QUESTION

Case Study

 

AusNat is a SME company based in Creswick, Victoria, with a shop front retailing a range of horticulture products (including a range of propagation equipment, greenhouses, pots, sprinkling systems, and watering accessories, fertilisers and washes, hydroponic equipment, gardening products, sprays, tree guards and stakes, plants, seedlings, seeds, and bulbs). In addition to the retail business, the company operates a wholesale export business specialising in Australian native fauna. AusNat propagate the native species locally. They are a small family-owned business with capitalisation of $A12M, annual sales of $A3M, increasing at two percent per annum, and net profits of eight percent of total sales. The younger members of the management team are university educated, with the others industry experienced. However, in an ever-changing industry, their future business is uncertain.

 

Their main business is the wholesale sale of Australian native seeds and seedlings to International commercial retailers, however they do supply to Australian domestic and commercial retailers (currently 50 percent of sales and 50 percent of profits).

 

 

While AusNat grows its own stock, the main suppliers for the related horticulture products are based in to the AusNat are based in Perth and Sydney, although several product lines are imported directly from the UK. Supplier relations are all paper-based transactions, while long-term contracts are managed using email and facsimile transmission of orders.

 

The AusNat management team is keen to expand the retail sales, which are potentially very profitable for the company and to improve relations with suppliers, and growers. To do this one member of the management team (who recently graduated from the University of Ballarat) has suggested the company create new online channels for sales, marketing, and supply chain management.

 

You have been called in as an internet and management consultant. AusNat wants to know how e-commerce business technologies could be used to improve the company’s operations. The company is keen to leave as much open as possible – you have been told that it is a ‘clean sheet’ strategy but cannot consume more than half the profits of next year’s business. The Chief Executive, Ms Grower, needs a report from you to give the board a specific brief, along with an e-Commerce website.

SOLUTION

Introduction

 

This E-commerce report is a compilation that defines ecommerce and describes the scope of application of e-commerce technologies in AusNat ‘business venture. The report is an assemblage of the business solutions to be presented to AusNat a small family-owned business with capitalisation of $A12M, annual sales of $A3M. For their new strategy of expansion they are willing to pay $A1lakh. The new business strategy will help them to improve their profitability and topline. The company will be able to reach to its ultimate consumers by adopting the e-commerce route.

It is a report which explains about the strategy adopted by a product oriented firm to increase its revenues. It describes how we shall steal the market share from the existing competition , what strategies they should employ, all aimed at convincing the Venture Capitalist to adopt e-commerce strategy in the times of globalisation. Also, it includes a description of the adopted business model, the relevant legal, organisation and cultural issues that may impact on our venture and a full description of the high level online marketing strategy and promotional plan the company intends to adopt and execute.

The E-commerce Venture document further describes to the Venture capitalist the employed e-commerce architecture, the selected development approach for the e-commerce platform, a usability plan and a prototype of the website.

At the end of it all, the strategies adopted to develop and measure the success of the idea.

 

 

 

E-Commerce Business Model

 

According to Chesbrough & Rosenbloom (2007), a Business model is a description of how a company intends to create value in the market place. It includes that unique combination of products, services, image, and distribution that the company carries forward. It also includes the underlying organization of people, and the operational infrastructure that they use to accomplish their work. A business model is the method of doing business by which a company can sustain itself that is, generate revenue. The business model spells out how a company makes money by specifying where it is positioned in the value chain (quick, 2007).

 

 

 

 

(Business model design template, Source (businssmodeldesign, 11/ 2005))

The components and functions of a business model are to:

According to Chesbrough & Rosenbloom, these are the six components of business for a model:

• Articulate the value proposition, that is, the value created for users by the offering based on the technology;
• Identify a market segment, that is, the users to whom the technology is useful and for what purpose;
• Define the structure of the value chain within the firm required to create and distribute the offering;
• Estimate the cost structure and profit potential of producing the offering, given the value proposition and value chain structure chosen;
• Describe the position of the firm within the value network linking suppliers and customers, including identification of potential complementors and competitors;
• Formulate the competitive strategy by which the innovating firm will gain and hold advantage over rivals

E-Commerce Architecture

 

The different types of transactions recommended in this architecture are :-

Business-to-Business (B2B):

In this the transaction is done between two different business organisations. Usage of internet by organisations has become an effective medium to support all business. The products of AusNat can be sold to other whole sellers. It will open new doors of business opportunities.

Business-to-Consumer (B2C):

This is the business or commerce conducted by the business organisations with an individual customer over the internet. The services performed during this process are online banking, travel services etc. The aim of supplying its product to its end customers can be achieved and this will increase the retail customers for AusNat.

Consumer-to-Business (C2B):

During the process when the customer wants to know about the product, services provided by the business organisation on the internet, these transactions occur.

Consumer-to-Consumer (C2C):

In this the transactions held in between the consumer to consumer like interact with each other.

OSI MODEL LAYERS

Presentation Layer:

The presentation layer is the webpage of the site that customers see when they visit to the e-commerce site. It controls the appearance of site including fonts, colour and buttons. Although there is a lot of information about the products in the related pages but most of the data the customer can get by this layer. It is very important that how we introduce a product and information regarding to the consumer.

Application Layer:

The most prevalently used layer of the OSI model is the Application layer. In an e-commerce application this layer handles the business logic. This layer encapsulates the heart of business banking like management rules, business concept.

