To effectively discuss both 'What is e-business' and 'Why it matters for modern organisations', it is important to firstly outline the motivation that the discussion is founded upon. This motivation can be broken down into three inter related categories that are briefly explained below:
- Why the academic field of E-Business should be studied?
- Why E-business should matter for modern organisations?
- Why E-business needs to be defined?
When perceived in a broad sense, E-business covers the relationships between 'The Internet and Internet related technologies' (Li, 2007) and any form of commercial Organisational activity. Since its first obvious inception through the creation of 'Book Stacks Unlimited', an online book store, by Charles Stack, E-business has stretched itself to appear in almost all facets of modern life. Through prominent areas of business, such as online shopping, to new up and coming ventures such as mobile commerce, E-business has rapidly been establishing itself as a major field in which to gain competitive advantage. This seemingly unlimited provision for potential has even led to the formation of management concepts, such as e-strategy (Robert and Racine, 2001) and 'e-HRM' (Strohmeier, 2007) that are solely devoted to the development of E-business. Due to the sheer speed at which E-business is increasing and diversifying, it is therefore determined to be a subject that should be studied not purely out of interest, but also out of necessity. If it is not explored in an effective manner, then society is likely to lose out on potential opportunities and also fail to understand it well enough to successfully monitor and control it safely in the future.
Having been identified as a new source for competitive advantage, and having already experienced its first dot.com 'Boom and Bust' (Doms, 2004) in the early 2000's, modern Organisations need to now develop a more mature approach to E-business. Prior to 2001, the vast majority of firms that tapped into E-business gained rapid success. However since the dot.com market crash, previously unknown pitfalls have identified themselves, and modern organisation have realised that as well as being a vehicle for success, E-business can also become a fast tracked route to disaster; as was seen when 'WorldCom' was forced to file for the largest corporate bankruptcy in U.S. history (Moore, 2002). This recently gained deeper understanding of E-business must therefore be explored further, and be utilised to help the business world better understand what they are dealing with and how to adapt and change in a sustainable manner that is in accordance with the field of E-business.
Not only has the rapid growth and diversification of E-business given rise to multiple issues for the world of business to deal with, it has also provided numerous issues for the world of academics; the most notable of these issues being the need to understand exactly 'What E-business does and does not incorporate', and also 'how best to define it'.
Through constantly providing new technology that can create new markets, and through operating in a range of ways in all facets of life, E-business has found itself subjected to a variety of opinions that all seek to define it from their own specific field of knowledge. From governmental policy makers to small shop owners, this melting pot of views has contributed to diluting the original concept of E-business, and provided the new challenge to re-establish a platform from which academic discussion can explore new ideas.
What is E-business; What does it include and what does it not include?
To explain why e-business needs to be defined, it is important to firstly elaborate on situations where the common misunderstandings arise from. To do this, a number of situations illustrating the varied sides of E-business have been outlined below.
Straightforward e-business - Purchasing antivirus software
If a computer requires a piece of antivirus software to help protect it against recent 'Malware' that has been released, the computer user uses Google to find a relevant website producing the necessary antivirus software to help protect the computer. To purchase the software, the computer user then creates an online account containing a database of their personal details. Once the account is set up, they purchase the antivirus and it is downloaded direct to their computer. The whole process is carried out electronically, and is devoid of a tangible exchange of goods.
However whether or not the computer user had have purchased the antivirus software, we need to consider which of the stages within the purchasing process can have the term e-business assigned to them.
E-business with a twist - Grocery Shopping online
Within the last decade, online grocery shopping on sites such as tesco.com has become a very regular and natural process for many people. The process of searching for the groceries you want through using an online catalogue, paying for the groceries electronically, and ordering the despatch and delivery of the groceries from a supermarket warehouse that same day would all be seen by most as e-business. However examples such as this provide an added dimension to the e-business experience due to their inclusion of an end gain of a tangible asset, as opposed to anything electronic. Online grocery shopping also tends to automatically fulfil the consumers order with groceries from their nearest branch of tangible supermarket outlet. E.g. A person living in Newcastle Upon-Tyne would have their tesco.com online grocery shopping order assembled at a Tesco's in or around Newcastle. Therefore due to the tangibility of the end product, and the use of a local supermarket, it is likely that many people would not be sure over whether or not the online grocery shopping process included e-business, e-commerce, or both.
