Impacts of E-Business and Factors Influencing the Implementation of E-Business in Grocery Industry:
Study on Meena Bazar
Impacts of E-Business and Factors Influencing the Implementation of E-Business in Grocery Industry: Study on Meena Bazar ___________________________________________________________________________
Prepared For: Mimnun Sultana Senior Lecturer School of Business and Economics
Prepared By: 1. 2. 3. 4.
Farah Hasan Sarah- 111 122 135 ShiffatAra Bonny- 111 082 122 JinathJahan Noor- 111 082 056 TuhinaJahan111 091 210
30 April 2013
30April2013 Ms. Mimnun Sultana Senior Lecturer School of Business United International University Subject: Solicitation for Acceptance of the report. Dear Madam, We are pleased to submit the reporton “Impacts of E-business and Factors Influencing the Implementation of E-business in Grocery Industry: Study on Meena Bazar”. We have tried our best to make this report holistic and informative enough. All the works presented here are done with utmost sincerely and honesty. We appreciate your cooperation and guidelines. Working with such an interesting program hasgiven us the opportunity to achieve experience on it. We shall be highly encouraged if you arekind enough to receive this report. We are always available for any further quarries regardingthis report. Sincerely, 1. 2. 3. 4. 5.
Farah Hasan Sarah- 111 122 135 ShiffatAra Bonny- 111 082 122 JinathJahan Noor- 111 082 056 TuhinaJahan111 091 210 Nasrin Akhter111 083 100
Acknowledgement
First of all we would like to thank our honorable faculty Ms. Mimnun Sultana, senior lecturer, School of Business and Economics, United International University, for giving us such an
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opportunity to prepare the report on“Impacts of E-business and Factors Influencing for Implementation of E-business in Grocery Shops”for the course Supply Chain Management. Our special thanks to the management of Meena Bazar for their cooperation and providing us with required information without any hindrance. We are also grateful to each other of our group members for everyone’s time and sincere cooperation in doing the assignment in time.
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Table of Content
1
INTRODUCTION:.........................................................................................1
2
Bangladesh chain superstore’s sectors:.....................................................1
3
SWOT Analysis of Meena Bazar:.................................................................5
4
E-commerce is being use in Meena bazzar:...............................................6
5
6
4.1
The IT-based services using by Meena Bazar:......................................6
4.2
Role of e-commerce in Meena Bazar:...................................................6
4.3
Embark on e-commerce:......................................................................7
4.4
Initiating person of e-commerce in meena bazar:................................7
EC gives a competitive advantage to meena bazar:..................................8 5.1
Benefits of e-Commerce to Organization:............................................8
5.2
E-commerce helps Meena Bazar to compete with other competitors:. 8
5.3
The other benefits e-commerce gives Meena Bazar:...........................9
The way E-commerce should be used in Meena Bazar............................10 6.1
The opportunities to improve e-commerce practice in Meena Bazar: 10
6.2
The additional EC activities could be developed in Meena Bazar:.....11
6.2.1 Advertise:.....................................................................................11 6.2.2 Social Media:................................................................................11 6.2.3 Others:.........................................................................................11 7 The Organizational Factors, Individual Factors, and External Environmental Factors Influence the Implementation of e-commerce:..........12 7.1
ORGANIZATIONAL FACTORS:..............................................................12
7.1.1 Firm size:......................................................................................12 7.1.2 Characteristics of the product:.....................................................13 7.1.3 Degree of diversification:.............................................................13 7.1.4 Marketing abilities:.......................................................................13 7.1.5 Technical skills:.............................................................................13 7.1.6 Range of activity:..........................................................................14 v | Page
7.1.7 Degree of third party dependence:..............................................14 7.1.8 Competitive strategy:...................................................................14 7.2
PERSONAL FACTORS:..........................................................................14
7.2.1 Attitude and perception:...............................................................14 7.2.2 Trust:............................................................................................15 7.2.3 Resistance to change:..................................................................15 7.3
EXTERNAL FACTORS:..........................................................................15
7.3.1 Infrastructure and business related factors:.................................15 7.3.2 Competition related factors:.........................................................16 8 E-commerce Change the Organizational Business Process of Meena Bazar:.............................................................................................................16 8.1
The Resources That Changes Organizational Business Process:........16
8.1.1 Human Resources:........................................................................16 8.1.2 Functional Resources:...................................................................16 8.1.3 Technological Capabilities:...........................................................17 8.1.4 Organizational Capabilities:..........................................................17 8.2
The Changes are Managed By:...........................................................17
8.3
The Difficulties Dealing with E-commerce:.........................................19
