Business strategy and scenario planning forms the basement of any entrepreneurial projection for excelling of new and existing businesses. E-commerce and internet development have therefore opened vast opportunities through removal of the massive vagaries and obscurities that marred the business world for long (Birley & Muzyka 2000). It has increased the level of interaction, information transfer, education, planning and therefore posed as a major platform for entrepreneurs. E-commerce thereby, as mainly refereed to as the new economy has supported the importance of longterm and future thinking for higher profits and corporate survival in the dynamic business world.
This essay explores the major opportunities that are presented by the growth of the e-commerce in the world where globalization is developing very fast. Besides, it also discusses the options for future growth of the the e-commerce business while evaluating the key strength and drawbacks brought by this establishment.
- Business opportunities presented by the growth of the Internet and e-commerce.
Internet and e-commerce has been described as the most important discovery of the 20th and 21st century due to it’s ability to open up, link and support massive growth of businesses all over the world with little limitations. To begin with, it has greatly enhanced direct sales of goods and services to various consumers locally and internationally. Internet has highly simplified business transactions in that different commodities can be ordered online and sold online too.
Majority the goods in the market are currently made and used through computer accessible equipments which require special data commands on their utility (Thomas 2008). Electronic printers, computes, cameras, internet accessing gadgets, fridges and bulk of the electronics available in the market require special and modified softwares for their improved performance all of which can be easily transacted online (Pierre-Andre 2008).
This type of venture has called for high level of innovation in the undertaking as competition has greatly increased in the fast growing business. Technological advancement therefore, must be invented for increased success in this field. Destructive direct trading and harmful application are also developed in order to destroy other companies networks and therefore enjoy the advantages of market monopoly in the vast business (Birley ; Muzyka 2000). Clear business orientation and strategic planning must be established well in advance to select the best technology that will result to least negative impacts to the tender business or growth seeking businesses.
Music on the other hand, is sold on the internet as more people are able to access it there rather than going physically to buy them from the the display shops down town. Bulk of the entrepreneurs who have been associated with sales of new music to the public, have resulted to the internet due to it’s accessibility both day and night. Largest sales in music and entertainment has been recorded online with over 60% improvement in it’s use during the year 2001-2005.
Education and information materials are also sold directly on the internet with high restriction and their access being granted to only those people who have subscribed at various capacities. As education and research based learning increases, it is a great window of opportunity where the materials are fully available in the internet for faster and unlimited access.
Various businesses dealing with books and journal materials already exist where they select the most important and relevant materials for improved research for the fast developing globe. With the search for knowledge being limitless, this direct business is projected to increase sharply for the next 20 years before temporarily stalling and then advancing very fast due to technology adoption at that moment. Metaphorical and radiant thinking in the analysis of the trends and use of graphical prediction ensures that the market at all the moments is compatible with the information base for the enterprise (Pierre-Andre 2008).
Secondly, internet and e-commerce opened new doors in commodities and services marketing and advertisements all over the world. This business has been very necessary in enhancing the competitive ability of the consumer products and services all over the globe. Based on the major entrepreneurial traits of combining reality and enhancing innovation in production to satisfy the consumer needs, internet has been used in minor and major marketing of various products like vehicles, food products, fashion wear, cosmetics, international and local tourism. As technology advances, the level and quality of manufactured products has increased drastically making it necessary to inform the consumers on the improved quality and enhanced levels of suitability in the new products (Thomas 2008).
Success in this service business is entrenched in the ability to develop captivating, convincing and persuasive advertisements that convince the consumers to use a given product. Internet advertisements has increased at an average rate of 52% since the year 2000 due to increased use of internet and integrated internet advertisements. Besides, over 75% of those entrepreneurs who used internet for theirs advertisements claim it is highly effective alongside other conventional means due to it’s ability to paste more materials to the consumers and accessibility to more people. Besides, the advertisements entrepreneurs take advantage of the rising levels of literacy all over the world that eventually links up the people through internet and e-commerce.
