RESEARCH BASED PROJECT ON E-BUSINESS MODELS AND THEIR OPERATIONS

UNDER THE GUIDANCE OF PROF. HEMALATHA

CIA 1
E- BUSINESS MBA 631D

SUBMITTED BY – SHAHNOWAJ HUSSAIN

MBA M1
1727032
INTRODUCTION

E-business is an acronym for 'Electronic BUSINESS.' The word 'e-business' has been derived from terms such
as "e-mail." As the name implies, e-business means conducting or operating business through the Internet. It
also pertains to “any form of business transaction in which the parties interact electronically rather than by
physical exchanges or direct physical contact”. The main aim is to establish a positive reputation of the
enterprise as well as sell goods and services. Internet is used as a medium like print and broadcast to promote
business and earn profits. It is also used to collaborate with business partners.

In e-business, on the other hand, ICT is used to enhance one’s business. It includes any process that a business
organization (either a for-profit, governmental or non-profit entity) conducts over a computer-mediated
network. A more comprehensive definition of e-business is: “The transformation of an organization’s processes
to deliver additional customer value through the application of technologies, philosophies and computing
paradigm of the new economy.” Three primary processes are enhanced in e-business.

Production processes, which include procurement, ordering and replenishment of stocks; processing of
payments; electronic links with suppliers; and production control processes, among others;
Customer-focused processes, which include promotional and marketing efforts, selling over the Internet,
processing of customers’ purchase orders and payments, and customer support, among others; and
Internal management processes, which include employee services, training, internal information -sharing, video-
conferencing, and recruiting. Electronic applications enhance information flow between p roduction and sales
forces to improve sales force productivity. Workgroup communications and electronic publishing of internal
business information are likewise made more efficient.
E-business has received much attention from entrepreneurs, executives, investors, and industry
observers recently. As information technologies (IT) develop, novel ways of business process
redesign (BPR) emerged, creating turmoil in the industry. Organizations today frequently
integrate Internet technology to redesign processes in ways that strengthen their competitive
advantages. Success breeds imitation and invites more entries. The rapid expansion of e -
commerce values in the past few years convinced many people that a new economy has emerged.
Chairman of Microsoft, Bill Gates, frequently expressed his fear that Microsoft is about 2 years
away from failure, that somewhere out there is a formidable competitor, unborn and unknown, who
will use better business models to put companies like Microsoft into obsolescence. And the most
successful new business models are probably those that can integrate Internet technology to all
activities of the enterprise-wide value chain. The three principal categories of e-business
applications are:-

1. Electronic markets or e-marketplaces: buying and selling goods and services.

2. Inter-organizational systems: facilitating inter and intra-organization flow of goods,
services, information, communication, and collaboration.
3. Customer service: providing customer service, help, handling complaints, tracking
orders, etc.
As information technologies developed, novel ways of business process redesign emerged. Most organizations
today use Internet technology to redesign their processes in ways that provide new competitive advantage.
Through the infrastructure of existing B2B exchanges in the e-marketplaces, many organizations will eventually
be able to integrate activities of their value chain encompassing suppliers, customers, and distribution channels
within an industry or across industries. The potential of e- business is so great that many believe that e-business
is the new economy that decides the success of future business organizations. Andy Grove, Chairman of Intel
boldly stated in 1998: ‘‘ Within 5 years, all companies will be Internet companies or they would not be
companies’’.

It is widely acknowledged today that new technologies, in particular access to the Internet, tend to modify
communication between the different players in the professional world, notably:
relationships between the enterprise and its clients,
the internal functioning of the enterprise, including enterprise-employee relationships,
the relationship of the enterprise with its different partners and suppliers.
OBJECTIVES
E-Business Objectives
Objectives give the business a clearly defined target. Plans can then be made to achieve these targets. This can
motivate the employees. It also enables the business to measure the progress towards to its stated aims.

The objectives of e-business can be summarizing as below: -

 improve service
 save time
 time taken by customers
 elapsed time for processes
 reduce process errors
 reduce the cost of core service provision
 free staff to provide value added services
 improve morale
 give people the tools and time they need

The most effective business objectives meet the following criteria:

S – Specific – objectives are aimed at what the business does, e.g. a hotel might have an objective of filling 60% of
its beds a night during October, an objective specific to that business.

M - Measurable – the business can put a value to the objective, e.g. €10,000 in sales in the next half year of trading.

A - Agreed by all those concerned in trying to achieve the objective.

