Business Management in E-Commerce - Essay Example

Running Head: Management in IT. Business Management Name Institution Date Management in IT There are three main issues with regard to management in IT related issues. These include risk management, strategic planning and the assessment of IT needs. Risk assessment forms a very crucial part of management and if not considered, actions taken can lead to wastage of time and resources as well as opportunities for the business to prosper. It is a process that encompasses assessment of risks involved, their mitigation and an evaluation and assessment of the actions undertaken. After a risk is identified, managers have the role of identifying possible means to reduce the risks or their impacts. Risk helps to minimize on risks and maximize on any actions that would result to realization of the opportunities. The measures taken involve risk transfer, risk avoidance and risk reduction. There are basic things that maintain or attract customers into a business. It is the role of managers to ensure that customer needs are met so as to ensure customer retention. Some of the concerns of customers and other stakeholders conducting business with a given organization include reliability, security and privacy with regard to the application of IT. If these risks are not assessed and mitigated, they can result to the downfall of an organization. For instance, where cloud computing is in use, the data is at risk of hackers (Viega 2009. P. 108). Three forms of risks should be mitigated. These include legal, technical and organizational and policy risks. It is only after their identification that mitigation strategies such as different forms of governance, setting of procedures and policies, implementation of audit controls and agreements at service level can be enhanced thereby preventing huge losses that would lead to closure of organizations. Armbrust et al (2009 p. 15) states that businesses may closedown as customers find them unreliable and seek for alternatives. IT implementation and use have many associated risks in addition to the uncertainties as to whether it shall be acceptable and successful. The fact that neglecting risk assessment and mitigation can result to total business failure makes a very important issue of consideration by managers aiming at success. Strategic planning is a crucial area for managers in any organization. This is because it determines how well planned activities are aligned with organizational goals. If the activities are not in line with the objectives of the organization, they become useless and only result to wastage of resources. It is therefore very important for managers to be well informed in this area so as to enhance the decision making process. Managers are able to determine the desired incomes and come up with a plan to ensure that this is achieved. The mission and vision of an organization which form the basic part of strategic planning act as a unifying factor between managers and employees at different levels. Lack of a strategic plan would result to each person acting individually towards attaining their own goals and not necessarily the organizational goals. This would result to a conflict of interest between employs. If not solved, this automatically results to failure of the organization. The plan should include the action plan in case of a disaster to ensure that at such a moment, IT infrastructure is not disrupted and if this happens, it is restored the soonest possible. This should include the inclusion of a well trained team who can effectively respond to any emergency. If this step is neglected, the organization may incur huge losses that would have otherwise been prevented. Assessment of the IT needs in the organization One of the most important areas where managers must concentrate in when applying IT in the management and operation of any organization is the needs assessment before implementing and accepting a new IT application program. The first question should be “Is it important?” implementing IT programs simply because others are doing it or it is available has been noted as one of the major causes of organizational failure. This is because, if unnecessary programs or programs that are not acceptable to the clients are implemented, these clients may opt to move to a different organization resulting to the loss of a valuable market share. For instance, though a given technology may have work before, its implementation may result to customers feeling that their privacy is at threat. For one to qualify to be a manager, there are necessary skills that he or she must possess. The skills include interpersonal skills that enable them to understand team dynamics. This involves an understanding of how people work together as a team aiming at the same goals. According to past researches, group performance has been found to be more effective in producing effective results as compared to incidences where people work individually. The manager needs to understand how to make each person comfortable and to motivate them to give their best for the sake of organizational success. Human resource is the most important resource in any organization. Learning how to maintain employees in a job is key to its success. Baldwin (1997) states loss of key personnel as one of the causes the failure of organizational management and ultimately organizational failure. In addition, an unskilled manager will not be in a position to effectively delegate responsibilities hence may result to work burn out. This would also result to low quality services as well as products. People who lack managerial skills do not also know how to separate personnel issues from work related issues and this may cause problems in the work place creating an environment that is not conducive for workers. Basic managerial skills in controlling, leading, organizing and planning define a manager. In addition, he or she should have knowledge on the competitors in the market, upcoming developments, marketing as well as have an overview of how finances are utilized. According to Baldwin (1997), small enterprises have been failing in the past because the elected managers lack these skills. According to a research carried out by Baldwin (1997), poor financial management has been found to highest (71%) in causing bankrupt in small enterprises. This means that managers should have appropriate financial management skills which include budgeting and planning if they are to guide and organization and result to its success. Papula (1995, p.28) indicates that the characteristics that should accompany skills and knowledge of manager should include; fantasy, optism, persistence, discipline, scrupulosity, cautiousness, independence, initiative, self-confidence, responsibility, intuition and creativity. Creativity enables them to come up with new solutions for arising problems as well as ideas for innovation. The ability of a manager to predict the future ensures that he/she implements preparedness strategies that mitigate possible risks. In addition, people with good managerial skills do not rush to anything but make every decision cautiously. The skills can be gained through learning and training. They can be classified in 6 groups with computeracy skills being the most important skills. The pyramid below classifies these