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Impact of E-commerce on a business organisation and development and implementation of e-strategy

Impact of E-commerce on a business organisation and development and implementation of e-strategy

1. Introduction

This report aims to prepare an account as an e-commerce expert of an organisation and develop an e-strategy for that organisation. I chose Marks & Spencer as the organisation on which I have to prepare an e-strategy. Marks & Spencer is one of the largest retailers in clothing, foods and homeware products. Over 129 years, it has expanded from a single store to a multinational business. The objective is to prepare a report that holds the benefits of e-business, company mission, vision, and implementation of e-strategy and how it affects the existing strategy, risks and uncertainties associated with it, monitoring and recommendations.

 

2. Task 01
2.1 Benefits of e-strategy

In this competitive world, every organisation is trying to grab the best for its long term sustainability. In this process, organisations are adopting different strategies. Adopting e-business strategies have been practised by them for a while. E-strategy enables organisations to achieve their desired goals in many ways. E-strategy has manifold benefits. These can be attributed as-.

  • Reaching a more comprehensive range of customers: 

According to Evans (2001), electronic media attracts a broader range of customers. Nowadays, online media has become the meeting place of numerous existing and potential customers. Organisations are adopting an e-strategy to grab these customers before the competitors do.

  • Creating a convenient buying experience

Organisations try to provide their customers with an exclusive buying experience so that they ensure returning. E-strategy enables this strategy well.

  • Reducing internal cost

E-business helps organisations better arrange and record transactions and activities. It reduces the internal cost associated with operations to a large extent. 

  •  Increasing revenue

For a sustainable business, plans should follow sustainable growth. Doing business online is a way to increase profitability over the period. Modern information technology provides various opportunities. Organisations take strategies to grab the benefits from those opportunities, which reflect in the revenue status.      

2.2 The market position of adopting e-strategy

According to Sabherwal & Chan (2001), organisations need independent and separate e-strategies to achieve their competitive advantages. This includes a strategy to market their product correctly so that it attracts customers. There are different models through which organisations can choose their positioning strategies. There are three types of e-commerce models controlled by three parties (Kumar & Kumar, 2009). These are models owned by the seller, models controlled by the buyers and models controlled by the third party. As a business organisation that sells products, the models controlled by sellers are the best. 

Sellers choose a different strategy to position their product online. The best way to place their products is to adopt a business-to-customer approach. In this strategy, organisations place their products and offerings on the website, and customers contract directly with them and purchase their desired product from the organisation now.  

2.3 Evaluation of the contribution of e-strategy 

2.3.1 Mission and vision statement 

Marks & Spencer is one of the leading retailers in the UK that sells foods, clothing and homewares. As a counsellor of Marks & Spencer, it is essential to evaluate its mission and vision and business objective.

Marks & Spencer is built on the vision of ‘doing the right thing’ to create long term value. From the founder of the organisation, this vision is continued. Value matters for Marks & Spencer, and its members try to make it with as much transparency as possible. 

The mission of Marks & Spencer is to make it a truly international multi-channel retailer. It aims at broadening its accessibility to customers to a more comprehensive range around the world. This includes offering more excellent quality products, enhancing the distribution channel, and reaching customers with a wide range of mediums.    

2.3.2 Current position of the e-strategy

Apart from physical stores in the United Kingdom and across the world, Marks & Spencer follows an e-strategy to reach customers. It has an online sales option, convenient navigation and an exclusive range of products within the UK and other countries worldwide, specifically in Germany, Spain, Austria and Belgium. 

The existing e-strategy is in line with the objective of the organisation. It focuses on the mission of the organisation as it is reaching a more comprehensive range of customers. The online sales service boosted the sales by 16.6% this year (Marks & Spencer, n.d.). It established a multi-channel strategy that covers online sales, mobile sales and call and delivery service.

2.4 How to align an e-strategy with the existing strategy

2.4.1 Purpose of e-strategy to achieve the objective 

Information system has changed the method of today’s business. In this fast track world where technology is so volatile, organisations need to change their coping strategies. The challenge is much more for a retailer who wants to expand worldwide with a more significant customer base like Marks & Spencer. This stimulates the need for e-strategy as the internet is the fastest and effective way to reach many people. 

The need for e-strategy in M&S lies in its objective of being an international multi-channel retailer. Without a proper and well-planned e-strategy, it is not possible. This strategy involves integrating strategic competencies, financial resources competencies, innovation, workforce, quality, productivity and information system (Chaston and Mangles, 2002).      

2.4.2 Benefits that will follow by the strategy

The strategy will bring so many positive consequences if it can be appropriately implemented. The prospective benefits will be-

  • A more significant number of customers: This e-strategy will bring new and prospective customers more substantial. 
  • Operational excellence: e-strategy involves so many upgrades of the existing operations systems. The enhancements result in more minor mistakes and high-quality service to the customers, and more outstanding operational excellence.

Improved decision-making: With the new strategy, managers and directors will have more excellent knowledge, making better decisions.

