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In recent years, information and communication technology (ICT) was at the heart of transforming business processes in a way that encourages higher productivity and product innovation. It has altered the way everyone does business. Small and large businesses are attracted to the Internet by virtue of its transcendence of geographic and political boundaries. By hosting a home page from your local address, your marketing material can be accessed around the world in seconds (Stuart, 1996). The ease of global access to commerce was previously unheard of.
The introduction of technology is not always met with glee. Technology
can sometimes play a major role in running the business and formulating
business strategies. A lot of businesses invest heavily on technology
thinking that technology alone can be a good source of competitive
advantage. While it may be true on the organizational level, it may not
always hold true in a global scale.
The importance of the Internet has been made much of repeatedly, and
there are those that opine that paying attention to its use further
affirms the value of e-commerce as a medium, something that needs to be
accessible to everybody (Latorre, p. 13).
The overall effect of ICT on the entire business community is measured
in terms of productivity growths and savings amounting to billions of
dollars. Studying the effects of ICT on business is quite complex and
very broad. At the center of technology in trade and commerce is the
Internet. The Internet has become a new niche where people are better
informed of improved products and services in the least possible time.
According to Maloff (1995, p. 44), one survey found that electronic
exchange was the most attractive area for potential use among
organisations included in the study. Some of the topics included in
electronic exchange were electronic data interchange (EDI), electronic
databases, email, and electronic imaging and document exchange.
Business processes have evolved in time but the essence of doing
business remains the same. Businesses processes have quietly adapted to
new socio-economic and political environments. Most importantly, these
different business processes have adapted to a new socio-technical
environment where it constantly exceeds expectations and foresights.
We do business in a lot of ways. The products of business innovations
are the products of human imaginations. Technological breakthroughs
came about because of human ingenuity and inventiveness. When we feel
the need to purchase a product or service, we look for them in
newspaper or television advertisements. Sales people entice us to try
new products and services by physically showing to us the different
features of their products. Before we purchase them, there is usually
some form of negotiations with regards to the terms of delivery,
guarantees, quantity, the price, and other issues. When we have
purchased them, the business processes usually does not end there. We
ask for support when we can hardly find our way through. We can return
the products when we are not contented with them. When we are done with
them, we can auction them and sell them to other interested buyers.
This typical business process is almost always practiced by those who
engage in any form of business transactions.
According to Miranda and Miranda (1981, p.28), modern business
enterprises are not only exposed to stiff, if not cut-throat
competition, but is doubtless engulfed many times in a sea of
uncertainty. Sometimes, the introduction of technology in the business
using time, effort, and money give rise to problems in organizational
structures, policies, and strategic directions. The introduction and
implementation of e-commerce to business firms may disturb the status
quo. Some might resist change. Organisational inertia can slow down the
transformation process. Transacting business in a virtual environment
may frighten some customers who are not familiar with the issues and
regulations that govern such kinds of activities. However, there are
individuals who welcome the entry of technology into their business
process and recognize the importance of strategically using technology
to gain competitive advantage. There are firms who can easily adapt to
new technologies while others can’t. So how does e-commerce affect the
different business processes of consumers and business organisations in
general?
The past two decades highlighted some of the major advances in
technology that has enabled businesses around the world to
revolutionize the art of delivering their goods and services to their
customers and vice versa. The use of the web-enabled technologies has
made it possible to identify new ways and new avenues of doing
business. It has expanded the horizons of business transactions to a
broader reach by getting through people in different times, different
locations, and in different strategies (Pour, 2002).
Those who take the strategic business value of technology seriously
know that time is crucial in doing business. In today’s competitive
business environments, reaching out to as many customers and suppliers
can spell success or failure in the business organization. Technology
has played an important part of managing tasks within business
organizations. It cannot be denied that every business transaction or
application involves the use of information and communications
technology.
Technologies have been beneficial to organizations not only in
supporting their different business processes but also to their
training and management efforts as well (Pour, 2002). Technology has
enabled different organizations around the world to collaborate and
engage in business on a new level requiring a new visions, new
objectives, new set of rules and protocols, and new environment.
Although e-commerce is an Internet-based communication to support
business processes, it can also refer to the use of non-Internet
technologies such as telephone voice messaging systems and short
messaging service (SMS) to support requests and inquiries from
interested clients in different places.
What made e-commerce so intriguing among business and technology
enthusiasts is its ability to play down and reduce the complexity of
doing business. Traditionally, a typical business sales cycle starts
with acquiring the product information through flyers, magazines,
newspaper and TV advertisements, letters, and printed forms. Payments
for the acquired products require a lot of paper works and endless
negotiations. This business process has been quite slow and
coordination is usually made more difficult by the fact that product
support is usually possible through a lot of human channels.
E-commerce can make it possible to shorten the time it takes to do the
different business processes. It can make the different business
processes easier. Everything remains digital. Products can be
advertised, ordered, and paid for electronically. Product support
services can also be done electronically.
Like many new ideas, e-commerce is not totally free of controversies
and challenges. There are many security concerns related to transacting
business online. There are ethical considerations related to how
technology is replacing human resources. There are cost issues also and
the strategic direction of organizations is more geared towards
improving technology, and not on improving the human resources aspect.
The biggest challenge lies on how modern technology can fit into the
overall corporate model of the organization. It remains to be a
strategic priority of organisations that are suddenly put into a fast
paced environment where only those who can manage to cope up with the
pace can survive. It may be a cruel new world but it is the reality all
business organisations must face.
