3.9.4 Assessing the greater use of digital technology

• Digital Technology?

  -E-commerce and M-commerce

  -Big Data

  -Data Mining

  -Enterprise Resource Planning
• M-commerce = business transactions are conducted electronically by mobile phones
• E-commerce = buying and selling online when business transactions are conducted electronically on the internet.
• Big Data = process of collecting and analysing large sets from traditional and digital sources to identify trends and patterns that can be used in decision making. e.g. supermarket loyalty cards.
• Data Mining = process of analysing data from different perspectives and summarising it into useful information. e.g. McDonalds promote the food that is most popular
• Enterprise Resource Planning (ERP) = a software system that helps businesses integrate and manage their complex financial, supply chains, manufacturing operations and HR systems.

  e.g. DPD offers customers track parcel
• Advantages of data mining?

  • Identify previously unseen relationships between business data sets
  • Better prediction of future trends and patterns
  • Extract commercial from big data sets
  • Generate actionable strategies built on insights
• Advantages of ERP?

  • Better control over assets, cash flow and accounting
  • Streamlined production and delivery
  • Improved customer service
  • Helps attract and retain good employees
• Disadvantages of ERP?

  • Expensive (High fixed cost)
  • Resistance to change from employees leading to lower user adoption
  • Poor training meaning it is too complex for staff to use
  • Ongoing upgrading and management costs
• Impacts of E-Commerce on Marketing?

  • Shortened product life cycles
  • Greater use of digital promotion
  • Greater use of dynamic pricing
  • Increased need for localisation
• Impacts of E-Commerce on HRM?

  • Employees need to have a broader range of skills
  • Workforce planning - to support highly seasonal demand
• Key impacts of E-Commerce on Operations?

  • Logistics behind large-scale e-commerce platforms are complex
  • Network economies of sale are increasingly important - where extra customers, products and suppliers are added to the platform at very little cost
• Key Impacts of E-Commerce on Finance?

  • Significant investment required to set up e-commerce platforms and to integrate with other systems
  • E-Commerce likely to involve greater use of multi-currency transactions.
• Business Model = way a business tries to make revenues and profits
• Examples of how e-commerce is challenging existing business models?

  • Print magazine readership - consumers prefer to browse online hence lower print circulation and subscription revenues falls
  • Data Storage Devices - memory stick demand has fallen due to implementation of 'clouds'
• First Mover Advantage = The advantage gained by initial significant occupant of market segment or industry
• Advantages of being a first mover?

  • Potential to make a lasting impression on customers
  • Sustainable advantage when there is a high costs involved for customers to switch brands
• Disadvantages of being a first mover?

  • First movers bear the economic burden of developing a new market
  • Followers into the market can learn from the mistakes of the first movers hence reducing risk
  • Followers can use newer technologies that became available