8.3.1 Security:.......................................................................................19 8.3.2 System and Data Integrity:...........................................................19 8.3.3 System Scalability:.......................................................................19 8.3.4 E–commerce Is Not Free:..............................................................19 8.3.5 Consumer Search Is Not Efficient or Cost–effective:.....................20 8.3.6 Customer Relations Problems:......................................................20 8.3.7 Products People won't buy online:................................................20 8.3.8 Corporate Vulnerability:................................................................20 8.3.9 High Risk of Internet Start–up:.....................................................21 9
The reasons for customers would/should not like to use EC:...................21 9.1
The reasons customers should like EC:..............................................21
9.2
The reasons customer should not like e-commerce:..........................21
10 References:..............................................................................................22 vi | P a g e
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Executive summary Electronic commerce is now a means for business growth and expansion in relation to both small and large firms irrespective of their geographical locations. Bangladesh is still far from development of such e-commerce specially B2C (Business to Consumer) e-commerce. Meena Bazar is a well-developed super shopping in Dhaka City. It has also some outlets outside Dhaka City. It is a retailer of the daily goods including all the fast moving consumer goods like household, groceries, stationeries and cosmetics etc. It offers clean and friendly environment with a wide range of quality products at affordable prices and it has become the primary channel for distribution of foods and other household effects on the consumers. The report mainly focuses on the emergence of e-commerce and the factors that affect the implementation of e-commerce in retail sector. The study has been conducted on Meena Bazar which is one of the pioneers in supermarket chain in Bangladesh. The report also covers the various issues related to e-commerce and its implementation in retail chain. According to the findings, Meena Baza has introduced e-commerce, although not in its full extent. The report concludes with a discussion on the changes in business process of Meena Bazar resulting from the use of e-commerce, the challenges and the difficulties of implementing e-commerce from both sellers’ and customers’ perspective.
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Impacts of E-Business and Factors Influencing the Implementation of E-Business in Grocery Industry: Study on Meena Bazar ______________________________________________________________________________________________________
1 INTRODUCTION: Meena Bazar is one of the chain super markets of the Bangladesh which serve in Bangladesh from 2000. Meena Bazar, the first truly national supermarket chain was founded with the promise of year-round. With a strong 15-20 per cent annual sales growth, about 30 companies with more than 200 outlets have already made foray into the industry since Rahimafrooz, one of the largest business groups in Bangladesh, introduced Agora, a chain superstore, in the capital a decade ago. Strengths of the Meena Bazar is Size allows for competitive buying terms, Strong senior management, Flexible formats. Opportunities of the Meena Bazar are forming or merging a strategic alliance with suppliers, Growth of non-food, Growth of convenience and compact hypermarket formats, effective use of Club card database to increase basket size and Develop additional services. Meena Bazaar has successfully implemented the organizational culture to the worker. They have a dress code in the outlets. From this the buyer can easily tress out who will serve them and can help them. Another culture is that they are very aware about the time. They have a good organizational bonding.
2 Bangladesh chain superstore’s sectors: Superstores are set to boom in the country as the current market players. They are planning to open several hundred more outlets in the next few years to cope with the rising demand from the consumers. With a strong 15-20 per cent annual sales growth, about 30 companies with more than 200 outlets have already made foray into the industry since Rahimafrooz, one of the largest business groups in Bangladesh, introduced Agora, a chain superstore, in the capital a decade ago. The annual turnover of the superstores now stands at around Tk15.0 billion (1500 crore), 1 | Page
according to Bangladesh Supermarket Owners Association (BSOA). They say that, a rise in organized retailing would offer the consumers hygienic foods at competitive prices, compared to those offered by retailers in the kitchen markets, where commodities are sold mostly in unhygienic condition. The rise in the number of supermarkets, according to analysts, will diversify the choices of consumers and boost their spending, so much needed for economic growth, while the wet markets will also improve quality and services following in the footsteps of supermarkets. But a decade ago, the retail-level trade was in the hands of thousands of small traders in the wet markets and the grocery shops in cities and remained out of the focus of the big business houses. The landscape began to change in 2000 when Rahimafrooz Superstores, operating Agora, moved in to seize a slice of the retailing and wholesale trade, which has been growing at 6 per cent, on an average, annually. Dhaka-based Agora now runs four outlets, Meena Bazar nine including seven in Dhaka, PQS five, Prince Bazar two, Nandan five and Swapno 70 including 30 outside the capital. Bangladesh Rifles (BDR) also runs 11 stores in the capital. According to operators, more than 600 chain retail outlets are expected to be set up in the next five years in an attempt to attract more customers. Consumers can buy as much as nearly 20,000 products of different kinds from such a store, the operators boast. Supermarkets have successfully made a breakthrough in the urban lifestyle with the idea of “all essential commodities under one roof.” In the early days of the business, around 500 customers would visit a supermarket outlet daily. Now some 5,000 customers come to a store every day, they say.