To add to the list, is the online consultancies that link various people online with different professionals who advice and recommend different courses of action for them to improve their situations. Just like the educational services, the entrepreneurs must device ways of linking the people especially those with confidential problems that require high levels of secrecy and their physical interaction with the consultants may hinder their revelation of full details. It has turned out to be a very successful mode for social related problems with which description and full disclosure of ones identity is not necessary for total assistance. Where parents and other people have failed in their roles of directing the young generation, this opportunity is available to them for all the information that they may require is readily available (Thomas 2008).
Internet banking and payment systems being considered as the all times banking solutions for the globe, have been a booming business for the entrepreneurs who develop building societies, credit unions and virtual banks that consumers can do their financial transactions for 24 hours on secured websites. Innovative designs and models have been established to perfect new accounts opening, accounts transfer, bills payment and loans applications and payments.
Since this service deals with direct cash transactions, innovation and strategic monitoring must form the heart of the application to perfect it and reduce internet theft. It has been very successful in US due to it’s ability to be flexible and the increased level of privacy compared to the ordinarily banking methods. The technology however requires large amount of investment and must also supported by physical banking methods for crediting of the system and conservative assistance to reduce alienation of the people from the system. Over 50% of the total number of banks offer full or partial banking to their consumers.
- (a) Amazon.com future growth options .
Due to the uprising demand and ever increasing competition from the numerous competitors in the market, Amazon.com must adopt new growth options that will help it remain relevant and thus profitable. Innovative options must be adopted to outdo the other players who are also out to make profits in the same business. Companies like Bertesman, Barnes and Noble have joined hands in order to beat Amazon.com due to it’s fast development to capture the market and increased sales (Richard 2008).
To begin with, the company can can specialize with several products in order to increase its scope and improve the service delivery to the consumers. With the company offers being mainly focused on different collections, narrowing to fewer options like research, children materials, sociological materials and philosophical books may help the company to increase it’s consumer desire requirements. Fewer options to deal with are usually easier to produce and give more details therefore increasing the customer utility from the materials.
This option however may make the company to loose potential consumers who were previously served by the books and materials to be removed or dropped. Besides it would also require ample market survey to determine the options to drop which would increase the overall cost to the company. To add to that, the ability of the company to supply a diversity of products guarantees the consumers that they will access all the products without much delays will be greatly reduced as the consumers will be prompted to move to other companies to look for some products. It is even more harmful in that the consumers trust might get low and therefore shift their interest to the new companies (Wickham 2006).
Inventing new methods to reach and sell it’s products to the consumers throughout the world. Having already linked with other web servers and obtained it’s own website (Amazon.com), new web options should be introduced to ensure that the consumers can access the companies details at all times with little jamming and blogging in the amazon.com due to congestion.
It is estimated that currently, the rate of internet access by the people is increasing at a rate of 65% since the year 2000 (Richard 2008). This option therefore has a big advantage of increasing the overall accessibility and thus the sales and profits that accrue to the company. However, this option is very costly as it will require more people to attend and update the web on the vast applications, concerns and emailing that will come up, the company will have edged itself an impenetrable niche by others.
In addition, marketing and advertising must be capitalized on as the major tools to reach more consumers and inform them about Amazon.com’s products and their suitability in their lives compared to the other companies in the same field. Through all the means available the company must make all the people understand it’s products throughout the world are the best. With the company’s presence being more felt in US and Britain, the rest of the world possess a great untapped potential due to the explosion in the use of internet and e-commerce that was previously a reserve of the developed countries.
Through consecutive market market symbiotic attachment and great innovation as well as promotions, this untapped market must be lured to the company as it clinches it’s niche. In the year 2006-2007, Asia had about 50% of untapped e-commerce market while Africa trailed it with 35% at various levels. This demand has also been predicted to increase tremendously in the next 10 years (Thomas 2008).
However, relying on this market as a major growth prospect may disappoint the company due to the low rates of economic growth in these regions that might culminate to unprecedented fluctuations in the overall returns. Then, the company can consider cooperation with other companies in order to raise it’s financial basement and improve it’s coverage for the products to the people internationally (Richard 2008).