skills and knowledge. In the application of IT, managers must have technical skills which enable them carryout tasks that require them to apply it. This is depending on the level of IT development in that particular organization. Conceptual skills are important for those in high level of management and those in the middle level. This is the manager’s ability to view the organization as one whole unit with each organ being important in the achievement of set goals and objectives. Piškanin, et al., (2006, p.11) explains the importance of managers having good communication skills. Information has been described as a powerful tool in any organization. It is important for decision making as every success is as a result of a decision that was made at some point. It is for these reasons that managers must have skills that will enable them determine what and how to disseminate or receive information. The development and success of an enterprise does not merely depend on technical skills of a manager though it is necessary for the business to kickoff. Managers continue growing as the business move to higher heights aiming to attain the global perspective of a successful business. This means training is inevitable if a company has to sustain its growth rate. The importance e-commerce adoption in our company In the growing global economy, e-business and e-commerce have tremendously become a vital component of business strategy and a compelling catalyst for economic growth and development. The coveted marriage between information and communications technology (ICT) in business has refined and revolutionized relationships within organizations and even those between and among individuals and organizations. More evidently, the use of ICT in doing business has enabled mass customization, enhanced productivity, reduced costs and encouraged greater customer participation. It is therefore truthful to say for most visionary business organizations like our company, adapting to technological changes is a business necessity. With the internet boom all over the world, shifting the gear to e-business solution is the most crucial technological decision many modern business CEOs will ever make. E-business provides significant competitive benefits to those business organizations that have a sound strategy in approaching this new mode of business conduct. Basically our business will benefit from the use of ecommerce in particular by gaining a wide customer base. This will be achieved through the availability of goods online such that the business is not limited by the normal trading hours as through ecommerce goods and services are available 24\7 hours. Creating a business website gives the business the ability to keep unlimited store hours giving its customers a whole day daily access and buying of the company’s items unlike traditional business that limits customers to shop within few hours a day in five days a week. With e-business, orders can be made over the weekend and customers can make contact through the emails, fax or phones any time of night or day at their own convenience. Moreover, the organization can cut down operation costs associated with having your store open at night and weekends. It also reaches a wide audience as the use of internet has greatly increased with the growing technology (Riegelsberger 2002). A business’s market enlarges to global consequently improving the relationship with customers. This is evident as the customers have a say about the business products, how they are made and how the products are delivered. In addition, it will become easier to identify upcoming markets for our goods there by grabbing the opportunities. business can generate global opportunities and help establish new relationships with potential clientele, business associates and new product manufacturers because the products are placed in a location that is easily accessible to users all over the world. Other businesses might approach you for partnership, new customers will learn of the company’s existence and suppliers will request to add their items. These are some of the opportunities that may not present themselves without an online presence. Moving our business online or opening an online extension for the organization boosts sales and hence immense potential profits because the market is no longer local but global. Since sales and profits are the heart of any company, it is prudent to increase them at any slightest chance--More sales, more profits, bigger budgets is the way to go for visionary companies. E-business will improve our communication with other businesses by making it easier and faster due to improved information flow. Payments and tender notices will be made on time due to increased use of e-cash and other means of electronic money transfer. Another reason why it is increasingly important to adopt e-commerce is the increased volume of goods and services being purchased online. E-business has only been in the market for a relatively short time but has proved effective and is likely to be the most trusted and effective mode of trade in the years to come. For instance about 30% of GDP involves the use of e-commerce which has affected retail, finance and communications (Federal trade commission 2000). Online store and web brochure are better ways of delivering and displaying information about the company and the product it sells. Online presence ensures customers have easy access to product information, the company information and its specials, promotions, real time data and any other relevant information that they can easily find by visiting the company’s website at any given time. Both the company and its customers can easily benefit by just updating the site rather than breaking down the adverts and in store displays and put up another for the next event. The precious time saved can be used to plan more updates or better sales. In addition, it is very promising in government operations, health and education which form 20% of the GPD. The effects of e-commerce in business interaction such as in estimating demand, paying bills, ordering supplies and such like activities explains its potential growth in the future. E-business and e-commerce are necessary and unavoidable in the emerging global economy where they act as catalysts for the economic development (Robert 2000). If the organization is to ignore e-commerce, it will remain stagnant and might eventually loss its market share to growing organizations that are ready to accept and adopt positive change. Apart from tremendously increasing sales and maximizing profits, e-business owners can basically reduce the costs of running business by moving it or extending it to the online business arena. E-commerce stores for instance can operate with fewer employees and it does not need a physical location in order to run hence reducing costs related to building leases, utility costs, phone, electricity and water bills and other costs associated with operating a brick-and-mortar storefront The success of e-commerce depends primarily on e-infrastructure. With enablers of web-based commerce which include commerce one, software that is content managed by content, service provider application, logistics such as distribution, warehousing and transportation, efficient customer care and web-hosting security, and software