3 Literature Review of E-Commerce: 3.1 What is e-Commerce? E-Commerce refers to the process of buying or selling products or service over an electronic network. The most popular medium in which e-Commerce is conducted is the internet. It combines a range of process such as: 2 | Page
Electronic Data Interchange (EDI)
Electronic mail (E-mail)
World Wide Web (WWW)
Internet Applications
Network Applications.
Basically e-Commerce involves the sale or purchase of goods or services over computer mediated networks. These goods or services may be ordered through these networks, but payment for them and the ultimate delivery of the goods and services may be conducted on or off line. Some analyst define e-commerce as simple buying and selling over electronic networks; and use e-business (buzzword) to refer to these wider range of supporting business activities that can be conducted over such networks. There are three basic components to every e-commerce solution:
Communications
Standards
Software
3.2 History of E-Commerce:
In 1950’s companies began to use computers to store and process internal transaction records
By 1960’s businesses that engaged large volume of transaction had began exchanging transaction information on punched card
In 1968 Transportation Data Co-ordination Committee (TDCC ) was formed by some companies
In
1979 ANSI (American National Standards Institute) chattered a new committee to
develop uniform EDI (Electron Data Interchange)
In 1987 UN publish its first standards under the title EDI
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3.3 Traditional and Electronics Business Transaction: The business processes are broadly divided into five main categories namely:
Market product and services
Sell and deliver products and services
Process payments
Manage relationship
Manage the enterprise
3.4 Types of E-Commerce: E-commerce can be divided into primarily three categories 3.4.1
Business to consumer (B2C):
Where enterprises sell directly to the customer, often cutting out (‘disinter mediating’) wholesalers or ‘bricks and mortars’ retail outlets. B2C is the most commonly understood form of internet business. The most successful trading has been with standard products such as CDs, Books, Software, downloadable music etc. 3.4.2
Business to Business (B2B):
It is larger, growing faster. This includes procurements of raw materials and supplies, liaison with contractors, sales channels, servicing customers, collaborating with partners, integrated management with data and knowledge. 3.4.3
Business to Government (B2G):
Here business trade directly with government offices and agencies for public procurement (e.g. supplies for hospitals, school and other government contracts. 3.4.4
Consumer to consumer (C2C):
Online transactions between private individuals.
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4 Meena Bazar: A Brief Overview: Meena Bazar – one of the chain super markets of the Bangladesh which serve in Bangladesh from 2000. Meena Bazar, the first truly national supermarket chain was founded with the promise of year-round freshness, affordable price, and the most pleasurable and hassle-free family shopping experience for all. Keeping true to this conviction, Meena Bazar has captured the hearts of shoppers all over. Due to our continuous expansion plans, we are looking for smart, hardworking and proactive young people to be part of our dynamic team. Here the Meena Bazar is the selected organization for the study and access this organization for the find our which will help to do better performance of it.
5 SWOT Analysis of Meena Bazar: Strengths
Weaknesses
Size allows for competitive buying terms Strong senior management Flexible formats Strong hypermarket portfolio Coverage the Mega City Dhaka Increasing level of investment Strong price message and offer at competitive
price than the competetors Expanding non-food and online offer Efficient distribution
Opportunities
Cannot spread the outlets all over the
Bangladesh Increasing geographical spread makes focus
on specific Markets difficult Exposed to macroeconomic difficulties in
some markets International expansion requires substantial
investment High reliance on Dhaka Market Poor CSR and community impact
Threats
Forming or merging a strategic alliance with
suppliers Growth of non-food Growth of convenience
hypermarket formats Effective use of Club card database to increase basket size
and
compact
Faces
internationally Increased level of "eating out" Move towards premium does not sit with
Meena Bazar's traditional strengths Restrictive planning guidelines Political opposition to the power
range
of
diverse
competitors
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of
Develop additional services
supermarkets tends to focus on Meena Bazar
Table: 1.1 SWOT Analysis of Meena Bazar
6 E-commerce Used by Meena Bazzar: E-commerce is used in Meena Bazar by following types:
6.1 The IT-based services using by Meena Bazar: . Meena Bazar stores exploit the following technologies:
Wireless devices Intelligent scale Electronic shelf labeling Self-check-out machine Radio Frequency Identification (RFID).
