Current and Future Use of Internet Technologies - Case Study Example

 Current and Future Use of Internet Technologies Executive Summary The modern global financial system which has developed a borderless international trade has been mainly inspired by technological advancements in e-commerce and e-business. Both small and large enterprises have welcomed the internet as a real tool in business approaches and a major channel for business growth. This addition of information and communications technology (ICT) in trade has transformed trade between companies and as well as those with other companies and their customers. The use of ICT in industry has improved efficiency, improved better customer involvement, and enabled group adjustments, in addition to reducing costing. At Qatar Airways, the airline has fully integrated internet technologies as a business strategy by adding the latest ICT architecture to evolve a full fledged website that has an online check-in facility using either a personal computer or mobile phone. The Qatar Airlines website has also started an online loyalty reward system named the Privilege for online booking to their 80 plus international destinations in addition to ‘generous travel perks and mileage award levels’ (Qatar Airways.com, 2009). E-Business Background Andam (2005, pg. 5) argues that e-commerce has levelled the playing field in marketing fo goods and services whereby with skilful careful approach, small and medium scale enterprises are able to compete efficiently with the larger and more established enterprises. According to a Forrester Research approximation, global e-commerce trade for 2008 stood at $204 billion with a projected growth of up to $335 billion by 2012. Within the United States, online trade accounts for over six percent of all retail sales (Barke et al, 2008, pg. 1). Geographical boundaries are vanishing as the internet interlinks the international commercial trade enabling businesses market access everywhere globally. In the UK approximately 90 percent of firms currently utilise it, even as one-fifth allege they can barely survive without it (See Global Usage by 2003, Appendix Table 3). It has been argued that the utilisation of the Internet can boost the efficiency of business productions by more than 60 per cent, while using e-business enhances ability by over 40 per cent (Kėdaitiene, 2008). The term e-Business has been simply defined as ‘doing business electronically’ (Timmers, 1998). Andam (2005) however defines e-business as ‘The transformation of an organization’s processes to deliver additional customer value through the application of technologies, philosophies and computing paradigm of the new economy’ (pg. 7). Andam has also outlined the difference between the term e-commerce and e-business. E-commerce involves only those transactions that use ICT tools between different organisations and also within same firms and their customers; while she describes e-business as the main improvement of a firm’s business in any form that uses ‘computer-mediated network’ (pg. 7). The improvement of an enterprise using e-business includes the improvement of the production systems, customer related systems, and in-house administration procedures (Andam, 2005). Japan, Finland, Sweden and Denmark are the heaviest users of the internet globally with over 95 percent usage (See Table 1: Appendices for sample analysis). In Ireland, 75 percent of enterprises use the internet to search for information, 65 percent for banking services, and 37 percent for marketing purposes (Ireland Department of Enterprise, 2004). Corporations with websites mostly employ them to market their products and services and moderately for sales, feedbacks, supply and mobile internet services (See Table: 2). An International Benchmarking Study 2003, by DTI revealed that customers spend over £1 billion monthly online (DTI, 2004, p. 16). e-business has been further enhanced by the emergence and popularity of the social networking forums like Facebook, MySpace, Twitter, and YouTube the multimedia site, that have grown into major media forums challenging other mass media like television and print services in their effective reach among the young consumers. These social networks are now available through mobile phones hence having even an even greater impact. Organisations now have the ability to exploit the many available social networking, web-based multimedia, and portable business forums for marketing purposes. Porters (1998) Five Forces model recommends that for a market entry, fully differentiated products and services must should do complete market research to identify the consumer’s needs and preferences thus gain a competitive edge. This information allows the organisation to decide when to launch particular products in the market. To