E- B USINESS S TRATEGY

By Shibin S Cherian.

Submitted for the module E BUSINESS for the award for Masters in Business Administration. Student ID: P134875

Shibin S Cherian 2/21/2014

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E- BUSINESS STRATEGY
By Shibin S Cherian.

EXECUTIVE SUMMARY:

In light to the requirement of this assessment, this report summarizes appropriate typologies and analysis to evaluate the impact social media strategy on small to medium enterprises (SMEs) in the E Commerce sector. Typically, this report demonstrates its objectives and further produces indicative contents that fulfill the requirements vital to the assessment of this report. Primarily, this report focuses its scope on why SMEs like Anoto (further elaborated in the body content of this report) are adapting social media presence to maintain their competitive advantage, market sustainability, and development and implementation strategies. Further comparisons of this objective will be demonstrated in reference to the small scale development completed for His Nibs Pens during the academic year and other real-life organisations as examples to support the validity of the objectives stated in this report.

OBJECTIVES:
1. Evaluate the prime objectives that SMEs (like Anoto) consider to establish social media presence in the digital media industry. 2. 3. Identify and evaluate key technical requirements that underpin E business applications. Demonstrate the small scale development produced as per the requirement of this report and establish prime understanding of developing social media strategy in order achieve competitive advantage. 4. 5. Recommendations following the reports objectives. Limitations during the progression of this report.

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CURRICULUM OF E- BUSINESS AND SOCIAL MEDIA STRATEGY IN SMEs:

Historically, there has been a broad debate on the difference between E commerce and E business (Papazoglou & Ribbers, 2006; Chaffey, 2011; Laudon & Traver, 2012; McKay & Marshall, 2004). Simply put, E Commerce is defined as the digitally mobilized viable transactions between organisations to organisations and amongst individuals as well; and E Business relates primarily to enablement of transactions internally or within a firm. E Business usually involves around the management of information systems (Laudon & Traver, 2012). Recollecting its historical penetration into the market, E Business majorly impacted the Banking, Travel and Tourism, Marketing, and retail sector and later it expanded to several minor and major industries. Eventually, the rise of E Business had a prospective impact on global economy developing a sense of fast cheap means to reach wider audience (Cao, Zhang, & Seydel, 2005; Kotler, 2002). Recognized as a new frontier for global competitive advantage, organisations must develop an understanding on how to tap into the vital components of E business marketing and strategy in order to maintain global E Commerce sustainability. Adams (2004) concluded that E business provides a substantial revolution by creating a predecisive typology for debauched management, data handling, delivarance and communication of informations. However, E Business environment is adversaly affeted by the amount of internet usage by customers. Observing Figure 1, it can be understood that the amount of internet users are observably enormous. Deductively, the rate of internet users can be understood to have increased further than the sourced data in figure 1. Beginning from the late 90s, E Commerce was coined to be a Land Grab where the market positions were served on first come basis. Therefore, the E Commerce presumably has significant competitors. Ghezzi, Rangone, & Balocco (2013) further defines this

situation as the Lock in effect or Information

Cascadaes. For instance, Yahoo and MSN are two competing web firms in the Internet and E commerce industry. The Figure1: Internet Users Pie Chart data; Source: (IWS, 2012) rate of business expansion for either firms is relative to the information

cascade distributed; where adopters and users spread information about either firms to other users. With information being momentous, the difference between progression and failure depends on the demand

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from the end users, thus implying the first mover advantage (Barnett & Feng, 2013). Eventually, when executed with appropriate business models and E business strategy develops market leader position in the Market. In addition to this, the accelrating phenomenon of social media marketing have now penetrated a larger ECommerce sector reaching wider audience (Bryer, 2013). Chingning & Ping (2012), further demonstrates that customers are more likely to accept suggestions from other customers they are aware of rather than automated E commerce webpages. In support to this fact, Bryer (2013) concludes social netwrok a competitve advantage for firms to expand their brand identity, reduced marketing cost, Substantial consumer traffic, enhanced revenue and consumer relationship mangement (CRM). For instance, Smith, (2013) analyses that Facebook has over 65 million active customers who are spontaneoulsy monetized through target advertising revenues. Organisations today are striving to achieve mutually benefitial business value through prospective CRM. Expanding CRM in SMEs are profoundly challenging. Harrigan, Ramsey, & Ibbotson (2011) explains that specific deficiencies such as lack of resoruces, expertise and financial budgets are few key essentials barricading SMEs growth stakes with Large corporate enterprises. Historically, SMEs are observed to face constant turmoil as a result of the above mentioned contraints, theoritically making the bargining power of buyers and suppliers at a significant level (Porter, 2008). This further implies the urge for positive CRM for SMEs to maintain its market sustainbility. However, responding to every single customer query can be time consuming and a slow process. The requirement of a successful CRM for SMEs today have a tossed a pioneer in ex ploring cheapest alternatives to reach wider audience, thus giving birth to social media strategy. Ucok (2014) demonstrates four key elements underpinning the impact of social networking on e-business, especially for SMEs:

