October 20, 2012

MB0053 [International Business Management] Set2 Q2

Q.2 Explain briefly the nature of e-business and the challenges involved. 

Answer:

The e-business denotes a major trend in the management like any other trends such as the supply chain management, mail order service or the service economy. The e-business is done by many asynchronous experts across the globe. The suppliers, customers and also the competitors coordinate the e-business.

Nature of E-Business
E-business can be defined as "the use of networks and information technology in order to electronically design, market, buy, sell and deliver products and services worldwide". E-business, meaning ‘electronic-business’, deals with application of information and communication technologies, in short an electronic medium in support of all the activities of business.

The e-business mainly stands for the internet enabled business. There are four entities in the internet enabled business. These four entities are as shown in the figure.

The Challenges of E-Business

As the e-business is growing, there are many technical and business trends that are associated with it. Some important trends in e-business are explained below.

E-business is crucial to business success. Many companies come out with changes that are necessary for e-business to become profitable. The process of e-business is long lasting than that of the re-engineering. There are some important trends in the e-business that are described as follows:
• Technology focus is on e-business – The hardware, software, and network vendors, focus on providing the tools for e-business. The e-business is mainly the extension of the products and services. 
• E-business produces cumulative effects – E-business is long lasting. The relationship with customers, suppliers, and employees changes as we implement e-business.
• E-business implementation effects success and failure of a business – There will be both the success and the failures that are associated with any kind of business. The failures become dramatic with e-business as it is more visible externally.

There are some major success factors for e-business. These factors include the strategic factors, structural factors and the management oriented factors. 

These factors are explained as follows:
Strategic factors.
° The technologies related to the internet are used as a complement for the existing technologies.
° The basis of competition that is not shifted from traditional competitive advantages such as cost, profit, quality, service and features.
° The new competitors and market shares are tracked.
° The web centric marketing strategy.
° The strategic position of the company in the market has strengthened.
° The frequent review of the distribution and supply chain model is done in order to maximise the company’s gain.
° The buyer’s behaviour and the customer personalisation.
° The first-mover advantage and quick time to start.
° The e-business offered good products and services.
° The innovation was allowed when risks are low.
° The customer’s and partner’s expectations from the well managed.

Structural factors.
° Correct digital infrastructure.
° Good e-business education and training to employees, management and customers.
° Current systems expanded to cover entire supply chain.
° Good cost control.

Management-oriented factors.
° The organisation wide commitment to e-business leadership.
° The necessary support for e-business from the top management.
° The awareness and understanding of capabilities of technology by executives.
° The top management has to communicate about the value of e-business throughout the organisation.

The e-business is facing challenges mainly in the areas of technology, logistics, and legal issues. These areas are explained in the following sections.

Technology
The technology plays a major role in the concept of new economy. The technology has two dimensions; one is the shift from manufacturing to services and second is the shift from physical resources to the knowledge resources. There are so many mechanisms for technology innovation and diffusion, both within and outside the countries. Many of the organisations will include different technologies both for quantitative and qualitative terms. 

Small scale enterprises play a vital role in the implementation of new technologies. They have added more value in terms of population, employment, and services that they are offering. Internet also plays a vital role as it helps the small and medium enterprises in providing the cost effective possibilities to advertise their products. Internet also provides the contacts to buyers and suppliers on a global basis. E-business is helps the radical transformation in the way that the business is done. The introduction of technologies like the common database, electronic networks and value added services are helpful for speeding up the transactions and these are fundamental at the industrial level. The e-business has to undergo lot of challenges in implementing the technologies that are helpful for the organisation since many of the people in the organisation will not be interested to shift to the new technology and learn the new skills.

Logistics
The logistics is defined as the planning framework for maintaining the material, information, and capital flow. The logistics includes the complex information, communication and control systems required in the business environment. The logistics presents e-business with challenges that exceeds the expectations of the customers with a reasonable cost. Now–a-day, attempt has been made to reduce the inventory costs. In order to meet the high expectations of the customers, an e-business needs the special infrastructure for tuning and managing the interactions. The interactions can be in between the shippers, logistic providers, shipping companies, and also the customers.

Legal concerns
As there is tremendous usage of internet, it is better to consider the legal concerns behind the internet. This is because whatever is printed on the net will be accessed by public throughout the world. We also have an option of going back and seeing the basics of that information. Now-–a-day with the help of wireless phones, Personal Digital Assistants (PDAs), internet can be accessed from anywhere in the world. As a result the customers must be provided proper security and privacy to access internet. It becomes very difficult to trust the actual with the unethical, illegal, internet marketing and advertising frauds and e-business email scams and hence one must be careful while performing e-business. 

It is necessary to concern the privacy and legal matters while writing a copy and maintaining a client’s e-business. 

There are uncertainties in e-business when compared with direct business. The uncertainties are related to the security, privacy, credit and debit card handling. The security is the primary concern in e-business. The PCI Data Security standard (PCI DSS) needs to be followed by one who handles the credit card information. E-business is all about the trust between buyer and the seller so one must be careful while dealing with the transactions which involve the handling of credit and debit cards.

There will also be copyright issues that is copying something from other sites and presenting the same content as their own. It is important to check for plagiarism when the company is publishing their own articles. When some concepts are copyright then it is necessary to credit the original authors. Disclaimer notice is required at the start of any business website. 

If the webmasters include some unethical information about the client then that can cause everlasting negative consequences for the client. The legal action is taken against the false advertisements also.

The risks associated with conducting e-business over the internet are explained as follows:
• Jurisdiction – Contracting over the cyberspace is a challenge for the website owners and the internet is the form of communication that rises above the spatial boundaries. There is a jurisdiction problem in the disputes between the buyer and seller regarding where the contract was formed and which state law applies for the contract.
• Contact validity – The emerging issue is the legal validity of web wrap or click on contracts. This type of contract is mainly found on the web site that offers goods and services for the sale. This e-business creates the legal relationship between the seller and buyer.
• Contract information – The advent of the e-business over the net is responsible for various legal issues regarding the formation of the electronic contracts.
• There is a need for matching both the e-customers and e-merchants with the legally responsible parties in the real world. There is a need for on cryptographic methods for reducing the risks associated with the identification and authentication. The cryptographic methods for eliminating the risks those are associated with the non repudiation and security.

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