Palawan State University – El Nido Campus
Module 5
Impacts of E-Business
Learning Objectives
At the end of this chapter, the students should be able to:
1. Explain impacts of business to business, customers, society and environment
2. Identify the barriers of e-business
Organizations are facing difficulties in retaining customers in today’s competitive
market. Whether they are classic brick-and-mortar businesses such as Ford or burgeoning
dot.coms such as Travelocity, many are fighting to stay afloat in current business environment
that is different from the past environment due to emerging sales channels, rapid introduction
of improved and innovative products, and increased global competition. The rapid changes in
telecommunication and computing technologies evidenced in the internet and World Wide
Web paved way for new range of business applications, process and structure. Companies that
move quickly to assess the changes underway and adjust their business models to meet shifting
market dynamics and customer demands can stablish significant leads over both traditional
competitors and new entrants.
The internet has changed many aspects of our lives, including the way we communicate
with each other, how we keep our finances. It has made a profound impact on society. Now we
shop online from our houses. This forces retailers to open online division. It can also force
smaller businesses to shut their doors, or change to being completely online. It also has
changed people way of spending money. Undoubtedly, it will continue to influence how
companies sell and market their products, as well as how people choose to make purchases for
many years to come. In global market scenario, the emergence of E-business as a forerunner
has opened up various windows of opportunities for a variety of online companies and
investors. More and more resources are being directed into electronic securities, internet
facilities, business plan and new technologies due to the boom in the space of E-business. As a
result, various new markets have emerged from E-business itself giving a boost to the global
market.
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
Impact of Electronic Business on Many Areas of Business Disciplines
E-Commerce and E-Business are not solely the internet, websites or dot com
companies. It is about a new business concept that incorporates all previous business
management and economic concepts. As such E-Business and E-Commerce impact on many
areas of business and disciplines of business management studies.
1. Management Information Systems. Most companies have been forced to
redefine their existing business activities to moderate themselves, as a result of e-
commerce. To keep steps ahead of others, online business owner has to analyze, design
and implement e-business systems within an organization. Issues of integration of front-
end systems has to be decided by owners. The system chosen will have significant
ramifications for the personnel’s productivity, as well as how effectively customers can
be served and help them grow their business--and the management.
2. Human Resource Management – Issues of on-line recruiting, home working and
‘Intrapreneurs’ works on a project basis replacing permanent employees. New
technologies require new organizational approaches. The nature of work and
employment will be transformed in the Digital Age. Driven by increased competition in
the global marketplace, firms are reducing the number of employees down to a core of
essential staff and outsourcing whatever work they can to countries where wages are
significantly less expensive. The use of e-commerce would lead to the removal of
traditional jobs and the replacement of new jobs with a new skill which required the
training of workers to use technology so that they could enter the competition and win
jobs. This means that e-commerce negatively affects manual jobs and unqualified labor,
but it has a positive impact on technically trained labor where it can easily find jobs and
help to create job titles and discipline that where not previously required or known.
3. Finance and Accounting – Businesses are required to change the traditional
financial accounting model, train a large number of complex accounting personnel, not
only need to master the new e-commerce theoretical knowledge, but also need to
strengthen computer technology and network technology culture, to quickly adapt to
new working environment, so as to promote the development of enterprises. The use of
the new payment systems such as electronic cash is complicated because it involves
legal issues and agreements on international standards. Nevertheless, electronic cash is
certain to come soon and it will change the manner in which payments are being made.
In many ways, electronic cash, which can be backed by currency or other assets,
represents the biggest revolution in currency since gold replaced cowry shells. Its
diversity and pluralism is perfectly suited to the internet. It could change consumer’s
financial lives and shake the foundation of financial system and even governments.
4. Economics – E-commerce affects economic variables and growth rates. It leads to
higher wages, higher standards of living for individuals, structuring markets and
expanding marketing, increasing sales and exports and thus increasing production and
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
growth rates, e-commerce helps businesses to global. Increasing digital employment
and building new entrepreneurs due to the ease of running or starting an online store.
E-commerce speed up the economic cash flow of the country due to the involvement of
the banking system in trading. E-commerce bringing new startups in the market and
enhancing entrepreneurship capabilities in next-generation business leaders. That is
helping in economic development and increasing demand for technical jobs and skills
globally. However, it presents a range of challenges, especially in terms of competition
in local markets where the capabilities of supra-national and multinational companies
may lead to the inability of national companies to compete it and continue in the
markets.
5. Production and Operations Management – the impact of on-line processing has
led to reduced cycle times. It takes seconds to deliver digitized products and services
electronically; similarly, the time for processing orders can be reduced by more than 90
percent from days to minutes. Production systems are integrated with finance
marketing and other functional systems as well as with business partners and
customers.
6. Marketing – in the past, marketing was mainly door-to-door, home parties and mail
order using catalogues or leaflets. The rise of e-commerce has enhanced the
opportunities of businesses to increase their audience in a cost-effective way. Today, a
lot of the ads come in form of social media ads, search engine ads or pop-up ads in
content platforms. Although the traditional marketing options are still vibrant, they play
second fiddle to the digital marketing platforms and this is down to e-commerce. The
impact of these digital marketing platforms, is that they have made marketing cheaper
and accessible to businesses of all scales. Irrespective of the marketing budget that a
business has, they can always run an online campaign to promote their business.
