Page 146 - DCAP307_PLANNING_AND_MANAGING_IT_INFRASTRUCTURE

Planning and Managing IT Infrastructure

Notes 9. Transactions between ................................ relate to the transactions between the many units
of government at national, regional and local levels.

8.3 Advantages of e-Business

Various advantages of e-business are discussed below:
Worldwide Presence: This is the biggest advantage of conducting business online. A firm
engaging in e-business can have a nationwide or a worldwide presence. IBM was one of
the first companies to use the term e-business to refer to servicing customers and
collaborating with business partners from all over the world. Dell Inc., too, had a flourishing
business selling PCs throughout the U.S., only via telephone and the Internet till the year
2007. Amazon.com is another success story that helps people buy internationally from
third parties. Hence, worldwide presence is ensured, if companies rethink their business
with regard to the Internet.

Cost-effective Marketing and Promotions: Using the web to market products guarantees
worldwide reach at a nominal price. Advertising techniques, like pay per click advertising,
ensure that the advertiser only pays for the advertisements that are actually viewed.
Affiliate marketing has emerged on account of e-business. Affiliate marketing has helped
both the business and the affiliates. Firms have managed to use cost-effective online
advertising strategies to their advantage.

Did u know? In affiliate marketing, customers are directed to a business portal because of
the efforts of the affiliate, who in turn receive a compensation for their efforts meeting
with success.
Developing a Competitive Strategy: Firms need to have a competitive strategy in order to
ensure a competitive advantage. Without an effective strategy, they will find it impossible
to maintain the advantage and earn profits. The strategy that the firms can pursue can be
a cost strategy or a differentiation strategy.

Example: Till the year 2007, Dell Inc. was selling computers only via the Internet and the
phone. It adopted a differentiation strategy by selling its computers online and customising its
laptops to suit the requirements of the clients. Thus, e-business resulted in Dell Inc. managing to
capture a chunky segment of the market using the differentiation strategy.
Better Customer Service: E-business has resulted in improved customer service. Many a
time, on visiting a website, the customer is greeted by a pop-up chat window. Readily
available customer service may help in encouraging the customer to know more about
the product or service. Moreover, payments can be made online, and products can be
shipped to the customer without the customer having to leave the house.

Curtailing of Transaction Cost: The nature of online business is such that, the costs incurred
for every transaction to go through smooth and sound, there is no acting middleman.
Websites are sufficiently loaded with directions to facilitate stress-free transactions. Simple
and succinct instructional tabs, generally, save the potential buyer from predicaments of
any sort. The mode of payment is predetermined, promising security to the customer.
Thus, online payments are a no-ho-hum affair. All that you are left with, as the proprietor
of your online business, is to download the requirement order and ship it. This demands
effort, too; however, the toil is far less than a tangible business profile.

140 LOVELY PROFESSIONAL UNIVERSITY