E-Business: Growth and Advantages

ACCA P3 考试:E-Business: Growth and Advantages


"E-business is the transformation of key business processes through the use of Internet technologies."

Lou Gerstner, former CEO of IBM

E-commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks and, strictly speaking, refers to the financial transaction involved.

1. Growth of E-Business

In 1990, only about 10 organisations were trying to make money on the Internet. By 2008, this increased to more than 10 new e-commerce start-ups every day. Today the Internet reaches over 30% of the global population; there are more than 2 billion Internet users.

The need for robust and flexible e-business strategies has been magnified by the recent explosion in demand for social media and e-commerce. Commercial organisations use a website to advertise, to define a brand or image, to facilitate e-retail and to communicate to stakeholders.

Electronic business, commonly referred to as "e-business", may be defined broadly as any business process that relies on an automated information system. Today, this is mostly done with Web-based technologies.

E-business methods enable companies:

to link their internal and external data-processing systems more efficiently and flexibly; 

to work more closely with suppliers and partners; and

to better satisfy the needs and expectations of their customers.

Software solutions allow integration of intra- and inter-firm business processes. E-business can be conducted using the Web, the Internet, intranets, extranets, or some combination of these.

E-business refers to a strategic focus emphasising the functions that occur using electronic capabilities. It involves business processes spanning the entire value chain:

Electronic purchasing and supply chain management;

Processing orders electronically;

Handling customer service; and Cooperating with business partners.

2. Advantages

In virtually every field of the value chain, integrated technology and e-commerce offer the opportunity for improved performance, lower long-term costs and better customer value.

Examples demonstrating the advantages of technology integration with business process include:

Catalogue flexibility and online fast updating—Direct "link" capabilities to content information and visual displays already existing on other client websites. Updates are easy and can be done anytime, whether to add new products or adjust prices, without the expense and time of a traditional print catalogue.

Extensive search capabilities—By item, corporate name, division name, location, manufacturer, partner, price or any other specified need.

Shrinks the competition gap—Reduced marketing/ advertising expenses, can compete on equal footing with much bigger companies (e.g. on quality, price and availability).

Unlimited market place and business access which extends customer base—The Internet gives customers the opportunity to browse and shop at their convenience (from the home, office or on the road, 24 hours a day, 7 days a week). Organisations can reach people around the world, offering products to a global customer base.

Improved manufacturing cycles—E-sourcing speeds up the sourcing process.

Lower cost of doing business—Reduces inventory, purchasing costs, order processing costs and even eliminates physical stores. Reduces transaction costs, unnecessary phone calls and mailings.

Eliminates middlemen—Eliminates the costs associated with intermediaries in the delivery process.

Increases customer involvement—Gives customers control of the purchasing process, helps to build loyalty. Dell Computers is a good example of this approach in which customers can design their own computers online.

Enhances business relationships—Integrated supplier systems not only reduce the inventory costs of the supplier (as they are able to produce to the exact supply demand) but also assist in "tying in" suppliers to the manufacturer.

Promotes secure payment systems—Allows encrypted, secure payment online.