7. Computer Science – There is a development of different network and computing
technologies and languages to support e-commerce and e-business, for example linking
front and back office legacy systems with the ‘web based’ technology. E-commerce
provides the right climate for the increase of production and efficiency by supporting
the computer and software industries, the technological industry and other associated
industries, such as electronic storage media, networks and communications, which are
the infrastructure for e-commerce.
8. Business Law and Ethics – there are different legal and ethical issues that have
arisen as a result of a global ‘virtual’ market issues such as copyright laws, privacy of
customer information, legality of electronic contracts.
All of the above points explain that e-commerce has changed the ways, methods, systems,
employment, shopping experience, trading, marketing in the business by using the internet,
social media, search engine, digital marketing, and data.
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
Benefits of E-Business to Business, Consumers and Society
The previous sections have included discussions about What e-commerce is and its impact, but
what are the benefits of e-commerce? What does it offer and why do it? The benefits of e-
commerce can be seen to affect three major stakeholders: Business Organizations, Consumers
and Society
Impacts of E-Business to Business
Product promotion. E-business enhances promotion of products and services through direct,
attractive and interactive contact with customers.
Local and International Presence. This is the biggest advantage of conducting business online.
A firm engaging in e- business can have a nationwide or a worldwide presence. Amazon.com is
a 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.
New sales channel. E-business creates a new distribution channel for existing products. It
facilitates direct each of customers and the bi-directional nature of communication.
Direct savings. The cost of delivering information to customers over the Internet results in
substantial savings to senders when compared with non-electronic delivery. Major savings are
also realized in delivering digitized products versus physical delivery.
Reduced cycle time. The delivery of digitized products and services can be reduced to seconds.
Also, the administrative work related to physical delivery, especially across international
borders, can be reduced significantly, cutting the cycle time by more than 90 percent.
Mass Customization - E-business has revolutionized the way consumers buy goods and
services. The processing allows for products and services to be customized to the customer's
requirements. In the past when Ford first started making motor cars, customers could have any
color so long as it was black. Now customers can configure a car according to their
specifications within minutes online via the www.ford.com website.
Digitization of Products and Processes. Particularly in the case of software and music/video
products, this can be downloaded or e-mailed directly to customers via the Internet in digital or
electronic format.
Customer service. E-business has resulted in improved customer service. Many a time, on
visiting a website, the customer is greeted by a popup 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
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
house. Customer service can be greatly enhanced by enabling customers to find detailed
information online. Also, intelligent agents can answer standard e-mail questions in seconds
and human experts' services can be expedited using helpdesk software.
Corporate image. On the Web, newcomers can establish corporate images very quickly.
Corporate image means trust, which is necessary for direct sales. Traditional companies such as
Intel, Disney, Dell, and Cisco use their Web activities to affirm their corporate identity and
brand image.
Impacts of E-business to Customers
Ease of Purchase. E-business eliminates complicated distribution intermediaries, direct dealing
with suppliers, reduce incurred costs such as commissions, shop at home. For example, express
check-in services for airline passengers at airports Kiosks and touch-screen terminals
More Information & Choices. Customers not only have a whole range of information and
products that they can choose from and customize, but also an international selection of
suppliers.
Price Comparisons - Customers can 'shop' around the world and conduct comparisons either
directly by visiting different sites, or by visiting a single site where prices are aggregated from a
number of providers and compared.
Competitive Environment. Where substantial discounts can be found or value added, as
different retailers vie for customers. It also allows many individual customers to aggregate their
orders together into a single order presented to wholesalers or manufacturers and obtain a
more competitive price.
Impacts of E-Business to Society
Enhances Quality of Life. E-business enhances the quality of life for a whole host of people in
society, enabling them to work from home. Not only is this more convenient and provides
happier and less stressful working environments, it also potentially reduces environmental
pollution as fewer people have to travel to work regularly.
Connects People. Enables people in developing countries and rural areas may enjoy and access
products, services, information and other people which otherwise would not be so easily
available to them.
Facilitates Delivery of Public Services. For example, health services available over the Internet
(on-line consultation with doctors or nurses) filing taxes over the Internet through the Inland
Revenue website.
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
Impacts of E-Business to Environment
Reduced Waste. Brick and mortar stores require a considerable amount of resources in their
normal operations—electricity, water, building space, etc. With the enterprise ecommerce
software for businesses both large and small, however no physical storefront is necessary,
which means a dramatic reduction in resource consumption. Some online businesses might
rent some office space to operate out of, but the needs of a small office compared to those of
an actual store are considerably smaller.
Dematerialization. The Internet is beginning to displace a wide range of printed materials, from
text- books and corporate brochures to encyclopedias. The technology for displaying text on a
computer screen will have to improve before electronic books make substantial inroads into
the market for printed text, but as dedicated electronic reading devices are improved and made
more User-friendly, more and more people will opt to read electronic versions of paper
documents.
