Internet-based electronic trading and data exchange is changing the way companies do business and breaking down global barriers of time, space, logistics and culture. It has introduced a new level of global competition by providing efficiencies through reducing the number of suppliers and slashing administration costs throughout the value chain. E-business is the integration of systems, processes, organizations, value chains and entire markets using Internet-based and related technologies and concepts.E-commerce refers directly to the marketing and sales process. E-business is used by firms to help build new relationships between businesses and customers. The Internet and e-business provide with the following global businesses advantages:
1. Convenience in conducting business worldwide; facilitating communication across borders contributes to the shift toward globalization and a global
market. 2. An electronic meeting and trading place, which adds efficiency in conducting business sales.
3. A corporate intranet service, merging internal and external information for enterprises worldwide.
4. Limitless options and price differentials for consumers.
5. A link and efficiency in distribution.
While most of the early attention was on e-commerce, experts now believe the real opportunities are in business-to-business (B2B) transactions. And, while the scope, complexity, and sheer speed of the B2B phenomenon, including e-marketplaces, have global executives scrambling to assess the impact and their own competitive roles, estimates for growth in the e-business marketplace may have been overzealous. The global economic slowdown and its resultant dampening of corporate IT spending has caused various research groups such as AMR Research and the Gartner Group to revise downwards their projections for B2B Internet transactions, as shown in Exhibit 1-3. Still the growth projections are considerable, with an estimated $6 trillion in B2B transactions expected in 2004.
While we hear mostly about large companies embracing B2B, it is noteworthy that a large proportion of the current and projected B2B use is by small- and medium-sized firms. This is shown in Exhibit 1-4, broken down by three common purposes: supply chain, procurement, and distribution channel.
Of course, a successful Internet strategy-especially on a global scale-is not easy. Potential problems abound, as experienced by the European and U.S. companies surveyed by Forrester Research, and shown in Exhibit 1-5. These include internal obstacles and politics, problems in regional coordination and in balancing global versus local e-commerce, and cultural differences. It is clear that such a large-scale change in organizing business calls for absolute commitment from the top, empowered employees with a willingness to experiment, and good internal communications.8
Barriers to the adoption and progression of e-business include lack of readiness of partners in the value chain, such as suppliers. Typically, companies must invest in increasing their trading partners readiness and their customers capabilities if they want to have an effective marketplace. Other barriers are cultural. In Europe, for example:
Europes e-commerce excursion has been hindered by a laundry list of cultural and regulatory obstacles, like widely varying tax systems, language hurdles and currency issues. Other problems relate to the difficulty within industries of agreeing on common formats for transmitting data-a problem experienced by Milan Turk, Jr., director of global customer business development for Procter and Gamble.
In spite of various problems, the use of the Internet to facilitate and improve global competitiveness continues to be explored and discovered. In the public sector in Europe, for example, the European Commission has started advertising tender invitations on-Line in order to transform the way public-sector contracts are awarded, using the Internet to build a truly single market:
With public procurement accounting for 11.5 percent of the European Unions GDP, the initiative could result in increased cross-border trade, improved transparency and openness, and better value-for-money for taxpayers.
Global professional service organizations are successfully using all aspects of e-business, and helping their clients to do so. One example is PricewaterhouseCoopers. The companys employees, operating in over 150 countries, provide clients with expertise in solving complex business problems, including the sectors of Global Human Resources, Business Process Outsourcing, Financial Advisory, Audit and Advisory, Management Consulting, and Global Tax Services.8283
Clearly, as the PricewaterhouseCoopers executives claim, e-business is not only a new Web site on the Internet, but, a source of significant strategic
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