 

3. Task 02
3.1 Analysis of business factors

In order to understand and implement an e-strategy, it is essential to understand the business factors first. 

3.1.1 Business growth

 Marks & Spencer has increased revenue in the UK and internationally (Marks & Spencer, n.d.). The revenue increased each year but at a decreasing rate. In 2013 the revenue growth was .94% in the UK. But the payment showed an increasing growth for international sales. It increased this year compared to the previous year. But the operating profit showed a negative change in the last five years. This may attribute the high operating cost over the years in the UK. But in the case of international profitability, it showed quite a volatile nature. In 2012 it experienced negative growth in profitability. But this year there is positive growth. From the analysis, it can be viewed that going international brings higher profitability for the organisation. Though there are some risks associated with going global, the returns are more significant.    

3.1.2 Market research and competition

A SWOT analysis will give a comprehensive picture of M&S. The strength and weakness refer to the internal factors that affect the organisation’s business operations. Opportunity and threat refer to the outside factors that influence the organisation’s performance.

Strength: the greatest strengths of M&S are- high quality, customer service, and shopping environment. 

Weakness: its weaknesses include- lack of segmentation, bill losses in transit, wastage of store spaces

Opportunities: opportunities include- internet technology (Sabherwal and Chan, 2001), marketing strategies.

Threats: its main threats are- social and technological changes, chemical pollution, competitors.

The primary purpose is to satisfy customers. As long as customers are satisfied, M&S will sustain. In this process, it has to get rid of its weaknesses and focus more on its strengths. At the same time, it has to capture the opportunities at the right time if it wants to succeed in the long run. 

According to Cao and Schneiderjans (2004), successful organisations tend to face greater competition. The closest competitors of M&S are BHS, Arcadia Group Ltd., Benetton Group and Burberry Group Plc. 

3.1.3 E-strategy on customer relationship management and supply chain management

According to Ghosh (1998), one of the best marketing strategies is establishing a direct link with the customers to complete transactions. E-strategy does go with this statement very well. Without a very well established customer relationship management, it would be tough for M&S to sustain in the long run.

M&S has a well-established supply chain management. As it has an integrated supply chain management system, an e-strategy is feasible for it. To be successful in e-commerce, companies must have to look at the cost side and the revenue side (Bremser and Chung, 2005). 

3.2 Benefits of eCommerce 

 With globalisation, e-commerce has become the burning issue of modern businesses. There are different types of e-commerce systems present in the business world. These include- business to business (B2B), business to consumer (B2C), business to government (B2G), consumer to consumer (C2C). For M&S, B2C is the most relevant model.  In this context, it can be said that e-commerce benefits M&S in several ways. These are:

E-commerce is the consequence of globalisation (Heng, 2003). It helps M&S to spread across the world and reach a more significant number of customers, enabling it to become an actual global organisation.

  1. A large pool of customers: E-commerce enables M&S to reach a vast number of customers. It helps attain the objective of it.
  2. Increased revenue: E-commerce helps earn more significant income by conveniently reaching customers and giving them a marvellous shopping experience.
  3. Reduced cost: E-commerce is not only about increasing revenue. It also enables cutting the cost of the organisation by adopting an efficient way of doing business.        
3.3 E-strategy for the M&S

The plan for e-strategy for M&S can be made in three main points. First of all, there has to be a well-established supply chain management process that will ensure the continuous inventory flow in an adequate number. A proper supply chain management indicates that a ‘just in time’ strategy can be appropriately implemented. This reduces the amount of inventory in the stores. The reduction of storage cost is a great help for any business which deals with a large number of short-lived fashion items.

Secondly, a proper flow of information has to be maintained. The main drawback of technological investment is the rapid change of technology. So to keep pace with it, there should be helpful information whenever needed. That is why there should be a flexible business process, workforce, and flexible integration that can adapt to the changes quickly (Sharma and Gupta, 2004).    

Thirdly and most importantly, e-strategy should be based on customers. It should be interactive with the customers. For a retail business, an information system helps personalise products to serve the best interest of customers (Laudon and Laudon, 2010). E-commerce makes this interconnectivity easy as each customer can be done according to his/her need. It needs to collect customer-specific information with their choices and preferences and tailoring the order according to the requirements. It ensures greater customer satisfaction and loyalty. 

3.4 Technical infrastructure

Technological integration is strongly associated with e-business strategy (Zhu et al., 2004). Before going for e-business, it is essential to know what technical infrastructure must be established before an organisation can benefit from it. 

3.4.1 Hardware, software 

Hardware includes-

  • Network hardware like hubs, routers, LAN switches, WAN switches.
  • Other technologies like WAP, PWAN, optical networks.
  • Intranets and extranets 

Software includes-

  • Network software like NOS
  • E-commerce payments software like IBM net payment
  • E-CRM (electronic Customer Relationship Management)
  • E-SCM (electronic supply chain management)
  •  E-BRM (electronic business relationship management)
  • ERP (enterprise resource planning)

3.4.2 Security

In implementing the e-strategy, security is the most vital issue that businesses should consider. Online transactions have problems of security and privacy (Saini and Johnson, 2005). Customers provide their information with great trust. Endangering that trust is very harmful to organisations. If the faith is broken by chance, it will be hard to regain that in the future, let alone compensation issues. Proper firewalls are needed to be placed to ensure security. Firewall software includes Checkpoint Firewall-1, IBM NetSP.

