Our Value-Adding Domains Identified by the Amit & Zott Model - Assignment Example

Running head: e-commerce questions Student name: Student number: Course title: Lecturer: Date: QUESTION 1 A) Illustrate & explain the four value-adding domains identified by the Amit & Zott model, giving examples to support your answer. There are four domains suggested by Amit and Zott (2001). They include Lock-in, complementaries, efficiency, and novelty. Lock-in In the dimension of lock-in, the context of the business-to-business and the nature of product that is based on the Internet service support are very important to be given consideration. An example is a worker who is at Philsoft Shoe Press Roll which is a shoe company based in Australia. The time that the customer will sepnd in the show press roll will be very intense and will be followed by periods where there is no work at all being done. In the company, if there is a problem that cannot be solved by internal staff, then it would turn to a third party company which is specialized in related issues. The create-capture-keep strategy will make the customers to the supplier unwilling to change to another supplier because of switching costs. Complementaries Using the example of Philsoft Shoe Press Roll, it is clear that the Philsoft Shoe Press Roll is a very important component in the paper machine. The Philsoft Shoe Press Roll is a very crucial part when compared to the other parts of the paper machines due to the fact that the part is not easily replaceable given the high price that is associated with this part. Efficiency The Philsoft Customer Center can be compared to the car display that is telling the owner when the time of service is due. As it is difficult to visit the customers face to face in the wide market, it is wise to use Customer Center which is a good complement. This is especially good because the communication with the customers is documented. Novelty The fourth domain of the model is novelty. The reason for the development of this Internet-based service is to have competitive advantage over the rest of the competition. Customer centers should have a user forum. The invention of a customer forum at many multinational companies all over the world has been handy as the knowledge of the company is passed to the users. An example is open-source software developers like the Ubuntu systems developers which have their forums where they discuss with the customers. b) Critically evaluate the role of Porter's value chain in underpinning the efficiency sector of the Amit & Zott model, giving applied case study examples to support your argument where appropriate. There is a relationship between Porter’s value chain and that of Amit & Zott. The identification of factors that play a large part in value creation is essential to link the e-business project development so that financial goals of the company can be achieved. In this case, e-business improves efficiency of B2B transactions; reduce the times that it goes in the cycle and the cost of transactions. Drivers of efficiency in operation fall into the group of reducing cost. Apart from improving operation efficiency, there are also new opportunities that are used for creating value from extended enterprises as they are described by Amit and Zott (2001). This enhances revenue in so many ways. One example is the fact that e-business enables the mass customization and customer driven products. There is also customized pricing that get to the customers through highly targeted promotions. QUESTION 2 A) Explain the function of Enterprise Resource Planning (ERP) within e-business Strategies. ERP systems have been the most reliable and trusted tools that can bring the information from various departments. The ERP system serves as a central database that is used for information feeding for the various modules that make the ERP system. With the advent of e-business, automation with the use of ERP is very important. The modules operate in a common platform. With the use of ERP systems, the data will have one uniform standard and format. They are entered only once to the company. In the work of the ERP system to maintain integrity of the data that has been stored in it. The ERP system, in this case, provide data which are consistent and of high integrity. One direct benefit if this feature is the fact that redundancy of data is eliminated and thus rationalization is achieved which reduces the cost of the operations within organization. Another benefit of an ERP system is the fact that communication is improved in the sense that the data modules which are spread across the organization are integrated to provide better communication and sharing of data. B) Critically evaluate the role of Balanced Scorecards for the effective Achievement of ERP objectives. The traditional balanced scorecard approach has been used to measure the rate of performance of the whole organization. Balanced scorecard has been also handy in the in the evaluation o performance of an ERP system. This has been done in n holistic manner. The balanced scorecard, developed by Kaplan and Norton, has been said to need modifications so that the aspects of the ERP can be fully applied in the new system. Some researchers have suggested the use of the original model of financial, customer, process and learning and innovation. There is need to add ‘project’ in the context of ES management. The use of balanced scorecard has helped managers come up with decisions in an easier way. ERP systems have put managers in a position where they are expected to make numerous decisions daily. The use of balanced scorecard has also helped employees with the required information required to carry out their duties in the quest to support the strategic activities of the company. In the implementation of the ERP system, the use of balanced scorecard is important when the financial indicators are not so much clear. An example is when they are used in NGOs and in the public sector. There has been the use of balanced scorecard by companies like Microsoft where it has been used to evaluate the performance of SAP enterprise system. This has been used to make informed decisions on what the managers and the employees should take. QUESTION 3 A) Briefly explain why many businesses choose not to become e-business Enabled. Implementation of ERP requires assigning significant manpower to operate and maintain the system. The bigger the size of the company, the larger it becomes the transition time. Transition often involves phasing out legacy systems, changing mindsets of people and their superiors, fixing bugs and stabilizing and fine-tuning it. This time is worth. After a fully functional ERP system is in place, the way the world looks at an enterprise is never going to be the same again. ERP is a collection of software packages that should work in unison to bring a single result and any malfunctioning of one application or component may impair the implementation of the ERP system. According to Koch (2001) he states that “some of the problems which are harbored by the ERP system occur mainly because of the inadequate investment