Abstract

Organizations today face intense competitive and economic pressures leading to large scale
transformation of existing business operations and transactions. In addition, organizations have
adopted automated business processes to deal with partners and customers. E-business diffusion is a
multi-phase process, moving from initiation through to routinisation and an insight into the adoption
processes helps organizations to adopt e-business more effectively. It is imperative that organizations
effectively manage the e-business environment, and all associated changes to accommodate the
changing relationships with customers and business partners and more importantly, to improve
performance. This assignment discusses the process of e-business implementation, usage and
diffusion (routinisation stage) on business performance.
Introduction
E-business, is the application 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.
Electronic commerce focuses on the use of ICT to enable the external activities and relationships of
the business with individuals, groups and other businesses.
The term e-business was first coined by Lou Gerstner, CEO of IBM. According to Wikipedia
(2006), e-business is any business process that relies on automated information system, which today
is mostly done with web based technologies (Wikipedia, 2006). The Aberdeen Consulting Group
defines e-business as ―the automation of the entire spectrum of interactions between enterprises and.‖

According to the author, e-business is conducting business on the internet by not only buying and
selling goods, but also servicing clients and collaborating with business partners by using all the
human technologies

History
In 1997, IBM marketing, with its agency Ogilvy & Mather began to use its foundation in IT
solutions and expertise to market itself as a leader of conducting business on the Internet through the
term "e-business." Then CEO Louis V. Gerstner, Jr. was prepared to invest $1 billion to market this
new brand.
After conducting worldwide market research, in October 1997, IBM began with an eight-page piece
in the Wall Street Journal that would introduce the concept of "e-business" and advertise IBM's
expertise in this new field. IBM decided not to trademark the term "e-business" in the hopes that
other companies would use the term and create an entire new industry. However, this proved to be
too successful and by 2000, to differentiate itself, IBM launched a $300 million campaign about its
"e-business infrastructure" capabilities

Types of E-Business
B2C
The business-to-consumer, or B2C, model of e-business sells products directly to retail consumers
online. Amazon.com is an example of a B2C model. The e-business has only an online identity
through which it offers a range of products to customers. Other B2C enterprises include
bestbookbuys.com and gartner.com. Most B2C models generate revenue from direct sales and
processing fees. B2C also is known as electronic retail or e-tail.
B2B
The business-to-business, or B2B, model involves companies using the Internet to conduct
transactions with one other. B2B e-business accounts for more than 90 percent of all electronic
commerce, according to the U.S. Census Bureau. The main reason for this is the complexity of B2B
transactions. Unlike B2C transactions that involve sellers offering products and services and buyers
purchasing them, B2B transactions are multifaceted and often involve multiple transactions at each
step of the supply chain. B2B businesses generate revenue from direct sales.
C2B
Consumer-to-business, or C2B, is a unique e-business model in which consumers create value and
demand for products. Reverse auctions are a common characteristic of C2B models, in which
consumers drive transactions and offer their own prices for products. The airline ticket website
Priceline.com is an example of a C2B e-business model. The website allows customers to bid for
tickets and offer their own prices. Shopping sites such as cheap.com, gilt.com and ruelala.com also
are C2B.
C2C
Consumer-to-consumer, or C2C, e-business models enable consumers to behave as buyers and
sellers in third-party-facilitated online marketplaces. Craigslist is an example of a third-party
marketplace. The company brings together disparate buyers and sellers to conduct business. Other
examples of C2C websites include eBay and PayPal. A C2C model generates revenues in several
ways, including personal ad fees, membership or subscription fees, sales commissions and
transaction fees.
Current state of E-Business market:
A research by Forrester research and cowls/samba information showed that in 1994, 240 million
dollars worth of business was done on the internet.
Source: Forrester research and cowls/samba information In the year 1996, that figure quadrupled and
rose to 993.4 million US dollars and in the year 2000 it touched 6.9 billion US dollars. Business
through internet is growing day by day. Most of the companies have realised that internet is a big
electronic market and companies like Google, Amazon and E-bay are prime examples of it. Most of
the companies now days have their own website and business on the internet have been adopted by
large and small organizations (Kosiur, 1997)

