Types, Advantages, Disadvantages and the Main Risks of E-Business - Essay Example

Name Unit Date Executive summary E-business has been experiencing a positive trend due to adoption of modern technology in business. This involves transactions being done online instead of traditional physical transactions. E business can be divided into B2B, B2C, B2G and M commerce. The advantage includes the ability of the business to reach far markets, more flexibility, low operational cost and continuous access to the customers. The main disadvantages of e business are security of the system and fraud. Despite this, e business faces a high risk from cyber crimes and transitional costs. Cyber crime involves botnet, phishing, email bombing, cyber stalking, e bank theft, credit card fraud and netspionage. These have led to some customers being skeptical in using e commerce. Cyber crime has posed great risks to operation of e-business worldwide. Knowledge of cyber crime is vital before embarking on e-commerce launch in a company. Contents Executive summary 2 Contents 3 List of figures 4 Introduction 5 Types of e-business 5 B2B 5 B2C 6 B2G e business 6 C2C e busssiness 7 M-commerce 7 Advantages of e-business 7 Possibility of small sized companies to compete with large firms 8 Continuous customer contact 8 Penetrating foreign market 8 Low operation costs 8 Reduces the travelling for the consumers 9 Disadvantages 9 Fraud 9 Security 9 Main risks of e business 9 Cyber crime 10 Email bombing 11 Web jacking 12 Phishing 12 Cyber stalking 12 Botnet 12 E-bank theft 12 Netspionage 13 Credit card fraud 13 Transitional risk 13 Conclusion 14 References 15 List of figures Figure 1 cyber crime distribution, (Chambers-Jones, 2012) 10 Figure 2Top 20 countries in cyber crime, (Kratchman, Stan, Smith & Smith, 2008) 11 Introduction Online business refers to different types of business enterprises that are done online. The parties involved do their transactions using electronic means rather than making exchanges manually. The right of ownership for the commodities is done online using a computer as a medium for the network. A more elaborate definition of e business refers to it as utilising electronic systems and digital data systems to make transactions, change and reorganize for value addition in organizations and between individuals. This type of business depends on ICT to enhance its operation. E commerce involves three main primary processes. These are production, customer focused processes and internal management processes. The production processes includes matters related to procurement, ordering, stock, payment and control of production. The customer focused processes looks at promotional, sales, customer service and marketing services. The final process involves managing the internal processes (Deise, Nowikow, King & Wright, 2000). The spread of high speed internet globally has led to rise of e commerce among the businesses and individuals. This involves training, recruiting and sharing of information (Weber & Kauffman, 2011). This report will look at e business by outlining its types, advantages, disadvantages and the main risks that are associated with it. Types of e-business B2B This refers to e-business that is conducted between two businesses enterprises. This is the main type of e business that is practiced accounting to more than 80 percent of the online businesses. This type of business involves e-frastructure and e-market. The architecture of B2B busssiness is the e-frastructure which has the logistics, service providers, outsourcing functions, auction solutions, content management and e commerce web enablers. E markets are the websites in which the customers make purchases. Some of the most successful B2b markets have been dominated by IBM, Hewlett Packard, Cisco and Dell. These are business whose most of their transactions occurs online. Most of the activities that are carried out by the B2B e-commerce include managing the suppliers, inventory, distribution, and channel management. This type of e commerce leads to reduced costs as the customers are spared time and costs of going through the intermediaries. The suppliers are capable of taking produce directly to the buyers (Sensis, 2011). B2C This type of e-business involves commerce being carried out between the companies and the consumers. The customers purchases tangible goads in form of digitized content. This includes purchase of e-books or information product over a network. B2C forms the second largest type of e commerce and has the oldest history. The most success B2C e commerce companies includes Amazon, Toys”R”Us and Drug store.com. This type of business is highly used in purchase of information and products as well as managing the personal finance (Pandya & Dholakia, 2005). B2G e business This is type of e commerce that is conducted between the company and the public sector. Internet in this form of busssiness is used for public procurement, licensing and other functions of the government. The public sector has the mandate of establishing the e-business through taking a leading role. The public sector is assumed to be the most interested in making this platform successful. The-e commerce based on the government has been developing at a slower rate than the rest (Sensis, 2011). C2C