within the involved information technology employees; this inadequacy includes deployment and testing of implementation”. This has been attributed to the lack of policy under the corporate umbrella which protects data integrity within the ERP system. Most of the disadvantageous aspects are usually attributed to the ERP system is due to the fact that as the system recognizes changes and reengineering so as to be able to fit in standardized ERP modules, it has led to competitive advantage. However through follow-up of process preparation ERP system is usually attributed to increased sustainable advantages which are competitive (Davenport, & Short, 1990). ERP system integration is always met with stumbling blocks of various procedures and software. This limited the sales person from accessing finance database in order to know the status of billing for the client; this limitation is extended to the denied access of both warehouse and the delivery status of the order for the customer’s. b) Critically evaluate any two reasons from your answer to part a) using a case study examples to support your arguments as appropriate. Software package integration leads to some companies and organizations declining to implement ERP software. An example is McDonalds firm where the various stores are located in different locations in Australia. The installation of ERP system in the organization seemed technical and complicated. The various sections and departments seemed to be using different software and platforms which were not compatible. When this was the case, the implementation of ERP seemed impossible and the top brass opted not to use ERP system as it would take time to implement the whole system. Another disadvantage that has been seen to affect companies is the fact that the implementation will need that there are many people being employed who will manage the system. A case study if Kinderworld group of schools which is situated in Australia. The school has branches in Sydney, Brisbane, and even outside the country like Hong Kong. The implementation of ERP would mean that the ICT staff be deployed in these branches. Since the organization is educational in nature, it will therefore mean that the management employs more technology people more than educational staff. This would mean that the ICT staff would be more than the academic staff which would be illogical to most of the management. QUESTION 4 A) Explain why an e-business organization might be better-placed to outsource elements of their business activities than a conventional business. Benefits to organizations It expands the market place to national and international markets. It decreases the cost of creating, processing, and distributing, storing and retrieving non-core data in the company. It will increase the professional standards of doing the little things that are normally not given the due attention in the company. It reduces the time outlay of capital and the receipt of products and services. B) Critically analyze the arguments against outsourcing as an ERP strategy. According to Enslow (1999) he comments that outsourcing is not only a facilitator of business. It also has various limitations:- Technical limitations Internet accessibility is still inconvenient and / or expensive. This is because the countries who are working on the outsourced work are still underdeveloped in their infrastructure. What is more, telecommunications bandwidth is insufficient. There is also need to have special web servers in addition to the network servers are needed (added cost). This will therefore mean that administrators of the same servers will need top be implemented. There are difficulties in integrating the Internet and Electronic software with some existing (especially legacy) applications and databases. Non-Technical limitations Cost and justification- The cost of developing outsourcing models and infrastructure in-house can be very high and mistakes due to lack of experience may result in delays. There is also the issue of security and privacy. Privacy measures are constantly improved. Outsourcing industry has a very long and difficult task of convincing customers that online transactions are very secure. Lack of trust and user resistance- Customers do not trust even unknown faceless seller, sometimes they do not trust even known ones. Other limiting factors, Lack of touch and feel online. Some customers like to touch items such as clothes and like to know exactly what they are buying. QUESTION 5 A) Briefly explain the main reasons for the development of customer relationship management (CRM) software in e-business. Companies have of late maintained their customer relationship by coming up with system to manage and monitor the customers. The current systems are very simple in the structure. This was achieved by reducing the cost of hardware. This increases acceptability to customers. They also improved on the quality of the system to the customers. This process was continuously done to have the assurance of the customers. They have also maintained the customer relation by coming up with a simple system with no driver distraction. They also provided a wide range of services that gave the customers options to choose from. These included safety, information and concierge services which were available to the customers at their own discretion. The customers’ big headache in the past is the fact that they are not able to get assistance on the road while they are travelling. Companies have capitalized on this to provide real-time services to the customers. They have also been able to develop databases of all service locations for other services like hotels and resorts, restaurants, Automatic Teller Machine locations and service stations. B) Critically evaluate the limitations of CRM systems within e-business giving examples where appropriate. There are limitations that come with CRM systems. One of the limitations is the fact that human behavior is hard to predict using machines. The rise of customer service has given rise to human monitoring of the customers. There is the complex area of the service industry. There is need to have management practices. The challenges in managing service workers in future will come in the use of technology. With technology which is ever changing, future services will be automated and thus workers will be required to have good skills. Employees will be expected to work with machines which will be difficult to measure their productivity. They will be monitoring services which have been automated. Their operating and managing of the machines will be hard to measure because unless the machines are faulty, they will be doing nothing. Another challenge is the case of offshore outsourcing. This is where the tasks which are not the main core business of the company are outsourced to another company. It will be difficult to measure the productivity of the workers in the other company. The other company might not be investing on its employees and so the employees might not be motivated to work and so the services they offer do not reflect the values and mission of the company. Read More