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PROLOGUE
An increasing percentage of the American economy and other dominant industrial economies of the world are directly or indirectly dependent upon their sales in the form of exports or imports. Revenue generation is governed by the ability of an economy to operate globally. The same generalization applies for firms and organizations. With the advent of modern technology, it has become possible for organizations to conduct trade and manage business on a global scale. To setup a venture on a global scale, some sort of an inter-connect is essential. In today’s world, the world-wide-web does the trick for most of the organizations. This very concept of globalization has led basis for a new type of business conducting strategy termed as e-business [1]. Explained as any kind of sale, service, purchase or commerce operation over an electronic medium as the internet, the e-business concept has drastically morphed the means by which companies can reach out to their customers and conduct trade. Setting up an e-business is not simple. Some of the challenges include communicating with distant distributors and suppliers, operating 24/7 un-interrupted throughout the year and guaranteeing quality to local and international customers. A business process forms the core of an organization and depicts the manner in which the organization coordinates and arranges work procedures, information and knowledge to produce a product or render a service. A venture in which all important business processes and relationships with customers, vendors and employees utilize the internet falls under the category of a digital firm. Pure digital firms operate in a total virtual world; they are all clicks.
CONSTRAINTS
Internet technology is creating a global platform for carrying out trade and for fueling business processes. Where transition to e-business results in increased customer service, increased sale and reduction in costs; a whole new set of challenges that must be met have been introduced. The challenges are not all technical. Many involve a change in the business strategy and the overall mindset. Digital firms require new management styles and organizational designs. Successful implementation of the electronics commerce or the electronics business requires the companies to examine and redesign the entire or part of the existing business process. Simply providing an interconnect technology to the existing business practice does not always generate the results. Companies have to sort a different organizational structure, changes in organizational culture, a different support mechanism for end systems, different methods of managing employees and networked processing functions. Starting a new venture needs the entrepreneur to take all these challenges into considerations. The conventional business strategy might not work well. Companies have raced to put up websites in the hope of increasing the earnings through electronics commerce. Many electronics commerce sites are to produce profitable figures. Merely starting a website does not guarantee the cost saving or access to new markets. It needs to be carefully thought that whether genuinely workable business model has been created and if the internet technology relates to the overall business strategy effectively. Electronic business requires different strategies for ordering, advertising and customer support; way different than a traditional business [2].
INTERNET BUSINESS MODELS
Business tends to flourish over the internet because it promises addition of the extra values to the existing products and services or provides basis for new products and services. A notion of what and how the enterprise delivers a product or service, governing how the enterprise wealth is created, is termed as a business model. A number of internet business models exist. The important ones have been categorized and briefly explained below [3]. The models have one thing in common, all of them in way way or the another add value. With such models, the customer is provided with a new product or service, additional information or service with a traditional product or service or a product or service with a lower cost than a traditional equivalent. Most of these models have been possible due to the internet’s excellent communication capacity.
Virtual Storefront
Sells physical goods or services online instead of through a physical storefront or retail outlet Delivery of non-digital goods and services takes place through traditional means. Examples include Amazon.com, Wine.com, WingspanBank.com
Marketplace concentrator
Concentrate information about products and services from multiple providers at one central point. Purchasers can search, comparison-shop, and sometimes complete the sales transaction. Examples include ShopNow.com, InsureMarket, DealerNet
On-line exchange
Bid-ask systems where multiple buyers can purchase from multiple sellers. Covisint, Fibermarket are important examples.
Information broker
Provides product, pricing and availability information, Some facilitate transactions, but the prime function is the information provided. Include PartNet, Travelocity.
Transaction broker
Buyers cab view rates abd terms, but the chief business activity is to complete the transaction. Examples include E*TRADE, Ameritrade
Auction
Provides electronic clearance sale facility where produts where the piece and availability are constantly changing, controlled in response to customer actions. eBay, Ubid, BIgEquip.com are important examples.
Reverse Auction
Consumers submit a bid to multiple sellers to buy goods or services at a buyer specified price. Examples include Priceline.com, ImportQoute.com
Aggregator
Groups of people who want to purchase a particular product signup and then seek a volume discount from vendors. Examples include MobShop.com
Digital Product Delivery
Sells and delivers software, multimedia and other digital products over the internet. Regards.com and Photodisc are important examples.
Content Provider
Create revenue by providing content. The customer may pay to access the content, or revenue may be generated by selling advertisement space or by advertisers pay for placement in a organized listing in a searchable database. Examples include Wall Street Journal Interactive, Salon.com and TheStreet.com.