e busssiness This involves business between the private individuals and the customers. This has been a platform developed through the expansion of the electronic market places and online based transactions. The C2C markets are perceived to have the greatest potential in the emerging markets. C2C e commerce comes in three main forms which are portal facilitated auctions, peer to peer systems and classified ads (Sensis, 2011). M-commerce This involves buying and selling of goods through use of mobile. The use of handheld devices such as cell phones and PDAs acts as the main drive in this type of commerce. M commerce has been well adapted in countries such as Japan. The fast speed of the wireless communication has enabled m commerce to a fast speed. M commerce involves industries such as financial, telecommunications, service and information services (Sensis, 2011). Advantages of e-business E-business provides a greater flexibility to the owners of the busssiness. The owner of the platform can choose whether to live in any place they want due to the higher flexible (Deise, Nowikow, King & Wright, 2000). Possibility of small sized companies to compete with large firms Setting up e commerce platform involves incurring small amount of investment. This reduces the barrier of entry for the small sized firms. The small businesses have advantages in that they have less bureaucracy as compared with large companies. This gives them a competitive edge as compared to large sized companies (Sensis, 2011). Continuous customer contact The online market provides the company with a continuous interaction with the customers for 24 hours. This is unlike the manual method where the involvement of employees is used in marketing. The use of e commerce leads to having customer contact for 24 hours at a minimal cost. This advantage helps the company to have a continuous communication with customers from diverse environment (Trepper, 2000). Penetrating foreign market E-business is borderless, they are not limited to any place and access is at a very low cost. The market offers the capability to communicate with client on any part of the world. The producer can sell their goods to any part of the world without encountering any barrier (Pandya & Dholakia, 2005). Low operation costs The company functioning costs are reduced due to the direct ordering process. The customer makes their orders automatically through use of internet reducing the costs encountered in making the orders manually (Pandya & Dholakia, 2005). Reduces the travelling for the consumers The consumers can make their orders and purchases at home. This saves them time and effort which can be used in other means. There is also reduction of pollution and traffic jams due to home purchases (Pandya & Dholakia, 2005). Disadvantages Fraud The online business is susceptible to fraud. This is due to the fact that there is lack of visual contact. The client may take the advantage of lack of visual contact and cheat to the supplier. This has led to the companies to be skeptical in offering e commerce services to some regions. This is due to embezzlement through fake credit cards (Fraser, Fraser & McDonald, 2000). Security Security of the online data is another main disadvantage. The connection of the company data to online markets leads to serious security issues. A company with online data has to keep worrying on the integrity of their data and systems. The public network can be assessed by anyone and can lead to malicious attacks to comprise the data (Chambers-Jones, 2012). Main risks of e business Risks in e-business are any potential threats to the operation of the busssiness online. Cyber crime This is an act of crime in which unauthorized access is made into the computer networks with a criminal intention. This involves hacking, identity theft, and service corruption which lead to high losses. Before embarking on e-commerce, knowledge on cyber crime is essential. Most of the e-commerce firms lose money due to the risk of cyber crime. A business being a victim of cyber crime leads to loss of business reputation. The customer avoids sites which have a record of cyber crime. This is due to fact that the customer perceives the company to be prone to cyber attacks (Chambers-Jones, 2012). Figure 1 cyber crime distribution, (Chambers-Jones, 2012) Figure 2Top 20 countries in cyber crime, (Kratchman, Stan, Smith & Smith, 2008) The list of cyber crimes can be elaborated as; Email bombing This involves sending a lot of duplicate mails to the same email. This is an attempt by the criminals to overwhelm the server and lead to service denial. The affected person has to manually unsubscribe form the subscriptions sending the email bombs. This type of attack has evolved with hackers coming up with ZIP bomb or enormous text files. The zip bomb consists of sending viruses to the customers email in compressed folders. Some hackers can use enormous files and type a repetition of one letter. The unpacking of these files requires a lot of processor power and RAM leading to service failure (Chambers-Jones, 2012). Web jacking This occurs when the hacker have the access to the online site and controls it. This may lead to the hacker changing the information or mutilate it. This may lead to wrong information being