Competition in business has sharply intensified as the number of firms
engaged in producing similar products has increased. It has also
widened the gap between those who are capable and not capable of using
technology to support their different business functions. Each business
tries to differentiate its product from those of its competitors. This
differentiation was made possible by technology. One firm is able to
deliver its services in the quickest possible time by taking online
orders and payments through the web while other firms are good at
adapting their new products so that it can be incorporated through the
web. Functional and non functional applications and office suites can
be rented from an Application Service Provider (ASP) instead of
purchasing or developing these software applications. The business
world has defined a new and strategic role for the web not just for
information and message handling but for handling business the way
members of a company’s value and supply chain would like it to be dealt
with.
Why it is then that e-commerce covers a lot of ground in the
business world? An important reason for the growth of e-commerce is
that it reduces the cost of doing business. According to Lallana et al
(2000, p. 6), e-commerce is particularly attractive because it can
serve as the ‘ great equalizer’. It enables start-up and small- and
medium-sized enterprises to effectively compete with large and
multinational firms in the global marketplace. It also appears to
ease the barrier to entry of small and large companies coming from
small and large countries. This is possible because when you are
online, you are given the same opportunity to ‘deliver’ your
information in any way you can. The web cannot discriminate against
small firms.
The study of e-commerce itself involves some degree of risk. It is
often risky to rely on different studies during the decision making
process. There are studies out there which tend to analyze the value of
e-commerce in business in different ways, perspectives, contexts, and
methodologies. The bottom line however, is that technology has always
played a key role in any business process. If technology is not
utilized to support such processes, it will always be there to create
pressures for competitive advantage. It will also heat up the
competitive environment of the different industries.
In order to maximize the customer satisfaction and also to maximize
profit, businesses are constantly adopting new technologies and methods
to improve various business processes. For example, automating the
entire production line and the ordering and payment schemes can improve
and increase the production capability of the business while at the
same time, reducing the need to rely on paper works for processing the
given transactions.
Literature Review
There are a lot of literature materials which discuss basically all
the aspects of e-commerce. A lot of reviews, studies, analysis, and
surveys were already formulated by market research firms and
organisations with direct interests in the e-commerce business. In this
research however, related literature materials which were included were
those that mostly concern the business processes and methodologies
employed in the use of e-commerce.
This section is structured accordingly. First, there is a brief
discussion about the definition of e-commerce. Then a justification of
e-commerce as a business methodology and its benefits is presented.
Different e-commerce applications, issues, and legal concerns were
discussed next.
Definitions of E-commerce
There are many confusing definitions of e-commerce. Some see e-commerce
as Internet-based activities only while others include any kinds of
exchanges of resources (electronic information, applications,
methodologies, and strategies). There is one thing common to all of
these sets of general definitions however: e-commerce is a process
where electronic connections make it possible to exchange resources.
E-commerce is a very broad term used to describe modern ways of
doing business today. If we take a much broader view, we define
e-commerce as the use of the computer to facilitate all of the firm’s
operations, many of which are internal. These operations are performed
within the firm by the functional areas of finance, human resources,
information services, manufacturing, and marketing (McLeod, 1998).
Finance mainly deals with the financial community, stockholders and
owners, and the firm’s customers. Human resources have a special
interest in the global community and labor unions, and information
services interface with hardware and software suppliers. Manufacturing
is responsible for dealing with the firm’s suppliers and labor unions.
Marketing is primarily responsible for interfacing with the firm’s
customers and competitors. All of these areas interface with the
government (McLeod, 1998)
E-commerce is the portion of a business that is put online, and to be
accessed by anyone worldwide who has access to the Internet.. It
involves advertising products on the web in order to reach out to more
potential customers. It also involves purchasing products and services
online. Everything that relates to how we run our business through the
use of modern technology can be called an e-commerce. Because the
World Wide Web presents a different environment for these activities
than traditional media, conventional marketing activities are being
transformed, as they are often difficult to implement in their present
form. This means that in many cases, these marketing activities have to
be restructured such that they can conform to this new medium (Hoffman
and Novak, 1996).
Even before the widespread use of the Internet for commercial purposes,
businesses were already engaged in Electronic Data Interchange or EDI.
EDI is an early form of e-commerce where companies engaged in business
transactions with only a selected few in a private network.
E-commerce as a modern business methodology
In order for businesses to cope up with changing customer demands,
they must adapt new technologies not only to support their business
functions but also to reduce paper works, reduce costs, and improve and
increase productions. In this way, e-commerce is seen as a business
methodology that addresses both external and internal needs of the
business organization. There are facts which tend to support the theory
that e-commerce will continue to play a crucial role in running a
business.
Most business organisations have already invested heavily on
Information and Communications Technology (ICT). ICT is already in the
forefront of helping the organization run some of their key business
functions like purchasing, invoicing, marketing, and customer support.
This has enabled the organization to have some aspect of technology
needed to transform their core business functions through the use of
e-commerce. As a business style, at least one major aspect of
e-commerce is already in the mainstream of society.
While business organisations have invested heavily on ICT
equipments, the prices of hardware and software equipments continue to
fall. This was brought about by stiff competition from the different
players in the industry. Microsoft, Sun Microsystems, Oracle, and other
leading software giants have face some kind of fierce competition from
each other and from open source advocates. Intel and Advanced Micro
Devices (AMD) continued to dominate the processor and semiconductor
industry by constantly developing faster processors while lowering
their prices. Established computer manufacturers like International
Business Machines (IBM), Dell, Hewlett Packard, and Acer tried to keep
their prices within the range of clone computers. Although the IT
sector is very dynamic and highly volatile and previously dominant
players are giving way to other players, falling prices continue to
lure organisations into investing into IT.