analyse Qatar Airlines competitive advantages, we have used Porters Five Forces framework or model to determine the competitive factors inherent in the industry (See Appendix: 1). Conversely to analyse the e-business sector, a PESTLE analysis was done that describes e-business as a viable business model (See Appendix: 2). E-Marketing Internet marketing has become one of the fastest growing sectors in the current competitive business world. This is especially true in advertising and ecommerce, whereby even new business units are able to use the internet to market their products at lower costs as compared to the old methods. Firms are able to market their products globally through two business models: business-to-customer (B2C) and business-to-business (B2B). This medium has brought great success to many sectors from banking, to auction marts and the music industry. Qatar Airways has effectively utilised this segment to market itself successfully internationally (See Appendix 4 & 5). Through an interactive forum in its website, the airline gathers data from its clients that assist in improving its services while similarly sending out updates and promotions to its customers (Qatar Airways, 2009). In such a survey, by Hellopeter.com this year, Qatar Airlines personnel were termed as having a bad attitude in one of the main complaints against its service-line among the regular commuter respondents in a 12 month period (See Table 1). Another unique feature allows the airline clients peruse offers and updates on cheaper fares offered in the website and also book, purchase, and check-in online (Qatar Airways.com, 2009). Table 1: Nature of complaints (last 12 months): Industry Analysis Bad Attitude (114) 17% Hygiene (2) 0%   Billing/Accounts (42) 6% Late/No Delivery (52) 8%   Booking Query (95) 14% Other (179) 27%   Breach of Contract (24) 4% Out of Stock (2) 0%   Call Centre!! (66) 10% Passing the Buck (19) 3%   Damaged Goods (17) 3% Pricing/Barcodes (6) 1%   Expiry Date (1) 0% Repairs/Service (2) 0%   Feedback (50) 7% Spam (3) 0%         Source: HelloPeter.com 2009 In another major improvement features started by the Qatar Airlines is the Internet Booking Engine which enables passengers to survey Qatar Airlines' flights over the entire system, reserve and pay out online and have tickets issued automatically online at QatarAirlines.com from any location worldwide (See Appendix 3). The website also has a unique that enables passengers search using the lowest fare finder service giving different flight alternative fares on diverse dates. According to Qatar Airlines Chief Executive Officer Akbar Al Baker, "Qatar Airlines has a committed strategy to develop the e-commerce of our business." (Beijing Review, 2008) The main attraction among the various benefits or advantages associated with internet marketing is the relatively low costs and the wider reach in its distribution and the sales of products and services. The channel is able to operate not only through the traditional personal computers and email but also through wireless media like mobile phones and other gadgets. Internet marketing requires efficient use of both the technical and creative web designs when developing the sites, advertising, and the sales aspects. It involves the setting up of the media content along several stages in the customer engagement cycle including search engine marketing (SEM), search engine optimization (SEO), banner advertisement on particular websites, the use of E-newsletters, and Web 2.0 tactics (Story, 2008). Internet marketing has several advantages over the other types of media. This include: improved expense efficiency and flexibility as compared to offline media; 24 hour - round the clock presence; cheaper research methods for your products and cheaper market research; value added clients approval; standardised transactions routine; improved reliability; interactive consumer marketing; higher possibility for market expansions; international recognition; and provides diversified revenue streams to the firm. Another major advantage is the ease of computation of statistical data regarding usage and its affect, which is done rather cheaply (DTI, 2004). This means that most aspects of the internet marketing campaigns can be drafted, evaluated, and verified through available techniques like pay per impression, pay per click, pay per play, or pay per action. This analysis uses web analytics to account for marketing and advertising exposure, reaction, and general effectiveness unlike other traditional marketing methods (European Commission, 2008); (Ramos and Cota, 2009: 25). Web design Analysis Internet technology eliminates tedious chores and can eliminate repetitive procedures in the supply chain management hence reducing time wastage and creating an inexpensive system. This