General impacts of adopting E-Business

E-business now is not a new concept. The current state of e-business started taking its shape at the
beginning of this century. The growth and its impact have been dramatic and will continue to be so.
It is promoting a new, borderless global economy which is not only a technological issue but also a
new approach of doing business. In brief, organisations are externalizing their business applications
via internet in order to gain competitive advantage. The three key areas of focus are: 1) Business
employee (such as intranet e-business sites) 2) Business to business (E-supply chain, e-marketing, e-
support) and business to customer (via e-lobby or enterprise portal) (Hurwitz S J, 1999)
http://www.informationweek.com/743/43uwjh.htm (29/12/06) The impact of E-business/IT on
business relationship has been in theoretical level two folded. First, it has had a huge impact on
internal process like book-keeping and salary payments, which happen inside a company engaged in
a business relationship. Computerization from large mainframes to inexpensive PC‘s with modems is
an apparent improvement of internal processes. Secondly, it has had an impact on the number of
connections, I-EDI and new viable connections ERP2 to other organisations. Both the levels of
impacts are interlinked. Before a company fully engages itself in activities in a business that require
digital tools e.g. software or extranet, the internal information systems and e-business possibilities
have to be in place.
Five forces analysis and its use in business
To understand the influence of an organisation‘s environment on a company, Porter‘s five forces
model is used. By recognizing the possible impact of e-business on each of these forces, the
influence on the organisation‘s environment is estimated. The five forces and its use in e-business are
as follows:
1. Entry of new competitors – E-business can help companies enter into new markets. Through the
internet small and medium organisations can think of gaining new customers by reaching people in
other parts of the world. By using standard and open systems, switching costs will reduce for
customers and suppliers. Capital requirements will also decrease to enter a new market.
2. Bargaining power of buyers – To strengthen the relation between buyers and suppliers using
high software investments were things in the past. Modern technologies allow forward and backward
incorporation in the value chain. The intermediaries are under pressure e-business enables to have
direct links across various levels in the supply chain. Due to this there is increased transparency in
the market.
3. Bargaining power of suppliers – Effects mentioned above for the ‗power of buyers‘ can be
replicated to describe the power of suppliers. In order to find, expand and retain relationships with
customers, suppliers will have to raise their efforts.
4. Threat of substitutes – Due to the increased transparency of markets it is easier for organisations
to develop substitutes for other markets. Huge amount of market data can be collected and analysed
by applying new internet technologies. Also because of decreased switching costs new substitutes are
more likely to enter the markets.
5. Rivalry among existing competitors – As mentioned above, e-business permits companies from
other industries or various countries to enter into new industries. This gives rise to more players in
the same market and eventually increases competition (Hooft et al, 2001)
Challenges of E-Business:
There are lots of challenges and issues with e-business. Some of them are discussed below:
• Trust: People are quite reluctant to buy high value goods or services using electronic medium. The
main reasons for such mistrust are security and hesitation to release personal information on the
internet.
• Security: One of the biggest disadvantages of e-business is security. Other people can easily get
personal and financial information of the customers. Most of the companies don‘t have authentic and
secured transaction systems. Many developments have been made to make transactions over the
internet safe and secure, like pay pal, secure server, etc.
• Technological standards: Technological standards develop quickly in electronic markets. Some of
these standards are not secure or have problem of integrating with standards in other areas.
• Re-intermediation: One of the problems is difficulty in finding the exact suppliers of goods and
services.
• Higher number of errors: The amount of mistakes made with customers and suppliers is much
more visible in electronic markets (Davies, 2004)
Advantages of E-Business

