unit 4 electronic commerce(ec) management. 长沙通信职业技术学院英语教研室 2 it can be...

Unit 4

Electronic Commerce(EC) Management

2 长沙通信职业技术学院英语教研室

• IT can be a barrier to entry to a given market place. Existing players in the sector may well have a substantial investment in IS / IT, including for instance the use of EDI to co-ordinate their supply chain. This experience and investment can be difficult for a new entrant to match. The converse is that developments in IT and e-Commerce may leave existing players with a heavy investment in expensive, obsolescent technologies giving the new entrant the opportunity to enter the market with fresh ideas and a business plan facilitated by a new generation of IT provision. Internet e-Commerce is a technology that can facilitate new entrants to existing markets without the need to match the IT and infrastructure investment of the existing players. Recent developments in Internet e-Commerce have facilitated the entry of new players into a number of market segments.

• Arguably, in some segments, the use of Internet e-Commerce changes the nature of the product sufficiently to be classified as a substitute product.


• Commercial organisations only survive if they are competitive; they prosper if they achieve a competitive advantage. The two generic competitive strategies are price leadership and product differentiation. The use of e-Commerce enables business to achieve competitive price advantage, differentiation and to combat competitive threats.


Section A Competitive Advantage

• The ability of an organisation to prosper arises from its competitive advantage over the other organisations operating within its market sector. The ability of the organisation to survive requires that its competitive position is not significantly less than the other firms operating within the market sector.


• The three basic strategies for competitive advantage are cost leadership, differentiation and focus. Cost leadership is simply to be able to sell the goods or provide the service at a price that is lower than that of the competition. Differentiation is where the goods or services provided have some quality that makes them more attractive than competing products even though the competition may have a somewhat lower price. Focus is concentration on a single aspect of the market, a product niche.

• Information and communications technologies (ICTs) can have a considerable part to play in a competitive strategy. The appropriate use of IS and IT can lower the administrative costs of the organisation and the use of ICTs, in the logistics supply chain, can add to that advantage. The use of ICTs, in addition to cost reductions, can also differentiate a product in terms of quality of service and responsiveness to customer requirements. For the niche player, ICTs can be used to target information on the selected segment and to gather customer data from that segment. Eventually quick response supply and just-in-time manufacture, enabled by ICTs, can provide the capability to evolve new products and services and to facilitate customisation.


Porter's Model• The basis of much of the thinking on

competitive advantage has been the writing of Michael Porter. Porter, in his book Competitive Strategy: Techniques for Analysing Industries and Competitors introduced his model of competitive rivalry; a model that is still widely used in business and academic papers.

• Porter's model helps a firm identify threats to its competitive position and to lay plans, that may include IT and e-Commerce, to protect or enhance that position. The model shows five forces of competitive rivalry:


● Competitive rivalry among existing firms in the trade sector; ● Threat of potential new entrants to the sector; ● Threat of a substitute product or service to the existing trade; ● The bargaining power of the buyers; ● The bargaining power of the suppliers. Typically one or two of these forces dominate in an analysis of the competitive position of an organisation in a trade sector. Each of these threats is further examined below.


Threat of New Entrants

• The threat of new entrants relates to the ease with which a new company, or a company in a different product area can enter a given trade sector. Barrier to entry into a particular market include the need for capital, knowledge and skills. The barriers to entry, for example, to the vehicle assembly sector are massive; to start building cars there is the need to develop a new model range, build a car assembly plant, contract a large number of component suppliers and sign up a dealer network. Getting into business in building personal computers is, in contrast, much easier; the components are readily available and there is not the same need for investment in product development or large-scale production facilities before the company makes a start.


• IT can be a barrier to entry to a given market place. Existing players in the sector may well have a substantial investment in IS / IT, including for instance the use of EDI to co-ordinate their supply chain. This experience and investment can be difficult for a new entrant to match. The converse is that developments in IT and e-Commerce may leave existing players with a heavy investment in expensive, obsolescent technologies giving the new entrant the opportunity to enter the market with fresh ideas and a business plan facilitated by a new generation of IT provision. Internet e-Commerce is a technology that can facilitate new entrants to existing markets without the need to match the IT and infrastructure investment of the existing players. Recent developments in Internet e-Commerce have facilitated the entry of new players into a number of market segments.

• Arguably, in some segments, the use of Internet e-Commerce changes the nature of the product sufficiently to be classified as a substitute product.


Threat of Substitution

• Substitution is a threat to existing players where a new product becomes available that supplies the same function as the existing product or service. The classic examples are the (partial) substitution of natural fibres such as cotton and wool by synthetic fibres or the replacement of glass bottles by a plastic alternative in some sectors of the packaging industry. Existing players can protect themselves by keeping their product up-to-date or alternatively, in some instances, have become major players in the business of supplying the substitute product.