Technology is a major macro-environmental variable which has influenced the development of many of the Meena Bazar products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available; services can become more personalized and shopping more convenient. The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains.
6.2 Role of e-commerce in Meena Bazar: The roles of E-commerce in Meena Bazar are:
E-commerce is one of the cheapest means of doing business as it is ecommerce development
that has made it possible to reduce the cost of promotion of products and services. There is no time barrier in selling the products. One can log on to the internet even at
midnight and can sell the products at a single click of mouse. The on-time alerts are meant for the convenience of the consumers and inform the consumers about new products. 6 | Page
E-commerce reduces delivery time and labor cost thus it has been possible to save the time
of both – the vendor and the consumer. Hence, in this cut-throat competition, an interactive user friendly and focused website in the form of online shops can generate Meena Bazar good business. They can find a lot of web development services from where they can get your website made but it is advisable to hire a reliable and user friendly web development service.
6.3 Embark on e-commerce: Meena Bazar, a chain supermarket of Gemcon Group, on 2 april 2013 Sunday launched a fully e-commerce-based web site for its customers living at home and abroad. The portal, which can be reached at www.meenabazar.com.bd aims to provide home delivery of ordered goods. On the same occasion, the chain supermarket also launched ‘club card’ at Gemcon’sDhanmondi office. Claiming that they would deliver the ordered item within 24 hours, Meena Bazar chief operating officer Shaheen Khan said customers would be able to place orders through the web site and the delivery would take a maximum of 36 hours. ‘Delivery time is from 9:00am till 10:00pm, depending on the time the order was placed and traffic on the road,’ he added. Informing that customer’s Visa, Master and American Express payments are going through secured payment gateways operated by the respective banks, Shaheen said, ‘Customer’s card details will be securely transmitted to the bank for transaction authorisation.’
6.4 Initiating person of e-commerce in meena bazar: Gemcon group director KaziInam Ahmed and communication manager Ahmed ShoyebIqbal addressed the web site and ‘club card’ launch. ‘Customers have to enter the country and the credit card billing address, in addition to the normal credit card details at the point of payment. The telephone number of the receiving party is a compulsory field in the order form. We will call and confirm the address and the route before delivering the order,’ 7 | Page
7 E-Commerce Providing Competitive Advantage to Meena Bazar: Competitive advantage has to do with a company's ability to outdo competitors, either by improving upon what competitors are currently doing or by doing something completely different in a way that proves successful. Being able to implement an e-commerce plan that improves sales or cuts costs might give one retailer a competitive advantage over another. At the same time, being the first to come up with a new e-commerce business model, or a unique twist on an existing model, might also allow an up-start to gain an early competitive advantage.
7.1 Benefits of e-Commerce to Organization:
Expands the Marketplace to national and international market Decrease the cost of creating, processing, distributing, storing and retrieving paper based
information Allows reduced inventories and overhead by facilitating pull-type supply chain management The pull-type processing allows for customization of products and services which provides
competitive advantage to its implementers Reduces the time between the outlay of capital and the receipt of product and services Supports Business process re-engineering (BPR) efforts Lowers telecommunication cost- the internet is much cheaper than value added networks (VANs)
7.2 E-commerce helps Meena Bazar to compete with other competitors:
Enables consumers to shop or do other transaction 24 hours a day, all year round from almost any location
Provides consumers with more choices
Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons
Allows consumers to interact with other consumers n electronic communities and exchange ideas as well as experiences
Facilitates competition which results in substantial discounts
Allows quick delivery of products and services (in some cases) especially with digitized products 8 | Page
Consumers can receive relevant and detail information in seconds rather than in days or weeks
Makes it possible to participate in virtual auction
7.3 The other benefits e-commerce for Meena Bazar:
Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution
Allows some merchandise to be sold at lower prices benefiting less affluent people
Enable people in third world countries and rural areas to enjoy product and services which otherwise are not available to them
Facilitates delivery of public services at reduced cost, increases effectiveness and or improve quality
8 The Way E-commerce Should be Used in Meena Bazar Due to the increased popularity and availability of Internet access many traditional small business are considering eCommerce as a valid and profitable sales channel. It’s important for Meena Bazar to weight carefully the differences
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between e-Commerce and traditional commerce in order to decide if it would be a good fit for your business or just a costly mistake.
