The business world is changing more rapidly compared to earlier days. E-commerce (electronic commerce) is a method of conducting business that has gained popularity all over the world. With the rapid improvement in communication and technology and reduced time for shopping, people have increasingly preferred online shopping. This has necessitated the introduction of online shops to counter these rising needs.
The proposal has been generated in order to address this issue of the rise in internet buying and selling of goods, products and services.
NoteExchange is a Manangatang-based company which sells CDs and Vinyl Records. They are a small family-owned business with a capitalization of $A1M, annual sales of $A250, 000, increasing at four per cent per annum and net profits of twelve per cent of total sales. Currently, their main business is selling to customers via their physical shopfront and via mail and phone orders.
The note exchange management team is keen to expand retail sales, which are hypothetically very cost-effective for the business. To do this, one member of the administration team has suggested the company create new online channels for sales, marketing, and customer relationship management (CRM).
Objectives and Goals of the business
To reach a wider target market.
To expand retail sales.
Increase the profit margin of the business
Business and Revenue Models
A business model is a set of processes that combine to achieve a company’s primary goal, which is typically to yield a profit. Earlier, many investors tried to find start-up companies that had new, Internet-driven business models. These investors expected that the right business model would lead to rapid sales growth and market dominance. If a company was successful using a new “dot-com” business model, investors would clamour to copy that model or find a start-up company that planned to use a similar business model. This strategy led the way to many business failures, some of them quite dramatic.
In the wake of the dot-com debacle, many business researchers analyzed the efficacy of this “copy a successful business model” approach and began to question the advisability of focusing great attention on a company’s business model. One of the main critics, Harvard Business School professor Michael Porter, argued that business models not only did not matter, they probably did not exist.
Nowadays, most companies realize that copying or adapting to someone else’s business model is neither an easy nor wise road map to success. Instead, companies should examine the elements of their business; that is, they should identify business processes that they can streamline, enhance, or replace with processes driven by Internet technologies.
Companies and investors do use the idea of a revenue model, which is a specific collection of business processes used to identify customers, market to those customers, and generate sales to those customers. The revenue model idea is helpful for classifying revenue-generating activities for communication and analysis purposes. In addition to the revenue model grouping of business processes, this company thinks of the rest of its operations as specific business processes. Those processes include purchasing raw materials or goods for resale, converting materials and labour into finished goods, managing transportation and logistics, hiring and training employees, managing the finances of the business, and many other activities.
In some cases, business processes use traditional commerce activities very effectively, and technology cannot improve them. Products that buyers prefer to touch, smell, or examine closely can be difficult to sell using electronic commerce. For example, customers might be reluctant to buy items that have an important element of tactile feel or condition such as high-fashion clothing or antique jewellery if they cannot closely examine the products before agreeing to purchase them.
An important aspect of electronic commerce is that firms can use it to help them adapt to change and this is one of the criteria for which of managing NoteExchange business has been chosen.
Product/Process Suitability to Electronic Commerce
Some products, such as books or CDs, are good candidates for electronic commerce because customers do not need to experience the physical characteristics of the particular item before they buy it. Because one copy of a new book is identical to other copies, and because the customer is not concerned about fit, freshness, or other such qualities, customers are usually willing to order a title without examining the specific copy they will receive. The advantages of electronic commerce, including the ability of one site to offer a wider selection of titles than even the largest physical bookstore, can outweigh the advantages of a traditional bookstore —for example, the customer’s ability to browse the pages of the books. The figure below lists examples of business processes categorized by suitability for electronic commerce and traditional commerce. As technologies develop, many processes that were strictly handled through traditional commerce have become more suitable for electronic commerce.