1. Advertising and Marketing: Social Media portrays an equally booming market where organisations can tap on to a wider audience. Consumer campaigns historically relied on clever marketing, however, presence pf social networks have become a prevailing medium for instant and viral marketing strategies. 2. Increasing Revenue through Cost efficiency: Firms have more chance to be visible and accessible to the market which collaterally benefits in faster launch of products, enhanced customer relationships and experience, and expanding reach to wider audience. 3. Enhancing Excellence in Employee and Customer Networking: Extensive CRM and global competitive sustainability are the key vitals to expanding global customer and employee excellence. Networking and sharing of information are observed to

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have impact on organisations, allowing them to render strategic decision for global sustainability (Ghezzi, Rangone, & Balocco, 2013). 4. Corporate Transparency: It is highly essential for organisations to develop transparency in their business in order to develop consumer loyalty and trust. With increasing rate of information available online, stakeholders may now access several data such as corporate social responsibility reports and financial reports for awareness purposes.
With accelerated usage of internet and E commerce, Social networking have become a dominant medium for Marketing and E business. However, with rising competitors in this field, the level of transparency may also become imitable, making it conversely necessary for organisations to adopt various E Marketing strategies to maintain their global competitive position for long term. Krishnamurthy & Singh (2005) extends E Marketings seven vital features:

1. Personalization: Analyzing and Evaluating Consumer needs in accordance with new market trends. 2. Privacy: Information shared must be guaranteed under Article II (201 -208) of Internet Security and privacy act (NYS, 2013). Privacy plays a significant role in maintaining a genuine transparency of trust for an organisation and by taking measures in maintaining such confidentiality must be taken in a vigilant routine as many legal aspects are associated with this aspect. 3. Enhanced Consumer Experience: With information shared with a network of wider audience (Social Media), consumer reviews and service plays an extensive role in E Marketing. Relatively, E Marketings primary scope lay on developing relational viewpoints. 4. Community: Developing a community is a crucial role to be created while implementing an E Marketing strategy. A Community would generally consist of a large group of audience thereby expanding the firms goodwill and loyalty 5. Digital Media: A presence in digital media must be considered while implementing an E Marketing Strategy. Digital technology creates 24/7 accessibility anywhere creating consumer accessibility.

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6. Security: Mentioned previously, Privacy and security plays a significant role in maintaining a genuine transparency of trust for an organisation and by taking measures in maintaining such confidentiality must be taken in a vigilant routine as many legal aspects are associated with this aspect. 7. Marketing Promotions: Marketing promotions further promote sales growth.

Scoping back to the objective of this report, this report will now focus on elaborating the comprehensive literature mentioned above towards the indicative contents of Anoto1. While considering its core business operations, Anoto focuses primarily on enhancing E CRM by functioning through effective E Marketing (Anoto, 2013). Anoto seemingly established a monogamous business operation but open to wide competition. Understanding the comprehensive scope of E Commerce, E- business and Social Media strategy, Anoto has established a leading digital automation SME with branches established in UK, Sweden, US, and Netherlands. Observing Anotos corporate website (Anoto, 2013), Anoto preserves essential components to succeed efficient E Marketing. Pivotalizing corporate transparency, Anoto exposes and shares its progression with wide audience by exposing their shares, financials, corporate governance, management team, stakeholders and corporate social responsibility reports. In comparison with the literature above, Anoto executes potential strategies to establish social media presence in order maintain global sustainability.