The Internet industry has grown quite fast, beating market
expectations. Internet bandwidth continues to double and triple as
compared to a decade ago. The number if Internet users have grown by
the millions. The number of applications developed for the Internet
commerce has also grown dramatically to new heights. Coupled with low
hardware and software prices, established ICT infrastructure, and
availability of the Internet to almost every member of society has
reinforced the notion that e-commerce is likely to play a major role in
every business functions and processes.
As a business methodology, e-commerce has allowed organisations to
carry out business transactions over networks. Examples of e-commerce
activities include online payment of application fees, payment of
tuition and student bills, purchases of books, merchandise, materials,
procurements between businesses, electronic access to institutional
databases, publications, and many more.
Benefits of E-commerce
The main benefit of e-commerce stems from being able to integrate
business operational processes across organizational boundaries and
time zones. Operational benefits of Web use for industrial sellers are
reduced errors, time, and overhead costs in information processing;
reduced costs to suppliers by online bidding, submitting of bids, and
awarding of bids electronically. In this manner, it encourages
transparency and honesty in certain business transactions. In addition,
creation of new markets and market segments, easier entry into new
markets of new and small players, and faster time to market is
facilitated.
The introduction of e-commerce to support business processes has
largely revamped a lot of these practices and methods. It has also
provided significant benefits to the organization in general and to the
whole global economy.
These benefits largely revolved around the reduction of overall cost.
Storing company and product information on the company database for the
web has saved organisations the cost of printing catalogs while giving
them the opportunity to reuse and make changes to information in real
time. Support services have largely been rendered through the posting
of frequently asked questions on the web or through interactive online
support services and applications. The use of data warehousing and the
development of data mining applications has enabled company executives
to make use of digital information for decision support and perform
more complex analysis. It also allows their suppliers and customers to
get a first hand view of company data and processes and gives them the
opportunity to get involved in the decision making process. Companies
who outsource most of their applications to third party service
providers have saved a lot of money by renting out services instead of
investing heavily just to own them.
E-commerce has also allowed business organisations to keep track of
customer feedbacks and how their customers are satisfied with their
products. This has help companies adjust to these feedbacks in the
quickest possible time and it allows them to structure their approach
in the fastest way they can. E-commerce has also allowed business
organisations to expand globally. It opened up a lot of opportunities
for them to discover and test new markets for their products just by
using the web-enabling their business processes and functions. Aside
from these, it also allowed them to manage their offshore sites in a
virtual environment.
E-commerce applications
McLeod (1998, p.81) describes the use of the Internet in the
context of data communication as a communication tool between the
business organization and its immediate environment and within the
organization itself.
In one article about e-commerce, applications can be classified into three classes (Tapaswi):
1. Intranet
2. Extranet
3. Internet
Intranet applications support the internal processes and
functions of the organization using company information in a new
strategic way. Extranets support electronic data interchange (or EDI)
where company information can be used to support internal processes and
can be used by other selected outside users. The Internet allows global
computing on a wider scale and facilitates unlimited
business-to-consumer electronic commerce applications.
According to Rossi et al (n. d.), e-commerce applications are a
particular kind of web applications with similar requirements like good
navigational structures, usable interfaces, a clear domain model, and
others.
Types of E-commerce Applications
E-commerce application
categories or types generally indicate what is occurring during the
commerce transaction (Franklin, 2002). In a Business to Customer (B2C)
application, a business sells a product or a service to an end-user.
These transactions are usually short-lived but the revolving process of
customer contact allows the business to make promotional advertisements
to their customers.
Business to Business (B2B) applications (Franklin, 2002) involve
multiple businesses using electronic communications to facilitate
commerce transactions between organizations. There are complex business
rules that govern transactions between these organizations. B2B
applications process orders from organizations (not the end-users) by
integrating the front-end applications with the suppliers of products.
B2B applications handle supply chain management, order procurement,
contract processing, logistics, and other similar transactions.
B2B applications involve the following (Lallana et al, 2000):
Supplier management – Electronic applications in this area helps to
speed up business partnerships through the reduction of purchase order
(PO) processing costs and cycle times and by maximizing the number of
Pos processed with fewer people.
Inventory management – Electronic applications improve auditing
procedures and helps reduce inventory levels, inventory turns, and
eliminates out-of-stock occurrences.
Distribution management – Electronic applications make the transmission of shipping documents a lot easier and faster
Channel management – E-commerce allows for speedier dissemination of
information regarding changes in operational conditions to trading
partners.
Payment management – An electronic payment system allows for a more efficient and faster payment management
B2C e-commerce involves customers gathering information,
purchasing, and receiving products over the Internet. B2C transactions
involving customers who use e-commerce include the following (Lallana
et al, 2000):
Purchasing products and information – Electronic applications make it
possible for customers to browse detailed product information online.
Personal finance management – Electronic applications help customers
manage their finances especially those that involve investments and
banking transactions.
New modes for electronic payment
There are different modes of electronic payments for
product purchases online (Sandeep Tapaswi). For this research however,
we will consider the following: electronic cash, electronic cheque, and
electronic wallet
Electronic cash or eCash is a software program which uses digital
signature technology based on public-key cryptography to provide
authentication, nonrepudiation, data integrity, and confidentiality.
With this form of payment, only the bank signs the payment data and the
same bank verifies its signature and the integrity of the payment data
when a payment recipient submits eCash payments for validation. ECash
should still have some form of monetary value.
Electronic Cheques is another e-commercial payment scheme where it can
be sent through email. When deposited, the check authorizes the
transfer of account balances from the account against which the check
was drawn to the account to which the check was deposited.
