Describe Effects of e-business on Existing Business

As we shall see later in this module, the changes that eBusiness brings to a company can be far reaching. It is important to note that without proper control and coordination, these changes can damage the business; and in extreme cases, even be fatal for the company. It is therefore vital that the desired changes are identified, understood, constantly monitored, and managed as the eBusiness is established.

• Commercial Implications: In understanding the commercial impact of a change to eBusiness, the executive might ask the following questions:
  Is this a short-term solution or a long-term feature? For example, the eBusiness may be viewed as a learning vehicle for the company, which may intend to replace it with a more robust and better targeted solution later. Is the change to eBusiness aimed at reducing the size of an organization or changing its role, or is it intended to grow the scale of the operation as a result of increased business? In any case, eBusiness has commercial implications for company image, budgets, scale, and viability. The diagram below describes each of the considerations for which the executive will need assurances.

The "commercial implications" of introducing e-business involve a wide range of strategic, operational, and financial impacts on an organization. Here are some key implications:

1. New Routes to Market
   • Digital Channels: Businesses gain access to global markets through online platforms, bypassing traditional physical channels.
   • Direct-to-Consumer (DTC) Opportunities: Companies can sell directly to customers, reducing dependence on intermediaries.
   • Omnichannel Integration: Businesses can offer seamless experiences across physical and digital touchpoints, increasing customer engagement.
2. Cost Management and Efficiencies
   • Reduced Operating Costs: E-business systems streamline operations, reducing costs associated with physical infrastructure, paperwork, and labor.
   • Automated Processes: Tasks like order processing, inventory management, and customer support can be automated, improving efficiency.
   • Scalability: Businesses can scale operations quickly with minimal additional cost, especially in cloud-based systems.
3. Enhanced Customer Experience
   • Personalization: E-business systems enable personalized interactions based on customer data.
   • 24/7 Availability: Online platforms provide customers with continuous access to services and products, improving satisfaction.
   • Faster Service Delivery: Digital transactions and communications significantly reduce turnaround times.
4. New Monetary Budgets
   • Initial Investments: Introducing e-business requires investments in IT infrastructure, training, and digital marketing.
   • Ongoing Costs: Maintenance, updates, and cybersecurity measures require consistent budgeting.
   • Revenue Streams: Businesses can unlock new revenue streams through digital products, subscription services, or online advertising.
5. Organizational Changes
   • Company Re-organization: The shift to e-business often necessitates changes in organizational structure, roles, and workflows to align with new technologies and market demands.
   • Training and Upskilling: Employees need to develop new skills to adapt to digital tools and processes.
6. Strategic Planning
   • Management Consultants: Organizations may hire consultants to guide e-business strategies, helping to identify opportunities and mitigate risks.
   • Data-Driven Decisions: E-business generates valuable data that can be analyzed to inform decision-making, optimize operations, and predict market trends.
7. Governance and Oversight
   • Senior Steering Committee: A leadership team is often required to oversee e-business initiatives, ensuring alignment with broader business goals and addressing risks such as cybersecurity and regulatory compliance.
8. Competitive Advantages
   • Innovation: E-business fosters innovation by enabling businesses to experiment with new products, services, and business models.
   • Market Leadership: Companies adopting e-business early can gain a competitive edge by establishing strong digital presences and building customer loyalty.
9. Risk Management
   • Cybersecurity Risks: Introducing e-business requires robust measures to prevent data breaches and ensure secure transactions.
   • Market Disruption: Adopting e-business may disrupt existing operations and relationships, requiring careful transition management.

Conclusion: Introducing e-business fundamentally reshapes how businesses operate, interact with customers, and compete in the marketplace. The commercial implications encompass both opportunities and challenges, requiring careful planning, investment, and adaptability to maximize the benefits of digital transformation.

The introduction of e-business into an organization's operational strategy presents a myriad of commercial implications. Evident through numerous case studies and industry shifts over the past few decades, eBusiness has not only reshaped commerce but also forged new paradigms for value creation and competition.

