International Business Management and E-business - Essay Example

In the recent times, internet has emerged as one of the most popular medium of communication with its wide range of applications in the ever expanding and highly competitive business environment. “The Internet with its low-cost entry and ease of use quickly changed how information was exchanged and removed the distance barriers for business partners. The idea of trading on the Internet has generated great interest especially among the smallest companies, formerly excluded from EDI1 usage (Gottardi et al. 2004). Internet has redefined the communication with its far reaching implications and has become one of the most important parts of any business strategy. The organizations must re-evaluate their business strategy to incorporate business plans so that the potential of the internet, which is fast emerging as a most power tool of communication, can be exploited for business purposes. The popularity of internet has been one of the most promising instruments of advancing one’s business base. As per the article “E-commerce is an economic solvent. It dissolves old business models and changes the cost structure, and rearranges links among buyers, sellers, and everyone in between. The impact of e-commerce is happening in phases” (Kalakota, Robinson, 2002). Internet, used as a potent communication tool, would provide a vast scope of income generation avenues through increased opportunities. The internet presence of the business through interactive module of the website would facilitate and encourage usage of ecommerce for a win-win situation and help exploit the vast potential of the internet to benefit business through the huge database of customers that internet provides at the click of a mouse. Case study of Tesco is an excellent example of using ecommerce to gain the popularity and trust of the people and the prospective customers. We would be using the case study to evaluate and analyze the methodologies and approach to ecommerce activities to develop and increase customer database. Tesco realized the vast potential of internet early and has been the first business enterprise to introduce e-commerce activity in UK. The interactive communication between the client and the business house has been utilized to develop a professional relationship between the two, that not only provides opportunity to improve and improvise the quality as per customer’s requirement and demand while at the same time, customer gets the best deal because of the competitive nature of internet, as a medium of business promotion technique. Smith P.R. and Chaffey D. have argued that E-commerce is commonly thought to include e-tailing, online banking and shopping – it involves transactions where buyers buy and shoppers actually shop. Others suggest e-commerce is any transaction such as a support or an online catalogue search (Smith, Chaffey, 2002). Tesco’s history has shown that the dynamic vision of its bosses combined with the creative and innovative approach in strategy and market planning would pay off in spades. Tesco started off as a small grocery retail outlet in 1924, by Sir Jack Cohen, rapidly added more than 100 stores in the next ten years. With ‘Pile it high and sell it cheap’ motto, Tesco was able to strengthen its market and in 1956, it opened its first self service supermarket, on the pattern of American supermarkets, selling products at low costs. The aggressive market strategy, based on acquisition, took the total number of stores to more than 600 in 1960s and thanks to Cohen, the largest supermarket of Europe came into being in 1961 in Leicester. 1970s and 1980s saw the rapid decline of Tesco primarily because of the low quality product. But under the dynamic leadership of Lord MacLaurin, Tesco underwent tremendous change. His business acumen was so sharp that he had realized early that introducing technology would accelerate the growth of Tesco manifold. He introduced technology in the two main areas of sales and distribution and at the same time, made special efforts to attract the upper class by opening superstores with high end products. MacLaurin made many changes in the basic format of the store by not only introducing a whole lot of new products lines including non food items, clothes, home appliances, electronic goods etc. but stores in new formats like Tesco superstore, Tesco Metro, Tesco Express, Tesco Extra were also opened to meet all segment of the society. Tesco superstores were characterised by huge space and were designed to attract customers of all strata. It was followed by an intensive drive to make committed customers as members through clubcard so that they could offer their customer extra benefits. This particular drive also helped them to analyse and identify the changing trends of the customer requirements which were used to gain leverage against their rivals. During 1996-97 Tesco became the first store in Europe to offer online delivery and took home delivery orders through phone, fax and internet. Technology thus became an integral part of Tesco strategy that was vigorously followed by later CEOs2 of Tesco. By 2001 Tesco had become one of three leading online stores with more than 50% grocery online sale in UK and today it has around 7,50,000 registered