Ebusiness Assignment

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Queens Academy Group

Strategic E Business

Strategic E business Assignment Tanmay and Elise

Table of ContentsLO5A Question 1: Develop a FOUR step e-business strategy for the owner of City.............................2

Analyse the external and internal environments...........................................................................2

Select the e-business strategy.......................................................................................................3

Implement the e-business strategy...............................................................................................4

Evaluate the success of the e-business strategy............................................................................4

5B Question 2: Discuss TWO tools to support the e-business strategy formulation process in the above case study....................................................................................................................................5

SWOT Analysis...................................................................................................................................5

Pest Control......................................................................................................................................6

LO5C Question 3: Discuss TWO alternative strategy which City Flowers can employ to achieve e-business capability.................................................................................................................................6

LO6B Question 4:Explain the SIGNIFICANCE of the Tesco Information Exchange system (TIE) to support supply chain management and the value chain.........................................................................7

LO6B Question 5:Explain the SIGNIFICANCE of the Engine Condition Monitoring (ECM) IT system to support supply chain management and the value chain to Rolls Royce.................................8

LO6B Question 6:Explain the SIGNIFICANCE of the IBM’s RFID infrastructure software system to support supply chain management and the value chain in Airbus........................................................10

L07A Question7:Identify THREE benefits and TWO risks of e-procurement which Ford faces in its e-procurement strategy...........................................................................................................................11

LO7C Question 8:Analyse the initiatives undertaken by Carl Zeiss and its suppliers to integrate their business processes...............................................................................................................................12

LO7C Question 9:Assess TWO options for integration of inter-organizational information systems..14

REFERENCES....................................................................................................................................15

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CASE STUDY 1

LO5A Question 1: Develop a FOUR step e-business strategy for the owner of City

Having access to the Web is essential for SMEs (Small to Medium Enterprises) as owning a

fax machine or a telephone. And though SMEs usually have limited material and human

resources at their disposal, successful e-business solutions are still within the reach for city

flowers. By thinking strategically about e-business, the owner and IT support can select

technological solutions that support the company’s business strategies and create value for

the shop and their clients.

For city flowers especially adopting an e-business model will definitely make significant

changes in their business processes and in the way they interact with customers and suppliers.

Failure to plan for these changes could threaten the existence of their online presence is why

strategic planning is so important.

The e-business strategic management process is based on the traditional model of strategic

management. It is a systematic process consisting of four interrelated steps:

Analyse the external and internal environments

Select the e-business strategy

Implement the e-business strategy

Evaluate the success of the e-business strategy

Analyse the external and internal environmentsIn the traditional strategic planning model, managers identify their company’s strengths and

weaknesses, as well as the obstacles and opportunities in their business environment. They

are then ready to make strategic decisions that seek to balance their company’s competencies

with the business opportunities around them. This step is equally crucial for e-business

planning.

The main barriers to e-business adoption

A wait-and-see attitude and scepticism on the part of clients and partners can put up

barriers that discourage e-business solutions. In other cases, the nature of the

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company’s product can make it more difficult to introduce e-business. For SMEs

located outside major urban centres, it is sometimes hard to find simple, economic

solutions for distributing the products they sell on-line. The Web makes it possible for

City flowers to increase their customer base, but it cannot solve all the logistical

difficulties related to the sale. However, studies indicate that by far the most

important obstacle to e-business adoption among small- and medium-sized enterprises

was lack of financial resources. The size of the investment and the long and

sometimes uncertain payback period frequently cause SMEs to postpone investing in

e-business.

What conditions enable e-business adoption?

When developing their e-business strategic plan, city flowers must take into account

the number and nature of external factors that are compatible with the adoption of e-

business. Depending on the industry, government financing may be an incentive for

adopting e-business. Other proven incentives are the time spent with SMEs to

understand their needs and the investments in technological infrastructure made by

the leaders of sector-based associations and the funding and technological expertise of

partners such as government agencies and large corporations.