Further Confusion - Searching online, but paying through other modes
The definition and perception of e-business is further watered down in processes where the internet plays a small yet vital role. One such example may relate to the payment of gas or electricity bills. It is now possible for an individual to have an online account that shows how much their monthly gas or electricity bill is. For many people, they are happy to use their online account to see how much they owe, and also pay the bill online. However for a more slightly older generation, it is not uncommon for them to not feel safe paying over the internet, and therefore purely use the internet to find out how much they owe, before either delivering payment via a cheque in the post, or over the phone. Despite not carrying out the transaction online, the knowledge of how much is needed to be paid and when it needed to be paid was gained online.
If we look at the number of estate agents who advertise houses online, then we can further see just how small but vital the role of the internet can be within an e-business process. An estate agent such as Knight Frank will not provide an online transaction service on knightfrank.co.uk, however they will expect that consumers will use the internet to search for a property they like the look of before making a decision to go and see it and consider a potential purchase. In this instance, the internet has purely been used by the company to advertise its goods and encourage consumers to come visit the company to make the purchase. This highlights how the internet may not directly help a firm make a profit through online channels, but has a huge influence over whether or not customers interact with the other areas of the business. Kukar-Kinney and Close (2009) take this debate further by illustrating how an online shopper can often be encouraged to buy a product in store, despite abandoning their online shopping cart at the online checkout. Intertwined with this concept, is the modern organisational understanding of consumer 'conversion rates'; by which many firms judge themselves (Gregoriadis, 2009), and are therefore reliant on a clear definition of 'what e-business is'.
In the above examples, we are made aware of the number of varied ways in which e-business can operate. The examples also highlight how the definition and clarification of e-business can be blurred. Being combined within the e-phenomenon enhances this blurring of the question 'what is e-business?, or even e-commerce?'. The ability to know where to draw the boundaries within which research on e-business is to be conducted is therefore subject to the researchers own opinion. This can therefore be considered as one of the major contributing factors for the extreme variation within e-business research results at present.
When analysed from a business perspective, the examples illustrate just how effective the internet can be in both creating sales and encouraging sales. Therefore defining e-business in a more accurate sense will not only help to advance the academic and theoretical thinking undertaken within its field, but it also provides potential to improve its practical use within the business environment.
E-business vs. E-commerce
The former CEO of IBM, Louis Gerstner, attributes the conception of the term 'e-business' to IBM's internet and marketing team in 1996. At that time, the term was defined as 'the transformation of key business processes through the use of internet technologies'. However since 1996, the e-phenomenon has rapidly expanded its presence into many new areas of everyday life. To recognise this expansion Li (2007) states that E-business also refers to 'servicing customers, collaborating with business partners, and conducting electronic transactions within an organisation'. Within modern organisations, we can also see the growth of e-business through the range of terms with the e-prefix that have been coined since 1996. Of these terms, e-commerce is the one that is most regularly confused with e-business. At present, e-commerce is defined as 'electronic transactions conducted by business partners, which can be both organisations and individuals' (Li, 2007). However this one definition of e-commerce does not explain the views of other leading theorists. Therefore outlined below are three of the main theories outlining the range of present day discussion.
- Laudon and Traver (2004) provides a formal definition for e-commerce; 'Digitally enabled commercial transactions between and amongst organisations and individuals.'
- In contrast to the clearly defined distinction between the two terms by Laudon and Traver (2004), Turban et al (2004) defined e-commerce and e-business interchangeably. They indicated that both terms described the process of 'buying, selling, transferring, or exchanging products, services and/or information via computer networks'.
- Jelassi and Enders (2005) defined e-business as 'the use of electronic means to conduct an organisation's business internally and/or externally'. However in contrast to the two previous views, they regard e-commerce as a subset of e-business and state that it 'deals with the facilitation of transactions and selling of products and services online, either via the internet or via any other telecommunications networks'.