Well Suited to Electronic Commerce
Suited to a Combination of
Electronic and Traditional
Well Suited to
Sale/purchase of books and CDs
Sale/purchase of goods that have strong brand reputations
Online delivery of software and digital content, such as music and movies
Sale/purchase of travel services
Online shipment tracking
Sale/purchase of investment and insurance products
Sale/purchase of automobiles
Banking and financial services
Sale/purchase of the residential real estate
Sale/purchase of high-value jewellery and antiques
Sale/purchase of impulse items for immediate use
Sale/purchase of used, unbranded goods
FIGURE 1. Business process suitability to type of commerce
This justifies the reason for choosing e-commerce as one way of reaching out to the customers
Some parts of the world have cultural environments that are extremely inhospitable to the type of online discussion that occurs on the Internet. These cultural conditions in some cases, lead to government controls that can limit, electronic commerce development. The Internet is a very open form of communication. This type of unfettered communication is not desired or even considered acceptable in some cultures. For example, a Human Rights Watch report stated that many countries in the Middle East and North Africa do not allow their citizens to unrestricted access to the Internet.
The report notes that many governments in this part of the world regularly prevent free expression by their citizens and have taken specific steps to prevent the exchange of information outside of state controls.
In many North African and Middle Eastern countries, officials have publicly denounced the Internet as a medium that helps distribute materials that are sexually explicit, anti-Islam, or that cast doubts on the traditional role of women in their societies.
In many of these countries, uncontrolled use of Internet technologies is so at odds with prevailing customs, cultures, and laws that e-commerce is unlikely to exist locally at any significant level in the near future. In contrast, other Islamic jurisdictions in that parts such as Algeria and Morocco the Authority, do not limit online access or content.
A number of restrictive governments in the world control Internet access as a way to prevent the formation and growth of internal independent political activist organizations. By limiting access or monitoring all Internet traffic, the planners of rebellions against the government can be thwarted.
The censorship of Internet content and communications restricts electronic commerce because it prevents certain types of products and services from being sold or publicized. Moreover, it decreases the concentration level of many potential participants in online activities. If large numbers of people in a country are not interested in being online, businesses that use the Internet as an information and product delivery channel will not develop in those countries.
Other countries, such as the People’s Republic of China and Singapore, are struggling with the matters presented by the growth of the Internet as a vehicle for doing business. These countries have a tradition of controlling their citizens’ access to information from outside the country, but they want their economies to reap the benefits of electronic commerce. China created a complex set of registration requirements and regulations that govern any business that engages in electronic commerce. These regulations are enforced by the Public Security Bureau, which is a branch of the state police, not an independent administrative agency.
North Korea, Singapore, and a number of Middle Eastern countries have also adopted rules and policies that restrict their citizens’ use of the Internet. These countries will continue to face difficult policy choices as they maintain their attempts to control individuals ’ use of the Internet while at the same time trying to encourage growth in online business transactions.
Some countries, although they do not ban electronic commerce entirely, have strong cultural requirements that have found their way into the legal codes that govern business conduct. In France, an advertisement for a product or service must be in French. Thus, a business in the United States that advertises its products on the Web and is willing to ship goods to France must provide a French version of its pages if it intends to comply with French law. Many U.S. electronic commerce sites include in their Web pages a list of the countries from which they will accept orders through their Web sites.
Categories of Electronic Commerce
Categorizing electronic commerce by the types of entities participating in the transaction or business processes is a useful and commonly accepted way to define the online business.
The five general electronic commerce categories are business-to-consumer, business-to-business, transactions and commercial procedures, consumer-to-consumer, and business-to-government. There are three main categories that are in most cases commonly used are:
Consumer shopping on the Web often called business-to-consumer (or B2C) and which will be chosen by NoteExchange due to its suitability is currently the most widely used.
Transactions conducted between businesses on the Web often called business-to-business (or B2B)
Transactions and business processes in which firms, administrations and other special organizations use Internet technologies to support selling and purchasing activities
A single company might participate in activities that fall under multiple e-commerce categories. For example, a company that manufactures stereo speakers might sell its finished product to customers on the Net, which could be referred to as B2C e-commerce. It might also purchase the materials it uses to make the speakers from other companies on the Web, which would be B2B electronic commerce. More often, businesses have all departments devoted to negotiating purchase transactions with their suppliers.
