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CHALLENGES AND OPPORTUNITIES OF ELECTRONIC BUSINESS

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1. Introduction

The electronic commerce business has increased and is based on the dealing of goods by electronic media such as television and internet. This kind of business is generally conducted with a set of easy payment options mainly conducted by cashless strategy. However, in case of the leading internet giant companies such as Amazon, eBay, and Alibaba, a tough competition can be noticed in case of both national and global scale. However, the competitive advantages of these companies are depending on different region and on their different business types. In the leading e-commerce business, e-Bay has achieved to penetrate in the Australian market with their unique marketing strategy. Thus, in the current study, the issue and opportunity of eBay in the Australian market have been portrayed systematically in the comparison with general e-commerce business model of the country.

2. Project objectives

The aim of the project is to determine the opportunities and challenges of general electronic business in the reference of business of eBay.

       To provide an overview of electronic business in both global and Australian market

       To analyse the opportunities and challenges of eBay in the Australian market

       To overview the existing challenges of electronic business in the country

       To provide effective recommendations for implementing strategic management

3. Project scope

The main scope of this project is to gain knowledge about the importance of e-commerce market. Along with this, in future, this research is going to be a quality resource for conducting other research work. Another scope of this study is to promote effective model of e-commerce business by overcoming the barriers and competitions. With the help of current project, the current challenges can be overcome with the provided recommendations.

4. Literature Review

4.1 Overview of electronic business

Apart from the Bricks and Mortar business model, the e-commerce business is propagating their tributaries since late 1970. According to Slack (2015), e-commerce business is a network-oriented business model which consists of Electronic Data exchange, e-mail, Electronic Bulletin board, Electronic fund transfer and other networking technologies. Wheelen et al. (2017) supported and commented that the main differences between traditional and e-commerce business is the communication process with the customers. In case of traditional business, a person to person direct communication is conducted whereas in case of e-commerce companies the main communication is conducted via electronic channel such as websites, emailing and many more. It has been noticed that almost 1.66 million people purchased goods in online in 2017 and the global e-retail market has achieved 2.3 trillion AUD. Among this statistics, eBay has gained 31 billion AUD on the global scale (abs.gov, 2017). On the other hand, Bettis et al. (2014) argued that the electronic business generally is of 4 types which are B2B, B2C, C2B and C2C. Among this business operation the eBay is a C2C business kind where the customers can post their personal advertisements in the websites and another customer can directly purchase the product. In this case, the buyer is another customer.

However, the e-commerce business is having major three strategies which include the area, money and interrelationship with customers and suppliers. Thus, with the help of this factor, the e-commerce business is propagating their business in both developed and developing countries. On the contrary, Daspit et al. (2017) argued that many governmental and global organisations are also interested in improving an economy and decrease the poverty level of a country by selling the patent and exportable goods via e-commerce business. As for example, International Federation for Alternative Trade (IFAT), are introducing 100 organisations among 42 countries for marketing such products from lower income countries. They are selling almost 200 to 400 million AUD in every year. Million of SME firms and personal business have been conducted by the leading e-commerce companies (australia.gov, 2017). Among them, eBay is the platform for auctioning used and new products. On the contrary, Delina (2014) argued that there are still some gaps present in the awareness of people to use the e-commerce sites for purchasing. In case of the developing countries, this issue is predominantly present and the governments of these countries are focusing on the development of their SME industries.

In the past few decades, there is an online business boom has taken place in the Asia Pacific region. As per the annual report of the e-commerce companies of Australia, the overall review is exceeded above 32 billion AUD in 2017 and the country has enlisted among the top 10 e-commerce supporting country of the world (Keikha and Sargolzaei, 2017). According to Dzhandzhugazova et al. (2015), the main reason for the increasing e-commerce business is the high rate of internet users of the country. On the other hand, in case of eBay, they are recognised company of Australia. However, there are some government issues that have been noticed in eBay where a collision and friction among the stakeholders are noticed. Among the subsidiary companies, Skype and GSI commerce are having tremendous market competition with the PayPal. After this confliction, finally, eBay has managed to penetrate their business in the Australian market after Amazon, Alibaba, and Google. On the contrary Gong and Wang (2015) argue that another major reason for the e-commerce blooming is the high rate of Smartphone and social media users that are present. Thus, it was easy for eBay to conduct their business since 1999 for 15 years. It has been noticed that the eBay Australian native sellers have capitalised about 78% of the global export market of eBay which makes the Australian eBay market sustainable (smartinsights.com, 2017) [Refer to Appendix 2].

Apart from this, in the Australian e-retail market a tremendous market competition can be noticed which impacts on the increased outcome of eBay. According to Janaćković et al. (2016), the market sustainability depends on the competitive advantage of a company which is influenced by the current competitors of the market. Thus, in case of eBay, there are numerous market competitors who are present and are providing the company a high market rivalry. Along with this, the Australian citizens are known as highest mobile phone User Company. However, the e-commerce business is having major three strategies which are the area, money and interrelationship with customers and suppliers. Thus, with the help of this factor, the e-commerce business is propagating their business in both developed and developing countries. On the other hand, Martin (2015) argued that the strong economy is also responsible for the emerging e-commerce business. In case of Australia, the GDP is of 88 AUD on average which promote a disposable income and high purchasing power of the citizen (australia.gov, 2017)

Thus, in the global market, the developed country more efficiently contributes to the online shopping. Along with this, the company has an urbanised society that takes interest in the online shopping. Along with this, due to the presence of various construction industries in the country the eBay C2C business are encouraged in the market.