However their definition of e-business is far less formal and 'refers primarily to the digital enablement of transactions and processes within a firm, involving only the information systems under the control of the firm' (Laudon and Traver, 2004).
The difference in definitions suggests that Laudon and Traver perceive e-commerce and e-business as two activities separate from each other, but functioning to assist one another.
In other words, Jelassi and Enders are suggesting that e-business and e-commerce are neither distinctly separate, nor are they interchangeable. Instead, e-commerce represents a small sub set that helps to make up the larger field of e-business.
For both the interest and benefit of this paper, the broadest possible definition of e-business has been assumed, with the aim of encompassing 'all the areas that a business can interact with the internet and internet related technologies'. To effectively study the concept of e-commerce as well, it has been decided to use the definition as stated in Li (2006); 'E-commerce is one subset of e-business, which focuses on the electronic commercial transactions between and amongst organisations and individuals'. Despite an ever increasing number of 'e-prefix' fields of research that can be interlinked with the study of e-business, we shall try to only include those containing large degrees of overlap.
The Changing Business Environment and rise of e-Business
Now that we know exactly what e-Business is, it is important to understand why exactly is has become an integral part of modern day organisations, and what enabling factors have contributed to its rise.
To assess the rapid development of e-business it is important to understand the changing business environment in which we live. As Bourlakis, Papagiannidis and Li (2009) highlight, our changing business environment has been underpinned by two fundamental processes: The first of these processes is the rise of the information economy. This is essentially where the focus of economies has shifted away from manufacturing and more towards Information. This can be quantified as we move towards a labour market where primary activities are informational rather than physical and a movement towards the intangible nature of our products and services is being favoured. Some information has entertainment value, and some has business value, but regardless of the particular source of value, people are willing to pay for information. In other words, we have shifted towards an economy where competitive advantage now lies primarily in the power and exploitation of Information.
This demand for up-to-date, relevant information has led to enormous demand pull pressure for new technologies and processes designed to handle and manage these new aspects of the economy. As a result, an ICT revolution has taken place and has provided us with extremely complex and advanced systems capable of handling, processing and managing this new information. ICTs have developed to such an extent that even the microchip inside a modern day greetings card contains more computing power than the entire world combined possessed in 1945 (Coyle 1999). The rise of the internet itself has been critical in the fundamental shift towards network economies. Access in many countries is now seen as a fundamental human right, with Dr Hamadoun Toure, secretary-general of the International Telecommunication Union (ITU), recently claiming that governments must,
"Regard the internet as basic infrastructure - just like roads, waste and water".
Perhaps more importantly now than ever, organisations need to adapt and do things differently in order to survive and be able to recognise further disruptive innovation opportunities. (Gilbert 2003)
With this new Information economy and vast development in ICTs firms have to reconsider their previous ideas surrounding Business Models and Strategies. Many strategies for purveyors of information are based on the fact that consumers differ greatly in how they value particular information goods. For example, as Shapiro and Varian (1999) highlight, one thing about information is that it is costly to create and assemble yet cheap to reproduce. In other words a Film may cost hundreds of millions of pounds to make, but can be copied onto a DVD for literally no more than a few pence. In other words fixed costs, i.e. the cost of producing the initial good are high, whereas the marginal costs of producing further units are negligible. As such traditional pricing structures for firms are often redundant and have no relevance in the modern information economy. For example, the idea of using mark-up pricing of say 25% makes no sense as the unit cost is 0. The pricing of information goods must be related to customer value and is this is extremely hard to quantify, it makes understanding how e-businesses work all the more important to modern firms.
From a consumer perspective one benefit of the growth and development of the information economy is that not only are search costs considerably lower, but efficiency gains can also be achieved through increased competition. This as a result leads to a lowering of average selling prices as firms compete on price and as a result consumer surplus is increased (Brynjolfsson et al 2003). While this form of competition is no doubt beneficial for consumers, it can have drastic consequences for the competing firms. The problem with this form of Destructive competition (Porter 2001) is that it drives prices down to where returns are inadequate. The fact that certain companies like Amazon have adopted loss-leader strategies (Krepel 2009) further signifies the need to understand modern day e-businesses. Why would a company opt to sell items below cost price? Surely they must be making a loss. The fact remains that although Amazon may make a loss on a small number of products, the publicity, and new customers it generates to buy other products from this promotion is invaluable.
