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E-commerce: Electronically Changing Management

Updated on May 3, 2013

Multiple authors have examined the issue of how e-commerce affects business management 1,2,3,4,5,6,7,8. All these authors focus on the quick information gathering and dissemination aspect of e-commerce.

Several researchers have examined the phenomenon of quick information gathering and dissemination in more detail4,6,7. It is widely held that information is one of the keys to running a successful business8,9,10,12. Porter11 states that information is critical in making offensive moves such as new product development and defensive moves such as reacting to new competitors entering a market. Grant9 further states that information is vital to analyzing rivals and their competitive advantage. So it should be no surprise that, when a technological innovation arrives that is capable of providing massive amounts of information quickly, competition begins to increase in the industry13.

Quick information gathering and dissemination through e-commerce may be beneficial to a firm along several dimensions. One such benefit to collecting and analyzing data may be targeting e-commerce advertising toward specific customers. E-commerce allows a firm to collect data on the individuals using it, synthesize that data, and structuring advertising based on the analysis. In effect, management can utilize e-commerce to show specific advertisements to people who are more likely to be interested in what is being advertised. In turn, this allows management to maximize the utility of the advertising.

Another useful dimension resulting from quick information gathering and dissemination is a potential increase in sales. A firm noticing a sales shift from one type of product to another might be witnessing a change in its life cycle phase. Firms that quickly recognize shifts in product phases can realize profitability through differentiation by providing replacement demand9,13. Having sufficient information for management decision-making can create the corresponding increase in sales.

E-commerce has opened up a whole new world of advertising possibilities14,15. Firms that advertise have the potential of using screen ads, banner ads, and pop-up ads to reach potential customers. With the electronic recording of data, these electronic ads cannot only be placed directly in front of customers but also be directed to customers that have the greatest potential to buy. This is especially important in the newspaper industry where the majority of income earned by a newspaper firm is from advertising. Newspaper firms can utilize e-commerce to collect data on individuals and target advertising using a variety of electronic means.

Footnotes

1Afuah, A. & Tucci, C. L. (2001). Internet business models and strategies. Boston, MA: McGraw-Hill Irwin.

2Boudreau, M. C., Loch, K. D., Robey, D., & Straud, D. (1998). Going global: Using information technology to advance the competitiveness of the virtual transnational organization. Academy of Management Executive, 12(4), 120-128.

3Globerman, S., Roehl, T. W., & Standifird, S. (2001). Globalization and electronic commerce: Inferences from retail brokering. Journal of International Business Studies, 32(4), 749-768.

4Johnston, R. B., & Mak, H. C. (2000). An emerging vision of Internet-enabled supply-chain electronic commerce. International Journal of Electronic Commerce, 4(4), 43-59.

5Kambil, A., Nunes, P. F., & Wilson, D. (1999). Transforming the marketspace with all-in-one markets. International Journal of Electronic Commerce, 3(4), 11-28.

6Kickul, J., & Gundry, L. K. (2001). Breaking through boundaries for organizational innovation: New managerial roles and practices in e-commerce firms. Journal of Management, 27(3), 347-362.

7Krishnamurthy, S. (2003). E-commerce management: Text and cases. Mason, OH: South-Western.

8Mahadevan, B. (2000). Business models for internet-based e-commerce: An anatomy. California Management Review, 42(4), 55-69.

9Grant, R. M. (2002). Contemporary strategy analysis (4th ed.). Malden, MA: Blackwell Publishers Ltd.

10Madnick, S., & Siegel, M. (2001). Seizing the opportunity: Exploiting web aggregation (Paper 144). Cambridge, MA: MIT Sloan Management Review.

11Porter, M. E. (1980). Competitive Strategy. New York, NY: The Free Press.

12Sherer, S. A. (1999). Information systems in manufacturing networks. International Journal of Electronic Commerce, 4(1), 23-43.

13Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review, 79(3), 63-78.

14Hoque, F. (2000). e-Enterprise: Business models, architecture, and components. New York, NY: Cambridge University Press.

15Plant, R. (2000). eCommerce: Formulation of strategy. Upper Saddle River, NJ: Prentice Hall.

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