Innocent trees will no longer pay the price of retail mania—all those bills, receipts, coupons etc.
that were once printed on resource-intensive paper can now be transmitted via the World
Wide Web. Online shoppers can receive confirmations, receipts, offers, newsletters, and bills
through their e-mail, which means not only less tree cutting, but a reduction in the fuels
necessary for transporting all those paper bills as well.
Green Products. Forward-thinking companies are redesigning products so that they can receive
information from the Internet and be controlled externally. This technology has the potential to
make products far more effective, efficient safe, and long-lasting, with all the attendant
environmental and health benefits. Rome-based MerloniElettrodomestici, the fourth largest
household-appliance vendor in Europe, has developed a line of digital refrigerators, washing
machines and dishwashers with remote Internet-control features that save energy by allowing
homeowners and local utilities to monitor the power consumption of each appliance.
Using web-based micro-management, individual appliances can be powered-down during peak
loads and programmed to operate during off-peak periods when utilities have excess
generating capacity. With the right economic incentives, this can save consumers money, cut
energy use, avert the need for utility grid brownouts and blackouts and relieve pressure to build
new generators The Internet also makes it easier for firms to continue providing customers with
information and advice after 'they make a purchase. Suppliers can provide product updates,
recall information, and instructions on safe product use, proper maintenance for optimal
performance and energy efficiency, and options for recycling, refurbishing, and disposal.
Green Purchasing. Numerous sites help companies find buyers for materials they no longer
need, reducing waste disposal costs and generating revenue at the same time. One company,
RecycleNet Corp., is a B2B exchange in which companies can list materials for sale or purchase.
A wide range of materials can be bought and sold at the company's Web site, recycle.net,
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
including scrap metals, plastics, paper, used equipment and surplus inventory. Users can log
into the website to find either buyers or sellers of products.
The sheer ease with which the Internet allows for searching, sorting, and
filtering information also makes it much easier for environmental organizations or socially
responsible investment firms running a "green" search engine to target a bad product or a
company whose practices are environmentally unsound for boycotts.
Barriers of E-business
Lack of Qualified Personnel- This is a particularly strong concern because internally
they do not have sufficient resources to attract and maintain their own support staff to
develop a sophisticated technology infrastructure. With regards to third parties, the
qualified personnel tended to work for larger organizations.
Internet Infrastructure - Deals with issues such as availability and quality of the Internet
in terms of speed and reliability. This barrier is of particular concern to Business to
Consumer organizations, since their business relies more on general consumers, and so
the ease with which the general public can connect to the Internet has a direct impact
on their Web-based business.
Security- It relates to the development of a broader security infrastructure and it also
relates to the kinds of measures barriers to e-commerce businesses can take to
improve security. In its broadest term, security is one of the most significant barriers
toe-commerce both within the organization and external to it. Security on the Internet
poses a special impediment. No user will interact with the Net if it does not guarantee
100 percent security. Users expect a higher degree of security on the Internet than they
do for other transaction media such as the telephone. Such security involves protection
of user identity and safeguard of user's credit card information.
Commercial Infrastructure-This relates to issues such as international trade
agreements, taxation laws and other legal agreements that facilitate all kinds of online
trading and so is a barrier relevant to all types of businesses.
While e-business has transformed the way companies do business throughout the
world, this digital revolution hasn't happened evenly and businesses need to be aware and plan
for the differences that exist if they wish to gain market penetration into developing
economies.
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
Exercise No. 5
Name: _______________________________________________ Date: __________________
Time: ________________________________________________ Score: _________________
Test l. Identification. Identify whether the statement mentioned below is a benefit of e-
commerce to business, society, customer, environment.
1. Dematerialization
2. Ease of Purchase
3. Green Products
4. Facilitates Delivery of Public Services
5. Local and International Presence
6. New sales channel
7. Connects People
8. More Information & Choices
9. Reduced Waste
10. Reduced Cycle Time
Test ll. Identification. Identify which business management studies is described in the
statement below.
1. Issues of integration of front-end and back-end systems has to be decided by business
owners.
2. There is a development of different network and computing technologies and languages
to support e-commerce and e-business.
3. Issues of on-line recruiting, home working and 'Intrapreneurs works on a project-by-
project basis replacing permanent employees.
4. The impact of on-line processing has led to reduced cycle times.
5. E-commerce leads to higher wages, higher standards of living for individuals, structuring
markets and increasing sales and exports.
Applied Business Tools & Technologies – GDS Module 5
Palawan State University – El Nido Campus
Test ll. Enumeration
1-5 Impacts of E-Business
___________________________ ____________________________
___________________________ ____________________________
___________________________
6-11 Impacts of E-Business to Consumer
___________________________ ____________________________
___________________________ ____________________________
___________________________ ____________________________
___________________________
12-15 Barriers of E-Business
___________________________ ____________________________
___________________________
Applied Business Tools & Technologies – GDS Module 5