❒ Worldwide Presence
This is the biggest advantage of conducting business online. A firm engaging in e-business can have
a nationwide or a worldwide presence. IBM was one of the first companies to use the term e-business
to refer to servicing customers and collaborating with business partners from all over the world. Dell
Inc., too, had a flourishing business selling PCs throughout the U.S., only via telephone and the
Internet till the year 2007. Amazon.com is another success story that helps people buy internationally
from third parties. Hence, worldwide presence is ensured, if companies rethink their business with
regard to the Internet.
❒ Cost-effective Marketing and Promotions
Using the web to market products guarantees worldwide reach at a nominal price. Advertising
techniques, like pay per click advertising, ensure that the advertiser only pays for the advertisements
that are actually viewed. Affiliate marketing -- where customers are directed to a business portal
because of the efforts of the affiliate, who in turn receive a compensation for their efforts meeting
with success -- has emerged on account of e-business. Affiliate marketing has helped both the
business and the affiliates. Firms have managed to use cost-effective online advertising strategies to
their advantage.
❒ Developing a Competitive Strategy
Firms need to have a competitive strategy in order to ensure a competitive advantage. Without an
effective strategy, they will find it impossible to maintain the advantage and earn profits. The
strategy that the firms can pursue, can be a cost strategy or a differentiation strategy. For instance, till
the year 2007, Dell Inc. was selling computers only via the Internet and the phone. It adopted a
differentiation strategy by selling its computers online and customizing its laptops to suit the
requirements of the clients. Thus, e-business resulted in Dell Inc. managing to capture a chunky
segment of the market using the differentiation strategy.
❒ Better Customer Service
E-business has resulted in improved customer service. Many a time, on visiting a website, the
customer is greeted by a pop-up chat window. Readily available customer service may help in
encouraging the customer to know more about the product or service. Moreover, payments can be
made online, and products can be shipped to the customer without the customer having to leave the
house.
❒ Curtailing of Transaction
Cost The nature of online business is such that, the costs incurred for every transaction to go through
smooth and sound, there is no acting middleman. Websites are sufficiently loaded with directions to
facilitate stress-free transactions. Simple and succinct instructional tabs, generally, save the potential
buyer from predicaments of any sort. The mode of payment is predetermined, promising security to
the customer. Thus, online payments are a no-ho-hum affair. All that you are left with, as the
proprietor of your online business, is to download the requirement order and ship it. This demands
effort, too; however, the toil is far less than a tangible business profile.
❒Reduce cost
An E-business, essentially, is independent of costs that are incurred due to business having a physical
entity. Utility bills and other expenses are manageable. You also cut back on costs incurred for hiring
personnel and retaining them with competitive incentives topped with abundant facilities. Running
an e-business is highly convenient as the proprietor does not require to rent another site to execute
the business.
Disadvantages of E-Business
❒ Sectoral Limitations
The main disadvantage of e-business is the lack of growth in some sectors on account of product or
sector limitations. The food sector has not benefited in terms of growth of sales and consequent
revenue generation because of a number of practical reasons, like food products being perishable
items. Consumers do not look for food products on the Internet, since they prefer going to the
supermarket to buy the necessary items as and when the need arises.
❒ Costly E-business
Solutions for Optimization Substantial resources are required for redefining product lines in order to
sell online. Upgrading computer systems, training personnel, and updating websites requires
substantial resources. Moreover, Electronic Data Management (EDM) and Enterprise Resource
Planning (ERP), necessary for ensuring optimal internal business processes, may be looked upon, by
some firms, as one of its disadvantages.
❒ Question of Safety
With the world beguiled by the Internet, it's a fat chance that you are not one among the aficionados.
The Internet is second to none, not to oxygen even, to say the least. Well, one breathes Internet.
Shoppers act live wires when it comes to online pick and pay. However, with far and many pacing
about, there are a few, who twitch at the mention of online payment. Instances of dupery have no
intentions of nailing up anytime soon, and pseudo sites merrily mushroom. All the customer can do,
is remain in a state of doubt.
❒ Data Security
To carry out online transactions, the websites ask for your email address and other contact details.
Customers brake at the mention of providing personal details, lest defiling of some nature occurs.
Besides, certain sites have a complicated operational structure. Thanks to them, hackers have a job!
They fiddle with accounts, meddle with important files, and corrupt data. This, certainly, cannot be
termed ethical hacking! Viruses metastasize every second damaging the database, sometimes
awarding disastrous repercussions, too.
❒ Site Integrity
"We respect privacy. The information provided by the customer will be protected. We refute
dissemination practices as much as you do." Does this statement not tintinnabulate in the ears. Well,
we have come across these paraplegic oaths several times. Are they true to their word? May be ...
may be not. Some sites are known to trade their customers' details for monetary benefits. The
question remains: Can we trust them?
❒ System Upgradation
Once a system is developed, the responsibility of ad hoc upgradation at intervals follows suit. If this
does not happen, the site turnover would be poor. To improve site performance and tow in a good
share of online customers, keeping up with the advancements is pivotal. Though, some sites may find
doing this an unnecessary feature.
❒ Momentary Intangibility
No matter what e-business may try, their chances of selling products -- like furniture and appliances -
- successfully, are bleak. Unless a buyer has the liberty to splurge the kitty, the 'E' sector fights a
battle, it absolutely isn't a part of. For instance, if you are planning to buy a sofa set, you would want
to sit on it, get the feel of the upholstery used, the finish, and what have you! An online furniture bay,
by no means, can consider a proposition like this one. It is better to accept that, there, indeed, are
certain things not meant to be bought online due to the spatial creep; for the rest there is e-
transaction! E-business does have its set of pros and cons. However, eventually, every business -- be
it partially or completely -- has to change its modus operandi, and adopt e-business practices in order
to ensure survival and success. Read more at Buzzle:

SWOT Analysis of E-Business

A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate
the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. A
SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the
objective of the business venture or project and identifying the internal and external factors that are
favorable and unfavorable to achieve that objective. Some authors credit SWOT to Albert
Humphrey, who led a convention at the Stanford Research Institute (now SRI International) in the
1960s and 1970s using data from Fortune 500 companies.[1][2] However, Humphrey himself does not
claim the creation of SWOT, and the origins remain obscure. The degree to which the internal
environment of the firm matches with the external environment is expressed by the concept of
strategic fit.

Setting the objective should be done after the SWOT analysis has been performed. This would allow
achievable goals or objectives to be set for the organization.

 Strengths: characteristics of the business or project that give it an advantage over

others.
 Weaknesses: characteristics that place the business or project at a disadvantage
relative to others
  Opportunities: elements that the project could exploit to its advantage
 Threats: elements in the environment that could cause trouble for the business or
project

Identification of SWOTs is important because they can inform later steps in planning to achieve the
objective.

First, the decision makers should consider whether the objective is attainable, given the SWOTs. If
the objective is not attainable a different objective must be selected and the process repeated.

Users of SWOT analysis need to ask and answer questions that generate meaningful information for
each category (strengths, weaknesses, opportunities, and threats) to make the analysis useful and find
their competitive advantage

Strength of E-business

Ability to compete with other companies global and locally: Implementing an e-commerce
business solution allows companies to expand their customer base to a global level without
considerable time or expense.

Specialization and niche selling: The larger customer base created by online sales allows e-tailers to
specialize in certain niche products that could not support a more traditional business model.

Low overhead cost and low barrier to entry: Startup costs for an e-commerce retail operation are a
fraction of the costs of starting a traditional brick and mortar company.

Direct consumer communication: This form of commerce allows the business to maintain a higher
level of consumer communication. The communication happens when the order is placed, when the
order has shipped and then at a point in the future, should the customer opt-in to receiving regular
email communication.