KEY TECHNICAL REQUIREMENTS THAT UNDERPIN E BUSINESS APPLICATIONS:

Global economy races at momentus rate collataraly shifting the traditional balance between customer and supplier. With large volume of computing technology, global trading regimes, and new medium of communications emerging, bargaining power of buyers are observed to be strong, thereby making it necessary for businesses to reach out wider audience via E Commerce and E business (Teece, 2010). Neverthless, failure in implementing strategic business models; eg: ORKUT (Gunjan, Aditya, & Abin, 2011), eventually detriotes market position and competition, thereby making it necessary for E business and E commerce firms to implment funtional and strategic business models and applications. Discussed earleir, the challenging and the only potential typology in informations sector is to earn revenue through provision of information to the end users. Teece (2010) further observes that many E Commerce firms such as Ebay and Amazon.com have adapted an simple taraditional business model observed first in newspapers sector,
1

Swedish Company built on technology data capture and automation of handwriting into digital media. 5

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where information is sold for free, however sold with advertisements to cover remaining costs plus provide profit. This deduction makes it seemingly obvious to understand the breadth of E business and the potential risks associated with it. Google observably potrays another intersting E- business model. Developed around product/service innovation, Google follows freemium business model. Google develops its own software and takes advantage of computing power. However, Googles revenue model is eclipsed by advertisers. While noticably, previous search engines such as Alta Vista (Teece, 2010) arguably favored the revenue model, Google in contradiction focused on maintaing the search experience and integrating it with sponsor ads, diminishing pop ads and other advertisements interfearing the search experience. Laudon & Traver (2012) elaborates 8 key elements that underpin E Business Applications. This report will further relate its contents beneficial to the objectives of this report:

1. VALUE PROPOSITION: During the progression of this stage, organisations must declare the clarity to why customers should consider them above their competitors. Successful E- Commerce vlaue propositions implment substantial:

Customization/ Personlization: Evaluating consumer demands and market trends.

Reduction of product search: Making it technically visible and diminishing product search hapahazard.

Facilitation of transactions by product delivery: Procuring highly organised E Business typologies to facilitate organised transactions by product delivery.

Amazon.com can be viable example to exectue a typical B2C (Business to Consumers) market relationship (Teece, 2010). Amazon offers unparalled selection and convinince to its customers. 2. REVENUE MODELS: E Commerce and E Business firms primarly earn revenue from following models (Laudon & Traver, 2012): Advertising Revenue Model: Primaly, social media networks recognisably produces content services and or products to end users in order to retain increased number of users or niche customers.

Figure 2: Advertising Revenue Model Example; Source: Yahoo.co.uk

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Subscription Revenue Model: Effectiveness of the Subscription revenue model has to be designed and implemented in accordance with new CRM trends. A firm can charge subscription for usage of either all or some of its contents and features.
Figure 3: Subscription Revenue Model Example; Source: ft.nyc.

Transaction fee Revenue model: Firms may show leverage for certain amounts of financial transaction that takes through its website.

Figure 4: Transaction fee Revenue Model Example; Source: Ebay

Sales Revenue Models: the firm directly sells products and services to customer.
Figure 5: Transaction fee Revenue Model Example; Source: Amazon.co.uk

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Affiliate Revenue Model: Organisations may pass revenue affiliation through third party websites for a referral fee (See figure 6. Below).

Figure 6: Affiliate Revenue Model Example; Source: Colin&justin

3. MARKET OPPORTUNITY: Organisations must determine at what marketplace they intend to serve and what is its potential size. 4. COMPETITORS ENVIRONMENT: Potential competitors and emerging competition level to face while penetrating the market. In this particular segment, organisations create potential analysis on competitors price observations in order to create competitive power in the market. 5. COMPETITIVE ADVANTAGE: Potential strategies on how an organisation can be differentiated. Laudon & Traver (2012) further expands four sub concepts to brief an understanding on different kinds of competitve advantage: Asymmetries - a firm possess competitive power in the market. First-mover advantage firms creates consumer loyalty before potential competitors could enter into the market. Eg: Amazon.com (Hawk, Pacheco - De - Almeida, & Yeung, 2013) Unfair competitive advantage Unique competitive advantage over brand such as brand name Coke. Leverage Firms decide to utilize their competitive advantage and power to penetrate into new markets. 6. MARKETING STRATEGY: Firms decide on how to promote their services to target wide audiences. 7. ORGANISATIONAL DEVELOPMENT: Firm decides on the internal management structure that are deemed necessary to exist. Typically, the firm will be divided
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several operational departments and other hierarchical restructuring to execute appropriate business development. 8. MANAGEMENT TEAM: Firm decides their management team. Generally an individual with substantial experience in the required position.