Electronic wallet is a service that enables customers to store credit
card information with a wallet service provider. Examples of these
wallet service providers are Yahoo! and Microsoft.
E-commerce Issues
Too much of a good thing can sometimes be bad. Although e-commerce
provided a lot of opportunities for businesses, it also created another
set of problems and challenges. According to Adams (1996), the rapid
commercialization of the Internet coupled with the lack of regulation
on a systematic basis makes the Internet both a potentially fruitful
and possibly dangerous place to do business. Regulating the commercial
use of the Internet is an almost impossible task. Since no one owns the
Internet, no one can regulate it even if the outcome of e-commerce
trade is not within the bounds of government policies and business
ethics.
Accordingly, there are public policy issues in e-commerce (Lallana et
al, 2000). Among the issues of that needs to be addressed are the
universal access where all people should have inexpensive and easy
access to information networks, legal recognition of e-commerce
transactions, consumer protection from fraud, and protection of
consumer’s right to privacy.
There are instances nowadays where the Internet is used for
child-trafficking and where child and adult pornography takes on a new
dimension. It is difficult to put a stop to these kinds of activities
because of the anonymity of those who setup and control the different
web sites. Previously, controlling the spread of child pornography and
pedophilia presented a lot of challenges to governments around the
world largely because of the permissive socio-economic condition of
poor countries. Now, the battle is also in cyberspace. The commercial
viability of the Internet has made it even harder for governments to
crack the whip on child traffickers because the Internet has concealed
the identity of those involved.
Not all businesses are embracing e-commerce. There are constraints that
limit their ability to do engage in such activities. These constraints
are (McLeod, 1998):
1. High costs
2. Security concerns
3. Immature or unavailable software
Building an information systems infrastructure for e-commerce is not a
cheap proposition. These high costs come from purchasing hardware and
software and middleware products. It also includes costs in training
the IT staff and other related personnel in adapting to new business
processes in the e-commerce environment.
The unusual flow of financial transactions over the web makes it prone
to certain forms of attack and intrusion. Security is a paramount
concern that should be immediately addressed so that small firms with
limited resources will be encouraged to formulate strategies involving
the use of the Internet.
Just how secure are business transactions over the Internet is
everyone’s guess. Service Providers will always find a way to fortify
their network connections and Internet hackers will always find
different ways and means of infiltrating company data at all costs. The
proliferation of trade over the web has also provided a new breeding
ground for computer viruses and worms.
Information technology in general is an immature field of science. It
does not have any established order where experts can readily solve
problems once it occurs. The changing nature of technology requires
those with the necessary skills ample time to study new technological
innovations before they can propose a series of solutions to problems.
Coupled with a lack of the necessary skills and manpower services to
handle e-commerce activity, these constraints can sometimes lead to
alternative methods of engaging in business activities.
Electronic Commerce Frame-Work
The architecture framework for the electronic marketplace has three
logical layers: Access mechanisms, resources, and middle ware. These
layers lie on top of the Internet infrastructure.
Access mechanism is the layer at which participants enter the
marketplace from their home environment. Both computer-to-computer and
interactive access must be supported. Network protocols and
technologies must support information retrieval from the both computer
sites. This is where the information infrastructure can also be found.
It is composed of many types of transport systems. It is a synthesis of
various forms of high-speed network transport systems- band-based
telephone, wireless modem-based PC, or satellite-based.
The resources layer is where the procurement services and applications
reside. These services cover all phases of acquisition from catalog and
bid advertisements through shipping and payment.
Middleware refers to modular networks services that transform the
Internet into an e-commerce hub. Most of the security concerns are
addressed here. Here one finds essential functions such as directories,
user authentication, access control, accounting algorithms and
electronic payment mechanisms. This is where the messaging and
information distribution infrastructure is found. The messaging vehicle
is called the middleware software which is positioned between the web
servers and the end-user applications.
E-commerce laws
There are e-commerce laws and acts enacted by legislative bodies of
different countries to protect the entire e-commerce process. These
laws serve as legal protections of individual consumers and business
organisations and help resolve issues. Protections are centered on
legal recognition of e-commerce transactions, consumer protection from
fraudulent e-commerce transactions, right to privacy, and universal
access. It also seeks to provide recognition for electronic documents
by providing that these documents shall have legal effect, validity, or
enforceability as any other document or legal writing. Through these
documents, rights may be established, obligations may be extinguished,
and a fact may be proven and affirmed. Most of the provisions of these
laws are primarily based on the framework of the United Nations
Convention in International Trade Law or UNCITRAL. Accordingly, legal
protection of intellectual property is an important element in any
country’s policy and legal framework for e-commerce.
Unfortunately, there not enough laws to protect consumers and business
firms who engage in e-commerce activity. In some instances,
advancements in technology have enabled these laws obsolete and unable
to meet the times.
Technology can also be used to protect intellectual property rights through such measures as (Quimbo and Andam, 2000):
1. Imposing access control measures to the source of the work, such
as restricting web server access or individual document access.
2. Imposing controls on the manipulation of the electronic file which contains the work
3. Web server access restrictions where user identification and authentication procedures are implemented.
4. Document access restrictions which involves rendering or viewing
software systems which need a particular format which can be read only
by special software developed or controlled by the information provider
and software that consolidates control measures limiting unauthorized
viewing or use of work.
5. Secret-key Encryption and Public/private-key encryption. These
techniques For the purpose of protecting the privacy, integrity, and
confidentiality of business transactions and messages
Components of Privacy Control
The law regulating privacy control varies from country to country
(Janczewski) but some similarities exist in most of the developed
countries.
