Ecommerce jmuketsi individual assignment

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Introduction
Organizations are expected to make the correct choices when trading
electronically so that they reap the perceived benefits. The benefits can be
enjoyed if they fully understand the meaning of key concepts like e-commerce
and e-business. The discussion deals with the meaning of these two terms and
show whether they are similar or different. Issues to do with business models are
and value creation are discussed since these are pertinent when an organization
Definition of terms
The terms e-Business and e-Commerce are used interchangeably suggesting that
they mean the same thing and this is the main source of confusion. Those who are
against their distinction claim any perceived differences are based on a thin veil.
More so there is no one universally accepted definition of these terms as those
who have defined them have done so from their own perspective. Organisations
need to know the distinction between the two if they are to put in place strategies
that give them competitive advantage on the use of electronic ways of doing
business.Organisations should at least appreciate the complementarities that exist
between eCommerce and eBusiness.
The different definitions available are :
Andam(2003:7) defines ecommerce as, the use of electronic communications
and digital information processing technology in business transactions to create,
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transform, and redefine relationships for value creation between or among
organizations, and between organizations and individuals. It is the sharing
business information, maintaining business relationships and conducting business
transactions by means of telecommunications networks(Zwass,2001) A narrow
view sees ecommerce as the electronic transactions conducted by business
partners (Turban, Efraim, King, Lee and Viehland cited in Feng Li 2006).
E-business could be described as a function of key variables (Sarkane, 2006):
EB (EC, CRM, SCM, BPE, RP, BI, etc)
Where: EB E-business;EC E-commerce; CRM Customer Relationship
management; SCM Supply Chain Management;BPE- Business Process
Engineering;RPM Resource Planning; BI Business inelegance.
The above definition is supported by the fact that it is the transformation of key
business processes through the use of Internet technologies(chaffey,2009).These
processes are the ones mentioned by Sarkane above. It shows that e-business has a
broader perspective. E-business includes models and methods of doing business,
as well as all processes of business.However, the term commerce should be given
a wide interpretation so as to cover matters arising from all relationships of a
commercial nature, whether contractual or not. Relationships of commercial
nature include, but not are limited to, the following transactions: any trade
transaction for supply or exchange of goods and services; distribution agreement;
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commercial representation of agency; factoring; leasing; construction of works;
consulting; engineering; licensing; investment; financing; banking; insurance;
exploitation agreement or concession; joint venture and other forms of industrial
or business cooperation; carriage of goods or passengers by air, rail or
road(Kotle,2000).
There are those who believe that e-commerce and e-business is one and the same
thing. There is no need to draw a line between them (Mougayor, 1998).
The above definitions have shown that the common denominator between the two
is electronic; both are technology driven. The question at stake is not whether
these two terms mean the same thing or are different but how confusion over their
meaning can delay organizations to adopt e-business. Confusion can make an
organization to adopt e-commerce and think it is enough as that is erroneously
being viewed as e-business as well or vice-versa. This means ecommerce is a
subset of e-business. This is so because the buying and selling of goods
(ecommerce) is a business function of procurement, sales, marketing and
distribution. This is very critical to know if organizations are to adopt e-business
for competitive advantage. What this means is that an organization can have
ecommerce; that is buying and selling goods electronically but without e-business
in place. But it is hard for an organization to have an e-business and then sell
goods via the brick and mortar model; it would not make very much sense.E-
business is all about time cycle, speed, globalization, enhanced productivity,
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reaching new customers and sharing knowledge across institutions for
competitive advantage(Feng Li,2006). The main difference between e-commerce
and e-businesses is that e-commerce defines interaction between organizations
and their customers, clients, or constituents. On the other hand, e-business is a
broader term that also encompasses an organizations internal operations.

Electronic commerce describes the buying and selling of products, services, and
information via computer networks including the Internet, where e-Business
describes the broadest definition of EC. It includes buying and selling of products
and services, servicing customers, collaborating with business partners, and
conducting other intra-business tasks.
Why then is it necessary to clear the confusion on the meaning of ecommerce and
e-business? That will ensure organisations know their status and take corrective
action if they are to remain competitive. Confusion between the two means one of
them will suffer leading to the overall negative effect on the organisation.