R - Realistic – the objective should be challenging, but it should also be able to be achieved by the resources
available.

T- Time specific – they have a time limit of when the objective should be achieved,
e.g. by the end of the year.
The main objectives that a business might have are:

Survival – a short term objective, probably for small business just starting out, or when
a new firm enters the market or at a time of crisis.

Profit maximization – try to make the most profit possible – most like to be the aim of
the owners and shareholders.

Profit satisfying– try to make enough profit to keep the owners comfortable – probably
the aim of smaller businesses whose owners do not want to work longer hours.

Sales growth – where the business tries to make as many sales as possible. This may be
because the managers believe that the survival of the business depends on being large.
Large businesses can also benefit from economies of scale.

A business may find that some of their objectives conflict with one and other:

Growth versus profit: for example, achieving higher sales in the short term (e.g. by
cutting prices) will reduce short-term profit.

Short-term versus long-term: for example, a business may decide to accept lower cash
flows in the short-term whilst it invests heavily in new products or plant and equipment.

Large investors in the Stock Exchange are often accused of looking too much at short-
term objectives and company performance rather than investing in a business for the long-
term.
Alternative Aims and Objectives

Not all businesses seek profit or growth. Some organisations have alternative objectives.

Examples of other objectives:

Ethical and socially responsible objectives – organisations like the Co-op or the Body
Shop have objectives which are based on their beliefs on how one should treat the
environment and people who are less fortunate.

Public sector corporations are run to not only generate a profit but provide a service to
the public. This service will need to meet the needs of the less well off in society or help
improve the ability of the economy to function: e.g. cheap and accessible transport
service.

Public sector organisations that monitor or control private sector activities have
objectives that are to ensure that the business they are monitoring comply with the laws
laid down.

Health care and education establishments – their objectives are to provide a service
– most private schools for instance have charitable status. Their aim is the enhancement
of their pupils through education.

Charities and voluntary organisations – their aims and objectives are led by the beliefs
they stand for.

Changing Objectives:-

A business may change its objectives over time due to the following reasons:

A business may achieve an objective and will need to move onto another one (e.g.
survival in the first year may lead to an objective of increasing profit in the second year).

The competitive environment might change, with the launch of new products from
competitors.

Technology might change product designs, so sales and production targets might need to
change.
 Goal of e-Business
The goal of any e-Business project is to create value. Value can be created in different
manners:

 As a result of an increase in margins, i.e. a reduction in production costs or an

increase in profits. E-Business makes it possible to achieve this in a number of
different ways:
 Positioning on new markets
 Increasing the quality of products or services
 Prospecting new clients
 Increasing customer loyalty
 Increasing the efficiency of internal functioning
 As a result of increased staff motivation. The transition from a traditional activity to
an e-Business activity ideally makes it possible to motivate associates to the extent
that:
 The overall strategy is more visible for the employees and favors a common
culture
 The mode of functioning implies that the players assume responsibilities
 Teamwork favors improvement of competences
 As a result of customer satisfaction. As a matter of fact, e-Business favors:
 a drop in prices in connection with an increase in productivity
 improved listening to clients
 products and services that are suitable for the clients' needs
 a mode of functioning that is transparent for the user
 As a result of privileged relationships with the partners. The creation of
communication channels with the suppliers permits:
 Increased familiarity with each other
 Increased responsiveness
 Improved anticipation capacities
 Sharing of resources that is beneficial for both parties

An e-Business project can therefore only work as soon as it adds value to the
company, but also to its staff, its clients, and partners.
The purpose of e-business:
The e-business services have been introduced to search for business partners and explore
more opportunities. It is used to fetch potential customers, retain present customers and
even locate old customers. Entrepreneurs build business relationships with the partners
through the means of Internet. A marketer can invite the clients to enter into mergers and
acquisitions or contracts to expand the business. A marketer should build an online
presence in order to initiate and establish the online business.

This is possible by building a website for the company. You should optimize the
content in the site so that it becomes easily accessible to the search engines.

For this purpose, keyword rich content should be used. The presentation of the
company website always reflects the image of the company. Therefore, the presentation
of the website should not only be search engine friendly but also attractively presented.
This is done to allure the customers and potential business partners towards your
organization. The website should become accessible to the customers and the presentation
should be visually emphatic. The wide use of Internet has given a boost to the growing
trend of online shopping. A marketer can exhibit lucrative offers and his products and
services on his website. Make the payment and purchasing procedure easy on the Internet.
You can also provide contact details such as phone number or contact details of the call
centre of the company.

