TCL is a growing electronic company and it is a conscious organization that is instrumental in penetrates the market and captures its customers. To achieve this target the company needs constant changes in strategies in relation building its image along with customer preferences and facing competitions. In this context the incorporation of e-business provided a huge competitive advantage over its competitors.
According to Wigand (1997), electronic business is an integrative concept, designed to draw together a wide range of business support services. Several aspects such as products that are customized, genera; products, e-mail facilities under the platform of inter business communications, commodity support and maintenance facilities, customized service facilities, along with customer friendly services and other products and facility to use information from directories are chief advantage of the system. Furthermore, there are availability of statistics and logistics with other information system required by the management support. Thus, it could be stated that selling and buying facilities that act on the platform of World Wide Web through the use of internet can be enumerated as e-commerce. (Wigand, 1-10)
FMCG or consumer goods that are fast moving can be described as products that are fundamentally produced out of low cost but can be sold at a very fast rate. Additionally these types of products do not require a customer to expend a lot of thought, time, or financial investment. For companies that deal in FMCGs the margin of profit on every individual FMCG is less. However, isf the company can sell a huge number of goods than the company can earn a good profit. Thus, profit in FMCG goods always translates to number of goods sold.
Molla and Heeks stated in their article in 2007, that countries with developing economy and with growing purchasing power consist of about eighty percent of the population of the world and thus, it can be assumed, that the scope of e-commerce is huge with the growing use of internet. Molla and Heeks (2007) reported that e-commerce benefits are mostly limited to intra- and inter-organizational communications. So far the research has not supported that there are benefits like market access, customer/supplier linkages or cost savings for these firm in developing countries (Molla and Heeks, 95-108). Molla and Heeks recommended, however, that the manufacturer firms in emergent countries may be able to profit for B2B e-commerce if they expand a multi-prong policy aimed at construction of the resources and capabilities of their production and if they can expand electronic-mediated commerce routines with associates and clientele, and if they are able to concentrate on countrywide e-readiness and global trade convention. E-business provides a great advantage over other competitors by a great margin.
E-commerce helps to reduce inventory costs by allowing the company to access and utilize their supplier’s database. This allows for just-in-time inventory control, as the supplier and buyer are directly linked to one another for automatic restocking. The buyer can see availability and at what price. The supplier can see when the buyer is running low and act to re-supply immediately. The customer saves on warehousing costs (Wigand and Benjamin, 1995). By improving upon the processes, ensuring that adequate materials (inventory) is available as necessary and increasing collaboration to take advantage of concurrent work processes, e-commerce allows a company to reduce the time it takes to get its product to market. (Wirtz and Wong, 87–112). However, controls can be put in place to eliminate the need for approval of each and every activity, giving employees the ability to make some decisions by choosing from a list of pre-approved items (Wong, 539–567). When using electronic ordering, there is no longer any need to fill out requisition forms and purchase orders. Orders can be accepted, confirmed, processed and monitored via the e-Commerce link between the buyer and supplier. Suppliers can place their entire inventory in an online catalogue. Prices and products are those up to date and easily changed. It can also be tailored to provide different prices to different customers or transaction by volume. The catalogue can be customised by the customer, so that the customer is initially presented with a list of supplies that they regularly purchase instead of the entire catalogue. Billing and paying electronically are also possible through e-Commerce (Wigand and Benjamin, 1-10).
Because the system is online and people are making choices rather than completing forms free hand, there is greater accuracy. Because the system is tracking all data, there is greater reliability in the data that is pulled from the system, which does not miss items (Wigand and Benjamin, 7). Communicating electronically results in significant reductions in costs when compared with telephone, fax and paper-based transactions. Costs of paper supplies and telecommunications charges are also reduced (Wigand and Benjamin, 9). For example, software is now easily downloaded through the Internet rather than copied onto diskette or CD-ROM and mailed out (Wigand and Benjamin, 8).
Porter model: Adding value to business
It is essential to use the five force model by Porter along with the value delivery model, also by Porter, in the context of e-business because these elements of evaluation support the business statistics and identify the optimal market strategy. The working principal as per Porter’s five force model is the chief tool that evaluates an industry on a longer period of time and justifies the evaluation based over the stronger points and results of barriers during the entry period in a market, situation of the suppliers, behaviour of the buyers, rivalry amongst competing firms and threat of substitute products. On the other hand, the method of value delivery chain evaluation mainly focuses on the result of peripheral market structure or macro-environment factor on effectual performance of principal and support performance of business. (Porter, 126)
Strength of Entry Barriers
Australia, USA and UK are developed countries, for any manufacturer in products industry; these markets will be difficult to enter. The local taxes and tariffs on manufacturing industry are high. Start-up cost is high as well and the manufacturing facilities require extensive investment. This problem has been somewhat reduced now with implementation of World Trade Organization’s Free Tree Agreement. The product can be manufactured else where in world, with low manufacturing, labour costs and can be delivered to potential markets. New entrants also face hindrances because of strong brand preferences and customer loyalty. Cost advantages can only be achieved if production is manufactured in volume. Therefore, the entry barriers can be considered to be moderately strong. However, with the help of e-business the cost becomes much lower and thus entry barrier becomes manageable.