Cooperation not only helps to reduce the competition from the other competitors but improves greatly in the decision hybridization in order to raise the quality of the products sold to the consumers. Assets owned by the cooperating partners after pooling them together, improves the capital base that the company seriously requires. At a time when reading and entertainment has become part of every day lives for the people, increased resources will help greatly in conquering new markets.
Mergers in the international business have resulted to massive growth for major companies like Shell Us and Saudi Arabia Oil company as well as Kenol and Mobil oil companies. Major financial companies like J. morgan ; chase resulted to their massive financial base and unshaken consumer preference due to huge mergers with other major companies from US and outside (Wickham 2006). To add to that, mergers with other international companies that have branches in different regions of the world will make it easy to transact business in their regions of dominance. This option is highly viable for raising the overall repute for the company and transforming it into an internationally known company.
However, this option will result to reduced rates of decision making by the company due to the expanded management panel. To ad to that, shopping for a serious partner is very hard as those willing to get into partnership may have already destroyed their names in the market. As result, it is easy to destroy the good repute after getting into partnership with such companies. New partnership harmonization may take long in terms of structures and management as the companies make their employees, managers and other workers salaries and terms of work to cohere. To add to that, harmonizing management plans might turn out to be a night mare due to existence of varying laws, rules and regulations regarding e-commerce in various countries the different companies were operating in before.
To add to the above options the company can diversify its products to reach a wider consumer range than the present ones. With the current offers being on books, music, toys, accounts games movies and TV, the market can be diversified to include software development, advertisements and online marketing. Besides, increasing the average market base for the company, the profits will also go high. This option however, may reduce the overall quality of all the products being offered by the company to the consumers (Wickham 2006).
It will also require more capital as new products suitability have to be researched and their production systems put in place for them to become functional. As an online entrepreneurial business, a combination of international cooperation and diversification of products offered would be more productive as they both increase the overall accessibility and availability of the company products by the consumers who determine the success of the company.
(b) Amazon.com competitors
Amazon company like any other enterprise is faced by major competition from the companies offering similar services in the market. Scenario planning and strategic planning has however managed to to ensure that they keep running and profits keep flowing even in the uncertain future market. Barnes ; Noble (BKS) has been classified as a major competitor to Amazon.com with an annual sales of $ 5.4 billion in the year 2007, a record growth of 3% from the previous year.
From the year 2002 through to 2006, this company maintained a steady revenue growth, but recently, it suffered a wide margin in it’s operation which fell with $ 2.2 million to $ 8.3, million during the first quarter of the year 2008. during this period, the sales also decreased with 1.6% excluding the final sale offer of Harry Potter book. This company though with a strong capital base compared to Amazon.com, has been been rigid and easily affected by turbulent market tides (Richard 2008).
Also, Boarder Group company also puts high competition to Amazon.com with an operating margin of 0.2% and stores sales growth of 1.5% for the year 2007. this company has maintained a steady growth of revenue growth from the year 2004 to 2007. In the year 2005 it recorded a revenue growth of $ 3,675 million, $ 3.683 million in the year 2006 and $ 3.774 million in the year 2007 therefore indicating it’s ability to conquer the future market with proper scenario planning in it’s operations.
Other smaller companies include Books A-Million (BAMM) and Bertelsmann that had an average growth of operating margin of 4.9 % and average annual revenue of $ 520 million. These smaller companies though not major threats in the capital they hold, they serve to split the market and therefore push the overall expected results down for the Amzon.com and other large companies. They control about 22.3% of US, 24% of UK and 21% of Germany market therefore holding a significant market share control. All the scenario planning therefore must take them into account (Thomas 2008).
Entrepreneurship requires vast scenario planning that fully considers all the possible windows of opportunities that are available to enhance faster growth in the business. E-commerce being a field that has not been explored fully posts a good opportunity to develop and advance due to the increasing level of information technology all over the world. Clear analysis of the development trends, economic trends, operation costs and other players forms the key platform m for successful e-commerce business planing. A pure cost benefit analysis with projection to the future must be established and lean management option adopted to raise the quality of the products and thereby improve the consumer satisfaction at all times.
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Wickham, P 2006, Strategic Entrepreneurship, (4th Ed). Washington, Richard & Hopkins.