Online service provider
Provide services and support for hardware and software users. PCSupport.com, @Backup, Xdrive.com are important examples.
Virtual Community
Provides online meeting places where people with similar interests can communicate and find useful information. Examples include GeoCities, FortuneCity, and Tripod.
Portal
Provide initial point of entry to the web along with specialized content and other services. Examples are Yahoo, Barrabas.
Syndicator
Aggregates content or applications from multiple sources and resells them to other companies. Examples include Thinq and Screaming Media.
JUXTAPOSITION
In order to gain an insight into how a total digital firm differs from a hybrid digital firm, one of the business models is chosen and a corresponding ‘all clicks’ venture is juxtaposed with a ‘bricks and clicks’ venture. The objective is point out the difference in business process both the ventures should have in order to achieve the organizational goals of higher product or service quality, stronger reputation with customers, lower cost compared to key competitors and higher revenue generation. The model chosen for the discussion is virtual storefront. A total virtual storefront venture Amazon.com is compared with a hybrid virtual storefront offering both online and real world sales TESCO UK.
Level of Virtuality
The two organizations exhibit varying levels of virtuality. Amazon is a total e-based venture. The sole purpose of development of Amazon is to provide an online shopping facility. It is targeted at users with a tight schedule to actually visit a store to purchase products. TESCO, on the other hand is basically real world storefront to start with. It is recently that it has extended its services to accommodate online purchasing. The difference in the level of virtuality is strongly influenced by the intent by which each venture has been developed and launched on the world wide web. TESCO relies on its real world sales more than its e-sales whereas Amazon exploits the average person’s visit to the store dislike to provide an innovative online purchase platform, solely relying on its online customers. There is no other mean of revenue generation for Amazon other than the online purchasers of the products it stores. Yet another reason for the difference in the level of virtuality is that Amazon did not have a brick and mortar business when they designed their internet business. Hence, the teams focus was to develop a fully virtual venture. TESCO on the contrary was looking for ways to catch up with the emerging trends of online shopping and provide an alternative, less functional way to remote access to its services and products.
Organizational Structure and Work Methodology
Certain similarities are exhibited in both cases since the core functional requirement in both cases is the facility to shop online. Connectivity concerns like network connectivity and tariffs are of prime concern for both the organizations. Network management also has to be accomplished in both the cases. This requires a network management team to be included as part of the work force. Similarly an order processing facility, secure payment method and similar transaction issues are common to both of the ventures and need to be addressed in either case. This requires an operations team. Similarly, executive level team must exist in both cases. Organization wide decisions are to be made in both cases too. The difference in level of virtuality leads to a definite difference in the facilities and services provided by the two ventures. Amazon gives extended capability of price comparison. Further more in order to compete with other fully virtual front line stores, Amazon has to dynamically update pricing. TESCO on the other hand has no such concerns. Amazon has to constantly keep a look for disintermediation by other competitors. Disintermediation is the elimination of organization or business processes layers responsible for certain intermediary steps in a value chain. By selling directly to consumers or reducing the number of intermediaries, companies can achieve higher profits while charging lower prices. Disintermediation ion the internet by Amazon’s peers can lead to gloomy future for future. The management has to continuously look for such changes in levels. TESCO is free from such concerns. Another important factor is the customer loss of good will. Assume that a person logs onto TESCO and searches for a particular product. If it is out of stock for online purchase, the user can always visit a TESCO store for the actual purchase resulting in no loss of good will. If a similar situation occurs with Amazon, the user has no Amazon store to visit. He/she will have to choose another store. Probably, the next time he/she will think twice before visiting Amazon. Amazon also has an intense interactive marketing and personalization program. Amazon has to retain information on each customer’s purchase. When a customer returns to Amazon, that particular person will be greeted with a recommended buying section related to the customers’ previous purchases at Amazon. Hence Amazon has to maintain greater amount of customer record demanding greater memory constraints at the back end system. Amazon has to come up with innovative ideas to keep its hold in the market firm. Amazon has developed wireless access protocol websites which allow the user to access the facilities of Amazon from mobile. Such a sophisticated system does not exist for TESCO. Amazon’s use of mobile commerce provides flexible business with additional channels for reaching the customers with and with brand new opportunities for personalization. Mobile users can be regularly provided with advertisements as part of the intense interactive marketing program. Amazon also has to cater for new approaches towards customer care. Amazon relies on emails to interact with users and also maintains a FAQ and help section which needs to be regularly monitored and arriving queries responded. This has helped Amazon save money. Traditional telephonic support to the customers would have been ten times the cost provided by the web based responses to customer queries [4]. It is important that the customer care and response system be revised based on the reviews by the user about the assistance provided by the web based customer care facility [5].