is mainly done by designing web based forms that instigate another task or generates a report, automatic computation, tracking procedures, and general workflow management competence (State of Victoria, 2004). A firm needs to engage professional web designers to develop a secure website as a poorly constructed site is always prey to hackers and hoaxers who exploit the simple algorithms to generate viral false reports on the company. According to Craig Silverman, editor of Regret the Error, ‘Once something is online and people start finding it, it's just a matter of time before it starts spreading through links, blogs, Twitter, e-mail, or IM’ (Tynan, 2009, p. 1). Alternatively a web site must be overly attractive to draw potential clients and internet surfers. Osterwalder & Pigneur (2002) have proposed a generic e-business model comprising four main quadrants: Product Innovation, Infrastructure Management, Customer Relationship and Financial Aspects which they have named e-Business Model Ontology. The basis of this model is the conventional business model (Figure: 1) which illustrates the logic behind a commercial structure, ‘the conceptual and architectural implementation of a business strategy and as the foundation for the implementation of business processes’ (pg. 2). Figure 1: Business Logic Triangle Source: Osterwalder & Pigneur (2002) Timmers (1998) has defined a business model as ‘architecture for the product, service and information flows’ (pg. 2). This includes a description of the different people engaged in the business and the role they play, prospective advantage they may gain, and the sources of capital. Dubosson-Torbay et al (2001) asserts that a business model should include ‘the architecture of a firm and its network of partners for creating, marketing and delivering value and relationship capital to one or several segments of customers in order to generate profitable and sustainable revenue streams.’ (pg. 3) Osterwalder & Pigneur (2002) framework/ontology (Figure: 2) seeks to construct a systematic ‘building-block-like methodology that defines the essential concepts in e-business models’ (Pg. 3). The products and services offered by the corporation depict the value attached by the customer to the product/service and which ready to spend on; (2) the infrastructure and the system of associates are essential to generate goodwill and equitable client relationship; (3) the relationship investment with the client is important to please your customers whose expenditure generates your revenues; and (4) the financial aspects, critical to support all the other three factors including cost and revenue arrangement. Figure 2: e-business model framework Source: Osterwalder & Pigneur (2002) The EU recommends a continuous improvement of a firm’s ICT infrastructure and IT skills to take advantage of the rapidly improved software and systems in the market. Firms should embrace the ERP (Enterprise Resource Planning) systems which form the core platforms for data exchange and launching of e-business and ecommerce (European Commission, 2008). The most effective online marketing technique has been found to be search engine optimisation, as most users rely on websites like Google and Yahoo!, to hunt for bargains and other online shopping. To achieve this, a professional redesign of the company's website’s basic code, architecture, and visible content is improved to ensure the site features in the natural search results of spider-based search engines. This includes keyword research, directory submissions, search engine enhancements, link popularity enhancement, website conversion audit, website competitive intelligence, and website content enhancement. Business-to-Business (B2B) Analysis In e-business and e-commerce, the main categories of business models are ‘business-to-business (B2B); business to-consumer (B2C); business-to-government (B2G); consumer-to-consumer (C2C); and mobile commerce (m-commerce)’ (Andam, 2005, p. 9). Business-to-business (B2B) which constitutes over 80 percent of all e-commerce transactions refers to the business between two companies. Its main modules are e-frastructure and e-markets whereby the former refers to the architecture composing the B2B that includes: logistics; applications software including centrally controlled systems e.g. Oracle, Cisco); and outsourcing facilities e.g. webhosting among others. Cisco relies heavily on B2B receiving more than 90 percent of its business online. However most of the B2B transactions are in supply management including purchasing, inventory administration, distribution organization, and payment organization among others (Goldman Sachs Investment Research, 1999, Pg. 71). At Qatar Airlines, most of the business is done through business-to-consumer (B2C) as passengers directly book and pay