E-Business

© Oxford University Press 2012. All rights reserved. E-Business

 Chapter 1

Electronic Business –
Understanding new internet
economy and business

© Oxford University Press 2012. All rights reserved. E-Business

 Learning Objectives

To understand –
• The objectives of e-business
• Transition from traditional business to e-business
• Role of e-commerce, e-business and difference
between them
• Features and advantages of e-business technology
• Establishing e-business, different types of e-business
models
• Knowledge perspective of e-business

© Oxford University Press 2012. All rights reserved. E-Business

 Introduction

• Traditionally, business is exchange

of articles, goods and food items, a
need based..
• Further, a businessman travelling
to places for selling goods /
individuals going to shops to buy
any item
• Later, many layers / middlemen
came in to play
Cont..
© Oxford University Press 2012. All rights reserved. E-Business
 Introduction Cont..
• It reduced the pace of the transactions, loss of information
and gap between the demand and supply
• Production limitations - Simple production processes,
relatively simple technologies and low production volume
• Led to - numerous manufacturing companies, small in
size, unspecialized
• Distributed and diffused markets, lack of transportation &
communication facilities, lot of information inefficiencies
• Led to - distribution within a small locality, difficult to
balance supply and demand
© Oxford University Press 2012. All rights reserved. E-Business
 Introduction Cont..
• Economic, technological growth, new transport,
communication means changed the business scenario
• Advent of internet & its use in business changed the
overall business
• E-commerce, e-business where end-to-end business is
empowered by electronic communication
technologies, revolutionized the business
• Made ways & means available to do business with
pace and eliminate few middle layers in transaction

© Oxford University Press 2012. All rights reserved. E-Business

 Objectives of e-business
• E-business objectives can be listed as –
– Primary objective : to use internet and electronic
communication system to deliver business value by
its effective use in business transactions
– Information analysis and access
– Penetration
– Addressing particular customer segment
– Improving user satisfaction
– Knowledge augmentation and its business use to
increase stakeholders’ wealth.
© Oxford University Press 2012. All rights reserved. E-Business
Traditional Business to e-business
• Steps for transition of existing
traditional business to e-business
are -
• Document existing business
process
• Consider competitive business
advantage, ROI and other key
benefits
• Select technology to support
business process
• Roll out deployment plan

© Oxford University Press 2012. All rights reserved. E-Business

 E-Business Layers
• Business model sits on top of layers
• Technical layers include
performance, availability and security
related issues
• Two layers interact with each other
through application development layer
• The business model and business
processes are tested against business
objectives and that drives application
development
• Every layers needs to be considered
while moving ahead with legacy
system to e-business

© Oxford University Press 2012. All rights reserved. E-Business

Forces Driving transformation to e-business

• Different forces drive the transformation from legacy

systems to e-business
• Some of these forces are –
 Market forces
 Technology forces
 Economic forces
 Social forces

© Oxford University Press 2012. All rights reserved. E-Business

 Contributors for e-Business’ success
• The contributors of successful e-business can be –
– Website
– Knowledge about the use
– Skilled manpower
– Acceptance from society
– Robust infrastructure
– Appropriate pricing structure
– Smooth internal and external information flow
– Connectivity
– Mass communication
– Network production
© Oxford University Press 2012. All rights reserved. E-Business
Higher Level Contributors for E-business
Success

© Oxford University Press 2012. All rights reserved. E-Business

 E- Business and E-Commerce
• e-business, not limited to mere monetary and outward
business transactions
• Involves internal and external communication to improve
pace, efficiency, performance, customer satisfaction and
allows a faster and more open process, with customers
having greater control
• e-commerce, function of creating financial exchange with
the use of digital medium
• Instruments and methods like, credit cards, electronic
fund transfer etc. have become commonplace
© Oxford University Press 2012. All rights reserved. E-Business
 E- Business and E-Commerce Cont..
• The broadest definition of e-commerce is ‘the
conduct of transactions by electronic means’
• e-business is a superset and it can be defined as
‘conducting business and all business related
activities, internal, and external transactions along
with communications using electronic means’
• In short, e-business is the business that is empowered
by e-commerce

© Oxford University Press 2012. All rights reserved. E-Business

Difference Between e-commerce / e-business

e-business e-commerce
Superset of e-commerce Subset of e-business
Deals with all aspects of business and not More about monetary
limited to just business transactions transactions, buying &
selling
Internal processes such as production, Focuses on the outward
inventory management, product facing processes and not
development, risk management, related to internal
finance, etc., are also part of e-business processes
Other aspects of business like contacting Does not include other
the customer on-line, educating him, business aspects like in e-
providing services, and product related business
information, that all constitute e-business
© Oxford University Press 2012. All rights reserved. E-Business
 E-commerce in e-business : Issues