These departments are usually named supply management or procurement. Consequently, B2B e-commerce is at times called e-procurement.
In addition to buying materials and selling speakers, the company must also undertake many other activities to convert the purchased materials into speakers. These activities might include hiring and managing the people who make the speakers, renting or buying the facilities in which the speakers are made and stored, shipping the speakers, maintaining accounting records, obtaining customer feedback, purchasing insurance, developing advertising campaigns, and designing new versions of the speakers.
A rising number of these dealings and business processes can be done on the Web.
Manufacturing processes can be controlled using Internet technologies within the business. All these activities related to communication, control, and transaction have become an important part of electronic commerce.
For more than 80 years, business researchers have been studying the ways people behave in businesses. This research in this context has been able to help managers to better understand how workers do their jobs and what motivates them to work more effectively. The research results have helped managers, and more recently, the workers themselves, improve job performance. By changing the nature of jobs, managers and workers can, as the saying goes, “work smarter, not harder” and also an important part of doing these job studies is to learn what activities each worker performs. In this setting, an activity is a task performed by a worker in the course of doing his or her job.
Transferring funds, placing orders, sending invoices, and shipping goods to customers are all types of activities or transactions. For example, the business process of shipping goods to customers might include a number of activities (or tasks, or transactions), such as inspecting the goods, packing the goods, negotiating with a freight company to deliver the goods, creating and printing the shipping documents, loading the goods onto the truck, and sending payment to the freight company.
NoteExchange will use online payment service through a designed website that will help its customers choose on a particular product on which a price tag has been labelled. Afterwards, they will be required to enter their Visa or Master Card numbers for the transaction to be completed before the goods are delivered to them. One important way that the Web is helping people work more effectively is by enabling employees of many different kinds of companies to work at home or from other locations (such as while travelling). In this arrangement, called telecommuting or telework, the employee logs in to the company network through the Internet instead of travelling to an office.
Some researchers also define a category of electronic commerce called business-to-government (or B2G); this category includes business transactions with government agencies, such as paying taxes and filing required reports. An increasing number of states have Web sites that help companies do business with state government agencies.
In this proposal, B2G transactions are included in the discussions of B2B electronic commerce.
Businesses sell products or services to individual consumers.
Walmart.com sells merchandise to consumers through its Web site.
Businesses sell products or services to other businesses.
Grainger.com sells industrial
Supplies to large and small businesses through its Web site.
Participants in an online
The marketplace can buy and sell goods to each other. Because one party is selling and thus acting as a business, this proposal treats C2C transactions as part of B2C electronic commerce.
Consumers and businesses
trade with each other in the
EBay.com online marketplace.
Businesses sell goods or services to governments and government agencies. This proposal treats B2G
transactions as part of
B2C electronic commerce.
CA.gov procurement site allows businesses to sell online to the state of California.
Therefore, this business will employ three business models which include: B2C, B2B and B2G
Being an online business, it will be faced with various security threats. These include Credit card fraud/theft, Spoofing, Pharming, Spam/junk Web sites, Denial of service (DoS) attack, Distributed denial of service (DDoS) attack, Sniffing, Insider jobs,
Customer relationship management (CRM) is a term that refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth. CRM systems are designed to compile information on customers across different channels or points of contact between the customer and the company, which could include the company’s website, telephone, live chat, direct mail, marketing materials and social media.
CRM systems can also give customer-facing staff detailed information on customers’ personal information, purchase history, buying preferences and concerns.
This business will employ and necessitate customer interaction through the use of email services or providing comments, issues or ideas that may help in serving them better. The comments and reply section will be placed on the home page of the website as this will enable them to easily access it. In addition, the contact information of the business will be provided to ensure that the customers get directly in touch with the managers.
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