Privacy law
There are acts of the local parliament regulating the distribution
of information related to individuals. Usually, individuals have rights
to verify information about them and to set up limitations related to
the spreading of this information.
Illegal access to computer records
This law is usually labeled as ‘anti-hacking law’. These acts
introduced penalties for individuals attempting unauthorized access to
computer-stored information.
Telecommunications law
These are the rules of running telecommunication networks. Among
these laws are clauses related to the rights of organisations managing
networks to monitor or control the content of transmitted messages.
Crime Acts
In some countries, there is no separate law for regulating access
to computer networks and parts of the ‘anti-hacking law’ are
incorporated into this type of legislation.
Methodology
This is a descriptive type of research. More specifically, it is a
descriptive-analysis type of research. This research methodology tries
to understand the nature of things (Calmorin and Calmorin, p. 48). It
tries to identify the different e-commerce business processes and how
these individual processes are affecting the overall business
operations. This method helps us to better understand the different
forces, issues, and constraints that tend to tear down or hold the
different processes together and what makes it work in a particular
business environment. Descriptive research is concerned with conditions
and relationships that exist, practices that prevail, beliefs and
processes that are ongoing. From the point of view of continuing
research into e-commerce, what new questions are brought out to light
by analytical work which will give directions to future researches
(Calmorin and Calmorin, p. 48)?
At the center of this study is the web. Due to its commercialization,
the web offers a lot of benefits which can be examined from two
perspectives: the consumer side and the business organisation side.
Even though the web is not the sole medium for e-commerce transactions,
it is still considered an important medium due to its accessibility and
commercial viability nowadays. It is not, however, a technology which
can address a lot of business and consumer concerns. E-commerce is not
the quick solution for start-up companies to be known globally. Certain
issues involving business processes, practices, and risks need to be
known and addressed so that the commercial viability of e-commerce can
be incorporated into the overall business plan of organisations.
Solution Methodology
The solution methodology in analyzing the way e-commerce affects
business processes is structured based on issues, advantages and
disadvantages of using e-commerce in helping the business improve its
business processes. Different marketing and business issues facing
business organisations today will be presented. Based on these issues,
a discussion of how e-commerce is being used to help solve these issues
will be presented. Furthermore, the use of e-commerce applications will
be presented as an alterative to solve and address the different issues
in business today. Since this research would be presenting both sides
of e-commerce issues in business processes, the system employed by this
research in generating the results of the analysis will also be based
on the pros and cons of e-commerce in the context of the different
business issues. Further analysis will be supported by statistical data
and other important facts derived from e-commerce studies around the
world.
E-commerce is considered a broad topic because it covers nearly all
sectors of business-from education, manufacturing, airlines, hotels,
IT, and many more. It also covers a lot of business processes like
inquiry, purchasing, payments, and customer support services. In view
of these facts, the data gathering tool needed for this research is the
document analysis method. As such, relevant information and statistics
were taken from web sites of different e-commerce organisations. Some
statistics included used in this research were taken from the US census
office, E-commerce surveys from the UK Office for National Statistics
(ONS), and from Internetindicators website.
Before we can evaluate the research findings, it is important to
identify some key business processes and some e-commerce applications
that are applied to these business processes. From there, we can
identify and relate some relevant issues that affect the business
process. These key businesses processes are marketing and payments
Issues
1. Business organisations are pressured to adapt their business
strategies and processes in a changing social, economic, political,
technological, and cultural environment in order stay competitive or
maintain their competitive advantage.
Transforming a business in order to easily adapt to changing
environments is one of the best ways to stay competitive.
Transformation involves restructuring the organizational staff and
human resources, cutting production costs, fast tracking information
dissemination; streamline the information distribution schemes, and
improving payment and customer support services. There is no question
about the role that information technology plays here. Although the
definition of e-commerce varies accordingly, most people support the
idea that every transaction that uses the Internet as a medium is
already leveraging technology.
According to Grant (1999), many small business entrepreneurs have not
even had much time to browse the web. They might have been doing quite
well in their current business situation that they don’t see the need
to web-enable their business processes. Some view the application of
technology in their business as risky and unproven. Grant asserts that
the successful introduction of technology has never been risk free and
it follows that business organisations need to adapt their business
processes to new systems development methodologies. An introduction of
e-commerce to a small business is not the same as previous approaches
to information technology. There have to be fresh new approaches to
systems development. This bluntly characterizes the ever changing
nature of a business environment.
Small businesses eventually grow in time. But at this point, they need
time to build on their finances. Today might not be the right time to
invest on technology and embrace e-commerce as way of jumping into the
global bandwagon. These businesses need to develop their
infrastructures first before they can eventually think of engaging in
electronic trade.
Small businesses are not the only ones pressured to make electronic
transformations in their business processes. The more established ones
are forced to compete on a more global scale and showcase their
innovations such that they view the Internet as the only means of
getting there. However, the reality is that very few businesses are
capable of using the Internet on a worldwide basis. These limitations
are brought about by a lot of social and economic factors that act as a
means of undermining their competitiveness.
There is the issue of time. Different countries are in different
time zones. When a customer calls for support services, it is expected
that the organisation should respond in real time. On the part of the
business, this entails the need to provide the necessary manpower to
man help desk support systems in night shifts.
There is also the issue of language. Although English is predominantly
the language used in the Internet, not everyone understands it.
Non-English speaking countries may ask for their own language versions
of web information but for a business organisation wishing to go
online, this is another story, another major issue, and another
deviation from their original business goal.
Some business organisations want to operate on a global scale without
first defining their business boundaries and global goals. Perhaps they
should ask if the foreign market is really a good market for them.
