Oxford University Press

Neuman, B. Clifford, and Genyady Medvinsky (1998). Internet Payment Services. In Internet

Economics. Edited by L. W. McKnight and J. P. Bailey. 401-416. Cambridge, MA: MIT Press.

Osborne SP and Brown, K. (2005). Managing Change and Innovation in Public Service Organisations London: Routledge

Shim, D. and Matheson, A. (2001). ‘Public sector leadership for the 21stcentury Paris: OECD’

Users’ Privacy. Proceedings of the ACM Conference on Human Factors in Computing Systems