Weaknesses of E-Business
High Customer Expectations: Small businesses can appear to be large companies on the Internet.
Customers have no way of gauge the business‘ actual level of man power and resources. This leads
to customers that demand the same level of service from business with 1-2 employees as they would
from industry giants like amazon.com. Search Engine Unpredictability
-Web retailers live and die by organic search engine placement. The higher the store is placed on the
search engine result pages (SERPs) translates to more traffic and sales. Search engines regularly
change their ranking systems and this can cause major fluctuation in placement and create an
unpredictable environment.
Consumer trust: consumer trust is a hard thing to build in conventional shops so imagine how
harder it is to build it in a shop that you never actually visit a shop meaning no human interaction
whatsoever just browsing and purchase no people to explain something you are unsure about, there
are no cashier‘s meaning the whole place feels very robotic and without a soul that on top of the fact
you hear stories about websites like this conning people into buying things they wouldn‘t normally
buy or having them steal your bank details and what not.• And then once you have gained a level of
consumer trust its hard to keep as its lost easier then it is gained say if you‘re delivery goes wrong or
they ship you the wrong item, these can impact consumer trust in a big way.
Lack of human contact: The lack of human contact is a god send for people like me, but for people
in the older generations it probably feels like an empty way to buy things without a personality and
leaving it quite soulless, some people prefer to have people around to ask to explain a product to
them and some people want to go to a till before they leave because its what they are used to and
people prefer to do something that they understand rather then venture into something new, it was
hard enough trying to get my mum to trust Amazon.• Personally I prefer the lack of contact, it makes
the whole thing quicker and removes many barriers that would otherwise the process down but on a
whole i can also see why people would not like this.
Product description problems: If there is a product description problem that‘s the fault of the staff
who research and run the website from the HQ so to speak.• It is up to them to keep the information
up to date and correct because if the customer can find what the product is before you can they are
probably going to think that you are not running a business as good as you could be
Opportunities of E-Business
1. Selling goods online: E-commerce, or electronic commerce, is one subset of e-business. It
involves buying and selling hard goods, electronic goods or services over the Internet. What comes
to mind when people think about doing business on the Internet is good, old-fashioned trade. Selling
goods online is probably the simplest way you can start an e-business. Depending on your business
plan, you can put up an online store for a very small investment or you can spend millions.

2. Service Companies: The Internet can be used for a lot more than just selling products. Companies
are now moving toward service-oriented models, using the Internet as a delivery vehicle to provide
services to consumers and to other businesses—including many services that weren't possible before
the Internet revolution and the technology accompanying it. There are a variety of services that can
be offered using the Internet as a conduit. You can offer online data backup, be an ASP or provide a
unified online message center. ISPs fall into the category of e-commerce services as well.

3. Distance learning: In the old days, when a company wanted to train its employees, it had to send
them to an off-site location, pay for accommodations, and lose a day or two of productivity for each
employee. Now it's possible for employees to get training on demand, right at the desktop, delivered
via the Internet. Becoming a part of this training delivery vehicle can be lucrative.

4. Telecommunications: Since deregulation, telecommunications has blossomed, and the

competitive marketplace has opened up. There are plenty of opportunities for the Internet
entrepreneur here, from simply selling telecom equipment and services to becoming a link in an
Internet telephony network. Internet telephony, a new type of technology that allows you to place
long distance calls over the Internet at very low cost, is an area with lots of potential for service-
oriented companies. Tremendous opportunities exist in establishing the infrastructure required for
Internet telephony and in reselling long distance minutes.

5. Information and content provider: Here's your chance to be a publisher. The World Wide Web
has turned publishing on its ear, giving you the opportunity to create a publication without having to
invest in printing presses, ink or paper.

Threats if E-business

Accidents – These are errors arising from mistakes by staff. For example, it is surprisingly easy for a
webmaster to delete many key files of a web site.

Natural Disasters – These include fire and flood. If a company host their own e-commerce server or
their ISP is affected by such a disaster, then it is possible that their web presence could be lost for
several days in the event of a flood.

Sabotage (Industrial and Individual) – This is deliberate sabotage of a system possibly for
commercial gain or due to an individual grudge such as an ex-employee.

Theft – This is theft of information such as credit card numbers, for commercial gain.

Unauthorised Use (Hacking) – This can be for the purposes of theft or sabotage, but sometimes it
has no malicious intention – it is a challenge for technically minded people to try to break into
systems.
Hijacking – A companies web server may be used to mount attacks on other servers. For example
Denial of Service attacks to send a lot of unwanted traffic to major sites such as Yahoo! were
mounted by sending messages from many hijacked computers. Similarly Spammers can hijack a mail
server and use it for sending SPAM. This could result in your web operations being shut down by the
ISP if they believe you are to blame.

Computer Viruses – these are programmes which spread between machines with, or without the
intention of causing damage. As we will see in a later section, there are a great variety of viruses.