Select the e-business strategyThe selection of an e-business strategy requires solid knowledge of how e-business can create

economic value for the firm. Successful SMEs know how to identify the scope of their

activities and determine which products, clients and geographic markets they should target.

They also know how to set clear and measurable goals.

How can e-business create economic value?

The ultimate goal of any strategic decision is to create value. Efficiency is mainly

derived from lower costs due to faster transactions, increased automation of the

company’s operations, and the ease with which clients can research relevant

information. By locking in to a particular, reliable technological solution, city flowers

gains approval and trust among its client base. Complementarities are mainly

concerned with the bundling of resources and technological capabilities, as well as the

bundling of products and services, of various partners in one electronic network.

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Using e-business allowing city flowers to reduce costs and find new clients. Value

can also be created through complementarities and lock-in.

Implement the e-business strategyAfter defining the targeted client base and geographic markets for new or traditional products, city flowers should plan the implementation of their e-business and decide what type of technological solution and supply chain to adopt.

What are the most suitable technological solutions?

City flowers have a wide range of technological options from which to choose. Online study shows that SMEs usually develop Web sites and e-shops that complement their products and services, and fulfil their need for identity and independence. SMEs in plastics and printing often are reluctant to embrace technological solutions that impose standardization on the entire industry. In fact, portal solutions, virtual communities and e-mails are usually not attractive to SMEs because they do not support the SMEs’ need for identity and independence which is what city flowers should work towards to. Some businesses prefer to involve other retailers or partners in their technological solutions, and to devise a technical format that is tailored to the specific operations of their association or sector.

What mode of e-business procurement should be chosen?

The procurement model that city flowers select needs to complement the strategic importance of the project and the in-house availability of resources to develop such solutions. Businesses that enter into partnerships generally seek a partner (consultant or service provider) who can supply the expertise they lack to develop the new information system. However, most SMEs prefer to hire freelance programmers, because a partnership arrangement with a consulting firm is often expensive and time-consuming.

Evaluate the success of the e-business strategyAfter acquiring a sound understanding of how to create economic value with e-business and determining the owners desired positioning, IT support must finalize objectives relating to sales growth, cost reduction and profitability. They must also select the indicators that will enable them to assess the success of the e-business solution-scorecards showing financial, client, internal process and learning and growth indicators can be vital tools.

Indicators for evaluating e-business success

Overall, the business uses a small number of unsophisticated indicators for evaluation of the success of the e-business. They placed importance on the profitability of transactions, and

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STRENGTH

city flower is currently an on going business

further benefits due to brand recognition

wide range of products

available not limited to flowers

employment are sufficiently staffed and

sales is enough to cover cost

WEAKNESS

there is shortage of resources in

the organisation

there is a shortfall of

online presence against their competitior

higher prices than city

flowers the competitor

potential clients look for better

deals and product on other online competitors

OPPORTUNITY

with venturing into e business , city flowers can

increase potential clients

advantage of selling their

product s online to a larger

target market

able to reduce their labour cost

networking with customers and suppliers to gain trust and

continuous business

THREAT

lack of competitive advantage

against pre-existing online

florist

there are no IT administator to monitor sales

online

lack of reliable payment

methods such as paypal or Amazon

payments unabale to deliver to

certain countries due to

trade barriers


measured performance by analysing additional sales volume and the savings realized by using e-business. Continuous monitoring, documentation and reviewing are vital for stay competitive against other online florist.

5B Question 2: Discuss TWO tools to support the e-business strategy formulation process in the above case study.