will ensure real time solutions in any internet operation. The use of face to face transactions is on the reduction as people prefer e-commerce. People are busy trying to meet their objectives in life and if there is a means to save on time such as placing orders online and waiting for deliveries, they automatically opt for that. This has been seen in the case of Cisco which now orders and receives 90% of all her products online. In addition to this, Australia as a country has gone far in technological development. E-commerce has been applied in business-to business transactions especially management of payment, channel distribution, inventory as well as supply management. The market share of e-commerce is on the increase. This is a great threat to any business that will assume its application. . For instance, in 2000, B2B e-commerce was standing at 79.2% in the global e-commerce while in 2004, it stood at 87%. This means that e-commerce has become a major contributor to global development in achieving the millennium goal. There is a prediction of revenue increment to $ 300 billion resulting from ecommerce. Every country has benefited from e-commerce as indicated in the table below. Another advantage is the elimination of middle men that reduce the product total cost (Ansoff, 1988). Transactions between buyers and sellers are conducted directly hence eliminating distributors and intermediaries. However, there are emerging new intermediaries in the electronic markets. e-commence has effect on the network as well as economies of scale. The rapid growth experienced in the e-market involving business-to-business transactions unites a large number of sellers and buyers hence resulting to demand-sided economies. An increment of a single e-market participant in this market means increased values on all participants who are on the demand side. This attracts other individuals and companies to the e-market hence increasing the total percentage of persons that engage in e-commerce. There is increasing transparency in the e-markets which is an advantage to customers. It brings information closer to customers attracting a large share. Transaction processes and prices are revealed to all customers since only a single e-market exists. Any member of the e-market can access information regarding any product immediately it is posted and can therefore compare the prices and quality of products provided by different companies. The transparency of information affects the price differentials enabling companies to offer their products at close figure to the market price hence reducing the price differentials. This protects companies from extreme competition and customer loss since they are able to rate their products at a relatively fair price. The purchasers are in a position to make the best decisions while purchasing services or goods through a comparison of different products, prices and the customer services provided by the company. In addition, business-to-business e-commerce provides a chance for price negotiation where different stakeholders are involved in setting the product or service cost. A two-way auction may exist where both sellers and buyers are involved in price setting benefiting both parties. Such prices can be set in terms of offers and bids. The competitive e-markets result in lowered prices when compared to prices reached by individual companies. There is increasing transparency in the e-markets which is an advantage to customers. It brings information closer to customers attracting a large share. Transaction processes and prices are revealed to all customers since only a single e-market exists. Any member of the e-market can access information regarding any product immediately it is posted and can therefore compare the prices and quality of products provided by different companies (Ansoff, 1988). The transparency of information will affect the price differentials enabling our company to offer her products at close figure to the market price hence reducing the price differentials. This will protect her from extreme competition and customer loss since she will be able to rate her products at a relatively fair price. The purchasers are in a position to make the best decisions while purchasing services or goods through a comparison of different products, prices and the customer services provided by the company. In addition, business-to-business e-commerce provides a chance for price negotiation where different stakeholders are involved in setting the product or service cost. A two-way auction may exist where both sellers and buyers are involved in price setting benefiting both parties. Such prices can be set in terms of offers and bids. The competitive e-markets result in lowered prices when compared to prices reached by individual companies. Although the company can have unlimited and global customers through e-business, the company can zero in to smaller consumer markets and buyer niches for its products since an online store gives the company much control over who it can target and reach out to notify about the items for sale in their store . More specifically, the company can target men, women, a generation of users and other smaller niche markets by placing keywords they use on regular basis when shopping the company’s items. However, e-business has its limitations and risks. The business press is full of online business failures in both business to business and business to consumer business arenas. Many of which results from lack of cash flow , fundamentally flawed business models, and out of control expenditures to mention but a few (Pfleeger, 1996). The biggest challenge is to come up with a sound business strategy to integrate e-commerce activities with the overall business strategy- a critical flaw. This will be solved by use of skilled personnel in different levels of operation. These limitations can be countered by being the first ones to market with key tools in key business; evaluate new channels for targeted market; tightening links with vital customers; building alliances with new third parties and improving service to customers and suppliers. This way the company will create economic value through sustainable profitability and sustainable competitive advantage and thus be its yardstick to measure success. Application of e-commerce for the organization is not only important but also inevitable if it is to maintain its competitive advantage. References Armbrust, M., Fox, A., Griffith, R., Joseph, A., Katz, R., Konwinski, A., et al. (2009). Above the Clouds: A Berkeley view of cloud computing. Retrieved from http://www.eecs.berkeley.edu/Pubs/TechRpts/2009/EECS-2009-28.pdf Federal trade commission, 2000 privacy online, fair information practices in the electronic marketplace , http,//www,ftc,gov/reports/privacy2000/privacy2000,pdf. J, Riegelsberger ,2002,, The Effect of Facial Cues on Trust in e-Commerce Systems, HCI 2002 Doctoral Consortium, Proceedings of HCI 2002, Volume II, Sept, 2-6, London, UK, pp, 234-235. Papula, J. (1995). Minimum of a manager: Profession that pays out [Slovak version]. Bratislava: Elite Piškanin, A. – Rudy, J. et al. (2006): Introduction to management [Slovak version]. Bratislava: Comenius University. Viega, J. (2009). Cloud computing and the common man. 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