Perhaps, if it is not really a good market for them, then why should
they even consider using the Internet? Aside from that, different
markets in different countries have different cultures which can play a
big role in dealing with international customers. Some organisations
may have the latest technology at their helm but their target customers
might not have the same level of sophistication.
Using e-commerce without ample preparation and study may eventually
lead to disaster. Strategic planning for adopting e-commerce would
involve a lot of resources, time, and risks that not all organisations
have and are willing to take. In this issue, e-commerce is not the
solution to business problems of small and large business
organisations. Embarking on e-commerce for organisations that are not
best suited for this kind of environment will not only hasten the
demise of the organisation in a very competitive environment but would
also pull down other organisations and economies as well.
One of the great things about using e-commerce is that it provides a
lot of opportunities for international exposure and business
transactions never dreamed of. Organisations restructure themselves in
preparation for a more competitive activity in the corporate world.
Organisations today need to be engaged in some form of networking or
partnerships in order to stay remain competitive. E-commerce provides
an avenue for different SMEs and other small organisations to be
engaged in cooperative arrangements. By forming such structures,
businesses are able to leverage their limited resources with other
small firms and they tend to achieve economies of scale and create new
sales opportunities that were not available prior to the introduction
of e-commerce (Kettinger and Hackbarth, 1997).
According to Franklin (2002), it’s almost a requirement that companies
have effective e-business strategies or their very existence could be
in jeopardy. He adds that an organisation’s ability to communicate and
transact with customers and business partners electronically is
tantamount to its success, and the inability to do so puts them at
competitive risk.
Global e-commerce is less affected by economic climates. Economic
climates are often characterized by hostile or friendly economic
atmospheres where businesses are usually situated. One country can take
advantage of great financial returns from other countries who patronize
their products. Basically, the Internet provides a forum where
countries can showcase their products and their ingenuity as well. With
an e-commerce presence, potential customers can number to several
million all across the globe. Staying competitive is staying globally
competitive. The web offers the best alternative for business
organisations to offer customers their own brand of solutions to their
changing needs and problems.
2. Marketing of products is often a challenge to businesses because of changing customer needs and demands
Sometimes, it is also a challenge for customers on what, where, and how
to get the needed information to satisfy their needs and demands.
E-commerce places the burden on consumers to do the searching and
mining of information at their fingertips. It is never an easy task
though. Allowing customers to do the searching gives them more power
to choose. It also allows them to try a lot of strategies in
transacting business over the Internet.
Because the Web presents a fundamentally different environment for
marketing activities than traditional media, conventional marketing
activities are becoming transformed, as they are often difficult to
implement in their present form (Hoffman and Novack)
Marketing involves the introduction of products and innovations to
these products. It aids customers in making decisions. Web-enabling
this process will have an impact on the way marketing of a product is
done. There are a lot of e-commerce applications and strategies which
can affect this business process. Some of these applications involve
online reservation, telecommunication services, electronic publishing,
education and Internet-based training.
According to Press (1993), the Internet as a marketplace has the
potential to make markets more efficient. It gives greater flexibility
to customers since they are in control of the search process. It will
enable customers to make price comparisons on a new level of price
shopping. E-commerce then has the potential to lower market costs in
delivering information while at the same time, improving on the quality
of information.
According to an article posted by Internetindicators.com, 68% of
Internet economy companies that are leveraging the Internet reported
experiencing a gain in market share attributable to the Internet. The
article adds that aside from an increase in market share, the hundreds
of billions of dollars spent on the Internet infrastructure are now
paying huge dividends to companies that provide goods and services over
the web.
Delivering information to customers using traditional media can be
challenging and may entail s enormous cost. The web, as a distribution
channel, provides a way of reaching out to different people in
different locations at different times and circumstances. Since the use
of the web and the Internet in general is already a global phenomenon,
the boundaries are limitless. Businesses do not need to engage
customers in a definite time of the day (8 working hours to be exact).
The web can provide continuous communication with customers provided it
is up and running 24 hours a day, 7 days a week.
Since customers know where to contact the firm for inquiries,
purchases, and customer support services, there is some form of
relationship that is created through these informal ways of
communication. These relationships, though not really anchored on a
specific platform, serves to guide other future customers on where to
get the needed information later on. Customer feedbacks can be easily
collected (through email and comments gathered through web clickstream
data). Providing customer support can be done real-time or customer
inquiries can be attended through email communications.
The web enables businesses to gather as much data needed to adjust
the prices of their goods. Competing with others solely on prices is
not always a sound marketing strategy. Sometimes, it is necessary to
lower product prices based on reduced customer demands on certain
products or increase prices while meeting new customer demands.
It is very convenient to place all the needed marketing information
on the web and just let the customers navigate and read all the
necessary contents there. It is another story however, if customers
could freely express their sentiments and needs and let the business
get a personal assessment of their actual needs. This is actually true
with customer support services. Most of the time, in a web-enabled
support infrastructure, you would actually let the customer do the work
in your behalf
People have a tendency to distrust the reliability of information
posted on the Internet. It is fairly accurate to say that not
everything we see on picture is what it’s really worth. The downside of
relying on the web for just everything is that people will not have
other opportunities to test the capabilities of the product. It is
difficult to ‘see through’ people’s needs because they will not be in a
good position to ask different questions. Even if the web is one of the
best ways of reaching out globally, it’s not always an assurance that
customers will respond accordingly.
Although it was previously mentioned that the Internet gives equal
opportunities for both small and large companies to compete for global
markets, it is not usually the case for smaller, less developed
countries. The relatively underdeveloped information infrastructure of
these countries hinders their business capability to go online, much
more, to compete on such a global scale.
