November 01, 2018

Why should bookselling organisations with very little or no significant e-business migrate into a net-enabled e-business or e-commerce model?

This issue is currently very interesting as the ubiquitous power of the internet has made industries plunge into new businesses ventures. Its features that help to support as e-commerce, e-marketing or e-business has also aided the development of various other capabilities and processes of businesses. This question shall be critically analysed to understand how such a mind-boggling concept such as e-commerce could make bookselling organisations as a market leader in this field. To do so, the research methods shall be based on qualitative research methods, drawing primary information through literature review. Secondary data collection method that shall be used to research on the above issue shall be ethnography and semi-structured interviews with various stakeholders of the bookselling industry. The strategic choices of bookselling organisations shall also be studied to realise its benefits. The question generated above shall develop answers through applied qualitative research to selected issues and execute strategy, business model and other concepts.

Executive Summary

  • The above question shall help to realise how limitations of the historical models of traditional brick-and-mortar-based bookselling were overcome by the innovative use of the internet in coordinating various business functions and enabling the end-customer to gain insightful information about desired products and ease of purchase like never before.
  • To analyse and answer the above question, the principles of Alt and Zimmermann's business model have been applied, which cover all the essential components and their linkages to help build a successful business venture (2001).
  • Also, Michael Porters five forces model shall be used to analyse the possible strategy of bookselling organisations and critically consider factors such as market performance, profitability, competitive survival and future prospects.

Report for Senior Manager: Introduction

The execution of internet technologies has helped businesses in various ways. This report addressed to the Senior Manager of a bookselling organisation Obeikan Investment Group and explains a migration plan to develop e-business capability from scratch. The strengths, weaknesses, opportunities and threats of such a business plan shall be discussed and ways shall be suggested in which the organisation can leverage its business in the future for better profitability and success. Management of information and business processes has become much easier as compared with traditional information systems and tasks that were done manually (Gogan and Applegate, 1997; Zwass, 1996, Schnieder, 2009). The impact of such issues has led to the invention of the concept of electronic commerce, which simply means trading over electronics and communications media. The benefits of e-commerce are also huge as a result it is now necessary to execute E-business in organisations. E-business models are focused on transactions, process and collaboration, which in turn relies on the coordination of people, process and technology. Obeikan Investment Group must migrate to the usage of electronic networks, mainly the Internet, to work together with key stakeholders (e.g. clients and investors) reaching whom can be very beneficial economically. This new business models and migration plan shall strategise and help to reduce the barriers of time and distance. The benefits of technology can also be easily realised. However, there are some limitations too. E-Business, even though has helped many organisations to successfully expand themselves, has also increased the complexity of the businesses leading to difficulties in the making of decisions by managers. Hence, a deep understanding of companies current capabilities and future trends is required to build the right strategies and earn a good amount of value and profitability in the long run.

Proposal: Initial Concept and Strategy

Ravi Kalakota and Marcia Robinson (2000, p.400), describe the changing nature of bookselling over the years. In the early 1980s, the business strategies of bookstores were based on personal advice, service, proximity to locations such as schools; colleges etc. and they had a limited offering of books. The books were suited to the local taste and the general nature of the buyers. In the late 1980s however, with the emerging industrial revolution and widespread interest in learning diverse subjects, the concept of large bookstores emerged. These bookstores had various kinds of books all under one roof and the bookstores did not limit the variety of books in the store by the local taste of the area. The bookstores were still limited to regional selection and did not offer international or rare books, which had very few buyers. In the mid-1990s, the concept of online bookstores emerged, some of which (e.g. Amazon) are leading this field and are preferred over other bookstores. The consumers now demanded reviews, lesser price, one-stop shopping, easy ordering, speed, global selection and home delivery. For Obeikan Investment Group to become a leading name, the initial concept should be to create a virtual bookshop. It has been identified that with the growing popularity of electronics and communication networks such as the internet, it is intelligent to venture into online bookselling wherein the company could provide advantages to the traditional forms of bookselling. The facilities that should be provided as part of the migration plan must be more range of book titles, greater flexibility for customers, 24 hr access, quick and efficient online search facilities, and a competitive price based on low transaction costs. However, the plan that has been proposed is a shift from the above linear model as it has been realised that this model is not beneficial to compete with the present market scenario. Obeikan Investment Group initial strategy should be to bring about greater interaction between the different stakeholders of the business, namely, authors, publishers, bookshops and customers. This can be done by integrating the various functions through the use of information technology and communication techniques. Pant and Ravichandran (2001) describes that an online booksellers business model must represent a combination of an e-tailing (electronic retailing) of standard products and a supply chain model. As a result this will impact the business by the smooth flow of product information, entertaining customer queries and orders, validating credit card information and completing customer query or sale.

