Analysis of Online Book Publishing Business Environment - Example

E-commerce Business Report Introduction Publishers of the book have great expectation regarding the digital prospect of the book industry. The book publishing venture can be considered to be a multi-billion dollar business as it is growing comprehensively. Reading books is considered to be the most popular leisure time activity. In this regard, in the year 2009, people spent nearly US$108 million for the purchasing of books. The region of Europe and other parts of the world exhibited higher sales portion signifying the importance of books among the people. Thus, it can be stated that mass market books have high percentage of sales globally as compared to the young people and children. There is a strong indication regarding the increase in the sales of the books for the young people as they have shown the desire for reading books (PWC, 2009). The business report intends to aid a local book publishing business “The Book Emporium” To establish a dominant online presence with the help of an interactive website. The aim of the report is to determine how the new electronic business platform can prove to be beneficial for the organisation in today’s changing book publishing business environment. Analysis of Online Book Publishing Business Environment There have been various concerns regarding the viability along with success of the e-books in the future. The concern regarding the prospect of e-books has been more in the recent times due to the increase in the sales of the books. The electronic transformation is catching up pace in the book publishing sector like the others such as the newspaper, radio and the music. This industry is witnessing a period of transformation and is reforming itself for a better future. In the year 2010, It has been viewed that the total size of online market in the United Kingdom was almost £180 million, which symbolises 38% increase as compared to 2009 (Wischenbart, 2011). The most surprising fact was the increase in digital consumer sales of books, which demonstrated a high rate of growth i.e. 318 per cent in the year 2010. The present digital market of the UK has increased as reflected in the sales amount of 2012 i.e. £250 million (Wischenbart, 2013). Correspondingly, PESTLE analysis has been conducted for the online book publishing market to evaluate the business environment which is impacting the book publishing industry. PESTLE Analysis Political Aspects There are various aspects that must be considered by any business when transforming a traditional book publishing into an online platform to reach more people at a rapid pace. One of such political aspects is the taxation system. It has been observed that the taxation structure of the online business is under improvement. The online business creates various issues regarding the tax of the online business such as the implementation of the stringent, strong as well as impartial environment of tax. The key issue with regard to taxation is that the tax enforcement of one nation is not regulated similar to the tax of the other nation. The need of the online business is to have an impartial tax and legal system (McLure, 2002; Pinto, 1999). The intellectual property is an important aspect for the online book publishing company. The intellectual property refers to the innovative ideas, the vision of the company, the target market, the design of the product and information regarding the market of the same industry. In e-commerce, intellectual property is a significant constituent because the book traded through the internet must be secured from unauthorised use. Intellectual property is also involved in improvement and protection of trademark for better service and product delivery (Kwok et al., 2004; Kaetzel, 1996). Economic Aspects The economic aspects are an important concern when transforming a traditional business into an e commerce business. The aspect that is affected the most is the cost. The changing purview of the books from the traditional form to the online domain is termed as expensive hence affecting the economy. The costs which will be borne by the “The Book Emporium” in the initial stage are the hardware and the software installation charges, maintenance cost and cost regarding the training of the employees. Although the initial cost of the company is high but ones the company launches its own website it will have many cost advantages. This can be explained with reference to the fact that the internet access is quite low and it reduces expenses with respect to information interchange and paper usage among others. It can be stated that a lack of knowledge regarding the online expertise can lower the progress of the business. Moreover, the spending of the people for the online books depends on the economic condition of the country. The slow economy of the country can affect the business prospects of “The Book Emporium” (Donici et al., 2012). Social Aspects The trust of the consumer and cultural diversity can be the social issues creating an impact on the book publishing industry. Different cultures of the people impose extensive impact on the online book publishing industry. In this regard, culture can affect the trust in business, as different cultures have dissimilar ways and preferences towards communicating, negotiating and making payments among others (Lo & Gong, 2005). One of the important social aspects that can cause interruption in the growth and expansion of the online business is the trust of the consumer. The major issue faced by the consumers while purchasing the e-books is their concern towards the security and confidentiality of their personal information. Even though the sales have increased in the recent years, the concern of the people remains the same while making the online transactions for purchasing the books. It is viewed that the lack of trust by the consumers can be the reason for the decline in the business due to the concern of safety and security. In the online book publishing business unlike the traditional business model people will not be able