According to Rankin (2003), a survey of 130 US companies in 2002
estimated that consumers spent about $76 billion shopping online.
Although shoppers spent a lot of money online, it would have been
greater if customers have not abandoned their shopping carts (Rankin
2003). According to the same survey, 41% of these shoppers abandoned
their shopping cart because they found the checkout process too long
and another 21% abandoned their shopping cart because of confusion with
the checkout process. These figures are staggering and reflect the
unresolved issues that need to be taken cared of by e-commerce
retailers.
In another e-commerce survey made by the Office for National
Statistics (ONS) of UK, only 16% of businesses in the UK used a
computer-mediated network for sales with a smaller percentage (12%)
planning to start doing so the succeeding year. On top of this, nearly
70% of these businesses have no intention of using computer-mediated
networks for sales in the same year. Such a low e-commerce
participation in the UK might have been brought about by the structure
and size of organisations. Small and Medium Enterprises (SMEs) in the
UK represent about 95% of all businesses registered for VAT, employ 65%
of the work force, and produce 25% of gross domestic product
(Ballantine et al., 1998).
There is now the argument of whether e-commerce is really the ‘in’
thing in business since not all businesses are into this bandwagon.
There is little proof to support the fact that a business will close
shop if it will not open up its business processes through the web.
3. Most businesses find it hard to protect their intellectual property rights and their privacy
Businesses handle larges volumes of data and information that are
critical to their business operations. With the introduction of
e-commerce as a distribution channel, businesses were able to reach out
to a large segment of society in different locations. At the same time,
it opens up threats to their intellectual property and privacy. While
e-commerce has hastened the time it takes to market their products, it
also opened up the possibility of intruders invading corporate privacy
and stealing sensitive information. It should be kept in mind that as
network security improves, so does strategies and techniques in
breaching these defenses. In this section, we will examine the main
issue of what e-commerce has contributed to the protection of
intellectual property rights and privacy.
E-commerce technologies can be used in any environment where
documents are exchanged between organisations, including procurement,
purchasing, finance, trade, transport, and health, law, and revenue/tax
collection.
Electronic documents and forms, though they can contain the same sets
of information as a traditional paper document, can be interpreted in a
lot of ways. In electronic transactions, electronic mediums are usually
relied upon to transmit orders, purchases, or perform sales
transactions. One disadvantage of using electronic documents is the
uncertainty surrounding the treatment of these documents in legally
binding contracts. The issues and questions involved here are more
legal than business in nature. In legal proceedings, documentary
evidences are “those which consist of writings or any material
containing letters, words, symbols, figures, or other modes of written
expression offered as proof of its contents.” Electronic documents and
forms will always be subjected to some degree of risk during the
transmission process.
In another setting, opening up a corporate computer system so that
online transactions can be performed can increase the risk that
corporate privacy may be invaded and corporate information may be
accessed by unauthorized users. The infrastructure for setting up an
e-commerce structure is not always perfect due to the changing nature
of technologies that handle these e-commerce activities. In short, the
art of doing business has become rather complicated and a lot of
interweaving forces are making it more difficult to resolve different
issues.
While it may be good that governments around the world have taken
notice of the risks involved in doing business online, it eventually
boils down to the fact that these risks associated with privacy and
intellectual property issues are part of the game of business.
Legislation has provided some degree of protection and imposes
penalties for those who violate provisions of the e-commerce laws and
regulations of their country.
The proliferation of business on the Internet has largely grown
unnoticed and unregulated. Different forms of businesses emerged-some
legal and some illegal and unethical. While e-commerce has helped speed
up the communication process, it is now also used as a medium to
transact covert and illegal activities at a faster and more
sophisticated manner. Child trafficking and pornography is easily
consummated through electronic transfer of images. Terrorists have
largely used the Internet for channeling funds, making communications,
and spreading propaganda materials.
Countries around the world have made progress in enacting laws that
protect consumers and businesses who are engaged in e-commerce. Though
not all provisions of these e-commerce laws address all of the
concerns, it has provided a way for governments around the world to
recognize the valuable contribution of technology in the world of
business. Governments have not only enacted laws. They also provided
packages of measures needed to protect the whole e-commerce activity.
This proactive approach tends to put businesses well within government
reach and fosters a favorable political and social business
environment. For example, in recognition of the potential impact of
e-commerce on the UK economy and its competitive in global markets, the
government set itself the aim to make the UK the best environment in
the world for e-commerce (Williams and Gibbins, 2000). Such noble aim
can only be accomplished by all sectors of society who would be working
towards that goal.
There are debates and issues related to intellectual property rights
especially if it pertains to documents in electronic form. How will
these issues be resolved when the source document came from one country
with another interpretation of intellectual property, downloaded and
used the electronic document in another country which does not have a
law protecting electronic data? As if these issues were not enough,
there is a more pressing question of who would provide and who would
handle the legal framework for doing business transactions over the
Internet. Shouldn’t Internet users that do business online be
protected in the same way as people who do business in the traditional
way?
There are different laws that can protect the rights of consumers
and businesses. Most countries enacted laws for these purposes. There
is the anti-wiretapping law, the bank secrecy law, and most
importantly, the E-commerce law. Sometimes though, these laws are not
always free from discrepancies. They are not always capable to handling
sensitive issues in today’s changing environments. Sometimes, these
laws tend to be outdated and could hardly adjust to new conditions. But
if these laws are nonexistent, how would everyone be protected? A
protection such as these is better than not having any protection all.