Resistance as a Potential Barrier
As with any new development in technology, or radical innovation like that of internet technology, there will always be a form of resistance. With change comes a level of uncertainty and an element of the unknown. In general people tend to be risk averse, and any change, no matter how incremental, will certainly bring about a level of discontent amongst certain individuals. The problem with most innovations is that they tend to fail, and as a result people are sceptical towards them, and will do their upmost to maintain the 'status quo'. Gains from innovation may be diffuse, and often unnoticeable, however losses can be extremely concentrated. An example of this would be where a new process or product is implemented within a firm. Yes there will be gains, but at the same time there may be loses in terms of human capital. In the labour industry, age brings a decline in the ability to learn new skills, and as such there may be an element of goal directed behaviour from the older workers, as they know the threat of new technology may mean the loss of their jobs. As well as resistance from workers, the process of understanding the new networks that have come about as a result of the ICT revolution is an extraordinarily difficult task. Not just because it is inheritantly complicated, but because it requires different kinds of specialized knowledge that are usually segregated according to academic specialty and even discipline. (Watt 2004) As such firms have to be extremely cautious when they are perhaps extending their services to cover an online branch or subsidiary. Examples of what happens when firms aren't prepared will be discussed later.
The Emergence of e-Business as a Result of Technical Revolution
To understand the growth and development of e-Business during the 1990's it can be useful for analytical purposes to compare and contrast it to other technical revolutions that have happened in the past. Perez (2002) studied five successive technological revolutions between 1770's and the 2000's, placing particular emphasis on the crucial role of financial capital as a cause of and solution to crashes within these technical industries. He defined a technical revolution as:
"a powerful and highly visible cluster of new and dynamic technologies, products and industries, capable of bringing about an upheaval in the whole fabric of the economy, and propelling a long-term upsurge of development" (p.8)
This technological revolution itself can then be divided into two separate periods. The first being the installation period, followed by the deployment period. These can then be divided up into five further stages: irruption, frenzy, crash, synergy and maturity. Perez also describes the cycle as a stage like process fooling that repeats the following cycle about once every fifty years:
"Technological revolution - financial bubble - collapse - political unrest" (p5)
This theory of technical revolutions admittedly is a little vague, however it does provide us with a useful underlying framework to understand the surge like nature of these particular shifts in the overall techno-economic paradigm.
Enders (2005) further developed this framework to analyse the evolution of e-business and divided the process into four distinct periods:
- The Grass-roots of e-Business
- The Frenzy Period
- The Crash Period
- The Consolidation period.
The first period, or 'Grass-roots' era pre-dated the extensive, commercial use of internet technologies in e-Business transactions. During this era firms made use of Inter-Organisational Information Systems (IOS) and Electronic Data Interchange (EDI) to connect business functions internally. However, the value-creation of these technologies was limited due to the high costs involved in installing these systems compared to the limited benefits that they actually provided. Another issue was that often these ICT systems were propriety and needed to be adapted extensively between individual companies. As a result, their use was limited, as only a relatively small number of firms actually used these systems, limiting the number of potential partners. Secondly, the incompatible nature of individual firms systems meant that e-business was limited at best.