• The IT industry has itself substituted many products previously used in business with the replacement of the typewriter by the word processor being but one example. Of the e-Commerce technologies, Internet e-Commerce has the potential to make significant inroads into traditional retail sectors with online banking or down-loadable music from the artist's web site, being substitute distribution channels for conventional retailing and, arguably, constituting substitute products.


Bargaining power of Buyers(1)

• For a business to be profitable the cost of producing and distributing its product has to be less than the price it can fetch in the market place. Where there are a number of competitors in the market or a surplus of supply the buyer is in a strong position to bargain for a low price and for other favourable conditions of trade.

• The use of IS/IT may help companies achieve efficiencies that enable them to meet the price requirements of the powerful buyer. Another approach is to use ICTs to facilitate a level of service that will keep the customer loyal. Short cycle times, quick response supply and reliable service are features that can be enabled by e-Commerce technology. Value added services such as stock control and accountancy facilities available from the suppliers are also features that can lock the customer in.

•


Bargaining power of Buyers(2)

• E-Commerce can also be used to reshape the supply chain. Intermediaries such as wholesalers and agents can become unnecessary when an organisation can efficiently deal directly with small traders and members of the public using e-Commerce systems. Competitive advantage, in all three categories, can be achieved using e-Commerce for direct sales. This process of dis-intermediarisation can save costs of distribution, allow an organisation to differentiate its products and services and / or focus its attention on selected segments of the market.


Bargaining power of Suppliers

• The organisation, whilst trying to get an adequate price from its buyers, will be looking to get favourable terms from its own suppliers at the next stage along the value chain. The organisation's ability to get a good deal is the mirror image of its position with its buyers. If the supply is plentiful and / or there are several suppliers it should get a good price. If the product is scarce or the number of suppliers that are able to meet its needs is limited then the supplier is in a more favourable position.

• For the supplier, the strategies of price advantage and differentiation such a branding or quality of service give a stronger competitive position. The ability to trade electronically is a factor in the quality of service and may be a requirement of trade from the buying organisation.


Competition between Existing Players

• The final force is the competition between existing players in the market. The competition is to get the buyers and to trade at a price that produces an acceptable profit. That competition is won on the basis of the generic competitive advantage of price, differentiation or focus. The competitive position of each organisation is determined, in part at least, by the deal it is able to make with its suppliers. The competitive position of each organisation is not absolute; in most markets the factors that lead to a successful deal in one place at a given time will not necessarily be replicated in the next bargain that is to be struck.

• E-Commerce is a factor in competition between existing players. The use of e-Commerce can:


Competition between Existing Players

• Reduce the administrative costs of trading (transaction costs);

• Increase the logistic efficiency of the supply chain and hence facilitate reduced stockholding and greater reliability of supply;

• Meet the requirements of a trading partners that trade is conducted electronically;

• Differentiate the product or service that is offered from that of competitor organisations;

• Cut out intermediaries in the supply chain, e.g. replacing ticket sales through an agent with direct sales to the public;

• Provide a new marketing and servicing channel.


Words & Phrases(1)• niche n. 定位，地位，小环境• appropriate adj. 适当的• logistics n. 后勤学，物流• responsiveness n. 响应，反应• rivalry n. 竞争，竞赛• academic adj. 学术的• range n. 范围• vehicle n. 媒介物，传达手段• assembly n. 装配• barrier n. 障碍，壁垒• entry n. 登录，进入• massive adj. 大量的• converse n. 相反的事情• obsolescent adj. 荒废的• available adj. 可用到的，可利用的，有用的• synthetic adj. 合成的，人造的• fibre n. 纤维• package n. 包，裹• alternatively adv. 二者择一地，作为选择• up-to-date adj. 时髦的• substitute V. 代替


Words & Phrases(2)

• substitution n. 代替• inroad n. 袭击• down-loadable adj. 可下载的• conventional adj. 传统的，常规的• arguably adv. 可辩论地，可争辩地• constitutite V. 制定，建立，组成

• accountancy n. 会计师，会计学 • reshape v. 重塑，重构 • intermediaries n. 中介人 / 中介机构 • wholesaler n. 批发商 • agent n. 代理 • differentiation n. 差别化

• scarce n. 短暂的• generic adj. 同类的 • replicate v. 复制• stockholding adj. 持股的• reliability n. 可靠性，可信赖性

unit 4 electronic commerce(ec) management. 长沙通信职业技术学院英语教研室 2 it can be...

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