There are number of questions concerning marketing through the Web:
validity of an electronic signature, non-reputability, legality of an
electronic contract, risk, trademark and copyright violations, loss of
right to trademarks, loss of right to trade secrets and liability.
Ensuring that justice and fairness prevails in any e-commerce activity
is next to impossible. The e-commerce environment is full of legal and
technological loopholes that cannot be seen by two or more individuals
who enacted e-commerce laws. These issues can only be resolved through
collective and diligent work on the part of countries around the world.
Research Findings
This research was able to identify ways in which e-commerce affects
business processes. Analysis of the findings suggests that the
following variables of business processes are affected by e-commerce:
1. Marketing strategies – small and large firms are given an
equal playing field. There is no definite boundary. There is also no
definite strategy to follow. Since no one owns the Internet, there is
no formal barrier to the entry of firms who are willing to make their
presence known in the global economy. However, different organisations
have different capabilities to web-enable their business processes. The
high cost of transforming business processes, the security risks
involved, and the uncertainty of capturing a large market share can
sometimes play major roles in business strategies of these
organisations. Moving your business to a new level by using technology
is not enough to sustain competitive advantage. Different sets of
factors, issues, concerns, and resources should be taken into account
first. Formulating the right methodology by varying the degree that
technology will play in the business process depending on the need is a
good way to start the business transformation process. It is still a
fact of business life that even if organisations have not embraced
technology, there are capable of producing and marketing their own
goods with modest returns. The technology myth sometimes tend to be
bias against those who have not taken into account the value of
technology in their business.
2. Time to market – There is no question that the Internet provides
the fastest way to market products and services. Web-enabling your
business processes will surely help speed up and simplify the business
process regardless of geographical locations. However, an increase in
exposure also comes with it greater responsibility to respond
accordingly. Since time is crucial in any business, failure to meet
immediately the concerns of customers will drive them and their other
contacts away. When an organisation is online doing business, it must
be prepared to operate the business 24 hours a day, 7 days a week.
3. Government policies – Governments around the world are tasked to
protect consumer and business interests in general. There are at the
helm of enacting electronic commerce and consumer protection laws. They
are in a position to regulate the way business processes are done in an
Internet economy. Based on the analysis, the proliferation and growth
of e-commerce activity has encourage governments to look beyond
businesses as more than revenue-generating entities in society but as
major players in trying to reach out to other countries around the
world. E-commerce businesses are also a way of promoting a country’s
culture and identify to the international market.
4. Growth of the business – Based on the analysis, small firms who
can web-enable their business processes are already perceived to be
globally competitive. This is brought about by their ability to
overcome startup syndromes at the earliest possible time and were able
to lay out the information systems infrastructure and foundation for
e-commerce in the quickest time possible. Business cannot do this if
they have been lagging behind in economic growth. Information system as
a field has always been categorized as immature. A small and medium
scale business that can use the Internet to support its business
processes can already be considered ‘mature’ in the organizational
perspective.
5. Partnerships and Collaborations – Previously, partnerships
were limited by geographical distances and locations. The
implementation of e-commerce as a business strategy involves
consideration of other partners’ or players’ contribution to their
business processes. These partners or players can come from the ranks
of customers, business partners, suppliers, and even competitors.
Engaging in these kinds of organizational setups can help smaller
organisations leverage the competitive advantage of their partners.
6. Business strategy - It is also important for businesses to
consider the business viability of technology before they formulate
their e-business strategies and policies. Based on the analysis, it
came out that technology not only supports the internal processes that
occur within the business organisation. It can support various business
processes specifically involving business-to-business and
business-to-customer transactions.
Conclusion
It so happens that businesses today are caught up with the inner
fixtures of the web. The Internet has grown in sophistication and in
number of users. Applications that support business processes are
getting bigger, better, and more complex.
E-commerce plays an important role in enhancing and transforming
relationships between businesses’ customers, their governments, and
their environments. Embracing e-commerce is not just web-enabling a
business process that is already ongoing and proven to work. It is not
just doing the same thing in a different setting. The success of a
web-enabled business depends on how new things, new approaches, new
strategies, and new improvements were made and integrated with the
existing business process through the help of the technology. It is
good to look at the Information superhighway as a road where businesses
can market and deliver their goods in the fastest possible time they
can, in the finest quality of service they could possible offer, and in
the most appropriate way to address the immediate and growing needs of
customers on a global scale. E-commerce not only lessens production
costs and spending but also enhances the values of products and
services. In a way, e-commerce forces companies to adopt strategies
which are not only consistent with current global settings but also
help them to transform the organisation in a more dynamic structure
capable of not only adapting to new trends in technology but in
adapting to changes in general.
Although there are issues confronting the way businesses are conducted
online, the reality is anything that is introduced to society that will
alter the status quo in one way or the other will always generate
issues.
Basically, issues against e-commerce are more anchored on its technical
nature like how it can address security and how it can be implemented
in the least possible cost. Issues favoring e-commerce are centered on
the way it helps in formulating marketing strategies, time to market,
lowers production costs, and provide an even level playing field for
all types of business organisations.
E-commerce has changed the business process. A strategy in
e-commerce migration of the entire or some business process into the
global economic mainstream requires careful thought and assessment of
prevailing social, economic, political, and technological conditions. A
mature e-commerce business will have technology properly integrated
with their business processes and information flow. A business process
need not be automated. It just needs to be adapted to changing
environmental conditions.
The important thing for any business is to clearly define what they
wish to accomplish with regards to technology. It’s either they rely on
their existing structure or they web-enable their business processes.
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Appendices
Appendix A
E-commerce Charts and Graphs
First UK E-Commerce Survey
Source: Office for National Statistics
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