E-business no longer exists - all business is e-business

‘E-business no longer exists - all business is e-business’

The emergence of the Internet and the development of complex e-business applications have affected and fundamentally changed the way people conduct business worldwide across all industries. The Internet’s integration into companies’ strategies and the development of sophisticated e-business solutions caused transaction costs to decline, helped to shrink time and information asymmetry ¹ , endowed firms with a new distribution channel and finally established new business ventures such as eBay.com, amazon.com, or google.com (Tucci & Afuah 2003). In addition to that, the Internet and e-business

have enabled companies to participate in the worldwide market place, reduced inventory levels, and to benefit from the digitisation of products and services (Tassabehji 2003). Therefore, nowadays the long-term survival of firms depends

no longer only on competitive advantages such as economies of scale, but especially on the intuition of adjusting correctly to a continuously changing competitive environment based upon the Internet’s options and e-business.

This essay attempts to give an introduction to e-business and illustrates how ebusiness influences firm’s business models. It critically evaluates the statement “E-business no longer exists - all business is e-business” and tries to show the implications of this statement for business and management in general.

The Internet can be referred to as a ‘public global network of networks’ (quoted from Tassabehji 2003, Lecture III p.2). In turn, e-business is regarded as the

commercial utilization of the Internet structure and its opportunities to conduct business. IBM, as part of a Marketing campaign, originally invented and heavily promoted the expression ‘e-business’ as part of a marketing campaign in 1997 (www-1.ibm.com/ibm/history/history/year_1997.html). Tassabehji (2003) defines e-business as ‘the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners’

¹ e.g. via Request for Proposals, virtual communities or ‘infomediaries’ such as priceline.com

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(p.5). This definition emphasizes the opportunities the commercial usage of the Internet offers companies in dealing with its external environment. Besides, ebusiness does not only have external but also internal implications for companies. IBM stresses this and describes e-business as ‘the transformation of key business processes through the use of Internet technologies’ (quoted from http://dotcom.monster.com.hk/articles/5911/).

The Internet, and e-business in particular, influence companies’ business models in primarily three areas: the value stream, the revenue stream and the logistic stream. Concerning the value stream, the Internet and e-business help to enhance a company’s options to offer various stakeholders something distinctive from their competitors. This competitive advantage can be achieved in the form of lower transaction costs, better pricing opportunities, improved customer services, closer customer relations and in depth customer knowledge, as well as complementary products and service offerings (Tassabehji 2003).

The revenue stream on the other hand is regarded as the income source of businesses and can be directly or indirectly affected by e-business. In a direct way, e-business helps companies to increase their revenue streams by reducing their costs (e.g. transactions or production costs) and by endowing them with an additional sales channel. On the other hand, e-business indirectly offers firms another income source in the form of Internet advertising (e.g. banners, pop-up advertisements) or by selling customer information to other companies.

Finally, the logistic stream refers to the internal effects e-business has on organizations. E-business forces companies to continuously re-structure themselves and reshape their business models. The logistic stream looks at the way companies must reinvent their value chains to deliver value added and sustainable revenue streams (Tassabehji 2003). It is important to mention that all areas are closely interconnected with one another and are mutually dependent on each other.

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In practice, e-business can adopt many forms such as Business-to-Business (B2B), Business-to-Consumers (B2C), Business-to-Government (B2G) or Consumer-to-Consumer (C2C), whereas B2B and B2C constitute the most important types of e-transactions for the industry (Korper & Ellis 2000). Research

firms predict a bright future for e-business in the oncoming years. Researchers of Strategy Analytics, Inc. expect worldwide B2C sales for example to grow on average with 44.5 percent to $515 billion by the year 2005. ² Concerning B2B, Gartner Research predicts that the worldwide B2B Internet commerce will grow on an average of 81% per year until 2005. For the year 2005 Gartner Research finally forecasts B2B online sales to reach $8.5 trillion. 3

This trend is confirmed by a survey conducted by AT Kearney and Line56.com in 2001 (www.line56.com/research/contributor.asp?ID=24). In this survey more than 80 percent of the surveyed companies stated to plan at least one new e-business project in the year 2002 (illustrated below in figure 2).

² Source: www.findarticles.com/cf_dls/m4PRN/2000_Dec_5/67583973/p1/article.jhtml

³ Source: www4.gartner.com/1_researchanalysis/focus/ebus_focus.jsp

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