for their flights from the airline portal (See Appendix 4, 5 & 6). Nevertheless, their is a large number of transactions done through travel agents who mostly use the internet to book, pay and initiate check-in procedure online thus translating this to B2B transactions (Wee, 2009). There have been numerous advantages attributed to B2B e-commerce. These include: reduced transaction costs by firms due to reduced costs in getting clients, time and money costs minimised as well as improved efficiency in completing transactions. Competence has therefore been greatly boosted due to reduced supply chain management and bureaucracy. At Qatar Airlines, the using e-business means that the airline is able to transact several flights efficiently and effectively for many clients, without the normal manual queuing procedures as demonstrated by the latest online checking-in facility. Another advantage attributed to B2B e-commerce is direct trading whereby traders are now able to deal directly with others hence reducing or eliminating the incidents of brokers or agents. This in effect contributes to expenditure reduction when e-marketing serves both the customer and producer at minimal costs to either of them. Other benefits in e-commerce are availability of choice in pricing procedures as the single online marketing forums constitute a large market for dealers that offers customers a choice of available prices. Likewise the supply-side of producers are able to pool resources in effective economies of scale as they are able to source for cheaper raw materials (Andam, 2005, p. 11). Mobile Commerce Analysis A study by Cisco Internet Business Solutions Group (IBSG) in 2008 outlined how cell phones have now emerged as a major marketing channel for both digital and online transactions. This include either through the short messaging service (SMS) or the now popular condensed internet viewing through the mobile phones (See Figure: 3) (Barke, 2008). Figure 3: Source: Cisco.com According to the Cisco IBSG survey, there are ‘three times as many mobile-phone subscribers (3.3 billion) as Internet users (1.3 billion) worldwide.’(pg. 2) Mobile phone technology has enabled the use of SMS, internet interface and other facilities to advance e-market to the next level. Qatar Airlines has already integrated these features in the online check-in feature available for approximately 90 minutes before departure and sending updates to the clients (Appendix: 3). Conclusion and Recommendations The significance of e-business has been aptly demonstrated by the successes of Qatar Airlines online portal that has efficiently utilised a practical e-commerce strategy to attract numerous potential and existing clients to sample their flights. The emergence of social networking as the next major media forum provides an opportunity for further growth. Similarly the mobile telephony technology has wide-ranging potential for growth in e-marketing and e-commerce. The Porters Five Forces model study of the market revealed that Qatar Airlines has a strong competitive advantage with minimal threats from either substitute products or market entrants. A PESTLE matrix analysis to assess the impact of e-business illustrated the effectiveness of online technology to enhance a firm’s and industry growth using the e-business channel. E-business is now the most important strategy for most business and it has now become indispensible for a majority of modern firms both small and large. Recommendations To further enhance the airlines potential, Qatar Airlines can employ the Return on Opportunity (ROO) Assessment Model that will assist in discerning the effectiveness of its online strategies among its customers. This can be used to assess the efficiency of enterprise application integration (EAI) solutions that enable the integration of diverse applications into one forum that is accessible to a singular user. Qatar Airlines should also use the social networking forums like Facebook and Twitter that currently rely on customer groups as a viable e-marketing strategy. This will assist the firm tap into the largest active online users marketing the firm globally by either linking its website to this sites or advertising there. It is currently set voluntarily by Qatar Airlines customers and admirers (See Appendix: 6) Qatar Airlines should also improve its advertising in the large search engine websites like Google, Yahoo!, and MSN which use web-analytics to enhance the full use of search engine marketing. It has been estimated that 90 percent of internet users rely on search engines to research on desired merchandise, services and for other information. This factor is highlighted by the fact that most users use the first 10 to 30 search results or the first three pages hence making others ineffective. Internet marketers