Future Challenges
For TESCO, the future challenges are in fact the current services provided by Amazon. TESCO can overtake Amazon only if TESCO it first reaches to the current level of Amazon in online purchase services. As for Amazon, keeping the pace with peers and competing with other business model based ventures is an open challenge. Auction services are growing popular. Amazon must keep its services up-to date and intact for the growing number of users. Attacks on an organizations’ computer are becoming more frequent with time [6]. The significant reason is the transition of the hackers from using simple techniques to more sophisticated hack in to the system. Simple techniques as password cracking are no longer the demon’s tool to threat system security. Advanced techniques based on manipulating the fundamental protocols of the internet have come into play. Password guessing, password cracking and self replicating code techniques have become obsolete. Backdoors, sniffers, packet spoofing and packet protocol denial of service attacks are taking their place. It is worth noting that at the same time the hacker skill level is becoming low. Probable reason being the increase in number of loop holes in modern systems and open opportunity forhackers to share information and transfer technology amongst one another. This situation is of prime concern to the information system security world. Methodologies are being developed and improved to combat, investigate and prevent such breaches into system boundaries. Amazonmust provide itsusers with mechanisms of safe transactions. In case of a hack attack the system must rely on Network Forensics [7]. Network forensics is the storage and scrutiny of (intra/inter) network events in order to determine the cause of security threats or other problem incidents. Network forensics determines the evidence in case of a system breach. Network forensics software products, known as Network Forensic Analysis Tools, just might be the answer to the problem of evidence management in an organization that does not conduct its own investigations and relies on outside consultants or investigators for the analysis of evidence. Two types of NFAT systems exist [8]. Each type provides a different evidence management strategy. The first type captures all the packets passing though a certain point in the network and stores them for analysis by the concerned expert personnel at later stages. This demands a high memory facility at the organization. The second type of system is based upon a rudimentary analysis of each packet in memory and only certain information saved for future analysis. This approach requires less storage but may require a faster processor to keep up with incoming traffic. Information in either case is actually the valuable evidence that has to be managed until it is delivered for analysis to the experts. In either case, best memory products must be purchased with probabilities of wash outs equal to zero. An alternative is to maintain several copies of the evidence on different memory reservoirs in order to ensure retrieval at the time of court trials and proceedings. It is also important that the evidence itself be kept away isolated from the suspected network do disable attackers from accessing the breach evidence, since in that case, the organization would have to suffer to an immense extent. Once the evidence has been scrutinized, the next step in the management process is to perform forensic analysis. Forensic analysis involves examination of data to classify its prime features and inter feature relationship in order to reshape evidence in a manner that is admissible in a court of law. Also to be produced in the court of law is the chain of custody, a mean of liability, that depicts by whom the evidence was obtained, where and when the evidence was obtained, by whom the evidence was secured and who had control or possession of the evidence before the trial. Apart from the information security perspective, there are legal issues posing limitations and challenges. Laws pertinent to electronic commerce are still being written. Legislatures, courts and international agreements are just starting to settle such issues as the legality and force of e mail contracts, the role of electronics signatures and the application of copyright laws to electronically copied documents. Moreover, the internet is global, Amazon is used by individuals in hundreds of different countries. If a product is offered for sale in country X via amazon regional site in country Y and the purchaser lives in country Z, whose law would apply. The answers to such legal and regulatory questions are being sorted out [9].
CONCLUSION
The internet can dramatically reduce the transaction and agency costs and is fuelling new business models. By using the internet for commerce, the organizational processes can be streamlined. To take advantage of these features, the organizational processes must be redesigned [10].
[1] Benson & Buqnitz,, 2004
[2] Bocij et.al (2005)
[3] Laudon & Laudon (2002)
[4] Curtis & Cobham (2004)
[5] Ray (2003)
[6] Novak & Northcut (2002)
[7] Mandia & Prosise (2002)
[8] Haisser & Kruse (2002)
[9] Wyatthaines (2007)
[10] Weill & Ross (2004)
Article Source: sooperarticles.com/business-articles/case-study-organizing-virtual-world-363.html
Author: Humayun Shahid