8.1 The opportunities to improve e-commerce practice in Meena Bazar: Traditional Commerce vs. e-Commerce: Items Sales Channel
e-Commerce Enterprize Internet
Traditional Commerce Manufacturer
Consumer
Wholesaler Retailer
Sales Hour /Region
Entire world
Sales place/method
24x7 Market
Consumer Restricted area space
(Network)
Customer
information
Sale
information Any time acquisition
acquisition
based
Restricted sales hour Market space (store)
Sale
on
on
display
through internet
based
Market survey and salesman
Digital Data without
Require information
Marketing activity
no re-entry 1:1 Marketing via bi- One
Customer support
directional communication consumer Real time support Delayed support for for
customer
Real acquisition
capital
customer needs small
to
customer
Dissatisfaction
re-entry way marketing
Dissatisfaction time
of
Time different for catching
customer
needs large
8.2 The Additional E-Coomerce Activities to be Developed in Meena Bazar: Meena Bazar can develop their e-commerce by using additional activities such as- advertise and social media. Because, marketing is both vital to get new clients and one of those areas where 10 | P a g e
budget and time cuts are more likely to happen. It is understandable that when choosing where to spend money, a salesman salary will rank higher than his/her budget. So online advertising will help them to select a faster time with a huge collection of product for them.
8.2.1
Advertisement:
The best way of reducing the cost and time spent on marketing is selecting where to spend them. Optimizing the campaigns to target the networks and websites, Meena Bazar’s target audience is most likely to visit can reduce both the money and the time required to manage them. So that customers can get satisfied by using these web sites.
8.2.2
SocialMedia:
Social Media can be extremely valuable to engage with the customers, current and potential. It’s also relatively cheap, if Meena Bazar can create an account in Twitter or even a fan page in Facebook with just a bit of technical knowledge. The only thing those channels will require of proper time to interact with the audience, a general understanding of how people communicate there and maybe a few Takas a month for a subscription to automation tool that will make Meena Bazar’s business easier.
8.2.3
Others:
Zapalla and Gray (2006) mention the concept of “E-Business Adaptation Ladder” proposed by Nachira (2002) that divides the process of evolution of e-business to its current stage into the following six stages:
Stage 1 – introduction of e-mail as one of the most efficient business communication methods
Stage 2 – with the introduction of websites businesses gained access to world markets
Stage 3 – e-commerce was introduced and the convenient procedures of ordering and paying online changed global business environment irreversibly
Stage 4 – with the development of e-business the supply-chain operations of the business were integrated
Stage 5 – the concept of networked organisations introduced and the principles of open information with customers, suppliers and business partners are widely embraced. 11 | P a g e
Stage 6 – with the advent of digital ecosystem such business concepts as knowledge sharing, natural selection and the evolution of services were promoted.
9 The Organizational Factors, Individual Factors, and External Environmental Factors Influence the Implementation of ecommerce: There are a number of factors that can influence the implementation of e-commerce in a retail chain like Mena Bazaar. These factors can be grouped into three forms: organizational, personal and external environmental factors. The influences of these three factors are discussed in the following subsections.
9.1 ORGANIZATIONAL FACTORS: Several organizational factors have been identified that may affect the adoption and implementation of e-commerce in an organization. 9.1.1
Firm size:
Past research has found that firm size is an important determinant of a firm’s involvement and decision process in acquiring ICT (Dholakia et al., 1993).The firm size is fundamental since it influences the maximum absolute value of any investment. Size of a firm was also a major influence on the selection of a competitive strategy (Ibrahim, 1993). As one of the pioneers in the retail chain industry of Bangladesh, Meena Bazaar is considered to have its resources and infrastructure to implement e-commerce.
9.1.2
Characteristics of the product:
The product tangibility and availability are also important determinants of a firm’s involvement in e-commerce. Selling an intangible product through Internet means very low constraints and costs due to its logistic management. Besides, e-commerce could turn out to be a powerful promotion channel for unique products (such as handicrafts of specific regions), not subject to
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constraints deriving from customers’ geographical distance. Since Mina Bazaar sells tangible goods, it is costly as well as it involves other resource constraints.