therefore focus on natural search engine optimization or the strategy that ensures their website appears on this visible pages or listings (Direct Traffic). Qatar Airlines must also initiate aggressive e-marketing techniques including paid placement or pay-per-clip (PPC), demographic, contextual advertising, and paid inclusion. Similarly using behavioral targeting then develops from the recorded behavior of the user; the airline can enhance its marketing targets. According to surveys done by Marketing Sharpa and IMedia Connection, a majority of companies spend more on behavioral targeting, as they were largely impressed by the impact. A Forrester Research study also confirmed that 52 percent of the respondents in the survey were already utilizing the sector. They identified the main advantages of behavioral targeting of further click-through at over 35 percent more, extra conversions at 26 percent extra, and enhanced ROI of over 21 percent (Clay 1-4). Lastly, Qatar Airlines can enhance its management system through training to curb instances of poor customer services as reported in the HelloPeter.com Report. Intensive re-training of staff on customer service and redevelopment of internal systems in addition, as this is usually a periodic event for many organisations (See Figure: 4). References Andam, Z. R. (2005). E-Commerce and e-Business. Kuala Lumpur, Malaysia: The e-ASEAN Task Force & UNDP Asia Pacific Development Information Programme (UNDP-APDIP). Barke, C. M. (2008). Cisco E-commerce Study Reveals Mobile Phone to Be New 'Fourth Channel' for Revenue. Retrieved November 16, 2009, from Cisco Systems Inc.: Beijing Review. (2008). AIRLINE INFORMATION. Retrieved November 17, 2009, from Britannica Online: http://www.brittanica.com/AIRLINE-INFORMATION.html DTI. (2004). ACHIEVING BEST PRACTICE: An introduction to e-Business. London: DTI Publications Orderline. Direct Traffic. Internet Marketing. 2 February 2008. Direct Traffic Ltd. [Accessed on 17 November 2009 at . European Commission, D. E. (2008). ICT and e-Business Impact in the Transport and Logistics Services Industry. Brussels: Impact Study No. 05/2008. Goldman Sachs Investment Research, E-commerce/Internet: B2B: 2B or Not 2B? Vol. 1.1, 16, Pp. 68-71, 1999 Hellerstein, M. S. (2001). Content Integration for EBusiness. Hayward, CA: Cohera Corporation. Hellopeter.com. (2009). Qatar Airways - Customer feedback and analysis (last 12 months). Retrieved November 11, 2009, from Hellopeter.com: Ireland Department of Enterprise, T. &. (2004). eBusiness Strategy: Optimising Usage of ICTs by Irish SMEs and MicroEnterprises. Dublin: Ministry of Enterprise, Trade and Employment: Department of Enterprise, Trade & Employment, Ireland. Kėdaitiene, A. (2008). Impact of E-Business on the Effectiveness of Enterprise Performance. Lithuanian University of Agriculture. Kelly, D. (2000). Effectiveness Means e-business Success. Retrieved November 18, 2009, from Techrepublic.com.: http://www.techrepublic.com/Effectiveness_means_e-business_success.html Magali Dubosson-Torbay, A. O. (2002). eBusiness Model Design, Classification and Measurement. Thunderbird International Business Review , Vol. 44, No. 1: Pp. 5-23. Media.ameinfo.com. (2007). Qatar Airways chooses Flip Media. Retrieved November 18, 2009, from media.ameinfo.com: MRA, Marketing Research Association. Use of Internet for Conducting Opinion and Marketing Research. MRA Internet Ethics Guidelines 2000: 1-6. Pigneur, A. O. (2002). An e-Business Model Ontology for Modeling e-Business. 15th Bled Electronic Commerce Conference: e-Reality: Constructing the e-Economy (pp. 1-12). Bled, Slovenia, June 17 - 19, 2002: Ecole des HEC, Université de Lausanne. Pigneur, Y. (2002). A framework for defining e-business models. HEC Lausanne: Ecole des HEC, Université de Lausanne. Qatar Airways. (2009). Corporate Travel with Qatar Airways - a 5-star experience. Retrieved November 18, 2009, from Qatarairways.com: Qatarairways.com. (2009). Alternative Fuels: Taking Leadership in the Application of Cleaner Alternative Fuels. Retrieved November 11, 2009, from qatarairways.com: State of Victoria. (2004). Introduction to eBusiness. Victoria: Department of Communications, Information Technology & the Arts (DCITA). Story, L. (2008, March 10). To Aim Ads, Web Is Keeping Closer Eye on You. Retrieved March 17, 2009, from New York Time Online: Timmers, P. (1998). Business Models for Electronic Markets. Brussels: European Commission. Trombly, R. (2000). E-Business Models. Retrieved November 18, 2009, from Computerworld.com: http://www.computerworld.com/E_Business_Models.html Tynan, D. (2009). When the Web Got it Wrong: The best new Internet hoaxes. Retrieved November 18, 2009, from Networkworld.com: Wee, N. (2009). Qatar Airways case study. Doha: Mobiqa.com & Qatar Airways.com. Appendices Figure: 