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Introduction to E-Business
E-Business and Traditional Corporations
Before we talk about e-business, lets look at the model of a traditional Industrial Age
Corporation. In order to create profits such a corporation adopted a strategy to reduce
transaction costs at all levels. If a firm purchases products and services from the external
market, rather than using its own internal resources, transaction costs will be very high.
That is why large Industrial Age Corporations not only had factories to build their main products,
but they also created factories that produced the raw materials required for their main product.
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E-Business and Traditional Corporations - Continued...
However, a revolutionary change is occurring, giving birth to a new business model called
"E-Business". The basis for this new model is the internet and related technologies,
which are driving transaction costs for purchase of raw material (products and services)
to near zero.
The new e-businesses are not vertically integrated, self sufficient structures. They are based on
networks, where each node in the network is a specialist in adding value at a specific point
in the entire life cycle of the final product.
Difference between E-Commerce and E-Business
E-Commerce is often defined as buying and selling goods on the internet.
But E-Business is something much more than that. E-Business defines a new model for the
traditional firm. E-Business requires that the traditional business processes be redefined
and integrated. It defines a shift to a new structure which consists of an interconnected
web of enterprise applications. These enterprise applications include customer relationship management,
ERP systems, order management, supply chain, and more.
Importance of E-Commerce and E-Business
To be successful in e-commerce a company requires a suitable e-business infrastructure.
For a traditional firm, this involves large scale structural changes.
The key element of a e-business architecture is customer-oriented integration. An e-business
must constantly address the issue of providing better value to the customer. It must work on
realizing the customes' needs, tastes, and expectations in a better way.
The connected, computerised world of e-business makes this a very feasible option.
Firms that do not adopt the e-business model in the future, will be left behind and forced to
close due to increased competition from e-business firms.
If you want more information on E-Business or E-Commerce, use the search box below:
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