SWOT Analysis

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POLITICS

intricate law on privacy and data

storage

change of government locally or at federal or

national level

different taxation schemes or levels being

introduced

ECONOMIC

change in interest rates or inflation

unemployment rate and income level may effect

city flowers retail sales

changes in economic growth due to recession

SOCIAL

aging population resulting

implications in areas such as

spending

Disposable income amongst certain groups

Increasing internet usage and all things

digital amongst younger

generation

TECHNOLOGY

internet usage, mobile usage and

mobile advertising

social media, e-commerce, R&D

and manufacturing

practices

technology access, licencing,

patents, manufacturing

capability


Pest Control

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LO5C Question 3: Discuss TWO alternative strategies which City Flowers can employ to achieve e-business capability.

E-procurement would be the ideal alternative as the business strategy for city flowers. Web-

enabled B2B e-commerce enhances inter-organizational coordination resulting in transaction

cost savings and competitive sourcing opportunities for city flowers in the long run. By

examining the procurement processes, IT support can develop an objective for the type of e-

procurement system that would best fit the business and their desire to go online.

There is another alternative strategy can be used that is advertising-subscription revenue

model which is City Flowers can put their advertisement into some subscriber channels,

website or magazine which are famous such as trade me, Time, New Zealand Herald etc.

which are widely accepted and spread in the local area. That would be the significant solution

for the hidden customers to pay attention to the products, which would advance the

reputation of the City Flowers and gain possible benefits.

CASE STUDY 2: TESCO

LO6B Question 4: Explain the SIGNIFICANCE of the Tesco Information Exchange system (TIE) to support supply chain management and the value chain.

By using automated data collection software to feed information into its big data analytics

program, British grocery and merchandise retailer Tesco has dramatically boosted profits and

more proactively met consumer demands.

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Tesco has used big data analytics to improve its supply chain, primarily targeting

its inventory management systems. According to Information Age, Tesco's new supply chain

optimization program helped the company save up to £16 million (approximately $24.5

million) annually because it is now better able to predict customer buying habits and track the

effectiveness of special sales offers.

In particular, Tesco has developed an analytics model that uses weather patterns to properly

stock store shelves. By looking at historical buying data and expected temperature trends, the

business can accurately predict what consumers in a specific area will want to purchase and

then supply locations accordingly.

The retail giant has also been applying sophisticated analysis to its supply chain data. And by

identifying opportunities to cut waste, to optimise promotions and to match stock to

fluctuations in demand, Tesco's supply chain analytics function has saved the company many

millions of pounds.

The suppliers were given access to the product database. They could now do the demand

forecast themselves and process the information in real-time. They were not caught off-guard

now with regard to the supplies and had a clear idea related to fast or slow movement of

different products. They were rather in a better position to make adjustments to the supplies –

either increase or decrease the same, subject to sales and then replenish or re-supply

efficiently.

During product promotions, the suppliers, having an access to the product database, could

very well see the accurate movement of the different products. This made them prepared to

replenish efficiently in real-time and also enabled them to plan for over-supply or under-

supply in future.

CASE STUDY 3: ROLL ROYCE AERO ENGINES

LO6B Question 5: Explain the SIGNIFICANCE of the Engine Condition Monitoring (ECM) IT system to support supply chain management and the value chain to Rolls Royce.

An Engine Condition Monitoring (ECM) approach has been adopted by many engine

manufacturers and operators, in which intelligent real-time data analysis systems are

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employed to assess the condition of engine components. The objective is then to make

maintenance needs be determined according to the engine’s operating condition, rather than

maintenance being performed at fixed periods of time. ECM involves both “manual”

practices such as MCD, oil consumption and vibration monitoring, and computer methods

based on performance analysis and mechanical parameter monitoring using an adequate

software tool. These monitoring systems for engine health typically process data from

engine-mounted sensors, whose recent evolution in robustness and versatility have made the

implementation of ECM possible.

The significance is as follows:

Low risk, fixed cost engine maintenance - The comprehensive suite of engine management

services available provides predictable costs over the life of the agreement and covers all

aspects of engine maintenance and management.