9.1.3
Degree of diversification:
The implementation of e-commerce should also be adequate to the degree of diversification. The more diversified the business operation, the more resources are likely to be invested in implementing the e-commerce. The Mina Bazaar has its own diversification plan that calls for its preparation to update its e-commerce accordingly.
9.1.4
Marketing abilities:
Marketing abilities represent an important influence for the operation of the e-commerce opportunities. Since the adoption of e-commerce could affect all the variables of the marketing mix (product, price, promotion, and place), companies should make a specific online marketing plan. Besides, the intrinsic characteristics of the Internet could make it the natural application field of direct marketing techniques.
9.1.5
Technical skills:
E-commerce is by nature a highly technical issue and accordinglytechnical skills strongly influence the degree at which the e-commerce system could be actually implemented. Since Mina Bazaar sells a rich assortment of goods, it needs adequate technical skills in fully implementing e-commerce system.
9.1.6
Range of activity:
The range of activity denotes the geographical extension of the market area. This variable can positively be influenced by the adoption of e-commerce applications and can be assessed through the proportion of turnover per geographical area.
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9.1.7
Degree of third party dependence:
The degree of third party dependence refers to companies belonging to the same value system, which choices can be more or less constrained by commercial partners. Like other retail chain, Mina Bazaar has to depend on third parties for supplying the goods it sells. A high level of coordination and commitment from third party is needed for successful implementation of ecommerce. 9.1.8
Competitive strategy:
The company competitive strategy has a strong impact on e-commerce applications, both when it aims at fulfilling a leadership in costs and when it is based on the differentiation of products and services.
9.2 PERSONAL FACTORS: The major personal factors that can affect the implementation of e-commerce are discussed below. 9.2.1
Attitude and perception:
Hill, Smith and Mann (1987) found that self-efficacy which is one dimension of attitude, the belief in one’s ability to perform a particular behavior, influences the adoption of a technology. Hence top management needs to have a high level positive attitude in adopting and implementing any technology like e-commerce. 9.2.2
Trust:
A high level of trust is required from the part of management regarding the benefits and necessity of e-commerce. If the management does not have trust on the benefits of e-commerce, it is not possible to implement e-commerce regardless of the resources and capabilities the organization owns.
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9.2.3
Resistance to change:
It assumes that the e-commerce adoption could imply organizational transformations in terms of task changes, introduction of new roles, and rearrangement of the organization as whole, innovative organizations should face less resistance to change while implementing any of the ecommerce activities. Here the top management has to be mentally ready for any kind of change that calls for implementing e-commerce.
9.3 EXTERNAL FACTORS: External factors exist at three levels: industry, macroeconomic, and national policy level (Lefebvre and Lefebvre, 1996). These external factors affect the general and competitive environment within which a particular firm has to operate. 9.3.1
Infrastructure and business related factors:
Electronic and telecommunications environments as well as the business environment in which a specific firm operates influence the level of involvement of the firm in the Internet. Businesses fortunate enough to be located in new and high-bandwidth telecommunication regions can expect to obtain better technological services to support e-commerce applications. Such access is generally better in urban than in rural areas. A business environment where other firms invest in technologies, share their experiences offer greater support for a specific firm to actively or passively pursue a specific strategy.
9.3.2
Competition related factors:
Competitive environments have a strongly influence on the adoption of a technology (see, for example, Dasgupta et al., 1999). Ghosh (1998) provides several examples of companies in the U.S. that adopted the Internet mainly because of competitive pressures. It also applies in Bangladesh although not in the same scale. As it is evidenced from last few years, retail chain has got a significant progress in Bangladesh, especially in the metropolitan areas. As a result, competition in the industry is getting stiff that calls for the retailers like Mina Bazaar to implement e-commerce with a view to increasing the connectivity with the customers.
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10 E-commerce Changing the Organizational Business Process of Meena Bazar: An organization’s business process can be measured through some features. The features are given below and assess the Meena Bazar.
