BS3912 Week 4 1

Managing e-Business & High Tech. (4)

Last week – the challenges for managers(Chaffey, Chapter 10 – Change Management)» Identify the changes needed» Develop Outline Plan» Impacts on the organization structure and on individuals

This Week» The Macro-environment (Chaffey Ch.4)

Social, Legal, Ethical, Political & Technological factors

» Main activity – assignment workshop– Extra brainstorming of assignment ideas

BS3912 Week 4 2

Activity 1 – SLEPT factors

Imagine you are manager of a B2C operation, and list Social, Legal & Ethical issues you need to consider

Include avoidance of negative effects:» Risk of prosecution» Actions that annoy prospective customers or website users» Reduction of potential market

What Political and Technology aspects need to be considered?

http://www.leichtmanresearch.com/press/111510release.html contains information about spread of broadband technology

BS3912 Week 4 3

Pre-requisites for e-Commerce

Companies are online Potential Customers have Internet Access

» Ideally with broadband service – not the issue it was» Coverage demographics are significant

Customers trust online services» Information provision» Honesty of vendors» Technical integrity

Customers find services usable» Easy to get information» Rapid ordering» Systems “remember” you

Trust built with:Easy e-mail and

Phone accessGood pre-sales adviceAfter sales serviceDistance selling regulations

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Growth of Internet

According to Internet indicators for 2009 at http://www.itu.int/ITU-D/ict/statistics/ UK was at 83%, Japan & USA at 78% and Netherlands at 90%

But are averages useful in this context?

BS3912 Week 4 5

Source: ITU (www.itu.int/ITU-D/ict/statistics ) for 2008

Global variation in PCs and Internet Access

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2010 Internet Coverage

Source: ITU (www.itu.int/ITU-D/ict/statistics )

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The Global Marketplace is Patchy

2004 2009 Broadb 2004 2009 Broadb

Netherlands 62 90 36 Germany 43 79 30

Denmark 60 87 38 NZ 53 80 23

Sweden 75 91 32 Japan 50 78 25

Finland 63 82 29 Australia 65 74 24

Switzerland 47 81 35 Iceland 77 93 33

Korea 66 82 35 Italy 50 49 21

Canada 62 80 31 Spain 33 63 22

USA 63 78 26 France 41 72 32

UK 63 84 30 Source: ITU website

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Chaffey (2007) Figure 4.6 Source: DTI (2004), Fig 7.3a

Percentage of businesses that order online

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How do we generate Trust? Generally based on favourable experiences

» Our own and others’» Highly usable sites get user onside quickly» Can be destroyed by a single disaster

Enhanced by known safety factors» Virus checkers (often run by ISPs on incoming data)» Encryption» Ability to detect Adware, block pop-ups

Openness» Physical address of operator included in site» Clear privacy policy with easy junk opt-out» Collect feedback» Human contact – phone, e-mail

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Buying offline after researching online

Chaffey (2007) Figure 4.4 Source: BrandNewWorld: AOL UK / Anne Molen (Cranfield) / Henley Centre, 2004

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Chaffey (2007) Figure 4.5

Developing experience with Internet

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Chaffey (2007) Figure 4.9 Source: © 2005 Adapted from Economist Intelligence Unit data

E-Commerce Leaders and Laggards

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Legal Factors

Customs and rules vary across countries (even within EU)» Belgium limits “sales” to specific times of year» Germany prohibits “brand X” comparisons» “BOGOF” illegal in some countries» Products may be banned Can present problems if you sell into these markets

But many rules are more nearly universal» Liability for damage done by faulty product» Prohibition of misrepresentation» Proper use of Personal Data

BS3912 Week 4 14

E-Commerce – Sparrow’s eight areas

Marketing your e-commerce business Forming an electronic contract Making and accepting payment Authenticating contracts concluded over the Internet E-mail risks Protecting Intellectual Property Advertising on the Internet Data protection

Derived from Chaffey (2007) slides

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Ethical Concerns

Will we increase social exclusion?» On-line marketplace tends to be fairly well-heeled …

... it also gets the lowest prices» Dependence on e-Government can starve lower

socio-economic groups of information» Poorer countries may find it hard to join global economy,

and be exploited by those who control infrastructure Global trading can undo regulatory efforts, for example

» Trans-border gambling» Online promotion of tobacco products

Opportunities for dubious practices such as buying up domain names and holding them to ransom

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UK Internet User Demographics

Chaffey (2007) Figure 4.3 Source: eMori Technology Tracker – http://www.mori.com/ (technology link removed)

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Political Factors

Taxation» European countries now collect VAT on imports to the EU

Even pure intellectual property like downloads» Private imports within EU at VAT rate of source or

customer» EU Services are taxed on location of supplier

(Ireland has exploited this successfully)» US doesn’t yet tax inter-state transactions