to feel the books physically before purchasing them as there lays no existence of the physical medium. It can thus be an issue for the people who prefer to visualise things before making the purchase decision. The online business gives an opportunity to the customers to view a few portion of the books in order to gain their trust regarding the contents of the book. This service can be advantageous for ‘The Book Emporium’ to provide sample of its products to the customers in order to generate trust and reliability. Technological Aspects The e-commerce business faces several issues regarding the technological aspects such as the reliability and security factors. The online business cannot be considered as a complete reliable source due to the various environmental issues. The online business largely depends on the technological aspect and hence any breakdown in the system, hacking of the system, hardware as well as software issues along with the virus attack such as the Trojan Horse can create an issue in the running of the e-business (Sopitkamon, 2006). Moreover, the e-business can generate several security issues such as hacking, fraudulent activity and misuse of the personal information regarding the customer details. These risks can lead to the security issues and therefore in order to be effective in the online business activity, the technical protection should be placed such as the antivirus and data encryption (Middle East Technical University, n.d.). Environmental Aspects The people involved in the online business are concerned regarding the security of the environment due to the issues of global warming and climate change. In this regard, it can be stated that the online book publishing business can assist ‘The Book Emporium’ to engage in executing environmental friendly activities by reducing the use of paper and the minimising the transportation. This will further create a positive impact on the environment reducing the issues such as global warming. Moreover, the online business does not emit any form of pollutants in the environment thus helping to safeguard the issues of global warming (Yang, n.d.). Legal Aspect Every business needs to follows certain legal rules in order to perform and expand in the market. The online business industry follows certain rules and regulations in respect of the sales, quality, policy, authentication, security management, confidentiality and warranty (Radut & Petria, 2010). Furthermore, with the changing environment of the online business the legal aspects are facing few challenges to meet the requirement of the business. The E-commerce business lacks strong legal framework which affects the trust of the people for the online book publishing business. The main legal aspect of the online business is to provide security to the people regarding their purchase (Nasir, 2004). SWOT Analysis of Online Book Publishing Business The SWOT analysis is an important aspect for the business as it helps to identify its key points that help the business to sustain in the competitive new market. The analysis of ‘The Book Emporium’ will assist in determining the area of growth and opportunity keeping in view the strength. The key strength that the online business “The Book Emporium” has is the ability to meet the demand and compete with the global competitors. The other strength is to gain more profit through lower cost of the e-books. Moreover, the ability to gain low overhead expense along with ensuring high communication level is other key strength. The other valuable strength is to have a large customer base with less expense such as the physical business. The use of advanced technology will be the key aspect of the business. On the contrary, one of the key identified weaknesses is to meet the regular customer demands by improving the features of the online business. Besides, ‘The Book Emporium’ might face high competition from the online leaders such as Amazon in terms of the quality aspect delivered by it. Lack of proper customer service can be a weakness for the business to sustain (Free management E-Book, 2013). The opportunities of the business through the online are many. ‘The Book Emporium’ will have the chances to compete with the businesses throughout the market along with meeting the expectations of the people by selling its products globally. Due to the use of the online 24/7 selling, the business will be able to take orders at any time from any part of the world. Moreover, the online domain will enable to create an opportunity to increase the business-to-business (B2B) activities and spread the distribution network without much difficulty. As per the research, the expectation for the online business to flourish is high which is creating a strong prospect for ‘The Book Emporium’ in the publishing business (Free management E-Book, 2013; Prieto & Schiro, 2011). Furthermore, the threat for ‘The Book Emporium’ can be the low entry barrier which can increase the number of rivals and thereby augment competition. Redesigning and reengineering of the e-commerce platform can pose a threat in terms of adoption of the new business model. Besides, the other threats related to the e-commerce are fraud and breach of privacy (Free management E-Book, 2013). Porter’s Five Forces Analysis The diagram depicts the analysis of the five forces with regard to ‘The Book Emporium.’ Comparison and Contrast of Traditional and Online Publishing Business By conducting the analysis, the table will evaluate the comparison between traditional and digital platform of publishing business. Analysis of Expected E-Business Improvement Profitability and Efficiency of e-commerce The change in the business platform from the traditional to the online will have an impact on the “The Book Emporium.” The traditional business depends largely on the economies of scale for the purpose of profit, hence the decrease in the sales figure would lead to a loss. However, the online platform can accelerate the use of the distribution channels around the various business players which can deliver ‘The Book Emporium’ with extreme economies of scale. Moreover, with the initiation of the online business, The Book Emporium will lose its control of the organisation in terms of the value chain. The authors will be able to manage their own distribution due to the online business. Thus, to insure the effectiveness of the value chain the company needs to reorganise the resources of the business in the electronic channels. The business requires offering strong value to the authors with respect to digital and physical marketing. For the customers, the business needs to develop the products as per their need and to promote the books the business can send small video of the books (Bain & Company, 2011). Pricing Strategy The pricing strategy to be implemented by ‘The Book Emporium’ is the dynamic pricing strategy. The two aspects of demand and supply are evaluated in determining the strategy. The price of the product will depend on the value it provides to the customer along with the availability of the product. In order to increase the sales, ‘The Book Emporium’ needs to provide discounts to its regular, loyal customers and publishers (Narahari et al., 2005; Mendelson & Meza, 2001). There will be 20% discount rate on books sold for loyal customers and bulk purchases. The past history of customers will be used to determine the price of products. With respect to book editing, ‘The Book Emporium’ will take about 2% extra charge on each book sold. Regarding online book publishing, ‘The Book Emporium’ will charge from US$0.99 to US$5.99, depending on the volume and selling price of books. Moreover, 60% royalty would be offered for selling books to the consumers. For the cover designing services, the price will differ as per the choice of the users. The price range of cover designing service would be from US$30 to US$1000 depending on the appearance of the cover. Revenue Model The revenue model evaluates the methods by which ‘The Book Emporium’ can generate profit. There are several revenue models that can be used in the online business. ‘The Book Emporium’ can implement the sales and subscription revenue model. The business will earn revenue by selling books in large numbers through the stores and the websites. Also, the business will earn revenue by charging subscription from the customers who express their desire to use the website contents. For the future prospect, the business can implement the transaction fees revenue model allowing the customers to purchase products from the third party (Laudon & Guercio, 2009; Boerrigter, 2008). The Business Model canvas for ‘The Book Emporium’ is depicted though the use of the following table. Source: (Business Model Foundry AG, n.d.) Proposed E-Commerce Website for ‘The Book Emporium’ Source: (The Book Emporium, 2014) The seven pages of the websites have been evaluated in the website of “The Book Emporium.” Books will be the main product of the website that will provide diversified range for the readers. This will attract various customers especially children and young people. Packaged services such as the standard design cover designing and book editing will be offered by the business to the publisher. Kindle is an EBook reader which assists in reading the contents of the eBook. Thus ‘The Book Emporium’ will offer kindle to the customers at a low price. Certain promotional offers need to be provided such as discounts as well as gifts to the customers for online transaction and they can be permitted to create an account for the purpose of transaction. Payment Function ‘The Book Emporium’ can implement several electronic payment systems for the purpose of online selling of the books. The payments can be done in the form of card payment, electronic money and electronic fund transfer (ETF). Card payment is the most common way of making monetary transactions in the e commerce. The cards can be either a debit or a credit card. The ETF is the oldest technique of electronic payment. Through this method, The Book Emporium can transfer the money digitally through the bank accounts. This is a secure way of payment for the business in order to perform the payment activity. Peer-to-Peer is another way of transaction wherein the customer pays the amount through the use of the email (Uspto.Gov., 2005; Nakamoto, 2000). Moreover, the micropayment system will offer ‘The Book Emporium’ a cost effective method for processing low volumes of products. The customers will be able to pay the money to buy one chapter from the entire book using micropayment. Advantages and Risks Involved in Undertaking Changes Several advantages can be acquired by ‘The Book Emporium’ by the implementation of the new business model. The advantages through the online book publishing platform are that the business can enthusiastically maintain the orders from the customers as per the demand. The business can use various distribution channels for the purpose of supplying books and can adjust with the fluctuation of the demand. The key advantage can be that it can maximise the profit from the use of proper distribution channels (Oce North America, 2011). The risks can be faced by the business include the strategic as well as the operational risks. ‘The Book Emporium’ might not be able to deal with the strategic risk due to the increased market competition. The operational risk in the online business is high as it is related to the smooth functioning of the systems. Any failure regarding the network might lead to high operational risk (Wenninger, 2000). Conclusion The report thus concludes that in order to obtain various benefits and profits The Book Emporium’ needs to implement the new model successfully to make a proper transformation from the traditional publishing to the online. To be effective in the market and to get market share, the business needs to develop various strategies. The e-commerce business brings both risks and advantage to the business and benefits the people by making the service easier. The Book Emporium thus can manage the risk and take the benefits from the online services provided. References Boerrigter, T. 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