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Lesson 2 Why build an eBusiness solution?
Objective Describe market trends/business drivers that make eBusiness compelling.

Why build an eBusiness solution?

In order to understand and weigh the reasons for building an eBusiness solution for your business, it is important that you know the general drivers and forces associated with eBusiness. There are three such forces behind the growth of eBusiness:
  1. Changing productivity
  2. Shifting market scenarios
  3. Rapidly evolving technologies


One of the principal drivers behind any business is the need to reduce costs and stay competitive. In fact, many pundits cite the long-term, technologically driven improvement in productivity as the key reason underlying the healthy economy and robust stock markets of the latter 1990s. To stay economically efficient companies must enhance productivity, and they must focus on both their external and internal operations, as outlined below.

Outward-looking initiatives may focus on: Technological infrastructures Electronic transactions with suppliers Global information sharing and advertising Customer service
Inward-looking initiatives may focus on: Customer requests Shipping Billing Inventory Electronic data storage that allows for instant retrieval and transmission

In developing an eBusiness solution, organizations can improve their productivity and efficiency, both within the organization and in their external customer and supplier transactions.

Market scenarios

In recent years, the number of businesses, whether they are traditional storefronts, catalog suppliers, or online businesses, have proliferated. Customers have more choice in what they purchase and who they purchase it from than at any other time in history.
In order to remain competitive, marketing executives must work hard both to attract and retain customers, as illustrated below.

Data-Driven Marketing
This illustrates the customer focus and market value that e-business enjoys : 1) To attract customers, businesses must expend greater amount of capital to carve out a recognizable name and identify for their products.

eBusiness therefore offers a new channel for attracting business opportunity. Just as eBusiness provides techniques to improve productivity and efficiency (that is, reduce cost), it also offers new ways to drive revenue (that is, increase opportunity). In short, the Web brings an entirely new set of opportunities, and challenges, to the marketing of a company's products.


The last driving force behind eBusiness is technology. The popularity of Web-based technology has resulted in an explosion in Digitized content. This explosion has generated new technologies, which have affected many industries,
but especially content-intensive industries such as publishing. The table below explains the effects that digital content has had on both users and entire industries.

Digitized Content: Content that is broken down into and transmitted in digitally.

Digital Content

The opportunity of eBusiness

Due to these developments in productivity, market scenarios, and technology, the lines between the communications, entertainment, publishing, education, and computing industries are beginning to vanish. Businesses, now forced to reevaluate their positions within the marketplace, have two choices.
  1. They can ignore these developments and continue conducting business in the way they have for years.
  2. They can capitalize on the wealth of opportunities that the convergence of these forces has created, namely the creation of new service delivery channels like transaction processing; the development of new markets for existing products; and the development of new information-based products for an online environment.
Now that you realize the vast opportunities presented by eBusiness, it's important for you to understand how eBusiness emerged as a business model. The next lesson discusses the history of eBusiness.