The advent of the internet has provided organizations the ability to conduct businesses beyond the traditional brick and mortar business model and expand beyond organizational and geographic boundaries. Organizations that can adapt and control the potential of the Internet and its related technology will find success in attracting new customers, retaining customers, streamlining channels, operations, and processes, attracting new partners, and improving productivity. This paper will review the evolution of e-business or electronic business as well as compare and contrast the differences and limitations of e-business with e-commerce.
Evolution of E-Business
The evolution of e-business has taken several stages. As technology advancements have occurred electronic business functions have improved as well. E-business can be categorized into three generations. Efforts to conduct e-business prior to the Internet are categorized into the first generation. According to Owens (2006), “In the second generation most businesses progressed in e-commerce to where they could conduct sales transactions electronically” (p. 24, para. 6). Although an improvement, e-commerce still must be integrated with other organizational functions to proceed to stage three in the evolution of e-business.
Stage three, the current stage of e-business evolution, integrates all an organizations functions with electronic sales data. As a result, “E-business includes connections of electronic sales to other parts of an organization that relate internally to finance, fulfillment, staffing, marketing, customer service, etc. and externally to customers, suppliers, and ultimately improved supply chain management” (Owens, 2006, p. 24, para. 7). Organizations that realize how important effective integration of systems and processes are gain significant competitive advantage. Often many ways an organizations improves its position is through the effective use of e-marketing as part of the e-business process. For example, according to Rohm & Sultan (2004), “Internet use has begun to mature. E-business has evolved and is now an integral part of the multi-channel marketing strategy in most corporations” (p. 37, para. 6).
Differences between E-Business and E-Commerce
Differences exist between e-business and e-commerce. When comparing e-business to e-commerce, each shares the same denominator, the internet and related technology. E-commerce is the buying and selling of goods and services, and the transfer of funds, through digital communications, is the foundation of e-business. Whereas e-commerce focuses on the transaction between buyer and seller, e-business focuses on integrating the electronic sales transaction with the rest of the organizations functions. E-business involves the innermost workings of an organizations processes and culture. By connecting critical business systems directly to customers, employees, suppliers, and business partners through the use of intranets, extranets, and collaborative applications, organizations quickly integrate and transfer knowledge.
Organizations use e-business to identify opportunities for goods and services. Because e-business connects sales transactions with rest of organizations functions through various electronic and technological advancements, organizations can become rapid response organizations reacting quickly to market conditions. Some rapid responses include introducing products to market faster, better management of products with shorter life cycles, identifying potential customers, and retaining existing customers with tailored follow-up communications.
Limitations between E-Business and E-Commerce
However, with advancements in technology come risks of technology limitations and trust. Technical issues or glitches occur when computer systems, networks, or software incompatibilities create communication gaps and failures. Failure to relay important production information to fellow supply chain partners create back logs and bullwhip effects that create inefficiencies throughout the supply chain. In addition, information like back orders that do not reach final destinations like retail stores cannot plan advertising and promotions around the lack of products. The result of information delays and knowledge transfers is the possibility of creating customer dissatisfaction. As a result, organizations continually seek improvements to ensure that compatibility issues and down times remain under control by IT departments through updates and reengineering or hardware and software applications.
The trust risk factor as part of the non-technical limitations between e-business and e-commerce is similar. In both instances, transactions are conducted without the other party being present. Therefore, an organization must provide reliable, trustworthy, safe, and secure forms of electronic transfers of information, data, and funds. Privacy issues, proprietary information, and identify theft are some of the trust issues facing e-business and e-commerce participants. Petrovic-Lazarevic & Sohal (2004) comment, “By providing education, not only to other executives but to staff as well, the chief information officer (CIO) has the opportunity to transfer cultural issues to everyday business that is related to computer networks” (p. 169, para. 4). Organizations develop a culture of trust by using effective countermeasures to avoid identity theft, invasion of privacy, and capture of proprietary data through effective encryption programs and secure links to websites, intranets, or extranets. The ability to overcome the fear of not conducting a transaction with a live individual is important for future growth of e-commerce and e-business.
The limitation of e-commerce is the inability to capture feedback from customers and integrate with other functions of the organization. This inability prevents developing marketing, procurement, and supply chain strategies to meet better the needs of the customer in the future. Without this knowledge, organizations cannot effectively coordinate activities between supply chain partners like suppliers, manufacturers, and retailers. As a result, organizations struggle to plan and execute a supply chain strategy, the position the organization wishes to take, and how to execute the plan because of the various affects and challenges of incomplete data.
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- James Tallant (Author), 2010, E-Business Evolution, Munich, GRIN Verlag, https://www.grin.com/document/167265