Unit 3 E-Business Systems

 

E-business takes into account the use of the internet, technologies and forms of electronic communication to assist in business activities. E-business systems allow businesses to stay informed with up-to-date information and be more competitive in their respective markets through tools such as transaction processing systems or business applications.  E-business systems can encompass any part of the organization.  These systems can include human resources, marketing, production, and logistics among other functions.  Considering their depth of functionality, it is easy to understand that E-business systems can easily permeate through the value chain of activities for the benefit of the organization.

E-business systems are created to help businesses to be more competitive.  In our world of constantly developing technology, almost all companies utilize some type of E-business system to attempt to gain a competitive advantage or in some cases just to keep up with the competition. One example of a company that successfully used e-business systems earlier on was Intel.  It helped them in terms of operational efficiency and strategic positioning.  They automated their order management and information delivery system.  Intel built online relationships with customers and customized these relationships based on the type of customer.  These steps have contributed to the success and long lasting reputation of Intel. Another example would of an E-business system would be a leader in transaction processing on-line, Paypal. Paypal claimed a 91 per cent market share of the online payments market but their strangle hold on the market has decreased considerably due to increased competition. Paypal is considered one of the original online payment processing companies but in some ways it has hurt the business. Due to a lack of early competition, Paypal suffered from stagnancy while other competitors created a product that was easier to understand and use. These substitutes found a competitive advantage and have used it to take their own share of the market. PayPal’s brand name remains its largest asset and the company will need to hold onto and draw more customers with their security efforts. They are known to be one of the safest online payment processing businesses and they will need to retain that quality in the consumer’s eyes.

According to Michael Porter, businesses can have a low cost strategy, differentiation strategy, combination or niche strategy. With any of these strategies, it is possible to include e-business systems.  For example, Walmart has a low cost strategy and they have a continuous inventory allows the consumer to specify what they want in their laptop and their online system ensures that that takes places smoothly. Another benefit to having an E-business systems is that it allows employees to have up-to-date information. Information like real time inventory levels is pertinent to sales representatives that are out in the field trying to make sales for the company.  If a sales representative has out-of-date inventory level information and ends up making a sale for a product that is out of stock, then the order will have to be changed or cancelled.  For example, adidas America, an athletic apparel company, saw inefficiencies with their sales force knowing inventory levels while making sales calls.  The common practice was prior to a sales meeting; a sales representative would check inventory levels at the warehouse. When they made the sale, they would return to the office to place the order only to find out that the product would be out of stock. The order would then be lost or the order would have to be changed.  Nevertheless, customers would be inconvenienced when they found out that adidas America could not fill their order as promised.  In order to overcome this problem adidas America implemented Atlas2Go, a salesforce automation application. This application allows sales representatives to use their mobile devices in order to access real time inventory levels through the internet.  Since the sales representatives were able to access up-to-date information it eliminated change orders or cancellations.  The application only cost $10,000 and adidas America was able to pay for the application after one order.

Looking over some examples, it is obvious that organizations have been able to take advantage of E-business systems all over the world. From companies like Adidas, Paypal, and Wal-Mart, all of these businesses were able to use E-business systems as a competitive advantage in their respective industries. The use of E-business systems has become a requirement in this generation from the largest corporations to the smallest mom and pop businesses.

 

References:

Alsalloum, O., (2011). Achieving Competitive Advantage with Information Systems. Slideshare. Retrieved from: http://www.slideshare.net/DrOthmanAlsalloum/achieving-competitive-advantage-with-information-systems

Asay, M., (2012). PayPal is bleeding market share and it’s all e-bay’s fault. The Register. Retrieved from: http://www.theregister.co.uk/2012/07/18/ebay_paypal/

O’Brien, J. A., & Marakas, G.M. (2011). Management Information Systems 10th Edition. McGraw-Hill/Irwin. 272-290.

Phan D. (2003).  E-business development for competitive advantages: A case study, Information         and Management, 40:581-590.