E-Markets and Organizations Analysis Essay

E-commerce has changed traditional organizational structure and understanding of business. Many modern organizations combine features of traditional retail companies and virtual organizations selling their products and services through the Internet. “A traditional business often will build and maintain a brochureware site as a marketing tool with the objective of promoting the business”. This development threatens to be just as much of a paradigm shift as the first two stages in computer evolution. As before, those organizations which do not take advantage of the opportunities it brings, or which ignore the threats that it poses, are likely to fail, and those which can foresee and exploit the changes are becoming leaders in their markets. The advantage of the Internet will come not from trying to replace existing sales channels (such as providing a website that looks like a virtual shop) but from exploiting the virtual possibilities that the Internet brings to add value to customers.

The main changes place in business orientation and structure of everyday operations. E-markets demand new approaches to management and business activities including e-banking systems and the Internet control over sales. Integrated circuits can be created to perform virtually any information-processing function and, by combining these integrated circuits, information-processing devices of incredible complexity (like the computer) can be quickly and cheaply created. It is this invention which has driven the pace of the information revolution and has enabled the unprecedented changes that have occurred to take place. Small businesses could start to compete with large ones, as the physical trappings of business were automated — typing pools and secretaries became word-processing programs; telephonists became automated switchboards; and schools started introducing computers and computer training into the classroom. Modern organization “can be the weakest link in many vendor organizations and therefore due diligence must be stringent – i.e., evaluate the vendor’s strengths in project management, systems integration, and business”. Consumers neither have, nor particularly want, to go to a single location on the Internet to do their shopping. Nor is there any significant passing trade: linking different sites selling very different goods together does not provide any guarantee that people viewing one site will then go on to view the other. he virtual nature of the Internet means that you can use different methods for achieving sales — methods that cannot be applied effectively in a physical environment. Ironically, however, most websites fail to take advantage of these methods. The Internet has been constructed by computer experts, not by marketeers, but its future, whether the computer geeks like it or not, is going to depend on the speed with which an effective model emerges that allows commercial organizations to sell their goods and services. There is no such thing as a free lunch, and unless the marketeers can find a way of making it pay, then the Internet is doomed to grind to a halt It is one of the key — but comparatively under-exploited — aspects of the Internet that it provides you with an opportunity to lower costs as a precursor to reducing prices. As such, the Internet enables a traditional business company to pursue a low-price strategy while maintaining profitability. There are industries in which this is already proving possible: indeed, in some sectors there is wholesale migration from physically based methods of doing business to virtual methods. One of the best examples is the brokerage industry for stocks and shares.

Supply Chain

Supply Chain is the integral part of any business defining all processes and activities from product development and its distribution to the end consumer (see appendix 1). The supply chain is defined as “a col­lection of physical entities such as manufacturing plants, distribution centers, con­veyances, retail outlets, people, and information, which are linked through processes such as procurement or logistics, to supply goods or services from source through consumption”. In virtual environment, supply chain involves the following steps: suppliers – purchasing, production, distribution – customers. The uniqueness and distinctive features of the virtual supply chain is that all processes are simplified and fulfilled a virtual environment. The Internet is a virtual medium without a physical manifestation, and that this means that the constraints imposed by geography can be broken. Of course, at the end of the sales process, the consumer has to receive his goods. Goods that are large relative to their price, furniture for example, are unlikely to sell well, simply because the shipping charges constrain the population to which they can be offered. Goods and services that have no physical manifestation, for example dealing in stocks and bonds, are ideally suited. The fulfillment of the purchase of a stock or bond requires simply a certificate to be sent in the post or, at best, no physical manifestation whatsoever. Although not necessarily playing to the Internet’s strengths, price nevertheless remains an extremely powerful method of encouraging (or discouraging) consumers to buy. If the prices on the Internet are lower than in the physical market, this advantage will go a long way. towards increasing sales. But, to be sustainable, lower prices clearly need to be matched by lower costs if the profitability of a business is to be maintained. Those who get in first have a significant advantage. Not only do they reap the rewards of publicity and new customers, but they also can continue to evolve their exploitation. As soon as the companies who are following manage to catch up, they can add a new variant to keep them in the position of market leader.

The supply chain is influenced by a large geographic network of branches, shops or other outlets has traditionally been the only way in which information could be exchanged between a producer and consumer. Local bank managers are essential because they are the only people who had, or could obtain, the information about their local economic conditions to ensure that the correct decisions on lending and saving could be made. For a manufacturer, a large sales force is essential because this is the only means by which information could be given to and gathered from customers — and it is this information which ensured that the company’s products sold successfully. The first organizations to acknowledge and accept that the information revolution had removed the need for a geographical presence are the financial services organizations such as banks and insurance companies. These organizations sell products that consist, almost entirely, of information. They supply their customers loan or savings accounts, abstract entities that consist largely of information about the customers’ ability to draw money from an account. The physical elements of the transaction are minimal, consisting in most cases of a paying-in book, cherub book or plastic card, all of which can be transported through the postal service.

E-Books

The development of the Internet and digital environment creates a new type of product: e-books. E-books have not replaced printed books and magazine articles thus they occupy a large market share in the Internet and books sales. The popularity of this product is caused by its low price, fast access and electronic version of the book. At this point, traditional economies of scale came into effect: the largest booksellers could afford to make the largest reductions because their sales per square meter were high enough to absorb the reduced margin on the discounted lines. One of the other major advantages of the e-book is the volume of information that can be stored and the ease with which it can be updated. This enables new services to be provided in a way that was not economically feasible before. A good example of the use of the e-book in this way is to access to the most recent editions of famous books. By uploading the daily catalogue of goods and prices that are available, stores can now enable consumers to buy their goods without having to go round the store to collect them. In an environment in which time is precious (the young affulents who use the Internet also tend to work extremely long hours), the advantage to the consumer is undeniable. By identifying the customers on their database who have the most similar tastes, they are then able to offer suggestions about other authors and books the customer might enjoy. Not only that, but they then couple this to an e-mail messaging system that informs you when a new book has been published by an author whom you like. In this case, they are clearly adding a new opportunity to the existing shopping experience, enabling you to access the views of people with similar tastes and interests. They are, in effect, automating the word‐ of-mouth experiences that so many of us rely on when we buy something. Whatever the product, exploiting its information content can add value. The popularity of e-books is caused by low price and easy access: the company has no shops, no sales staff in the traditional sense, but what it does have is a phenomenal range and costs so low that it could easily undercut the discounts offered by even the largest conventional bookshop, even though the number of volumes it processed might be significantly fewer. E-book will be more popular in several tears because they can be purchased by ant consumer in spite his geographical location and tome zone. In contrast to e-books, traditional sales require that customers travel to a physical branch, fill in a form and then queue to hand the form to a cashier in order to perform each and every transaction with their account. This is a rather inefficient and expensive way of doing business. As a result, book sellers have been at the forefront of using the information revolution to change their methods of sales and distribution. E-books simplify everyday purchases and allow customers to read and access information from all over the world. Also, e-books allow companies to save millions of dollars on delivery and storage facilities.

Appendix