E-business is the function of deploying technology to maximize customer value
while e-commerce is the function of creating exchange of value (i.e., buying and
selling) over digital media (Kalakota and Robinson, 1999).E-commerce is broader
than e-business in the sense that it encompasses and deals with macro-
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environmental issues whilst e-business is at the micro level. See the diagram
below:
Table 1: The micro-environmental and macro-environmental levels of e-
business and e-commerce.
Micro-environmental level: e-
business
Macro-environmental level: e-commerce
Business process
engineering
Information management
Change management
Risk management
Supply chain management
Human resource
management
Strategic management
Society
Digital economy
Legal and public policy
Telecommunications infrastructure
and technology
Source: Mougayor (1998): E-commerce? E-business? Who E-cares?
The above illustrates the major differences in e-commerce and e-business,
where e-commerce has a broader definition referring more to the
Macro-environment, e-business relates more to the micro-level of the firm. It is
equally important to note that e-commerce provides e-business with the
technology it requires to operate. As a result, e-commerce is triggered by macro-
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level environmental factors whilst e-business is driven by micro-level
environmental factors.

The distinction between ecommerce and e-business can be explained in a
chronological way: In the first phase (1994-1997), e-commerce was about
presence: making sure that every company, large or small. The second phase
(1997-2000) of e-commerce was about transactions buying and selling over
digital media. The focus in this phase was on order and gross revenue .Today; e-
commerce is entering the third phase (2000-?) with a focus on how the Internet
can impact profitability. And profitability is not about increasing gross revenues
but rather increasing gross margins. We call this phase e-business, and it includes
all the applications and processes enabling a company to service a business
transaction (Kalakota and Robinson, 2001).the authors went on to develop rules
that should govern e-business:
Table 2: Rules that govern e-business
Rules Explanation
1 Technology is the cause and driver in business strategy formulation; it
is no longer an afterthought. Technology is strategic.
2 Achieve cost effectiveness in production by moving away from the
physical manufacture of goods; streamline the structure, influence and
control of information.
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3 Business failure is caused by inability to do away with the dominant,
outdated business design methods.
4 The goal of new business designs is to create flexible outsourcing
alliances between companies that not only off-load costs, but also make
customers ecstatic.
5 E-commerce enables companies to listen to customers and become
either the cheapest, the most familiar, or the best.
6 Technology should be used to innovate and enhance the product not
just used as a production tool; it should be used to add value.
7 The business design s of the future is increasingly reconfigurable in
order to meet customer needs.
8 Management should align business strategies, processes and application
fast and all at once. It calls for strong leadership.
Source: Adapted from e-business: Roadmap for success, Kalakota and
Robinson (2001)
The above rules only indicate that e-business is very far much different form e-
commerce and organisations need to be aware of this so that they adopt e-business
for a purpose not for its own sake or just thinking that it is the same as e-
commerce.
The diagrams below are illustrative of the differences between e-commerce and e-
business:
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We can further observe that, e-commerce covers outward-facing processes that
touch customers, suppliers and external partners, including sales, marketing, order
taking, delivery, customer service, purchasing of raw materials and supplies for
production and procurement of indirect operating-expense items, such as office
supplies. It involves new business models and the potential to gain new revenue
or lose some existing revenue to new competitors. E-business includes e-
commerce but also covers internal processes such as production, inventory
management, product development, risk management, finance, knowledge
management and human resources. E-business strategy is more complex, more
focused on internal processes, and aimed at cost savings and improvements in
efficiency, productivity and cost savings (Yip, 2004).
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Another area that reins confusion is the issue of business models. These models are either
labeled as e-commerce business models or e-commerce models. In order to make it clear
we define first the meaning of a business model. The plan implemented by a company to
generate revenue and make a profit from operations. The model includes the components
and functions of the business, as well as the revenues it generates and the expenses it
incurs. A business model describes the rationale of how an organization creates, delivers,
and captures value (economic, social, or other forms of value). The process of business
model construction is part of business strategy. A business model consists of two
elements: (a) what the business does, and (b) how the business makes money doing these
things.( Weill, Malone, DUrso, Herman, Woerner ,2005).The above definitions
suggest that business models cover the overall business and as such we have no specific
e-commerce business models since e-commerce is a subset of e-business. Essentially all
models are e-business models even though some authors may want to call them e-
commerce business models this is largely from their failure to distinguish the two terms.