These details are useful to serve the customers at the time when they encounter any
difficulty of payment. The presentation of your products should appeal to the
customers at a glance. For this purpose, you should study your target customers
thoroughly. E-business solutions establishes your online presence which enables you
to boost the sales and revenue.

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METHODOLOGY

There are some key differences between the development approach that's appropriate for building e-business systems
and the approach that's appropriate for building traditional client/server systems. However, the differences are not as
great as many people imagine.
Too many inexperienced e-business project managers think that they're simply "knocking together" a Web site. Faced
with ever-tightening deadlines and pressure from ignorant clients or users, these project managers believe that it will
be okay to skip key stages in the systems development lifecycle—only to find out later how wrong they were to do
so. Such an approach is doomed to failure, because the skipped stages tend to be those that ensure quality in the final
product.
By using of e-business we can differentiate our new economy relationship from the old ones.

Figure . Old Economy Relationships vs. New Economy Relationships

The above figure shows that in Old Economy Relationship consumers were not connect directly to the producer, so it
has a lack of closeness of a producer to his consumer because it is a linear function of consumer and producer in
which retailer was a medium. But in New Economy Relationship a customer can directly connect to his producer and
producer can interface with his customer. There is no third party medium like Old Economy System. So in this
system, a customer is not depent on his retailer.
In fact, it's arguably even more essential to adhere closely to a systems development methodology when building e-
business systems, which can cut across organizational boundaries, across country boundaries, and can involve the
integration of a great number of systems.1 Without the correct planning and methodologies applied, an e- business
system is likely to fail.
However, implementing a solid methodology doesn't necessarily mean that it will take longer to create a working
system; it can actually help improve the chances of meeting tight deadlines. In cases where the chances of meeting
such deadlines were nonexistent in the first place, a solid methodology can help the clients or users to understand the
reasons that the deadlines are not feasible and can help them to take some ownership for some of the timescale issues.

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  Strategy

It's important that user/client expectations be managed early on in the process of

building an e-business system. Facilitated workshops involving users/clients as well as
knowledgeable e-business staff can help. Users/clients need to realize that e- business
strategy is still about working out the best mission statement, goals, and objectives to
enable a retailer to be an excellent retailer or a financial institution to be an excellent
financial services provider. It's not about working out how to be an excellent e-business.2
Encourage clients/users to use e-business systems to carry out their current business
better, rather than trying to do something new—there will almost always be someone
else who can do the new thing bigger and better because they have more experience or
money.

 Analysis

Users/clients should not be allowed to think that requirements analysis can be skipped
for e-business systems because "there's not enough time." Studies show that spending
more time on analysis up front considerably reduces the chances of the system failing
later on. Because requirements for e-business systems can be critical— customer or
business partner expectations often include reliable, available (24 * 7 * 365), secure
systems that are scalable, able to perform under high load, and able to cope with cross-
country and cross-organizational transactions—it's vital to spend plenty of time up front
getting these systems right.

 Design

Iterative prototyping is also a good way of identifying issues with Web page design.
Human/computer interaction (HCI) issues are key when designing e-business systems
because the system must be intuitive, designed for naïve users, given that the user of the
system is unlikely to get any training in how to use it.

Design of an e-business system should involve more than just visual design, however.
Just as it's important during the design phase of "traditional client/server computing," it's
crucial that the design makes clear where the processing is taking place—client side or
server side (or in some middle tier, or on the database). It should also identify common
code/libraries to be developed to reduce duplication, and should identify standards and
guidelines to enhance maintainability.

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  Implementation

Because implementation of e-business systems is more likely to involve incremental

development, it's vital that code development and environment/installation planning be
tightly controlled to ensure that defects don't creep into the various releases. Coding
standards should be adhered to, code inspections/walkthroughs should be carried out
regularly, and quality should be ensured through effective testing. Testing should be
carried out in all supported browsers and with all PC (or other client)
configurations/screen resolutions, and although there may be an emphasis on
performance/stress/security/cross-system/cross- organizational testing, in general, the
approach to testing should be much the same for e-business systems as it has been for
traditional client/server systems. Configuration management and source code control can
also be vital throughout the implementation phase.