users and processes 70,000 orders a week! It has a huge network in Europe and has made its presence in America by tying up with its leading supermarket chain Safeway. The amazing turnaround by Tesco in late 1990s, to become the largest chain of superstores not only in UK but in Europe, is not only extremely praiseworthy but a very rare feat by any retailer as yet. MacLaurin had brought about the radical transformation of Tesco, from the near extinction to becoming the hugely successful chain of superstores, through his well planned strategy which was dynamic and defied the conventional mode of retailing. His belief and his visionary outlook for Tesco became the highlight of Tesco’s success in the coming years. His intrinsic trust in the new technologies and his charismatic personality that was able to convince others of his ideas was the decisive factors which facilitated easy implementation of those technologies in the stores. When one looks deeper into the success story of Tesco, one would realize that technology and e-business played a vital part in rejuvenating the core business activities of Tesco and helped it to rebuild the trust amongst its customers. When home delivery was introduced via phone, fax and online, the concept was new and radical because firstly the home delivery was a new concept which appealed to the working class as it saved their time. Secondly and the major reason was that the online presence of Tesco gave a radical zing to Tesco’s marketing strategy as internet was rapidly becoming popular. The interactive website of Tesco was a novel thing and initiated the process of customer relationship that later became its core strength. The ecommerce activities are backed by five major factors: aesthetic appeal of the website; the simple and user friendly website; interactive module backed by regular update and prompt response by the firm; high quality product which facilitate trust building; and highly secured online financial transaction. The CEOs of Tesco were highly professional and had the foresight to envisage a highly potential online market which they created by developing a website which was not only aesthetically appealing but efforts were made to make it simple and user friendly so that even a novice could use it without any difficulty. Concerted efforts were made by Tesco to get feedback by the online and offline customers and public so that appropriate improvements and improvisation in the site could be made. Tesco went so far as to employ a housewife on its payroll just so that it could get first hand point of view of the changes from a person who represents its customers. Lynn Pullum, the housewife, became the guiding factor for the major changes on the Tesco website which were solely designed to attract more customers to use online shopping. Tesco also used its online customer base to analyze the changing habits of the public and accordingly made changes in its business activities resulting in Tesco diversifying its core business activities to include new areas like insurance, counselling, personal finance, petrol pumps with attached Tesco convenient stores in the format of Tesco Express etc. Tesco’s market strategy was totally focused on the needs and requirements of the people and made continuous efforts to update its products line with that of the changing public demands. This was reflected on its continuously changing website which became increasingly people-centric. The huge success of Tesco website could be gauged from the fact that it has maintained its positions of being one of the four major ecommerce site and the top online grocery store in UK for the last ten years, in a row. Another important factor which has significant impact on the e-commerce activities of organizations is that its interactive website must be updated and well maintained. Tesco reasserted its superiority on its business acumen when it relieved its in-house managerial line from the tedious job of updating and maintaining the website and contracted an outside agency to upgrade and maintain a hassle free website that could be easily manipulated and individual features could be added by different unit managers, without heavy technology jargon or complexity. Interwoven’s TeamSite provided the much needed technology support and facilitated the management of ever expanding online operations of Tesco within and outside the UK. TeamSite contributed in three main areas to facilitate Tesco to better supervise their online operations. Templating makes it easier for the Tesco business managers to manage timing, look and feel of online campaigns to attract customers and disseminate information about new product lines and events. Smart context editing ensures that website contents are proof read and approved prior to submitting it for online shoppers. Lastlt, the flexible workflow allows managers to control and manage online and offline distribution of work customer channels. It is a hard fact that technology alone cannot guarantee success of any electronic commerce activity if it is not backed by a long term vision and creative inputs. It is imperative for organizations to have radical and innovative approach towards adopting new ideas which must be followed by aggressive marketing and quality service. Tesco strategy was a landmark