The Second, or 'Frenzy' period began in 1995 with the launch of amazon.com. This was to be an era where business fundamentals seemed to be totally disregarded as companies sought to gain as much market share as possible and quickly establish large customer bases. Between 1995 and 1996, companies selling particular products such as computer software, books, CDs and videos experienced moderate success. The reason for this was that consumers had previous experience with these products through reviews, or previous use. As a result these represented low cost transactions for the consumers, and benefits from online transactions were seen in the form of faster deliveries and cheaper prices. (Benbya and Belbaly 2002). Other companies then entered the market between 1997 and 1998 introducing ventures that explored more adventurous retail avenues. These companies included florists, home decorators, travel agents, new and used car sellers that offered non- standardized products but at higher costs. The problem with this was that a greater level of uncertainty arose as customers had no prior experience with these products and often faced difficulties with regards to shipping. Hence online buying resistance increased and issues regarding return policies and warranties began to restrict profits and growth. The problem during this period lay in the fact that firms were over-optimistic about their expectations regarding changing consumer behaviour. Issues regarding transferability of consumer trust were also underestimated. These included fears over the of security payments, reliability of deliveries, unknown product quality and costly procedures for returning goods (Dahlberg et al 2001). Driven by irrational exuberance and wild predictions about the future of business firms were to ignore these factors at their own peril. Nevertheless lower transaction costs and lower marketing/distribution costs helped to shift demand and supply respectively. As a result the markets expanded and the NASDAQ rose from under 1000 points in 1995 to well over 4500 by March 2000.
The third, or Crash period, was when this bubble of growth finally burst. The NASDAQ slid by over 500 points in three days (Enders 2005) and by the end of 2000 The Market had fallen by 45%. Inflated market prices through the idea of the 'greater fool' theory was one particular reason for the crash. The idea here being that many investors did not believe in the future of the start-ups they funded, yet hoped that potential investors would not realize this until it was too late.
The final period, or the consolidation phase, began in late 2000 as key stakeholders had to pick themselves up again and contemplate where it had all gone wrong, what needed to be done, and what did this mean for the future of e-businesses. A return to basic business fundamentals was necessary as firms realised that simply being on the internet was not sufficient enough to warrant success. (Benbya and Belbaly 2002) During this period though many stocks returned to pre-crash levels, and markets began to improve steadily, with early start-up companies like Amazon returning ever stronger than before.
What did we learn From the Crash? Why does it matter for Modern Organisations?
As we know, the Dot.com crash of April 2000 did not mark the end of e-Business, but instead paved the way for an era of slower growth, and sustainable ways to create profit through the Exploitation of Information. The need to focus on integration technology, business processes and e-business readiness throughout the business chain were all harsh lessons learned from the fallout.
Internet commerce in the late 1990s was widely characterized as a "land grab" where firms rushed to acquire market positions before competitors had an opportunity to do so. The logic behind this was that companies believed they could generate scale effects through large sales volumes, and they believed that if they expanded quickly enough, they could achieve a 'lock in effect'. In terms of Industrial economics (Geroski 2000) this relates to the ideas of 'Information Cascades' within innovation. For example, say there are two competing web-firms, both vying for the same market, then information cascades happen as a result of early adopters spreading information about one or other of the firms to other users. As mentioned earlier, with Information being the key, getting these adopters on board may mean the difference between success and failure. The firm that gets adopted may not necessarily be the better of the two, but once consumers have made their initial choices, the 'lock-in' effect occurs and is almost impossible to reverse. As such First mover advantage was seen as critical (Lieberman and Montgomery 1998).
As a result, a 'winner takes all' scenario became prevalent. Understanding this helps us to understand why for example we have only one Amazon, or only one e-Bay. One lesson learned during the crash, was that not only is having the correct Business Model critical, but adopting the correct strategy is equally as important. The terms Business Model ,and Business strategy are often over used, or more seriously, assumed to be one and the same. A business model is at heart, a story that explains how enterprises work, whereas a Business strategy explains how you will be better than your rivals. As Magretta (2002) explains,
" A Business Model describes, as a system, how the pieces of the business fit together. But they don't factor in one critical dimension of performance. Competition. Sooner or later- and it is usually sooner- every enterprise runs into competitors. Dealing with that reality is strategy's job. A competitive strategy explains how you will do better than your rivals. And doing better, by definition, means being different."
The problems with most internet business models lie in their transparency, and as a result, ease of imitation. The number of patents (such as that of Amazon's 'one-click' ordering system) is also relatively low compared to other technology sectors. As such, the idea of a Business strategy becomes all the more relevant to modern organisations.