Reduced management burden – It enables airlines to focus on their priorities,

because Rolls-Royce provides a full suite of Engine Management Services

Enhanced aircraft resale value - It is transferable with the aircraft and therefore increases

its residual value

Reduced capital investment – It needs fewer spare parts and tools

24/7 - Benefit from a world-wide network of support focused on the needs of corporate jet

operators. Their network is always there 24 hours a day, 365 days a year.

The monitoring of aircraft and engines consist a continuous compilation process of flight

data, which is then analysed in different ways to assess the level of degradation and

performance at that moment. Particularly for engines, the continuous following of an

engine’s health can allow significant savings in several ways.

Engine Condition Monitoring (ECM) is becoming used on a daily basis in many airline

companies, for they have understood the potential savings that can be achieved, in fuel, parts

and maintenance actions.

ECM continuously assesses the health of an engine, and therefore the performance it will

present in terms of fuel consumption. If this information could be complemented with a Fuel

Monitoring tool that would compile and analyse all data regarding routes, flight time, aircraft

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weight, number of passengers, take-off weight (TOW), etc., the operator could establish a

direct correlation between every engine maintenance action and fuel consumption, assessing

their cost-effectiveness and allowing to define long term strategies to reduce costs.

ECM may be used for three different approaches, one pre-emptive, one reactive and one

more analytical and educational. Through the condition monitoring, early warning of

potentially hazardous engine conditions may result in the identification of the precursors to

component failure in advance of the actual failure. This is a prognostic approach to condition

monitoring, and is useful for types of faults that may be prevented if identified soon enough.

Faults for which there are no such precursors like a “bird strike" require a diagnostic

approach. Those monitoring systems automatically identify engine faults that have occurred,

and may recommend restorative maintenance actions appropriate to the type of fault.

There was no break in the flight schedules and the customers were more than happy and

satisfied with the high level of customer services provided by the airlines.

Since the ECM system could predict the most likely date of failure and the most likely parts

to fail, the airlines could now plan for the engine’s maintenance well in advance and also had

sufficient time to arrange for the spare aircraft or order the spare parts. Therefore, by

controlling the inventory levels, the costs of operations were reduced which led to increased

profits.

CASE STUDY 4: AIRBUS IMPROVES PRODUCTIVITY WITH RFID

LO6B Question 6: Explain the SIGNIFICANCE of the IBM’s RFID infrastructure software system to support supply chain management and the value chain in Airbus.

As it is in constant competition with Boeing, the European aircraft manufacturer Airbus is

looking for every opportunity to increase productivity, reduce costs, and make its production

process more efficient. One of its latest efforts is to use RFID technology in both

manufacturing and maintenance of its airplanes. The basic idea is to use RFID to track parts

and tools, which are scattered over a large area. Airbus had major delays in completing its

A380, the two-decker, 525-seat airplane scheduled for completion in 2007 and 2008.

Airbus hopes that RFID will become “as everyday as barcoding.” The company

experimented with the technology for three years before signing a multimillion-dollar deal

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with vendors to implement the technology. It also created a value cabin visibility and RFID

unit to implement the biggest private sector RFID deal ever.

Airbus has implemented process-improvement projects involving RFID to track parts inside

warehouses, as they move from one region to another, and as they are built into aircraft, as

well as to track how and where tools are used for manufacturing and maintenance. The new

RFID software infrastructure lets Airbus employees and systems exchange information

collected by RFID readers. The infrastructure also integrates RFID data with business

systems such as Airbus’ core ERP system.

The software also manages data from barcodes, which remain an important part of Airbus’

supply chain. RFID tags can hold more information and require a line-of-sight reader. Airbus

expects RFID to augment ongoing supply chain process improvements, saving money by

reducing time spent searching for parts, reducing inventory, and improving productivity.

IBM’s RFID infrastructure software system helps in:

Integrating real-time data capture with business processes to reduce time to market.

Track assets to reduce loss and theft.

Optimally manage work in process and logistics networks.

Build a secure, responsive and flexible supply chain - to ultimately deliver value to

your end customers.