4 Table 3: World Internet Usage - 2003 89% in Sweden 67% in Germany 84% Australia 63% in France 81% in the US 62% in Spain 80% in the UK 60% in Italy 79% in the Netherlands 52% in Brazil 74% in Hong Kong Source: Australian Federal Department of Communications, Industry, Technology and the Arts. Appendix: 1 Competitive Environment Analysis (Porter’s Five Forces) Bargaining power of suppliers: Qatar Airways is an international airline passenger and cargo transporter. It needs to source its supply of airplanes, spare parts and fuel. Similarly, the airline needs to lease hangers; loading facilities and offices in it are over eighty destinations worldwide. The airline is therefore wholly dependent on its suppliers for its major trade products and services. It must expend considerable time and resources to develop its regular suppliers to its customer requirements. However the lack of elevated demand for these products lessens the impact. As such, the switching cost of suppliers is relatively high but the bargaining power of its suppliers is perceived to be medium. Bargaining power of customers: Qatar Airways as service industry provider draws its client base from international travelers. Though the company has built a strong niche for itself, its customers have a wide range of choices. However, its customers are not organized and they do not have a collective bargaining forum. Switching cost for its customers is low. Overall, the bargaining power of it customers is perceived to be high. Threat of new entrants: This business requires creating a unique brand presence and maintaining it, which acts as the primary entry barrier in an otherwise competitive market. Without a clear differentiator, the entry barrier into this industry is low. However, Qatar Airways seems to have created a strong brand presence, which will help in mitigating the risk of low entry barrier into the industry. Threat of substitute products: The threat from substitute products seems to be low in the foreseeable future owing to the very nature of the international cross border travel in many parts of the world except Europe which has developed high speed trains. As such there is a possibility of such advanced travel sectors extending to other regions hence constituting a threat to the industry. The overall the threat of substitute product nevertheless is low. Competitive Rivalry within the Industry: The industry is highly competitive especially with the onset of global recession which led to reduced air travel. There are several competitors in this field. The competitive rivalry within the industry is therefore very high. Appendix 2: PESTLE Matrix Analysis Political Economic Political interference in this industry is relatively low in most destinations that use e-business. Risk of adverse legislations is not very high. However, adverse legislation could arise owing to sourcing from other countries and sourcing from suppliers who use unethical means of production like phonographic material, spamming, and hacking. Inter-country relationships in this sector are good. However, relationship with some sourcing countries may not be very good e.g. Israel. No price regulation or control is envisaged in this industry. E-business performance is directly proportional to the level of consumer spending, which is dependent on the economy. E-business is not geographically confined. No geographical constrain existing. Seasonality/ weather issues are not a factor in internet usage The e-business requires minimal cash outlay hence not restrictive to market entrants Constant new innovations however require firms to regularly update their software and hardware. Social Technological Consumer attitudes/ opinions and media views are generally positive. Great potential of the market due to the popularity of social networking forums like Facebook, Twitter, YouTube and MySpace.com. The emergence of mobile phone as a major catalyst for social interaction has also offered opportunities for further growth. Increasingly, online sales in becoming a mode of choice for consumers. E-business is a technologically dependent system. Implementation of advanced architecture with rapid development of new software needed Innovative concepts always required developing a competitive strategy. Legal Environmental Litigation from disillusioned customers is a risk. Copyright violations prevalent due to the ambiguous nature of the internet. Hacking and misinformation constitute a threat. E-business is very environmental friendly since it employs a paperless environment. Appendix 3: Online Mobile Phone Check-In Procedure Source: Mobiqa.com Appendix: 4 Source: http://www.addme.com/reports/qatarairways.com Appendix: 5 http://www.markosweb.com/www/qatarairways.com/ Appendix 6 http://pagedata.insidefacebook.com/page/view/238624/ Read More