Anoto currently operates in a monogamous industry but with potential competitors who have severe competitive advantage than Anoto does. While Anoto solely scope on production of handwriting digital automation, competitors like HP have already penetrated several other market

segments (HP, 2014). Chaffey (2011) further extents the market relationship according to the demonstrated figure given below. Considering this, Anoto operates on business to business
Figure 7: E- commerce market relationship matrix. Source: (Chaffey (2011)

(B2B)

scale

by

providing assistance,

technological database

oirnetation and handwriting automation to other businesses. Therefore the necessity for revenue models can be considered low here. However, Anotos value propositions clearly produces corporate transparency allowing Anoto to increase its brand awareness thorugh social media groups and networkings. However, repeating again, Anoto must strategise its objectives in order to gain competitive advantage.

SMALL SCALE DEVELOPMENT: HISNIBSPENS1.COM (REFER ANNEXURE 1):

http://hisnibspens1.moonfruit.com/ As per the requirement of this report, the following section will summarize and refer with the data deducted above. HisNibsPens1.moonfruit.com (originally Owned by Norman Hasse under HisNibs.com) is a small scale development made through the academic year of 2013 2014. It is to be noted that the webpage developed for hisnibspens1.moonfruit.com is only to demonstrate appropriate E business

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implementation designs and does not authorize a corporate webpage owned by Norman Hasse for Hisnibs.com. http://hisnibspens1.moonfruit.com was developed using an open source web development online platform named moonfruit.com. HisNibsPens1.Moonfruit.com was completed in 09 Feb 2014. The prime purpose of this is to generate primary data on the functioning of a B2C (Chaffey, 2011) E Commerce operation. Hisnibspens1.com developed is basically a B2C business where the organisation serves directly to the consumer. Therefore, Revenue models will certainly play an important role in here. HisNibsPens.coms value proposition model is designed to integrate utmost consumer experience and customer support. However HisNibsPens1.com have penetrated into a highly competitive market. Competitive advantage for HisNibsPens1.com can be considered low as the market industry for writing supplies and accessories is observably large. However, HisNibsPens1.com being a small online enterprise, the marketing strategy pretty much relies on social media presence. As deducted earlier, social media strategies reduced marketing costs allowing organisations to focus on other monetary concerns.

CONCLUSION:
Hexagon relation can be observed in E Commerce sector. The Prime objectives of this report were deduced and concluded in a deductive approach with agreements being weighed on the potential sides. Social media presence for SMEs were concluded to deem profitable benefits. The report also briefed on SME Anoto as per the requirement of this report in order to clarify the E Commerce functioning. Recognized as a new frontier for global competitive advantage, organisations must develop an understanding on how to tap into the vital components of E business marketing and strategy in order to maintain global E Commerce sustainability. The rate of business expansion for either firms is relative to the information cascade distributed. Global economy races at momentus rate collataraly shifting the traditional balance between customer and supplier. With large volume of computing technology, global trading regimes, and new medium of communications emerging, bargaining power of buyers are observed to be strong, thereby making it necessary for businesses to reach out wider audience via E Commerce and E business. SMEs like Anoto and HisNibsPens.com must urgenty consider potential elements that underpin E business applications and market sustainability.

RECOMMENDATIONS:
1. SMEs like Anoto and HisNibsPens1.com must identify most appropriate social media tool that best suits the organisations prime business objectives. Extensive market research on existing social media tools must be carried out. Queries

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related to consumer views feedbacks and recommendations will help organisations to map its consumer power at several segments of the market. 2. SMEs like Anoto and HisNibsPens1.com must methodize social media strategies and revenue models in order to substantiate reverse profit. Further typologies can be explored in order to discover potential strategies to establish social media presence. 3. Organisations must specify on their corporate transparency as E Commerce deals with potential risk of faradism and cybercrime. In order to attract wider audience, organisations must become transparent to the market. 4. SMEs must consider potential elements that underpin E business applications presented in the report in order to maintain global competitive position in the E Commerce sector.

LIMITATIONS:
Resource database allocated for this report, Moodle (Supportive Dashboard for Students to use online resources) constantly faced disturbance, disrupting collection of further statistical data to validate the conclusions of this report.

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http://www.hp.com/country/us/en/uc/welcome.html

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IWS. (2012, JUNE 30). Internet Users in the World Distribution by World Regions. Retrieved from www.internetworldstate.com:

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Ucok, H. M. (2014). A Social Media Campaign Application in a Marketing Field Experience Course. Business Education & Accreditation., 6(1), 95 - 100.

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