4.3 Major challenges of electronic business: eBay

The main challenges of EBay Company are the presence of high market competition. According to Ramdani et al. (2016), high market rivalry affects the market sustainability in case of both traditional and e-commerce business companies. In spite of having a big brand name, the company has some issue in penetrating the Australian market in 1999. As opined by Roberts (2015), in case of an e-commerce retail company the reputation can be damaged due to the dishonesty of seller parties. Similarly, in case of eBay such disaster has occurred in 2016 due to the low-quality product selling by the customers (smartinsights.com, 2017). As a result, the market competition has been increased in the Australian market and the reputation of eBay has fallen. On the other hand, Savrul et al. (2014) opposed that; due to inferior quality of stuff, service, and products a company can lose their market reputation.

Thus, the company has gained massive negative feedback from the customers. However, in the present situation, this fraudulent activity is monitored by the eBay company effectively and has achieved competitive advantages in the market. However, Somsuk and Laosirihongthong (2014) argued that economy of a country impacts on the business revenue. Due to the loss of GDP of the country in 2014, the gross e-commerce revenue has been decreased drastically. As opined by Trigeorgis and Reuer (2017), in case of an e-commerce company the main focus after the customer satisfaction is the monitoring of fraudulent activities. Unlike Amazon, the eBay has an issue of online payment fraud in 2014 in the PayPal account. Lastly, it can be stated that the high product posting price of the company has `affected on the retention of potential buyers and seller. In case of the basic store, the fee was of 12 AUD whereas in the Premium store the fee was of 30 AUD (abs.gov, 2017).

Thus, the company has lost their potential customers which resulted in the loss of competitive advantages. According to Janaćković et al. (2016), the market sustainability depends on the competitive advantage of a company which is influenced by the current competitors of the market. Thus, with the help of this factor, the e-commerce business is propagating their business in both developed and developing countries. On the other hand, Martin (2015) argued that the strong economy is also responsible for the emerging e-commerce business. As per the Cooley's Theory of Competition and Conflict by Walter Bodenhafe, the reduced competitive advantage results in the loss of sustainability of the business in a specific marketplace.

4.4 Opportunities for business in Australian market: eBay

The main inventory strategy of eBay in the Australian market is the Quality Click Pricing (QCP). Along with the local buyers, the company also incorporated buyers from Abroad in order to get better revenue. It has been noticed that the local buyers also get a considerable amount of revenue from the eBay selling. Along with this eBay is having a cost-effective economic scale which influences the increase of business. Somsuk and Laosirihongthong (2014) opined that, in order to incorporate the strategies of building effective reputation, a company can be increased their branding through the social sites and electronic media. Thus, it can be stated that eBay also incorporated strategies to increase the numbers of customers and sellers by the social media and internet branding.

On the other hand, the company has Australian specific operations especially in case of construction and real estate business. In this case, they have used the Facebook, Twitter, LinkedIn and many more platforms. However, there are some government issues that have been noticed in eBay where a collision and friction among the stakeholders are noticed. After the confliction, finally, eBay has managed to penetrate their business in the Australian market. On the contrary, Trigeorgis and Reuer (2017) argued that the economy of a country and the lifestyle of people influence the monitoring e-commerce business. Thus, in case of eBay, the company has been influenced by the high GDP and Urbanised population of Australia. It has been noticed that there are 7.8 million shoppers of Australia who visit the sites and the majority of the shoppers are of age 14. On the other hand, there are only 3.8 million users visit in the Amazon portal in Australia (australia.gov, 2017). Thus, the competitive advantage of eBay is more than Amazon and other internet giant companies and they have achieved the competitive advantages [Refer to Appendix 3].

However, there are some market entrants providing eBay a huge market competition. Among them Amazon, OzBargain, Kogan are main (abs.gov, 2017). The main challenges of EBay Company are the presence of high market competition. According to Ramdani et al. (2016), high market rivalry affects the market sustainability in case of both traditional and e-commerce business companies. In spite of having a big brand name, the company has some issue in penetrating the Australian market. Thus, in case of eBay, there are numerous market competitors who are present and are providing the company a high market rivalry. Along with this, the Australian citizens are known as highest mobile phone User Company. However, the e-commerce business is having major three strategies which are the area, money and interrelationship with customers and suppliers. The main opportunity for the company in Australia is having a number of electronic media and social media users who found e-commerce business attractive. Among them, the dealers have also found the e-commerce module attractive in case of eBay.