So while other companies may have rushed in with similar Business Models, and competed purely on price, with no emphasis on value creation, companies that grasped these fundamentals like e-Bay and Amazon were able to survive long after the crash. e-Bay in particular was able to benefit from other core competencies obtained from smart decisions made early in the formation of the company. These included the fact that they had a huge customer base of dedicated collectors and auctioneers and simply act as a facilitator of these transactions. E-bay leaves buyers and sellers to work out the logistics of payment and shipment. The Company never takes possession of the goods or carries any inventory. Therefore there are no transport costs, no credit risks. And it has none of the overheads that comes with those activities.
In terms of survival, as seen with the firms that entered the market between 1997 and 1998, it is more difficult for e-tailors who sell touch and feel products and for pure e-tailors who do not have the support of either brick and mortar stores or catalogue operations (Nikolaeva et al 2009). Once again this highlights issues of trust, and how it shapes consumer preferences. As pointed out by Dennis, Jayawardhena and Wright (2009) consumer behaviour is also affected by their preconceived attitudes towards certain retailers. So for example it has been shown that one of the reasons the Tesco online division is so profitable is because of the strong positive image that Tesco has portrayed in the past with regards to other aspects of its business.
As we have seen there are many reason why an e-Business may not succeed. (McLaughlin 2009) However, the above points can best be illustrated by looking more specifically at the failure of the e-Toys (Cotriss 2008). In this case, despite huge financial backing, and a seemingly sound business model, the firm was still doomed to failure. The company launched in 1997 as an online toy retailer with the premise that families would be able to take care of all their Toy shopping from the comfort of their own homes. Featuring various newsletters and an award winning website, the company really did seem to have it all. The initial public stock offering (IPO) was $20, but by the end of the day, shares closed at $76. The company really did seem to be heading in the right direction, but like most new online start-ups at the time, it grew too fast and utilised a largely untested Business model. Failure to fulfil huge amounts of orders during the Christmas 1999 period was a blow that it never recovered from. As Phil Polishook, vice president of marketing at e-Toys stated,
"The bottom line is that e-Toys had the potential to be a great $500 million company but it was masquerading as a $5 billion company."
In the case of e-Toys, it was clear that they had a unique strategic innovation (Markides 2003), however, the underlying Business model was not sufficient to sustain the high demand. This once again highlights the significance and intertwined nature of Business Models and a competitive strategy.
How e-business affects the future of modern organisations
So far this paper has shown that the worldwide economy is undoubtedly changing, with a large part of this change being directly driven by the advancement of the interlinked relationship between the e-business revolution and its new corresponding strategic resource; information. With the e-business revolution being centred around the development of the internet and internet related technologies (Adams, 2004), then the e-business revolution is providing the ideal super highway for the management, handling, communication and deliverance of information. In response, the ease at which information can now be dealt with in its various forms provides an unequalled thirst for development of e-business. Our focus on modern organisations has also illustrated that to be considered a modern organisation, and to work within the modern business arena, then a firm must constantly develop and operate in new ways if it is to successfully survive in the new economy.
If this successful survival is to work effectively, then it will be required to enter into new fields of organisational functions and practices. Primarily, these new fields of functions and practices will be required to focus around the emerging information economy that modern organisations operate within it. However the speed at which the information economy is evolving dictates that any change that is implemented within a modern organisation, be done so with consideration to how it will be able to utilise the future potential and capabilities of ICTs. This consideration thereby recognises the move away from technological stagnation, and towards rapid advancement. In order to implement new processes successfully, it is also recommended that modern organisations allocate significant time and effort researching possible future advancements of the e-business revolution. At present, many organisations have turned to outsourcing for their technology needs, which suggests a strong likelihood of becoming even more common in the future, as it allows organisation to focus on their traditional strengths while integrating with new advancements.