1. Lack of awareness and understanding of the value of e-

business and e-commerce
2. Reluctance to go for the required change in environment
3. Lack of ICT knowledge and skills
4. Doubts about the capability of organizations to take
advantage of the benefits e-business
5. Assurance about security and privacy before getting
engaged in use of internet related technologies
6. Lack of legal infrastructure& legal liability on e-payments
7. Issues related to financial costs
© Oxford University Press 2012. All rights reserved. E-Business
E-business Framework

© Oxford University Press 2012. All rights reserved. E-Business

E-business Framework

© Oxford University Press 2012. All rights reserved. E-Business

 Features of E-Business Technology
• E-business features drive the new economy
• Some of the major features of e-commerce are -
 Ubiquity
 Global reach
 Universal standards
 Richness
 Interactivity
 Information density
 Personalization
© Oxford University Press 2012. All rights reserved. E-Business
E-business technology layers

© Oxford University Press 2012. All rights reserved. E-Business

E-business Service Model
• ‘e’ component in each of these
transactions is a value proposition
• This component gives easy
interface for service request
• No processing component sits on
the customer side
• All processing is done at the end
of the service provider
• Customer does not need any
special hardware or software

© Oxford University Press 2012. All rights reserved. E-Business

 Advantages of E-business
1. Provides flexibility
2. No need for physical presence
3. Cost reduction
4. Transparency
5. Personalization
6. End-to-end information flow
7. Integrated solution
8. Saves time
9. Improved communication with customers, suppliers
10. Online publishing

© Oxford University Press 2012. All rights reserved. E-Business

 Benefits for the retailer
• E-business provides benefits for business houses,
customers as well as for retailers
• These benefits come from information efficiencies
and penetration, in the form of market exposure and
cost reduction
• Benefits for retailers include -
 Increased market exposure
 Increased sales
 Reduced costs

© Oxford University Press 2012. All rights reserved. E-Business

 Establishing E-business
• Establishing e-business can be transformation from
traditional business or a completely new business
• Apart from the traditional parameters, other strategic
aspects that need to be considered while establishing e-
business are –
 E-business frameworks and standards
 E-content interoperability
 Inclusive solutions
 Trusted frameworks
 Support for interoperable reference implementations
© Oxford University Press 2012. All rights reserved. E-Business
 E-Business Models
E-business model –
• A framework with all business components to create value and
meet business objectives
• A set of business processes through planned activities to
achieve business objectives
• Aim to leverage unique properties and the strength of ‘e’
component of technology to optimize business objectives
• Create new ways of creating, capturing, and delivering value
to customers
Various e-businesses models are distinguished by the nature of
market relationship & the nature of transactions

© Oxford University Press 2012. All rights reserved. E-Business

 Ingredients of Business Models
Various ingredients of business models are –
• The offerings and value proposition
• Revenue model / cash flow
• Market forces and available opportunities
• Competition
• Positioning of product
• Market strategy
• Technology and information technology strategy
• Organizational structure and development
• Management team
• Knowledge management

© Oxford University Press 2012. All rights reserved. E-Business

 Elements of successful e-business Model
• Web technology provides a platform for building an e-
business model to improve internal and external processes
• New business models aim to use and leverage unique
qualities of internet and in turn the World Wide Web
• A successful business model needs to address various
elements as -
 Value proposition
 Market opportunity
 Competitive environment
 Competitive advantage

© Oxford University Press 2012. All rights reserved. E-Business

Information & Financial Transactions

© Oxford University Press 2012. All rights reserved. E-Business

Technology Evolution in E-arena

© Oxford University Press 2012. All rights reserved. E-Business

 Transaction based e-business Models
• e-business models are classified based on parties taking
part in transaction
• Properties of business transactions like purpose of
transactions and parties involved, are used while
deciding the type of e-business model
1. Business to business, B2B model
2. Businesses to consumer, B2C
3. Business to government, B2G
4. Consumer to consumer, C2C
5. Consumer to business, C2B and
6. Business to employee, B2E
© Oxford University Press 2012. All rights reserved. E-Business
 B2B e-business Models
• Most common type of business transactions, 75 to 80% of
transactions are of this type
• Various companies and transactions coming under this model are -
– Transactions among providers, distributors, players,
manufacturers and other ancillary organizations
– Various logistics related transactions, distribution of material,
storage or warehousing
– Organizations providing software as a service (SAAS),
application service providers (ASP), Outsourcing of activities
related to e-transactions including project development, web-
hosting, security services etc. , KPOs, BPOs, inter bank
transfers, security companies etc.
© Oxford University Press 2012. All rights reserved. E-Business
 B2B Transactions