Business Model of Migration Plan

The principles of Alt and Zimmermanns business model (2001) provide an excellent understanding of the elements and mechanisms of innovative business creation in specific business domains and the relationships between them. The model also takes care of the shift from the importance of production to that of communication in a digital economy, which is what we are dealing with. This business framework makes a successful venture in e-business, by applying the components of Alt and Zimmermanns business model in our organisation. The evaluation of each has been done below.

Mission

It is important to understand the overall vision, strategic aim and value proposition of a business model as these elements are very critical issues (Alt and Zimmermann, 2001). As a result, it is necessary to develop a high level of understanding of the above-mentioned elements. Colin Combe (2006), among other researchers, rightly describes the following value propositions, which should also be the mission of Obeikan Investment Group.

  • Convenience
  • Greater Selection
  • Ease of use
  • Benefits of using the internet for buying books
  • Information search and retrieval capability
  • Ease of access from multiple locations
  • Price comparison capability
  • Competitive pricing
  • Personalization

A value proposition like this can be innovative as it could offer numerous book titles. This is beneficial as this never faces limitations of regional selection, the need to travel to their limited locations, expensive prices, limited reviews etc. with the rising innovations of the internet. For instance, Obeikan Group can later launch a GUI browser, which shall display images and data stored on websites. Thus, more than double the number of book titles and better services by collaborating suppliers and buyers through technological means can be offered to customers.

Structure

The structure of the business model should be to create business to customer (B2C) and business-to-business (B2B) customers. The former are book buyers and the latter are authors, publishers and resellers. For such a structure, it is important to implement a supply chain network. This would cater to the need of collecting the books from resellers/publishers and delivering purchased books to the customers just at a click of the mouse. This shall help the organisation to collaborate with its own competitors who can in turn direct their customers to the organisations catalogue of books. This not only publicises the online catalogue but also helps in sharing commissions and profits. The structure is indeed better than our traditional model of bookselling (fig 2), which is ineffective and inefficient in terms of time and cost. Initially, it might be difficult to manage the operations of such a structure but this can be overcome in various ways. Next proposal is that the customer should be provided with all the possible information about books including reviews by previous buyers, experts and media-persons, all free of cost. Also, we must develop a web-catalog of books to enable ease of search of over millions of books. The payment and delivery of books can be handled efficiently by the supply chain function. With all these facilities at one-click, customers can be attracted and they should keep coming back to the efficient service of Obeikan Investment Group.

Process

Processes shall provide a more detailed view on the mission and the structure and show the elements of the value creation process (Alt and Zimmermann, 2001). Our processes should be handled through effective database management and take full advantage of the benefits of technology. Schneider (2009, pp 19) noticed that it has always been difficult to integrate existing database into the software that enables the e-business process. Thus focus should be on quality related parameters such as cataloguing, timely delivery of books, quick and easy access of website, honest book reviews etc. Partnerships and alliances with portals (search engines) and internet service providers (ISPs) should be made. One of the key things that that must be developed is a centralised catalogue for publishers. The development of such a catalogue should be the heart of the company's strategy (Combe, 2006). Publishers can also benefit from the catalogue because it provides them with a good exposure to potential buyers without the need for spending huge sums of money on distributors. In addition, it is important to add good graphics to the content thus improving the marketability of the books. The online bookstores registered should refer to customers to the book catalogue while handling the process of distribution, ordering, payment and shipping. This referral system ensures that much more traffic can be routed through the website thus increasing exposure to Obeikan brand name. The advantage to the online bookstores is the savings in transaction costs by selling books over the internet. Initially, these processes shall be very expensive to implement. Moreover, the return on investment shall be very slow for the first few years of its implementation. Hence, we can engage techniques such as Six Sigma to identify and improve the sources of inefficiency, which might be in its expensive distribution and warehousing systems.