4.5 Strategies to be incorporated into eBay

 

In order to mitigate the challenges, the company needs to incorporate strategic management in the company. Among the strategic management, the major concern should be innovation of the overall business model. Besides having a C2C business model, like Amazon they need to incorporate a parallel B2C business in order to promote their own brands and products in the Australian market (australia.gov, 2017). According to Vlachos and Gutnik (2016), the internal factors of a company are also responsible for their sustainability such as the employee strength and technology innovation. Thus, in order to achieve sustainability in the market, the company needs to incorporate the technology innovation. Along with the technology innovation, the company should train their employees about the newly incorporated technologies to increase the employee strength and knowledge. However, Zahay et al. (2015) argued that not only the technology innovation but also the market innovation needs to conduct in a company in order to lower the market rivalry.

Thus, the branding policy of the company needs to be changed. Along with using social media for branding, the company needs to incorporate direct contact strategies with their potential customers and take continuous feedback. With the help of effective direct branding and feedback taking policies, eBay is going to achieve a huge number of potential buyers and sellers. On the contrary Daspit et al. (2017) argued that in case of any e-commerce company the payment security is the most important aspect to be monitored efficiency. In case of eBay, the fraudulent activities in the PayPal account need to be mitigated with the help of suitable security system in order to increase the sustainability of business .

5. Conclusion

Henceforth, it can be concluded that the business of eBay is not getting enough market competition yet but there is a chance of competitive rivalry is emerging in the Australian e-commerce market. Having a potential to bloom their C2C business, the company needs to incorporate innovation plan with their existing technology and branding strategy in order to increase their potentiality in the market. This kind of business is generally conducted with a set of easy payment options mainly conducted by cashless strategy. However, the competitive advantages of these companies are depending on different region and on their different business types. In the leading e-commerce business, e-Bay has achieved to penetrate in the Australian market with their unique marketing strategy.

7. Reference list

abs.gov (2017) Australian Bureau of Statics. Viewed on 8/4/18. Viewed From: http://www.abs.gov.au/

australia.gov (2017) Electronic commerce. Viewed on 8/4/18. Viewed From: https://www.australia.gov.au/information-and-services/business-and-industry/abn-acn-business-management/electronic-commerce

Bettis, R., Gambardella, A., Helfat, C. and Mitchell, W., 2014. Quantitative empirical analysis in strategic management. Strategic Management Journal35(7), pp.949-953.

Daspit, J.J., Chrisman, J.J., Sharma, P., Pearson, A.W. and Long, R.G., 2017. A strategic management perspective of the family firm: Past trends, new insights, and future directions. Journal of Managerial Issues29(1), p.6.

Delina, R., 2014. Transparency in Electronic Business Negotiations–Evidence Based Analysis. Quality Innovation Prosperity18(2), pp.79-89.

Dzhandzhugazova, E.A., Zaitseva, N.A., Larionova, A.A., Petrovskaya, M.V. and Chaplyuk, V.Z., 2015. Methodological aspects of strategic management of financial risks during construction of hotel business objects. Asian Social Science11(20), p.229.

Gong, S. and Wang, Y., 2015, April. Research on Security Strategy of Electronic Commerce Industry Websites. In International Conference on Advances in Mechanical Enginnering and Industrial Informatics.

Janaćković, T., Milovanović, S. and Milovanović, G., 2016. The transformation of business models and markets in the era of internet and electronic business. Facta Universitatis, Series: Economics and Organization, pp.59-72.

Keikha, F. and Sargolzaei, E., 2017. Designing Two-dimensional Electronic Business-to-Consumer Models’ Map by Fuzzy Delphi Panel. Journal of theoretical and applied electronic commerce research [Online] 12(2), pp.21-36. Available   from: https://scielo.conicyt.cl/scielo.php?pid=S0718-18762017000200003&script=sci_arttext [Accessed on 8/4/18]

Martin, G.C., 2015. The importance of customer equity and branding: A research note. Journal of Business & Economics Research (Online)13(3), p.153.

Ramdani, D., Azis, Y. and Kaltum, U., 2016. Innovation as a driver for enhancing transient competitive advantage in volatile environment–a literature. Electronic Business15(12).

Roberts, G.E., 2015. Transformational leadership in a postmodern world: the presidential election of barack obama. Electronic Business14(11).

Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a globalizing business environment. Procedia-Social and Behavioral Sciences150, pp.35-45.

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd: London.

smartinsights.com (2017) eBay case study. Viewed on 8/4/18. Viewed From:  https://www.smartinsights.com/ecommerce/ecommerce-strategy/ebay-case-study-2/

Somsuk, N. and Laosirihongthong, T., 2014. A fuzzy AHP to prioritize enabling factors for strategic management of university business incubators: Resource-based view. Technological forecasting and social change85, pp.198-210.

Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic Management Journal38(1), pp.42-63.

Vlachos, I.P. and Gutnik, S., 2016. Together we e-export: Horizontal cooperation among Austrian food companies in global supply chains and the role of electronic business tools. International Journal of Information Systems and Supply Chain Management (IJISSCM)9(1), pp.17-40.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. Pearson: London.

Zahay, D., Schultz, D. and Kumar, A., 2015. Reimagining branding for the new B2B digital marketplace. Journal of Brand Strategy3(4), pp.357-372.

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