10.1 The Resources That Change Organizational Business Process: 10.1.1 Human Resources: Human resources are an organization’s most important asset. Ultimately an organization’s distinctive competences lie in the skills and abilities of its employees. Because these skills and abilities give an organization a competitive advantage, organizations must continually monitor their structures to find the most effective way of motivating and organizing human resources to acquire and use their skills. 10.1.2 Functional Resources: Each organizational function needs to develop procedures that allow managing the particular environment it faces. As the environment changes, organizations often transfer resources to the functions where the most value can be created. Crucial functions grow in importance, while those whose usefulness is declining shrink. For Meena Bazaar the functional resources include its availability of the products in every outlet. From the assessment Meena Bazaar is not fully successful to available the products in every outlets in at time. It is happen for their distribution system. 10.1.3 Technological Capabilities: Technological capabilities give an organization an enormous capacity to change itself in order to exploit market opportunities. The inventory management system should be very strong and
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automated in the chain super shop. The Meena Bazar has inventory software for their inventory management. By the inventory management system the manufacturing company can be benefited in many ways. The key activities are (1) purchasing, (2) production, and (3) selling. In other words, purchasing and production functions would depend upon the level of sales. 10.1.4 Organizational Capabilities: Organizational change often involves changing the relationships between people and functions to increase their ability to create value. Organizational change often involves changing the relationships between people and functions to increase their ability to create value. Changes in structure and culture take place at all levels of the organization and include changing the routines an individual uses to greet customers, changing work group relationships. Improving integration between divisions, and changing corporate culture by changing the top management team.
10.2 Managing the Changes: Supermarket chainindustry has caught on to the bandwagon and has begun to offer Online Shopping. In the early 1990s we saw Companies setting up websites with very little understanding of E Commerce and Consumer behavior. E commerce as a business process is totally different from the traditional shopping in all respect. Like other organizations using ecommerce, Mina Bazaar considers E commerce strategy separately but as a part of overall retail strategy. Retail strategy involves planning for the business growth keeping in view the current market trends, opportunities as well as threats and building a strategic plan that helps the organizationdeal with all these external factors and stay on course to reach its goals. Further the retail business strategy is concerned with identifying the markets to be in, building the product portfolio and band width coupled with brand positioning and the various elements of brand visibility and in store promotions etc. Overall business processes are more or less standard and proven models that are adapted as best practices. However when it comes to defining an E Commerce strategy for the business, the dynamics of the various elements contributing to the business are totally different. The one factor that remains 17 | P a g e
common is the focus on Customer. While in the physical| traditional selling method, there exists a physical experience from the Customer’s end and hence it is easier to build Customer relationship and engage the Customer, E Commerce platform has got to devise methods to reach out to the virtual Customer on One to One basis and build the relationship. The E commerce generally provides more product information and technical details to the Customers than provided through the Traditional Sales channel. E Commerce has got to define the sales transaction, third party payment and financial transaction as well as Customer service processes. As compared to traditional |physical channel sales, all these processes are new and have been well defined and proven. One important question that we have got to answer is to figure out ‘How Do We Differ from Competition’ or have an edge over Competition in the E commerce market. One of the key differentiators has been the system security and the third party billing desk partners used by the organization. Wherever we have partnered with well-known and reputed bankers and billing desk service companies providing safe and secure transactions, the customer confidence in dealing with such Company is enhanced. Secondly Online Customer service coupled with publicized policy of customer returns and warranty management are successful in building loyal customer base. Pricing of products is another area that is required to be addressed through the E Commerce strategy. While the selling and operational costs are higher in traditional sales model, the E commerce or Virtual Sales costs are negligible. There exists a potential to price products attractively and engage the customer to buy in bulk. The fact that traditional shopping experience as well as back end operations is totally different from the virtual and instantaneous Online shopping, we have got to come up with separate sales strategy for both traditional sales channel as well as electronic commerce trading channel.
10.3 The Difficulties Dealing with E-commerce: The difficulties dealing with e-commerce with the new working style are given below:
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10.3.1 Security: Security continues to be a problem for online businesses. Customers have to feel confident about the integrity of the payment process before they commit to the purchase. 10.3.2 System and Data Integrity: Data protection and the integrity of the system that handles the data are serious concerns. Computer viruses are rampant, with new viruses discovered every day. Viruses cause unnecessary delays, file backups, storage problems, and other similar difficulties. The danger of hackers accessing files and corrupting accounts adds more stress to an already complex operation. 10.3.3 System Scalability: A business develops an interactive interface with customers via a website. After a while, statistical analysis determines whether visitors to the site are one–time or recurring customers. If the company expects 2 million customers and 6 million show up, website performance is bound to experience degradation, slowdown, and eventually loss of customers. To stop this problem from happening, a website must be scalable, or upgradable on a regular basis. 10.3.4 E–commerce Is Not Free: So far, success stories in e–commerce have forced large business with deep pockets and good funding. According to a report, small retailers that go head–to–head with e–commerce giants are fighting losing battle. As in the brick–and–mortar environment, they simply cannot compete on price or product offering. Brand loyalty is related to this issue, which is supposed to be less important for online firms. Brands are expected to lower search costs, build trust, and communicate quality. A search engine can come up with the best music deals, for example, yet consumers continue to flock to trusted entities such as HMV.