The company hopes to increase efficiency by tracking parts and materials.

CASE STUDY 5: FORD E-PROCUREMENT IN A MANUFACTURING COMPANY

L07A Question7: Identify THREE benefits and TWO risks of e-procurement which Ford faces in its e-procurement strategy.

Three benefits of e-procurement are as follows:

1) Cost reduction benefits – With e-procurement, costs were reduced by leveraging volume

and having structured supplier relationships. The improved and streamlined methods of

spending and performance measurement led to lower overhead and marketing costs while

improving quality and supplier performance. The employees could quickly locate products

from preferred suppliers and did not indulge in any maverick purchases.

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Accounts payable staff reduction of 75% (over 375 individuals) - Accounts payable

in some divisions is nearly 5% of old headcount dedicated only to handling

exceptional situations

Reduced inventories

Achieved high levels of purchasing economies of scale

Elimination of overpayment

Streamlined administrative functions—practically eliminated paperwork and indirect

overhead.

2) Supplier benefits – E-procurement automated all three parts of the purchasing process

viz. sourcing (negotiating prices), procurement (raising and fulfilling orders) and payment

(collecting invoices and arranging payment). The centralized tracking of transactions enabled

full reporting on requisitions, items purchased, order processes and payments made.

Reduces their cost of doing business with Ford - Less paperwork, fewer errors.

Better production planning, leading to reduced inventories, improved product quality,

better delivery schedules.

Joint problem solving.

3) Increased quality – With e-procurement, the staff ordered instantaneously from online

manufacturers’ catalogues through an online requisition and ordering system. The purchasing

approval was almost immediate. Thus there was reduction in paperwork/rework/errors, no

wastage in time and the procurement process became faster and efficient. Also some of the

procurement staff members were released from the job of processing orders and handling low

value transactions to concentrate on strategic sourcing and improving supplier relationships.

Overall product quality and cost improvement.

Suppliers are not consumed/concerned about winning the next contract and selling,

but on improving product quality and cost.

Two risks of e-procurement are as follows:

1) Integration of technology with suppliers - A key market-related barrier to Ford remains

the reluctance by suppliers to subscribe over fears of the effect of reverse auctions on

component price. Suppliers may show unwillingness in initiating a full organizational

restructuring associated with technological changes related to e-procurement. Suppliers have

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to collaborate completely with Ford in terms of the technology and other infrastructure

requirements of e-procurement. But they may be reluctant to adopt the idea of e-procurement

due to high training costs associated with switching to e-procurement.

2) Leaking of confidential data - Management fraud risk associated with a smaller set of

suppliers who have special relationship could impact Fords sales. Accounting information

risk if the procurement system is not adequately integrated with financial processes and

systems and Infrastructure risk related to application system deployment, logical security,

database management, and business/data centre recovery. Usage of e-procurement

technology will allow the flow of sensitive and confidential data between Ford and its

suppliers. An unauthorized entity or a hacker can gain access to the database and disrupt the

supply chain activities.

CASE STUDY 6: CARL ZEISS

LO7C Question 8: Analyze the initiatives undertaken by Carl Zeiss and its suppliers to integrate their business processes.

Some of the initiatives taken by Carl Zeiss and their suppliers to integrate business process

are by

Leveraging the company’s internal systems via an extended ERP solution and by

allowing access to important SAP R/3 data to their suppliers, it gives the company

advantage of eradicating the time and workforce exhaustive schedule of organizing

data between different groups in the supply chain.

All data of the company is monitored via user identification which means members in

the supply are only able to access and/or view data that are applicable to them.

The suppliers of Carl Zeiss were given access to its product database and they could

process the demand in real-time. But a lot of time was wasted in coordinating data

between members of the supply chain. Different suppliers needed data relevant to

their requirements. The data had to be collated manually subject to the IT system used

by the supplier and therefore a great deal of coordination was required between

Zeiss’s IT system and those of the suppliers.