In addition to selecting a strategy that considers future technological advancements, organisations will also be required to select a strategy that is in alignment with the development of their current and proposed business activities. In recent times, we can see that e-business has been the saviour of many firms. After Woolworths Group plc went into administration on the 10th of December 2008, within less than two months it had been revived as an online store under the umbrella organisation of the 'Shop Direct Group'. This ability to rejuvenate and regain a market presence within such a short period of time illustrates the benefits of e-business for modern organisations. However it must be remembered that this revival was heavily dependent upon the knowledge and expertise of the 'Shop Direct Group', who are the UK's leading online retailer. In contrast to the success of the Woolworths brand, many other firms have found themselves crippled by the significant capital required to implement ICTs and their associated organisational transformations. As well as being crippled by the financial costs of ICTs, it is also possible that an organisation will not actually benefit from the implementation of ICTs. For example, a small plumbing firm that operates in a local area may not require ICTs, as its customer base prefers to speak to the firm over the phone, and not look on the internet when searching for a plumber. Interlinked into the process of selecting an e-business strategy, an organisation must also realise that they are making an investment, and as such should outline an expected measureable return. Without this expected return, modern organisations may find themselves lost and confused regarding the progress of their investment.
Conclusion: How do we currently define e-business and what does the future hold for e-Business and the modern organisations that use it?
So far our discussion has demonstrated that it is important to appreciate the newness and constant significant changes in the evolution of e-business. It has also led to us identifying that e-business cannot be prescribed a definition based on the assumption that it has any permanent foundations around which it is based. Therefore current academic discussion would suggest that we must only aim to define e-business for what it can be adjudged to be at the present moment in time, with recognition of its historical context and consideration for its future context. As a result, we can say that in broad terms, e-business refers to 'the technologies and processes by which organisations, individual and partners interact with commercial activity via the internet and its related functions'.
By now we have identified what exactly e-Business is, why it has come about, and by studying it from a Historical context, we have firmly identified why it is so important to modern Organisations. Now all that remains to be established is the future implications for e-Business and to try and determine where the next major developments will be.
Social media is currently the newest and most actively engaging forum for interaction between consumers and companies. Within the last few years, the rise of social media sites has caused a significant change in the balance of communication. Consumers have been 'empowered by online social technologies such as blogs, social networking sites like MySpace, user-generated content sites like You Tube and countless other communities across the Web' (Bernoff and Li, 2008, p. 36). As Li (2007) explains; customers have now begun connecting with and drawing power from one another. Through this online empowerment, consumers have capitalised on the rebirth of word of mouth marketing (Datta, Chowdhury and Chakraborty, 2005) to create and influence perspectives on the perception of companies, brand awareness and their communication; a view that can often contrast the image an organisation wants to portray. 'This groundswell of people using technologies to get the things they need from one another, rather than from companies, is now tilting the balance of power from company to customer' (Bernoff and Li, 2008, p. 36) and is forcing many organisations to completely re-think their outlooks on strategy.
No longer can a company passively assert its brand promise and marketing messages out onto the consumer. Under the umbrella of the current Web 2.0, not only do consumers' opinions about their care experience shared online influence other people's perceptions about a business, they truly impact purchase intent, as can be seen from the successful recent 2010 online uprising campaign to overturn the traditional X-factor Christmas Number one single. In this example, a single person created a Facebook group that allowed consumers to unite and express their desire to have their individual needs recognised by large organisations, through the boycotting of one of the UK's most influential brands. This accurately illustrates how the economy of customisation has grown to such an extent that a consumer now demands a higher, more personal interaction with the company, such that it leads to the development of an experience. These consumer needs and wants are simply too important to ignore, and must be addressed in a firm's corporate marketing and communications strategy. The consumer's demands for a personal, interactive and relational experience have most likely arisen from the opportunity to demand and experience this type of interaction made possible through improved technology. However there will always be an underlying question regarding whether the growth of social media communications is arising from technologic innovation, or, if technological innovation has arisen out of changing consumer needs and developments. Although this question may seem to provide an endless story, it is the answer to this question that will provide modern organisation with both an identity and a competitive advantage. Do they follow the consumer demands, or do they try and lead the creation of the market technology. While it may appear the safest option to follow the consumer demands, an ability to develop fast in accordance with technology when required, must also be employed. Therefore whatever outlook a modern organisation chooses to embrace, an acceptance, or at least recognition, of the other stance will forever have to be considered.
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