© Oxford University Press 2012. All rights reserved. E-Business

 B2C e-business Model
• Second most popular e-business model after B2B
• Uses a concept of on-line distribution / selling of
services, products or information from organizations
to actual consumers
• Advantages of B2C model –
– Reduces the transaction costs
– Increases the information space available to consumers
– Allows smaller players to enter in the global market
– Saves cost needed for setting up shops and physical
distribution channels

© Oxford University Press 2012. All rights reserved. E-Business

 B2C e-business Model Cont..
• Manufactures, distributors, information providers,
and publishers use B2C model extensively
• Includes different transactions between companies
and consumers like -
– Customer buying various articles like books, computers,
computer accessories, etc.
– Customer accessing information, analysing information,
and in some cases buying information or information
centric articles
– Customer seeking some sort of services from the
companies

© Oxford University Press 2012. All rights reserved. E-Business

 B2C Transactions

© Oxford University Press 2012. All rights reserved. E-Business

 B2G e-business model
• Transactions between private contractors and government
agencies are part of this model
• Refers to commercial enterprises selling product, services
and information to government agencies
• Connects government and private sector
• Include use of internet for public procurement and for
different government related procedures
• Increases transparency in different operations
• E.g. energy providing companies and government energy
distribution companies, infrastructure building companies,
government infrastructure authorities etc.

© Oxford University Press 2012. All rights reserved. E-Business

 C2C e-business model
• About individuals doing business in online environment
• Allows individual auctions, individuals trying to sell old/
new articles, cars, etc. through electronic means/ website
• Slowly becoming popular
• Major hurdle in accepting C2C model is the trust factor
• The peers interact with each other by various means like-
– Direct transaction between individuals
– Individuals interacting through some well-known portal or the
auction site
– The individuals advertise their product through some site using
classifieds or advertisement 

© Oxford University Press 2012. All rights reserved. E-Business

 C2C Transactions

© Oxford University Press 2012. All rights reserved. E-Business

 M-commerce and e-business
• Advent of wireless technologies and cell phones
made it possible to carry business transactions using
mobile phones
• Commerce / transactions that take place using
wireless technology (cellular phones, wireless
devices, etc.) is referred to as m-commerce
• Many of the B2B and B2C transactions are possible
over m-commerce to build m-business models
• Poses different sort of technology and usability
challenges
© Oxford University Press 2012. All rights reserved. E-Business
Strength / Opportunity analysis of E-business

As a part of SWOT analysis, strengths of e-business include

-
1. Organization / company can reach to very specific
target group
2. Can have very specific instructions and services for
the said target group
3. Low investments within the traditional sector
4. Reputation of traditional brands can still be used and
even glorified with innovative marketing means
through electronic channels
Cont..
© Oxford University Press 2012. All rights reserved. E-Business
 Strengths Cont..
5. E-business is easily expandable compared to
traditional businesses
6. Allows prices to respond according to demand
(direct marketing
7. Help in increasing the yield maximize revenue
8. Lowers the cost of stocks and personnel
9. Minimizes dependence on physical resources
10.Available 24 hours a day

© Oxford University Press 2012. All rights reserved. E-Business

 Opportunities
Creates opportunities for businesses like –
1. use of ‘gimmicks’ for promotional activities on line
2. Allows dealing with wholesale trade companies as there’s a
connectivity between various companies
3. Promote brands and take those brands to global level
4. Selling well-known brands very easily, as the customers
cannot see the actual product, they prefer branded
5. Operate in niche markets at global level
6. Allows organization to improve decision efficiencies
because of integration and availability of information
© Oxford University Press 2012. All rights reserved. E-Business
 Opportunities Cont..
7. Ability to connect and integrate with other
organizations allowing to sell complete range of
products by using partnerships
8. Allows to sell product and the related services
together
9. Help in building efficient market, as the increase in
transparency due to electronic communication
means
10. Delivers different kinds of services for different
prices
© Oxford University Press 2012. All rights reserved. E-Business
 Proactive E-Business Strategy
• It is a framework that is about business transactions,
means, social environment and entities taking part in
business transactions
• Business model is the result of a business strategy
• E-business strategy is –
– Totality of how a company selects its customers
– Defines and differentiates its offerings
– Defines the task it will perform itself & the tasks it will
outsource
– Configure its resources
– Creates utility customers and Captures profit
© Oxford University Press 2012. All rights reserved. E-Business
 E-Business – A Knowledge Perspective
• E-business empowers individuals, businesses and customers with
the ability to collect information & use it
• Knowledge Management (KM) is about making right knowledge
available with right person at right time
• Includes building of right knowledge and processing it to take it to
next level
• E-business makes the KM platform available for this knowledge
management to empower business
• Knowledge about suppliers, retailers, specific areas and services
empower business with knowledge
• E-businesses build and use effectively this knowledge on e-platform

© Oxford University Press 2012. All rights reserved. E-Business