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The integration of business processes connected all the suppliers with their respective

part of the data in the product database of Carl Zeiss via proprietary GUI (Graphical

User Interface) of Carl Zeiss.

In an increasingly concentrated market for optical equipment, dominated by regional and

national optician chains, building close ties with each individual chain has become vital for

Carl Zeiss. Supply Chains are demanding that key suppliers provide means for online

ordering and supply chain visibility. Suppliers have also adapted to ongoing data format

changes as required by the chain. The positioning of Carl Zeiss as a flexible and adaptable

supplier became a key priority and this goal required a change of the integration

infrastructure.

The access of each supplier to Carl Zeiss’s product database was password protected and

therefore each supplier could access only the data relevant to its requirement. Also the data

accessed was compatible with the processing capabilities of the IT system of each supplier.

A key goal for Carl Zeiss is

To establish one enterprise application integration platform for all communication

between SAP and other applications, with the communication as close as possible to

the SAP core application.

The companies also centralize development on one platform with central monitoring

and a central storage area for business process information. Being able to adapt its

order systems to those of the chains and to implement changes rapidly strengthens

the company’s competitiveness.

Being easy to do business with is a key selling point when competing for new

optician chains in a combine and increasingly competitive market for eyeglass lenses.

Integration involving static data formats is faster, because the mapping from one

format to the other is done visually with no coding involved.

LO7C Question 9: Assess TWO options for integration of inter-organizational information systems.

The two options for integration of inter-organizational information systems are –

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Business to Business:

• A company selling products to customers online

• The technology, used by both the company and the customers, must be compatible

• The GUI (Graphical User Interface) of the company is the same for every customer

• The customers can only access the information and cannot update/modify the

information

• There is only one product catalogue for every customer and a customer cannot

customize the catalogue

• A customer does not require a password for access

• The concept of e-purchasing applies which means just buying online

Business to Consumer:

• A company buying products from suppliers online

• The technology, used by both the company and the suppliers, must be compatible

• Each supplier has a proprietary GUI (Graphical User Interface), designed as per the

requirements of the supplier

• Each supplier can access/update/modify the information

• Each supplier has a customized catalogue

• Each supplier requires a password for access

• The concept of e-procurement applies which means negotiating prices/quantities

while buying online

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REFERENCESMohsen Attaran (2012). Critical Success Factors and Challenges of Implementing RFID in

Supply Chain Management, Available:

http://www.csub.edu/~mattaran/home2/body_content/slides/MGMT602/Critical%20Success

%20Factors%20and%20Challenges.pdf. Last accessed 13 January 2014.

Bobbye Alley (2014).Five Steps of the Model Business Strategy, Available:

http://smallbusiness.chron.com/five-steps-model-business-strategy-17960.html. Last accessed

14 January 2014.

Gxs (2013). How Tesco Uses the Cloud to Work with Its Suppliers, Available:

http://www.gxs.com/resources/webinars/how-tesco-uses-the-cloud-to-work-with-its-

suppliers. Last accessed 14 January 2014.

Dirk Stelzer, Daniel Fischer & Ina Nirsberger (2006).A Framework for Assessing Inter-

organizational Integration of Business Information Systems, Available: http//www.tu

ilmenau.de/fileadmin/public/iwm/StelzerFischerNirsberger_Framework_Assessing_Inter-

organizational_Integration_2006.pdf. Last accessed 13 January 2014.

http://govwin.com/knowledge/eprocurement

http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/

FAST_magazine/FAST47_8-rfid.pdf

http://www.purchasing-procurement-center.com/e-procurement-advantages.html

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http://www.purchasing-procurement-center.com/e-procurement-advantages.html

http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/FAST_magazine/FAST47_8-rfid.pdf

http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/FAST_magazine/FAST47_8-rfid.pdf

http://govwin.com/knowledge/eprocurement


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Ebusiness Assignment