Installation/delivery must still be thoroughly planned—an e-business system might be

developed and working very effectively in-house, but deployment might involve fitting
the code around a live environment provided by an ISP. Allow time in the schedule for
ISP incompetence, as it's rife! Of course, the client side of e-business installations is often
far easier than traditional client/server installations because all the user needs to run the
system is a Web browser.

 Training

Installation of a new system always causes change-management issues, but e- business

systems can involve total cultural revolution. Effective leadership is necessary so that
staff see the changes in a positive light. Managers of employees who have been used to
hoarding information must encourage those employees to share data with external
business partners. Contrary to popular belief, it's productive to an e- company to
encourage employees to play computer games, surf the Web, and use chat rooms and
discussion groups, so that they're not paralyzed by technofear when they receive the new
e-business system. This strategy also encourages employees to "think out of the box"
about new ways in which technologies can be exploited to improve the business. They
need to be taught that in the competitive, ever-changing e-business world, change must
become a way of life. This can be done by encouraging employees to think of new and
innovative ways of beating the competition—or to think of new and innovative ways in
which the competition might beat them!

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The Different Examples of e-business:-

E- Business is the process of buying and selling of various products and services by
businesses through the Internet. It deals various kind of business concern, from retail site
of the consumer, which includes auction. The main focus is to concentrate on business
substitutes involving goods and services between various corporations.
E- Business is the purpose of Internet and the web to Conduct business but when we
concentrate on commercial deals among organizations and individuals demanding
selective information systems under the guarantee of the firm it accepts the form of e-
business. Nowadays, the word ‘e’ is hitting momentum. If you’re looking to get into this
business, one of the fore most thing you have to have is a Virtual Private Cloud Hosting
keeping the traffic in mind and respecting customers valuable time.

B u s ine s s to C o n s um e r ( B2 C )

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B2C stands for Business to Consumer as the name suggests, it is the model taking
businesses and consumers interaction. Online business sells to individuals. The basic
concept of this model is to sell the product online to the consumers. B2c is the indirect
trade between the company and consumers. It provides direct selling through online. For
example: if you want to sell goods and services to customer so that anybody can purchase
any products directly from supplier’s website.
Directly interact with the customers is the main difference with other business model. As
B2B it manages directly relationship with consumers, B2C supply chains normally deal
with business that are related to the customer.
B2C (Business to Consumer): Refers to a business communicating with or selling to an
individual rather than a company. B2C e-commerce jumped from $11.2 billion in 1998
to $31.2 billion in 1999, Doing business online no longer requires a huge investment by
retailers, thanks to developments in template-based online stores which are based on
packaged applications that are delivered over the internet.

As nearly all online stores will require the same functions: catalogues, order baskets,
payment processing, content management and member management, it makes sense for
those components to be created once and shared by all stores, with each store effectively
‘renting’ its own copy of the applications.

The one area where it's important for online stores to differentiate is their look and feel,
and naturally retailers feel very strongly about their business branding. So the ability to
create a unique ‘skin’ for each site is an important part of a template-based e-store
offering.

Using the latest internet application technology, individual sites can be created within
minutes of the retailer selecting a template and supplying graphics such as logos.
Typically, retailers will pay only a modest monthly rental charge – and retailers require
no specialist hardware or software, other than internet access.

Anyone who wants to sell products and services over the internet, or who wants
customers to be able to research their purchases on the internet, should consider an online
store.

These days, a web site should be a standard part of the promotional and advertising mix
for every business, along with other tools such as Yellow Pages, newspaper advertising
and signage.

Advantages:-
B2C e-commerce has the following advantages:

 Shopping can be faster and more convenient.

 Offerings and prices can change instantaneously.
 Call centers can be integrated with the website.

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  Broadband telecommunications will enhance the buying experience.

Challenges faced by B2C e-commerce:-

The two main challenges faced by B2C e-commerce are building traffic and sustaining
customer loyalty. Due to the winner-take-all nature of the B2C structure, many smaller
firms find it difficult to enter a market and remain competitive. In addition, online
shoppers are very price-sensitive and are easily lured away, so acquiring and keeping
new customers is difficult.

A study of top B2C companies by McKinsey[citation needed] found that:

 Top performers had over three times as many unique visitors per month than the
median. In addition, the top performer had 2,500 times more visitors than the
worst performer.
 Top performers had an 18% conversion rate of new visitors, twice that of the
median.
 Top performers had a revenue per transaction of 2.5 times the median.
 Top performers had an average gross margin three times the median.
 There was no significant difference in the number of transactions per customer
and the visitor acquisition cost.