posted on a trusted site and poses dangers to the clients’ security. This leads to a huge loss to the e commerce industry (Chambers-Jones, 2012). Phishing This involves stealing of the customers emails and using them for getting their personal information. The perpetrator uses the stolen emails to send fictitious links which directs the clients to fraudulent websites. Through this, the customers’ personal information is obtained which can then be used against them (Chambers-Jones, 2012). Cyber stalking This is done by criminals who want to stalk the clients and involves using the information stored online to harass or target a particular person or group. This may leads to blackmail to the customers as well as other crime activities (Chambers-Jones, 2012). Botnet This is done by hackers who transmit information to other computers with intent of controlling them. Through this, the hacker is able to steal the identities for spam distribution (Chambers-Jones, 2012). E-bank theft This occurs when the criminal has the access to the bank details of the customer. These details are gained by hacking into the bank system and gaining access into the funds. This has an adverse effect on the client trust to the online shopping. To prevent e-theft, the banks give a certain limit which can be done online (Chambers-Jones, 2012). Netspionage This is an act that occurs when the criminals gain access to online systems and personal computers. The information stolen is sold to the criminals who use it against the customers (Chambers-Jones, 2012). Credit card fraud In some instances, the criminal are capable of obtaining the credit card number of the customers. This is then used to make purchases leading to huge loss to the customers (Chambers-Jones, 2012). Transitional risk Adopting e-business requires a business to change their work processes and behaviors’ and involves commitment from the executive team. The market change requires a rapid change in the organizational behavior. The risk occurs due to the fact that the organizational change in most cases is slow and expensive. Transitional risk involves the possibility of the organization suffering disruption as the e-commerce is introduced in their operation. The risk increases depending on the type of e-commerce platform being implemented. For example, launching platforms such as the customer relation management or resource planning systems may lead to the organization being disrupted in great way. The employees and stakeholders response to the introduction of the platform determines the impact of transition risk. Channel conflict is a form of transitional risk. This occur the clients who used to shop in the store turns to use the electronic platform and abandon the old means of purchase. If this occurs without new clients joining the online channel, this leads to increased operational costs. This has been faced especially in the banking systems. When the banks introduce e banking, the same customers adopt the system without new customers joining in. This risk can be managed through using the change managing procedures. Conclusion E commerce has gained popularity over the years as information technology has improved. It has become an integrals part of the modern business where most of the transactions are being done online. This has helped a lot in enhancing the customer business relation, increased flexibility and reduced the operation costs. Most of organizations have online platforms so as to reach the markets which they could not physically reach. Despite the success of e-commerce and its advantages as a busssiness platform, it has suffered a lot of risks. The major risks in the e commerce industry are security related. Cyber crime is the main threat that faces the e commerce industry. This type of risk manifest itself in various forms such as Phishing, Botnet, email bombing, cyber stalking and e bank theft. This has made trust for e commerce to reduce. Another risk is transitional risk which occurs due to change in organisation processes due to online business. The organization must be well versed with cyber crime before embarking on e commerce and also change management process. References Chambers-Jones, C. (2012). Virtual Economies and Financial Crime: Money Laundering in Cyberspace. Cheltenham: Edward Elgar Publishing Deise, M., Nowikow, C., King, P. & Wright, A. (2000). Executive’s guide to e-business: From tactics to strategy. London: John Wiley. Fraser, J., Fraser, N. & McDonald, F. (2000). The strategic challenge of electronic commerce. Supply Chain Management: An International Journal, 5(1), 7-14. Kratchman, Stan, Smith, J. & Smith, L.M. (2008). Perpetration and Prevention of Cyber Crimes. Internal Auditing, 23(2): 3-12. Pandya, A., & Dholakia, N. (2005). Conceptualizing B2C Business as a New Category of Services, Journal of Electronic Commerce in Organizations, 39(1), 1-12. Sensis. (2011). Sensis e-Business Report: The Online Experience of Small and Medium Enterprise. Sensis: Canberra, Australia. Trepper, C. H. (2000). E-Commerce Strategies. Microsoft Corporation, Redmond Washington, Microsoft Press. Weber, D.M., & Kauffman R.J. (2011). what drives global ICT adoption? Analysis and research Directions. Electronic Commerce Research and Applications, 10(6), 683–701. . Read More