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Clifford’s Machinery
1. Provide and justify a viable set of e-business models for CM as a solution for their business problems.
What is e-business? A common definition is the one created by IBM, one of the first ever suppliers:
‘E-business is the transformation of key business processes through the use of Internet technologies’.
Taking this as a working definition, we need to look at what e-business models are and for what reason should CM undertake such a process. Timmers (1999) defines a business model as:
‘An architecture for product, service and information flows, including a description of the potential benefits for the various business actors; and a description of the sources of revenue’
For a company such as CM a business model will be essential in generating funding from venture capitals for their transition to e-business. Firstly we need to establish the type of marketplace CM is trading in: whether it is a business-to-business (B2B) market or a business-to-consumer market (B2C). The evidence reveals that CM deal mainly (80%) in B2B markets, but have some dealings with B2C markets (20%). This is a very common statistic with internet transactions as business-to-business transactions on the Internet account for 87% of the market. This means that CM will need to establish two different strategies and techniques, one for each type of market, although it will be found that the two different approaches do interlink.
The case study does not state the distribution channels CM use, or an analysis of how they deliver products and services to their customers would have been possible. The benefit of such an analysis is, because the Internet offers a means of bypassing some channel partners (Disintermediation), CM will be able to sell and promote directly to their customers, completely eliminating the cost of these channels. ... CM need to ensure their company’s representation within certain intermediaries operating within their chosen market sector (Reintermediation), who provide services such as supplier search and product evaluation. This allows CM to compare prices with competitors (marketing strategy). A purchaser will specify what they want, it is sent by e-mail to suppliers registered on the system and offers are awaited. ... Once CM have established themselves on the Internet they could create their own intermediaries (Countermediation).
There are disadvantages to e-business which CM will need to address, such as whether their existing sales outlets will be able to cope with the transition. CM may have to utilise new supply chain techniques to provide services and products such as just-in-time (J. ... T) and provide the same time lines as their competitors. This may cause problems like trying to find a supplier who can meet these demands and also provide the advertised products. ... Therefore CM has to ask themselves ‘will sales be taken away?’
So far we have used the ‘Marketplace position perspective’, for formulating CM’s business model but Timmers (1999) identifies 11 different types of business models facilitated by the web. The four best suiting CM’s needs would be:
Ø E-shop, involving their marketing via the Internet, which CM will have to do and is described in more detail in question 3.
Ø E-procurement, involving the electronic tendering and procurement of goods and services, which is dealt with in more detail in question 2.
Ø E-malls: involving the collection of all e-shops in one market onto one site to assist customers buying on-line. ...
Ø E-auctions, involving both B2B (discounts on large bulk orders) and B2C (In CM’s case mainly when dealing with services, not products, as these will have a fixed price) established ventures. ... Outline and justify an e-business strategy for CM for the next year.
An e-business strategy is a definition of the approach by which applications of internal and external electronic communications can support and influence corporate strategy. ... To ensure CM includes all key business activities, it is important to develop a logical and sequential framework to follow. ... Many theorists have developed different approaches (Venkatraman, Hacbarth and Kettinger), but I feel the generic four-stage strategy process model fits CM’s needs best. ... e. ...
1. ... When assessing CM’s current information communications technology (ICT), we realise there are almost no electronic communication or storage devices, bar a “flat file” database on one standalone computer at the counter. ... (2000) CM would fall under level 2 of the selling side of their business; ‘Simple static informational website, containing basic company and product information’. In terms of buying, they would be classed under level 1; ‘No use of the web for product sourcing and no electronic integration with suppliers’. CM will need to move up the technology adoption ladder from an informational site to a transactional site.
To improve their current status on both stage models, they will have to integrate many different strategies and processes. They will need to invest in new computers for each of the 3 sites and then have them networked, creating an intranet, including e-mail to increase communication within the organisation and a stock control inventory keeping track of items in the warehouse and informing them when a when a new order should be placed. ... e. ...
To climb up the supplier stage model they will need to look at e-procurement, involving the management activities of purchasing requests, ordering, delivery and payment. ... These steps will result in a widening of CM’s geographic potential, thus contributing to and encouraging expansion. ... One of CM’s visions must be the transformation of their internal structure to improve efficiency and provide e-business. CM’s vision of creating an on-line business should complement their current business processes. It is important CM communicate this to staff and other stakeholders, such as customers, suppliers and shareholders.
A similar vision will be needed for e-procurement. CM will need to establish a time frame in which to establish a good, reliable relationship with a supplier they trust. The eventual implementation of e-procurement can be used to complement paper-based procurement.
Approximate Word count = 5030
Approximate Pages = 20.1
(250 words per page double spaced)
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