The following e-business models are briefly explained (Timmers1998) :
e-shops promotion, cost reduction, additional demand, (seeking demand)
e-procurement additional inlet (seeking suppliers)
e-auction electronic bidding (no need for prior movement of goods or parties)
e-mall (collection of e-shops), aggregators, industry sector marketplace
third party marketplace common marketing front-end and transaction support
to multiple businesses
virtual communities focus on added value of communication between
members
value chain service provider support part of value chain, e.g. logistics,
payments
value chain integrator added value by integrating multiple steps of the value
chain
collaboration platforms e.g. collaborative design
information brokers trust providers, business information and consultancy

Organizations need to adopt suitable business strategies to get involved in e-
business revolution. E-Business gives a realistic business opportunity due to the
accessibility and ubiquity of the technologies it employs, such as the internet.
However, it presents a threat to businesses that do not get involved early on.
Organizations also need to have a managerial process to gain viable fit between
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its objectives, resources and environment opportunities. This is the reason why
businesses that delay adopting e-business on account of confusing it with e-
commerce are at a very big disadvantage.
The executives of successful E-Business companies seem to be strategic thinkers .
There are many choices for any organization that decides to move to E-Business.
The right choice depends on the nature of business, business environment, and the
internal resources availability. There are internal and external factors that
influence the decision process. This may include industry analysis and
competitive opportunities assessment .
E-Business adoption can be considered from two different perspectives, namely
the threat perspective and the opportunity perspective. Business opportunity refers
to the situation where adopting new business initiatives, e.g. IT adoption, make it
possible to achieve advancement to overall business . Business threat refers to
how business competition can be harmed, especially if critical business issues,
e.g. business limitations and IT adoption late
Having understood the distinction between e-commerce and e-
business,organsiations need to appreciate why e-business is essential in their
operations as a source of value creation.
E-business is the point where economic value creation and information
technology come together. The Internet and the World Wide Web in particular
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have emerged as major driving forces in changing our economy. Business
executives are now aware that information technology is a key strategic factor in
industry, not just a tool to increase business-as-usual efficiency. This has
happened over just a few years, but most of Internet business's socioeconomic
impact likely lies ahead. These developments have led to the quick growth of
scientific interest and activities related to e-business. Given these developments'
pace and depth, big challenges and opportunities exist for applying intelligent
systems technology and methodology. In fact, e-business has several distinct
characteristics that make investigating the deployment of intelligent systems
technology highly attractive.ncy, are not taken into account .
E-business implies that information technology must prove itself in an interactive
and distributed context of economic value creation. Technology push and market
pull both play their role in driving e-business forward. So, we could say that three
different logics of value determine an e-businesss success: market logic, techno-
logic and business logic(Akkermans,2001).
Conclusion
Having discussed the meaning of e-commerce and e-business and how they
operate we are convinced that organizations will now be in a better position to
make their choices on e-commerce and e-business strategies to drive their value
and increase profitability. We have emphasized that the two are complimentary
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and that e-commerce itself is normally the first to be implemented and then e-
business will follow because of the operational differences.
References
Akkermans, H.(2001): Intelligent E-Business: From Technology to Value,IEEE
Intelligent Syatems,Free University Amsterdam
Andam,Z. R.(2003): e-Commerce and e-Business,e-Asean task force,May 2003
Chaffey, D.(2009):E-Business and E-Commerce Management: Strategy,
Implementation and Practice,Prentice Hall,London.

Kotle, P.(2000): Marketing Management. The Millenium Edition Prentce hall
International, Inc.
Maugayor(1998): E-commerce? E-business? Who E-cares?
Sarkane, E.G.,(2006): An evaluation of information flow efficiency in e-
Business,VADYBA/MANAGEMENT 2006 m. Nr. 1(10).
Timmer, P(1998): Business Models for Electronic Markets April 1998.
[Electronic Source] / Electronic Markets, Vol. 8, No. 2, July 1998.Retrived from:
www.massey.ac.nzTrimmers(1998)
Weill, P.,Malone,T.W., DUrso,V.T., Herman,G., Woerner,S.(2005):Does some
business models peform better than others?A study of the largest 1000 US firms,
Sloan School of Management, Massachusetts Institute of Technology,working
paper number 26.
Yip,G(2004): Using Strategy to change your business model, Business strategy
review,15(2),pp. 17-24.
Zwass, V. (2001): Structure and macro-level impacts of electronic commerce:
fromtechnological infrastructure to electronic marketplaces. Retrieved from:
http://www.mhhe.com/business/mis/zwass/ecpaper.html



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