Restrictions on Freedom» UK has Regulation of Investigatory Powers Act

(means ISPs have to provide interception capability, encryption keys must be produced on demand)

» Many countries censor Internet activities

BS3912 Week 4 18

Technical Factors

How to create delight

Use cookies to remember the user

Attractive site with appropriate use of images

Clear navigation Search facility Focus on security

Clear and open privacy policy Everything works Rapid response to e-mail Customer-centric organization

How to turn users off

Fill the user’s machine with cookies

Overuse graphics, making response time slow

Pop-ups Search giving false results Fruitless warnings about mixing

secure and non-secure content Misuse of information provided Form-filling with input ignored Spam Site organized for convenience

of vendor

BS3912 Week 4 19

Globalization and e-Commerce Globalization is concept of a single global marketplace

» Not merely selling abroad, but competing as an equal with companies local to your export markets

Needs technical infrastructure, but however good that is, SLEPT factors can constrain trade» Language (especially important for services)» Social sensitivities with respect to promotion and packaging » Ethical concerns

Depends on reliable financial systems» Reasonably stable exchange rates» Affordable international transactions (e.g. Credit Cards)

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Most innovations happen like this…

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Gartner hype cycle

Chaffey (2007) Figure 4.11 Source: Gartner (2005) Gartner’s Hype Cycle Special Report 2005

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SLEPT Summary

LegalSocial

EthicalTechnology

Political

Economic factors

Customer expectations

Available technology

Regulation, taxes, DPA, CMA, RIP, TDA, Trading StandardsPreference ServicesDDA Financial probity

Social Exclusion

Common CarrierService ubiquity

Privacy, opt-out

BS3912 Week 4 23

Chaffey (2007) Figure 4.8 A framework describing the e-economySource: Booz Allen Hamilton (2002). International E-Economy: Benchmarking The World’s Most Effective Policy

for the E-Economy. Report published 19 November, London. © Crown copyright 2002

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Assignment 1: Due 9 May

Assignment takes the form of an initial business proposal for one of the following: » a start up e-business company, » introduction of a high-technology product or » introduction of e-business to an existing company

Register your choice to avoid duplication You will need to come up with a suitable innovation:

» Write enough to explain what is proposed» Analyse the opportunity, risks and capital requirement» May consult banks’ business plan pro-formas

Tests your ability to analyse the business-case, not the quality of the innovative idea itself

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Examples from Previous Years

Developments Tablet PCs in Fire prevention Restaurant ordering on-line Touch-screen kiosks Crop sprayer B2C Server consolidation Roadwork maps: on-line service

to minimize disruption & waste Document Management system

in Local Government Storage integration Analysis of Thos Cook on-line

commerce, with new proposal New info system for schools

Start Up Surgeons-Net: software to

assist hospital surgeons Customized T-shirts justifying

premium price Cricket equipment B2C Marine incident emergency

service B2C Online optician IBP Photo albums

New Services Homelink Library service Cross-border trading Contact Centre Bus pass printing Info terminal for enhancing

service in health-food store

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Assignment 2: Due 6 June 2011 You need to prepare and write a detailed plan for

deploying the change you proposed, into the same existing or start up e‑business company» Will include Critical Path Analysis

Assessment criteria concentrate on your understanding of the issues involved in managing high-technology ventures, and the logic and clarity of your analysis

If you are not around to hand in the assignment in person, please submit over the Learning Network, or make sure you use recorded delivery and that the package is postmarked on or before the due date

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Marking Scheme

Assignment 1(5 elements: equal weight) Executive Summary Introduction Market analysis and/or

SWOT Costings Analysis

Assignment 2 (5 elements: equal weight) Executive Summary Introduction and update to

part 1 Deployment planning Completeness of coverage Analysis

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Initial Business Proposal

Around 2000 words Determine NEW product or service Decide on Start-up Company or Existing Company

» B2B or B2C?» e-Government» Consider Intermediary Rôle

– DISintermediation / REintermediation– COUNTERmediaries / CYBERmediaries

» Other applications of technology to develop Explain What you propose (in order to get capital) Analyse Environment (Macro & Micro) PEST & SWOT Detail Capital Requirements

Some examples in Chaffey Chapter 2

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Funding Requirements

Identify each business PROCESS needed to start & run your idea / business

Make maximum use of high tech to minimize costs List

» Fixed capital costs (premises, equipment, stock)» Working capital, to cover costs of people and inputs» Ongoing costs (electricity, phone, wages) etc

Quantify how long before sales generate revenue Quantify revenue needed to break even Quantify profits needed to repay debts etc