Revenue

With this proposed Business Model, Obeikan Investment Groups primary sources of income shall be book buyers (B2C), publishers and other online bookstores (B2B). Revenue shall also be generated from taking advantage of the increasing popularity and selling advertising space on the website. We can also negotiate to have corporate sponsors who could invest money on us and gain mutual benefits. Even though initially this shall not reap a lot of revenue, this has been proposed as a long-term goal. However, with the popularity of the internet worldwide, the number of end consumers must allow sales to expand. Schneider (2009, pp 24) that use of e-commerce shall also reduce the transaction costs as it eases the flow of information for customers. Later, the company can also expand its range of products such as souvenirs, etc. and can also expand its base into other countries and involve strategic partners (Schneider, 2009, pp 25) to generate better revenue.

Technology

Investment in technology and its execution should be of prior importance to support the company's business and IT needs. However, most disadvantages of e-commerce today are the rapidly changing and newly growing technology every day (Schneider, 2009, pp 18). There could be a massive investment and continuous upgrade to the best technology. Hence, each investment needs to be measured with levels of performance in terms of sales and profits. The data warehouse should be roughly divided into three functions: query, historical data and ETL. Additionally, there should be query servers, click history servers and the ETL cluster of raw data. The above-mentioned units must have a very good storage capacity. It must be kept in mind that a huge number of customers shall be logged online and feeding numerous searches and queries. Thus, the technological architecture must be able to handle all such queries. The issue to security is also a major concern. This can be handled by encrypting credit card numbers during the checkout process and by using the SSL (secure socket layer) protocol. Such confidential information must be stored in a separate database that cannot be accessed by the internet and every possible access to private information must be cut off technically from all entry points.

Legal Issues

Electronic commerce brings changes in the structure, processes and technology and that demands a new framework for addressing the legal, privacy, and public policy needs. With diverse groups involved, this process becomes even more complex. It is also necessary to protect the interest of the general public (Shaw 1999). A major concern for the company should be security and privacy of the content and the security of online transactions (Schneider, 2009, 453). The company must have its terms and conditions, which its customers need to respect before making online purchases. Aside from the usual credit card security concerns regarding online transactions and purchases, the problem of phishing must also not be ignored. The Model below explains Schneiders security and risk management plan that can be executed by Obeikan Investment Group. Security and Risk Management Model (Schneider, 2009, pp 456)

The company must also have a strict policy for book reviews. Reviews must go through a good screening process to ensure that it makes sense. A reference of a very famous online bookselling company mentioned in this section of the report must help to understand the intensity of such issues. This famous company had tried to patent many aspects of its e-commerce architecture that drew a little controversy for the affiliate program patent. Finally, it won the case back in 2000 as other e-commerce sites were using programs that looked similar to the one this leading market giant had developed and patented. Nunes and Johnson (2004) criticise the Differential pricing by saying that it was caught selling DVDs at different prices to different customers. Loyal customers, those with purchase history were being charged more than those Amazon considered first-time shoppers. At the same time, it must be ensured by Obeikan that its business sites do not contain sensitive information on the website or on book reviews posted by its customers that disturbs personal or religious sentiments across countries e.g. Iran blocked the sites of amazon.com due to selling books that was against Muslim laws (Basse, 2007).

Impacts: Porters Five Forces Model

The rising power of the internet has created several opportunities. Porters Five Forces model shall analyse how profitable the venture could be. Porters Five forces model for Obeikan Investment Group

Conclusion

In conclusion, the company could be a market leader by applying business strategies through continuous innovation and emerging technologies. In a short time, it could achieve high revenues by making use of the growing power of the internet by collaborating with people, process and technologies. The strategy can help increase Obeikan Groups popularity and can give it an edge over its book-selling competitors as well. In the short and medium terms, it needs to work further on its profitability and operational efficiency areas by cutting costs in its supply chain network and measuring performance critically so that it can increase its share value and achieve better public investment. The potential of E-business is very high in the times to come. Especially in emerging countries such as China and India, where Obeikan Investment Group should look forward to exploit the rising market conditions as a plan for the long term.

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