Bargaining Power of Buyers
Competing on cost aspect is often an indication of high power of buyers. However, the buyers are most often individual consumers, who tend to have low bargaining power. In case of hotels or any other bulk purchases, the buyer enjoys the bargaining margin. Switching cost of products is low. The quality and product technology is improving and information is readily available to potential buyers. In developed countries the demand of the product is still strong. Therefore, we can conclude that buyer’s bargaining power is low to moderate, depending on type of consumer as the cost of production be controlled with the help of e-business. (Molla, 95-108)
Bargaining Power of Suppliers
The industry of electronic products manufacturing has expanded globally. Parts and components can be procured from anywhere in the world. Suppliers are now competing on global level. The bargaining power of suppliers has reduced in recent years because of influx of television component manufacturers in Asian economies like China. The component manufacturers of Asian origin are cheaper and many foreign buyers have strategic alliances with them. Supplier manufacturing in high cost economies are working at a cost disadvantage as compared to China and Korea. Apart from material costs they are also paying high labour costs in developed economies, further threatening their operations. It is to note that cost of switching suppliers is not high. TCL is a well reputed company and with the help of e-business it should not have problem in forming alliances with potential suppliers. Therefore, we can conclude that suppliers for television manufacturers are facing fierce competition and have low bargaining power specially when dealing large manufacturers. (Wong, 539–567)
The price competition is fierce in industry. Costs have decreased as manufacturers have reached experience curve and scale of economies. Efforts in research and development are also strong in this industry. They have lead to constant improvement in product quality and introduction of newer and better technology over time. Competing firms realize that improved customer services also effect product’s sales over long term. Longer warranty periods and after sales services are provided by LG and Samsung. Exchange and promotional offers are also offered to customers. All above factors lead to the bottom line that competing sellers have strong rivalry. (Moodley, 155-178)
Threat of Substitutes
Innovation and advancement in technology has also bought with it substitutes to television. Amongst this are PC-TV devices that can receive television signals and connected to digital services. Also, online streaming of televisions to personal computers is also a substitute for television. Websites like Youtube.com, that stream videos of latest TV shows and movies have become increasingly popular. Windows XP media centre also promises to convert a pc into a sole media hub for a user from streaming TV shows and radio channels to downloading movies. These substitutes are low priced. These substitute products are also readily available to potential consumers. Customers switching costs are low. However, most consumers have hesitancy to switch to these substitute products because of lack of information and awareness, working on to the benefit of TV manufacturers. (Wirtz, 87–112)
As per Porter, it can be stated that there is a whole new world of opportunity with the usage of e-business. Impact of the development of proper IT Service Delivery Management practices and procedures in relation to support for a fast paced, demanding and changing business environment industry can aid small to medium sized units of organizations in greatly improving performance and productivity. The model is based on the importance of communication between organizations and employees along with other stakeholders and clients. The development of proper IT Service Delivery Management practices and procedures in relation to support for a fast paced, demanding and changing business environment has close links to Supply Chain Management and both together help to boost efficiency and significantly impact productivity. (Porter, 77)
Human resource costs are reduced as the need for training is reduced, since e-Commerce allows the use of a common interface (i.e. the Internet browser) to access all information and perform all tasks. This can also serve to reduce user frustration and improve accuracy as there is no need for printed records.
Because e-commerce uses standard software to interface with the system and it is shared amongst various companies, it can eliminate the need to support older network protocols and legacy software. It can also reduce the costs that are associated with developing and maintaining special client software (Wigand, 1-10).
The customer can find information whenever they need it, regardless of the time or location. It is a round-the-clock service, available every day of the year. Customers can find product information, pricing information and even technical support.
Links can be made to another business system working in real time. For example, a customer can get details of what is in stock and at what price. With supplier catalogues online, it is easy to find and order products because the customer does not have to know the exact name or product number, as they can search the supplier’s database for them (Wigand, 1–16).
Interfaces between regular suppliers and buyers can be personalized, so that the buyer is only getting the information they need and want. Services can be tailored for valued customers, such as recommending new products based on purchase history and can allow for the placement and tracking of orders, as well as payments online (Moodley and Morris, 158).
Although e-commerce enables a company to empower its employees, it also enables management to maintain control. Management can establish the limits within which an employee can work without requiring approval. This eliminates the need for managers to be constantly approving routine and/or regular activities. It also, eliminates maverick buying, as the employee is confined within specified parameters (Moodley and Morris, 159).
The global platform also enables the movement of goods directly between producers and suppliers and stakeholders. This removes an additional layer of intermediaries in the cost chain and truly realizes value along the chain. It will be interesting to watch if larger units and corporations to realize even bigger gains can adopt impact of issue.
Businesses have an economical benefit when they make available additional assessment to their customers or when they endow with the same worth to customers at a lesser charge. A business creates an economical benefit or competitive advantage when it generates superior value for its customer, because patrons are persistently looking for the largely outstanding value for their resources. Consequently, a corporation can either gives the purchaser additional value for their riches or can decrease the charge to the purchaser or in other words, reduce costs of the item sold, both in form of goods or services.
Molla, Alernayehu and Heeks, Richard. ‘E-Commerce Benefits’. Information Society, 23.2 (2007): 95-108.
Moodley, Sidney, and Michael Morris. ‘Does e-commerce fulfil its promise for developing country (South African) garment export producers?’ Oxford Development Studies, 32.6 (2004):155-178.
Porter, Michael. 2005. The Competitive Advantage of Nations. New York: The Free Press.
Wigand, Richard. ‘Electronic commerce: definition, theory, and context’. The Information Society, 13.4 (2006): 1–16.
Wigand Richard. ‘Electronic Commerce: Effects on electronic markets’. Journal of Computer Mediated Communication 3.3 (2005); 1-10.
Wirtz, James. ‘An empirical study on Internet-based business-to-business e-commerce in Singapore’. Singapore Management Review 23.2 (2001): 87–112.
Wong, Ping-ot. ‘Leveraging multinational corporations, fostering technopreneurship: The changing role of S&T policy in Singapore’. International Journal of Technology Management 22.5/6 (2001):539–567.