Chapter 12: Implementing E-Business Initiatives

Dr. Samim Al Azad (SAA2)

Assistant Professor, SB&E, NSU
 E-Business News Analysis

The growth of e-commerce during the pandemic in Bangladesh (The NewAge)

https://www.newagebd.net/article/114200/the-growth-of-e-commerce-during-
the-pandemic-in-bangladesh

https://www.tbsnews.net/thoughts/innovative-technologies-can-spur-e-
commerce-growth-bangladesh-256162
https://www.thedailystar.net/opinion/macro-mirror/news/addressing-the-
accountability-challenge-e-commerce-2136746

https://unb.com.bd/category/Business/online-business-how-to-get-started-
from-home/69656
https://www.bndesk.com/thinking-of-starting-an-e-commerce-business-in-
bangladesh-know-the-guidelines/

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 Learning Objectives

In this chapter, you will learn about:

§ Planning electronic commerce initiatives

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 Electronic Commerce Initiatives

• Keys to successful implementation of IT projects: planning and execution

• Successful e-business plan activities involve-

– Identifying initiative’s specific objectives
– Linking initiatives’ objectives to business strategies

§ Other activities
– Identifying and measuring benefits
– Identifying and estimating costs
– Funding online business startups
– Comparing benefits to costs

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 1. Identifying Objectives

§ Typical business e-commerce objectives include-

§ Increasing existing market’s sales
§ Opening new markets
§ Serving existing customers better
§ Identifying new vendors
§ Coordinating more efficiently with existing vendors
§ Recruiting employees more effectively

– Objectives vary with organization size and nature

§ Decisions consider
– Considering expected benefits and costs of meeting objectives
– Compare e-commerce initiative risk to inaction (delay) risk

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 2. Linking Objectives to Business Strategies

§ Businesses usually use some tactics to operate their business on the web
– Downstream strategies
§ Tactics to improve the value, businesses provide to customers

– Upstream strategies
§ Focus on reducing costs or generating value by working with suppliers and
shipping companies

§ Web use for businesses not only for direct selling to the customer, but also-
– Building brand, enhance existing marketing programs, selling product & services,
developing a better understanding of customer needs, improving after sales service,
managing supply chain, operating auction, and building virtual community to
maintain relationship with customers and suppliers.

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 Linking Objectives to Business Strategies

§ First-wave e-commerce activities

– Engaged in e-commerce without setting specific, measurable goals
– Plenty of investors for highly speculative (hypothetical) activities
– Successes and failures measured in broad strokes
§ Either leader or disappear into bankruptcy

§ Second-wave e-commerce activities

– Businesses take closer look at benefits and costs of initiatives
– Good implementation plan
§ Sets specific objectives for benefits achieved and costs incurred
– Pilot websites to test their online business ideas, and then full implementation

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 Linking Objectives to Business Strategies

§ Third-wave e-commerce activities

– Moving beyond a conceptualization of online business as a website
§ From a single website to social networking

– Increasing e-commerce initiatives by small business through the

social media and web communication tools
§ More promotional activities in social media rather than in traditional web
sites

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 3. Identifying and Measuring Benefits

§ Some e- commerce initiatives are obvious, tangible, easy to measure

– Example: increased sales or reduced costs

§ Other electronic commerce initiatives (intangible) more difficult to

measure
– Example: increased customer satisfaction

§ When Identifying benefits, managers should try to-

– Set measurable objectives (may also Include intangible benefits)
– Ex: increased customer satisfaction might be measured by counting the number
of first-time customers who return to the suites and buy

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FIGURE Measuring the benefits of electronic commerce initiatives

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 4. Identifying and Estimating Costs

1. Total cost of ownership (TCO)

– Includes all costs related to activity (establishing e-commerce platform)
– Example: hardware costs, software costs, outsourced design work, employee
salaries and benefits, site maintenance
§ Good TCO also includes
– Assumptions about how often site would need to be redesigned in the future

2. Opportunity cost
– Cost of not undertaking an initiative
– Largest and most significant costs associated with electronic commerce initiative
– Predetermined benefits that company could have obtained from electronic
commerce initiative not pursued

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 Identifying and Estimating Costs (cont’d.)

3. Web site costs

– Total amounts required to create and operate a Web site

– Relative proportion of costs remained stable

§ 10 percent: computer hardware
§ 10 percent: software
§ 80 percent: labor (IT staff, maintenance and operation cost)

– Annual cost of operating an online business Web site

§ Remained stable
§ Ranges between 50 and 200 percent of site initial cost

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What about Bangladeshi Market Condition?

FIGURE Estimated costs for business Web sites

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 5. Funding Online Business Startups

§ Banks were reluctant to lend money on the strength of a startup/new

idea
– Funded out of the founders’ savings, along with investments or loan from
friends and relatives

§ Late 1990s Web businesses

– Started by investors wanting to make fast money

1. Angel investors funded initial startup (group of businessperson)

– Became stockholders hoping business grows rapidly
– Sell interest to venture capitalist (when business become bigger)

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 Funding Online Business Startups (cont’d.)

2. Venture capitalists
– Very wealthy individuals, investment firms
– Look for small companies about to grow rapidly
– Hope for rapid growth and initial public offering (selling stock to public)
§ Benefits: Access to large amounts of capital early
§ Costs: Investors, capitalists got most profits, pressure to grow rapidly

§ Decrease need for venture capitalists and angel investors-

– Cost of creating an online business have gone down
– Relieving pressure to grow rapidly
– Becoming more creative & learning from mistakes

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 6. Comparing Benefits to Costs

§ Capital projects (capital investments)

– Major investments in equipment, personnel, other assets

§ Key parts of creating electronic commerce initiatives business plan

– Identify potential benefits
– Identify costs required to generate benefits
– Evaluate whether benefits exceed costs

FIGURE Cost/benefit evaluation of electronic commerce strategy elements

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 Return on Investment (ROI)

§ Return on investment (ROI) techniques

– Measures amount of income (return) provided by specific current
expenditure (investment)
– Examples:
§ Payback method, net present value method, internal rate of return

§ Electronic commerce initiatives

– Seen as absolutely necessary investments
– The value of early positioning in a new market allows many companies
to invest large amounts of money

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 Strategies for Developing Electronic Commerce Web
Sites

Outside Contractor Vs Internal Development VS Outsourcing

§ Outside Contractor
§ Internal Development
– The internal team

§ Outsourcing
– Early outsourcing (outsources the initial site design and development)
– Late outsourcing (design and implement after becoming a stable)
– Partial outsourcing (component outsourcing/ portion)

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