in many ways. Tesco, after the fiasco of ‘pile high and sell cheap’ motto, literally made ‘quality at low price’ its motto because despite improving on its quality, it still maintained its status as being providing the best at the lowest prices which could be observed by the increasing number of online and offline customers which steadily rose and online customers alone accounted for whopping £300 million a year in 2001. It ensured that its promises are implemented in deed and service. The fundamental success of ecommerce depends on keeping tabs on the pulse of the public. Tesco managed this in the exemplary ways and was quick to analyze and encash the changing habits of the people by supplying them with latest products. It also made concerted efforts to promote and project its people-centric image by providing its customers with products and services which were customised as per their individual demands. It took its online and offline customers seriously and made customer satisfaction its priority which resulted in long term customer relationship which is fundamental to any retail business. Tesco was highly innovative in its marketing strategy. Its online recipe book was designed to tempt the housewives to try new and exotic dishes and indirectly made them shop for new products. It was also quick to realize that special events may require demands for specific products and therefore incorporated ideas for those events like Christmas, birthdays, barbeques etc. giving details of the products that would meet the needs of the customers. In same way, it made sure that the regular customers, under ‘my favourite’ have a list of all recently bought products, thus simplifying the process of remembering! Tesco also promoted computer literacy and internet proficiency among the less affluent class with the long term intentions of making them their customers. It was in fact a really commendable promotional activity that not only built its image as socially conscious enterprise but drew customers from unexpected quarters like old ladies and other persons who hitherto were afraid to use computers. The most interesting fact of the friendly image that it projected on its online delivery system was the provision of special note that often comprised of demands of the customers that went beyond the core activities of Tesco. Tesco often reaffirmed its people-centric approach by complying with those special requests at relatively low cost and earned its customers long term trust and commitment. The highlight of Tesco’s online business is its tie up with ivillage through which Tesco, not only contributes constructively to community work but it was a highly pioneering way to promote and popularise its products and services by contextually integrating them into the website of ivillage. The success of Tesco’s online business can be easily estimated by the fact that its partnership was sought by Safeway, largest retail chain of America, in upgrading and facilitating online operations of its online subsidiary, GroceryWork. The belief and trust shown on the online model of Tesco by america’s largest superstore chains, is a prime example of a successful electronic commerce activity that not only seeks fruitful alliances but is also sought after by its rival to give counselling and guidance on online operations. The fast changing environment of technological innovations has made it imperative for the people at large, to face the challenges of the new age with vigour and imagination. The fast and efficient mode of communication through the internet technology has created a huge database of potential market for the businesses. The need to tap this emerging market has become a necessity in order to compete in the new global environment. The electronic commerce, therefore, has become the need of the hour. The changing environment of new mode of communication which seems to have direct bearing on the consumer behaviour and may pose a serious problem to the marketing strategies of the business houses which are still following traditional ways of marketing their goods and services. One can therefore conclude with conviction that impact of e-commerce on the marketing development has successfully established that the e-commerce is fast emerging as a major platform of a new market designed to cater to the future. The internet has revolutionized the communication and has created a whole new segment of market with diverse needs and expectations. The e-commerce has opened new frontiers of market that has unlimited scope and opportunities. It has a vast potential that goes beyond the local market and embraces a global vision which could turn out to be economically more lucrative while at the same time, promoting global values. Tesco has shown how one can successfully exploit the potential of an area which was hitherto explored. Reference Case Study of Tesco. Gottardi G., Bolisani, E. and M. Di Biagi. (2004) Electronic commerce and open communities: An assessment of Internet EDI. International Journal of Services Technology and Management. Volume5. pp.151-169. Kalakota R., Robinson M (2001) E-business: Roadmap for Success 2.0. Addison-Wesley. Smith P.R., Chaffey D. (2002) E-Marketing Excellence. The Heart of e-Business (pp.35-78). Elsevier Butterworth Heinemann. Read More