B u s i n e s s to B u s i n e s s ( B 2 B )

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B2B stands for Business to Business. It consists of largest form of Ecommerce. This
model defines that Buyer and seller are two different entities. It is similar to manufacturer
issuing goods to the retailer or wholesaler. Dell deals computers and other associated
accessories online but it is does not make up all those products. So, in govern to deal
those products, first step is to purchases them from unlike businesses
i.e. the producers of those products.
“It is one of the cost effective way to sell out product through out the world”
B2B is the selling between companies, wholesale rather than retail. But it means
more than that. Efficient use of capital demands small inventories, which entails
anticipating demand, and so maintaining detailed information flows between all parties
involved in today's complex manufacturing processes. B2B involves widening the circle
of suppliers (for safety and competition), and of centralizing control (for records and
discounts).

B2B ecommerce is an important part of any online business. Leaving aside the simple
transfer of funds — covered here — many businesses need some combination of:

 Credit worthiness assessment.

 guarantee of quality and delivery of goods (escrow services).
 safeguards against fraud.
 fast collection of funds, with ability to vary the collection period.
 reporting: approval of sale, invoicing, delivery, payment.
 procedures to handle disputes.
 Information of all types — corporate, technical, identity-building — has to be
interchanged across the scattered divisions of large companies, and new ideas
fostered, assessed and disseminated. Speed is vital, as are improved
communication, collaboration, and customer understanding. All these
requirements can be handled by IT, and software has been developed to meet the
challenge — customer relationship management, enterprise resource planning,
online auction, supply chain management, etc. Little of it is off-the- shelf, but is
devised as systems to be extended and built round individual company
requirements.

Hence many problems with surveys. B2B has reportedly done better than B2C —
steadier growth, higher profits — but is it software sales or savings in companies with
B2B-enhanced management that have been measured? Even within the B2B market, there
are marked differences between types of software and their successes. Records of some
are distinctly spotty, and sales of the more advanced systems have been badly hit by
the dotcom bust and US recession. Improved management is not simply a matter of
installing new software: extensive company reorganization and retraining are required
to obtain even a modest payoff. These points need to be borne in mind when following
up the information briefly noted below.

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 B2B Ecommerce History

An Anderson survey found that America accounted for 67% of worldwide B2B
revenues in 2000, and Europe 14%. Towards the end of 2000, a gloomy period for
ecommerce in America, executives remained confident about the digital marketplace.
Some 45% of suppliers reported an average 31% increase in sales over the previous 6
months, and 66% of customers responding said they had increased purchases over the
period. A June 2001 IDG survey came to a similar conclusion, noting that B2B trade in
Brazil should near $2 billion in 2003. . Even in the B2C ecommerce slump of August
2001, the larger US retailers were planning to invest in B2B to improve customer service
and supply chain management.

Benefits:

 Encourage your businesses online

 Products import and export
 Determine buyers and suppliers
 Position trade guides

C o n s u m e r t o C o n s u m e r (C 2 C )

C2C stands for Consumer to Consumer. It helps the online dealing of goods or
services among people. Though there is no major parties needed but the parties will not
fulfill the transactions without the program which is supplied by the online market dealer
such as eBay.

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CONCLUSION

Market volatility makes understanding—let alone predicting strategic movements— very difficult. Practicing
managers, consultants, investors, and students all face the problems associated with analyzing a dynamic market
environment. As the environment changes, it becomes important to ask the following fundamental questions:

Do we understand the emerging business models?

Are we investing in the right business opportunities?
Are we attacking these opportunities using the right business model?
Are these opportunities ever going to be profitable?

In today's environment more than ever, managers of "old economy" companies need the right tools to support and
improve their effectiveness when making major strategic moves, allocating scarce resources, and managing risk.
Why? Because the large "old economy" companies from consumer products to industrial manufacturing have begun to
see relatively small pieces of their markets taken away by new, Web-enabled firms. As a result, they're waking up to
the e-business threat (and opportunity) and have started to push toward more efficient digital strategies based on
optimizing customer experiences, integrating their value chains, and accelerating information flow.
Clearly, we're in the early stages of a revolution that's changing the business landscape. As with any revolution, there
will be moments of extreme optimism when the potential reveals itself; there will also be moments of extreme
pessimism when skepticism rules. However, one thing is certain. E-business.

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BIBLIOGRAPHY

SCRIBD

RESEARCHGATE

BUSINESS AND ECONOMIC

JOURNAL

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