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10.3.5 Consumer Search Is Not Efficient or Cost–effective: On the surface, the electronic marketplace seems to be a perfect market, where worldwide sellers and buyers share and trade without intermediaries. However, a closer look indicates that new types of intermediaries are essential to e–commerce. They include electronic malls that guarantee legitimacy of transactions. All these intermediaries add to transaction costs. 10.3.6 Customer Relations Problems: Not many businesses realize that even e–business cannot survive over the long term without loyal customers. 10.3.7 Products People won't buy online: Imagine a website called furniture.com or living.com, where venture capitalists are investing millions in selling home furnishings online. In the case of a sofa, you would want to sit on it, feel the texture of the fabric etc. Beside the sofa test, online furniture stores face a costly return which makes the product harder to sell online. 10.3.8 Corporate Vulnerability: The availability of product details, catalogs, and other information about a business through its website makes it vulnerable to access by the competition. The idea of extracting business intelligence from the website is called web framing. 10.3.9 High Risk of Internet Start–up: Many stories unfolded in 1999 about successful executives in established firms leaving for Internet start–ups, only to find out that their get–rich dream with a dot.com was just that – a dream.
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11 The Reasons for Customers Would/Should not Like to Use ECommerce: 11.1 The reasons customers should like E-Commerce:
Faster buying/selling procedure, as well as easy to find products.
Buying/selling 24/7.
More reach to customers, there is no theoretical geographic limitations.
Low operational costs and better quality of services.
No need of physical company set-ups.
Easy to start and manage a business.
Customers can easily select products from different providers without moving around physically.
11.2 The reasons customer should not like e-commerce:
Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money.
There is no guarantee of product quality.
Mechanical failures can cause unpredictable effects on the total processes.
As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check.
There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways; all are always prone to attack.
12 References: Dasgupta, Subhasish, DevrajAgrawal, Anthony Ioannidis and ShanthiGopalkrishnan (1999). Determinants of Information Technology Adoption: An Extension of Existing Models to Firms in a Developing Country. Journal of Global Information Management, (July– September), 30–40. 21 | P a g e
Dholakia, Ruby Roy, Jean L. Johnson, Albert J. Della Bitta and NikhileshDholakia (1993). Decision-making Time in Organizational Buying Behavior: An Investigation of Its Antecedents. Journal of the Academy of Marketing Science, 21(4), 281–292. Ghosh, Shikhar (1998). Making the Business Sense of the Internet. Harvard Business Review, 76(2), 126–135. Hill, T., N. D. Smith and M. F. Mann (1987). Role of Efficacy Expectations in Predicting the Decision to Use Advanced Technologies: The Case of Computers. Journal of Applied Psychology, 72, 307–313. Ibrahim, A. B. (1993), Strategy Type and Small Firm’s Performance: An Empirical Investigation. Journal of Small Business Strategy, 4(1), 13–22. Lefebvre, Élisabeth and Louis A. Lefebvre (1996). Factors Affecting Adoption in Information and Telecommunication Technologies: The Impact of Their Adoption on Small and Medium-sized Enterprises, IDRC, Available at: http://www.idrc.ca/books/focus/807 Zappala, S & Gray, C, 2006, Impact of E-Commerce on Consumers and Small Firms, Ashgate Publishing Read more: Competitive Advantage - Dell, Business, Ebay, and Site http://ecommerce.hostip.info/pages/236/Competitive-Advantage.html#ixzz2RfeFkH00 (online edition) Importance of Ecommerce for Business,May 27, 2010,written by admin http://blog.halwasiyainfosys.com/ecommerce/importance-ofecommerce-for-business/ (online edition) Meena Bazar launches e-service, Monday, April 2, 2013, New Age,http://newagebd.com/detail.php?date=2012-04-02&nid=5918#.UXvcZ0rc4w0 (online edition) Advantages and Disadvantages of e-commerce, April 27,2013http://www.manjeetss.com/articles/advantagesdisadvantagesecommerce.html The Advantage and Disadvantages of e-coomerce, April 28, 2013 http://www.esalestrack.com/blog/2008/09/advantages-and-disadvantages-of.html
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