 

4. Task 03
4.1 Resources required

In order to attain complete success from the e-strategy, both physical and human resources must be present. Physical resources include technological resources and infrastructure. On the other hand, human resources have human labour, knowledge and skills to integrate with the physical resources (Heng, 2003). It is also essential that the human resource in the organisation know and work with the software needed to establish the plan. It also requires a digital database with proper auditing to attain efficiency and reliability (Martinsons, 2008). In short, all the necessary resources must integrate correctly and work as to the plan. 

4.2 Implementation schedule

Now we know the plans and required resources to achieve the goal, it is now time to prepare a schedule of implementation for the e-strategy of M&S. The implementation schedule is designed using SMART.

4.2.1SMART target

  • Specific: As M&S has an established online business system, it needs relatively more minor investment in infrastructure. To fully reap the benefit of e-commerce, it has to build a multi-channel platform encompassing all the countries it has operations in. It also needs to provide adequate training to its employees to adapt to the new system.
  • Measurable: Measuring the progress of the e-strategy. It also includes how the performance is to be evaluated after the plan is executed.
  • Assignable: The responsibility of implementing is vested upon the board of directors. Training of employees where necessary is the responsibility of human resources.
  • Realistic: This plan is assumed to generate M&S with increased customer loyalty and satisfaction. This strategy is expected to incur an initial cost, but it is likely to return on investment in later years positively.

Time-bound: This strategy is expected to take a couple of years to be fully implemented, and if it goes according to schedule, the result will be found in years after that. 

4.2.2 Responsibilities, uncertainties and risks

There are numerous uncertainties associated with the e-strategy. The future world is uncertain. However, there is a time-bound plan. But no one knows how much it will take. It can take longer than estimated. In the meantime, the technology may shift, or it may be required to establish a whole new model. The risk may come from the cost structure aM & s well. It requires a substantial initial outlay to establish an e-sIt may be difficult for M&S to collect this lump sum amount from the market at the present critical moment when all major economies are in distress.

4.3 How existing business system need to be adopted

When the new strategy is implemented, there will be a slight change in the existing business process. The current supply chain may not fully affect it, but it will be upgraded to a more integrated version based on individual customer needs and demands. The inventory management system will have a negligible impact. It will reduce the time products are stored even further. More importantly, it will change the customer service strategy. It will be more interactive and focus on their requests and responses.

 

5. Task 04
5.1 Implementation 

The e-strategy requires a broader range of technical skills in each of the stages. Multi-channel division requires an extensive level of skills in the autonomy of the technical infrastructure. Other than that, the marketing, merchandise, finance and human resource division must acquire knowledge about the skills to ensure proper collaboration.

5.2 Monitoring

The process monitoring encompasses the establishment of the strategy in an integrated way. It requires both infrastructural tracking and human resource training. The performance monitoring is the following evaluation. The most popular method of measuring performance is the balanced scorecard model. According to Bremser and Chung (2005), there are two components of performance measure. 1) Components that focus on the mission statement and core values, 2) Components that focus on implementing based on the first component.  

5.3 Assessment of competitiveness

The e-strategy ensures the competitiveness of M&S. The strategy is based upon the strength of M&S; it tries to reduce its weakness and grab the opportunity presently available. All these components will help improve its capabilities that are hard to replicate. It will give M&S a competitive advantage. 

5.4 Recommendations

Though the financial downturn is creating roadblocks for businesses, the present information technology has made an excellent opportunity for M&S to attain its business objective. Customers are the key players for M&S. it must focus on after-sale services as well. It is recommended to do its after-sale favour both during and after-sale better because a happy customer is a loyal customer.

 

6.0 Conclusion

Marks & Spencer is well endowed with an e-commerce strategy. But these are not adequate for achieving its core objective. It needs a more comprehensive e-strategy that focuses on supply chain management, proper information supply, and customer interactivity. For this purpose, it has to build a well-established facility endowed with hardware and software. It has to integrate its current resources and require some more help. In order to attain the whole gain of multinational business, it has to increase its customer service quality further and is recommended to get a happy and loyal customer.

 

 

 

 

 

 

 

References

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Chaston, I. and Mangles, T. 2013. E-commerce in Small UK Manufacturing Firms: A Pilot Study on Internal Competencies. Journal of Marketing Management, 18 (3), pp. 341-360.

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Sabherwal, R. and Chan, Y. 2001. Alignment Between Business and IS Strategies: A Study of Prospectors, Analyzers, and Defenders. Information Systems Research, 12 (1), pp. 11-33.

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Sharma, S. and Gupta, J. 2004. E-Strategy Model for Creating Flexible Organizations. Global Journal of Flexible Systems Management, 5 [Accessed: 15 Dec 2013].

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