List and differentiate perceived and actual benefits of eBusiness.
Reasons for Adopting e-business
What are the right and wrong reasons for an enterprise to adopt an eBusiness strategy? In many cases, the reason for adopting an eBusiness approach is about the perceived and actual benefits of eBusiness. The eBusiness decision has much to do with cost, growth, and evaluating the threat to the business. Although there are powerful reasons for adopting an eBusiness approach, in every case you should ask,
What are our goals for adopting an eBusiness process?
The graphic below describes some of the more common reasons companies adopt an eBusiness approach.
Increase Customer Base
Match the established competition
Combat first mover Advantage
Let us look at each of these reasons in more detail:
1) Reduce Costs
The first reason might be that eBusiness will reduce costs. It is clear that costs are incurred to design, implement, and maintain an eBusiness solution.
So there must be significant cost savings elsewhere for this reason to be valid. For example, depending on the business involved, an eBusiness approach might reduce unit costs through increased sales and higher throughput. However, this higher throughput could be too much of a good thing. Higher throughput is likely to increase volumes in many areas of the business, such as delivery and customer service. If the operations of these areas are not scalable, then operating costs could become excessive and/or service levels could suffer.
2) Increase Customer Base
The second reason to adopt eBusiness might be to increase the customer base. The question you must ask is,
Are the goods or services offered going to be attractive to customers via an electronic presentation medium?
As we discussed in the previous module, high-touch items traditionally have not sold well to online customers.
If your product is not going to appeal to your customers online, then although more people may see your company's wares, they are unlikely to buy them via this route. Where there are other sales routes, such as door-to-door agents completing the sale, a company may require a storefront solution. As we will stress throughout this module, a great deal depends on your goals for adopting an eBusiness approach.
3) Match the established Competition
The third reason to adopt eBusiness might be that established competitors are doing it. Although this is difficult for any enterprise to ignore, there are still reasons to be cautious. Just because a competitor is doing it does not necessarily mean it is the right thing to do. Again, much will depend on your objectives.
4) Combat first mover Advantage
First in the marketplace or first-mover advantage, it is impossible to avoid what's happening with eBusinesses these days: Once one company launches a Web site, it seems everybody and their dot-com sister launches one just like it. If new entrants to the business space have adopted eBusiness, there's probably a strong argument for following suit.
This situation is probably the most threatening to any business enterprise today. New entrants to the business space who do not have the overhead of legacy systems are very well placed to exploit new technology and eBusiness. While an established brand and an existing customer base provide a degree of protection from newcomers, these are generally short-lived advantages for established businesses.
Evaluate the threat to existing business
When should an organization adopt eBusiness? It is not possible to identify the right circumstances for all companies to adopt this strategy. What is certain is that all enterprises should be aware of eBusiness trends and their competitors' actions.
They should constantly analyze their position in the marketplace and seek to identify and, more importantly, anticipate the ways in which a new entrant or existing player could pose a serious threat through the use of eBusiness.
Strategies for Defense
If and when such areas of vulnerability are identified, the enterprise should give serious thought to defending the space by creating their own eBusiness threat before their competitors.
This tactic should be considered even if it means adversely impacting its existing business in the short term.
The thinking behind this approach is as follows: if the threat is real, then the new business gained will survive, and will stay within the enterprise. If a competitor beats them to the new business, it could cripple the enterprise.
Question to ask yourself
Under what circumstances would you choose to preempt the dominance of a competitor by creating an eBusiness presence before the competition, even when you know it will adversely impact your existing business?
What tips and suggestions would you offer others in identifying perceived and actual benefits of eBusiness, based on your experience?
Reasons for Adopting e-business Model - Quiz
Before you continue on to the next lesson, click the Quiz link below to test your knowledge on the best ways to select a business model. Reasons for Adopting e-business Model - Quiz
With the rise of B2B commerce in full force, many players are looking for new ways to capture the attention of other companies with whom to do business. There are a number of B2B models available, and we will look at them in the next lesson.