1. Revenue Streams and Business Models: Evolving beyond traditional bricks-and-mortar operations, businesses can tap into online sales, thereby opening up diverse revenue streams. Subscription models, freemium offerings, affiliate marketing, and on-demand services are just a few examples of innovative revenue models birthed from eBusiness. Companies like Amazon and Alibaba have capitalized on e-commerce, while Netflix and Spotify showcase the transformative power of subscription models.
2. Cost Efficiency: e-business can offer significant cost savings. Reduced overheads associated with physical spaces, the automation of various business processes, and the ability to scale operations without proportionate hikes in costs mean that, when executed well, eBusiness can bolster profit margins.
3. Global Reach: The digital realm knows no borders. An eBusiness model can expand a company's reach from local or regional to global, virtually overnight. Such global accessibility translates to a broader customer base, diversified markets, and the potential for increased sales volumes.
4. Enhanced Customer Experience: With personalized marketing, 24/7 customer service, AI-driven assistance, and a plethora of digital payment solutions, eBusiness enables an enriched and seamless user experience. Brands can engage and retain customers more effectively by leveraging data analytics and offering tailored solutions.
5. Competitive Dynamics: The barrier to entry in many digital spaces is lower, meaning increased competition. Businesses that were once market leaders in the physical realm might find themselves outpaced by agile, digital-first startups. Conversely, traditional businesses that adapt well to eBusiness can outflank slower-moving rivals.
6. Operational Flexibility: eBusiness allows for more flexible and responsive operations. Whether it's adjusting marketing strategies in real-time based on data analytics or swiftly modifying inventory based on online demand forecasting, agility becomes a tangible asset.
7. Increased Reliance on Technology: An undeniable commercial implication is the elevated dependence on technology infrastructure. Investments in cybersecurity, digital payment gateways, server capacities, and IT support become critical. Any technological downtime can lead to direct revenue losses.
8. Regulatory and Compliance Challenges: eBusiness operations often grapple with complex regulatory landscapes, especially when transacting across borders. Data protection regulations, digital tax stipulations, and e-commerce standards vary by country, necessitating vigilant compliance management.
9. Shift in Employment Paradigms: While eBusiness might reduce the need for some traditional roles, it simultaneously creates demand for digital-savvy positions such as data scientists, UX/UI designers, and digital marketing specialists. Adapting to these shifting employment paradigms is vital for talent acquisition and retention.
10. Stakeholder Expectations: Shareholders, accustomed to traditional business metrics, might need education on eBusiness performance indicators. Meanwhile, customers, emboldened by digital empowerment, might demand higher transparency, ethical business conduct, and robust online engagement.

The commercial implications of introducing eBusiness are profound and multifaceted. While the allure of expanded markets and increased operational efficiency is compelling, the challenges, ranging from fierce competition to intricate compliance requirements, demand astute strategic foresight. Organizations venturing into or expanding their eBusiness operations must navigate this digital terrain with a judicious blend of innovation, adaptability, and resilience to truly harness the transformative power of eBusiness.

New routes to market have especially important commercial implications. In service industries, this effect can be a strong negative for eBusiness, especially for established players. For example when Automatic Teller Machines^[1] (ATMs) were introduced into the United Kingdom (UK), the banks expected to see customer transactions migrate from the manned teller stations in their branches to the ATMs in equal number. In fact, the overall transaction numbers grew, and although there was a reduction in branch staff-managed transactions, the reductions were not on the scale the banks had expected. As a consequence, the anticipated cost reductions were never realized, and the business reasons for ATMs came under serious criticism.

• Managing this Change The important lesson here is that eBusiness will impact the existing business dynamics. In anticipating, planning for, and managing this change to eBusiness, its potentially damaging effects can be transformed into benefits. On the other hand, if the effects of the change are ignored, then they might damage the business, as well as the reputation of the architect. In the next lesson, we will talk about identifying the operational support requirements for eBusiness.

[1]Automatic Teller Machines: Machine that lets you do your banking without dealing with a person. At ATMs, you can take cash from your account, make deposits and move money between accounts. All you need is a password you key in and an access card. Do not confuse the acronym ATM with Asynchronous Transfer Mode, which is a means of transferring data across a network in the form of packets or cells with a fixed size.