Database Layer:

The detailed information about the products like product description, price, usage etc, is explained in this layer. For an e-commerce application this layer has database management system. It is also possible to keep track of the customer details, what they have ordered in past in here. This layer manages the storage of data.

WHY 3-TIER ARCHITECTURE?

The term e-commerce is generally said to be a business transaction by means of using a telecommunication networks.

Actually there are different types of technologies used in e-commerce and they are

1. 2- tier architecture
2. 3-tier architecture
3. N-tier architecture

2-tier architecture is client server architecture where the processing load can fall either on the server or on the client.

Among the above mentioned architectures we use 3-tier architecture for our venture.

As the name suggests a 3-tier application is a program which is organised into three different major disjunctive layers. They are

1. Transaction processing (TP) monitor
2. Message servers
3. Application servers

 

Transaction processing monitor technology provides the capacity to develop effectively, run and manage transaction applications. This technology is used in customer services, data management, security systems and in delivery order processing. It is also having a capacity to connect various data bases.

Message servers have the ability to connect to various data base sources like (Relational DataBase Management system) RDBMS. Here messages are processed asynchronously. There are very sound business solutions for the wireless infrastructures of m-commerce.

The applications belonging to are very scalable. It has less concern with the security. Supporting and installation costs are less on a single server rather than maintaining them on a desktop client.

 

 

BENEFITS OF USING A 3-TIER ARCHITECTURE:

 

1. Component roles are clearly defined within a 3-tier framework.
2. Results in quick development during the reusability of business component.
3. Change management of the system is easy.
4. While utilising this we can find easy in transformation of system.
5. Scalability:

It is not necessary to require the connection from each and every client to the data base.

Transaction processing (TP) monitors can manage the number of application servers available.

1. Improve data integrity:

For the databases to be updated the middle tier allow only the valid data.

1. Improved security

As it is more secure, business logic is placed in a more secured central server.

 

Risks With 3-Tier:

It is a complex work to build 3-tier architecture as the programming tools do not hold all the services required. When compared with the other architectures, the supporting products implementing 3-tier architecture is not established.

Solutions to the Risks:

Distributive enterprise computing is considered as a precise alternative workable to it. When reliability and scalability requirements cannot fulfil the existing multi layer technology, Transaction Monitors (TM) can be the valid choice.

 

Platform /Technology Recommendations:

 

For rapid development and deployment of web applications we use the web application LAMP, which refers to the tools Linux, Apache, mySQL, and PHP. To provide a platform for developing web based applications, the LAMP tool provides a collection of software programs.

Linux-it is an open source operating systems

Apache- web server which serves both static and dynamic web pages.

MySQL- database management system makes best use of SQL to process data.

PHP- programming or a scripting language.

This tool mostly comprises of two-thirds of servers, databases and scripting languages.

 

Some features of LAMP:

 Integration:

While compiling PHP, we can decide which extensions are available can be decided by us.

Community and News:

Huge amount of information can be gathered by the mails and news for installation and development problems.

Security:

As it is used by many communities and people, this is a stable and secured technology.

Development Approach

 

A system development methodology refers to the framework that is used to structure, plan, and control the process of developing an information system. There are several software development processes for developing a software product and each describing approaches to a variety of tasks or activities, the main processes are

• Waterfall
• Iterative

Waterfall

The waterfall model is “a sequential software development model (a process for the creation of software) in which development is seen as flowing steadily downwards (like a waterfall) through the phases of requirements analysis, design, implementation, testing (validation), integration, and maintenance.”  (wikipedia 2008)

 

 

Initial investigation

 

Requirements

Definition

 

System Design

Coding, testing…

 

Implementation

 

Operation &Support

Figure . (Steps of waterfall model, Source-Wikipedia)

 

Basic Principles:

1. Project is divided into sequential phases, with some overlap and splash back acceptable between phases.
2. Emphasis is on planning, time schedules, target dates, budgets and implementation of an entire system at one time.
3. Tight control is maintained over the life of the project through the use of extensive written documentation, as well as through formal reviews and approval/signoff by the user and information technology management occurring at the end of most phases before beginning the next phase.

Strengths:

1. Ideal for supporting less experienced project teams and project managers, or project teams whose composition fluctuates.
2. The orderly sequence of development steps and strict controls for ensuring the adequacy of documentation and design reviews helps ensure the quality, reliability, and maintainability of the developed software.
3. Progress of system development is measurable.
4. Conserves resources.

Weaknesses:

1. Inflexible, slow, costly and cumbersome due to significant structure and tight controls.
2. Project progresses forward, with only slight movement backward.
3. Little room for use of iteration, which can reduce manageability if used.
4. Depends upon early identification and specification of requirements, yet users may not be able to clearly define what they need early in the project.
5. Requirements inconsistencies, missing system components, and unexpected development needs are often discovered during design and coding.
6. Problems are often not discovered until system testing.
7. System performance cannot be tested until the system is almost fully coded, and under- capacity may be difficult to correct.
8. Difficult to respond to changes.  Changes that occur later in the life cycle are more costly and are thus discouraged.
9. Produces excessive documentation and keeping it updated as the project progresses is time-consuming.
10. Promotes the gap between users and developers with clear division of responsibility.

Iterative

Iterative is used to describe a heuristic planning and development process where an application is developed in small sections called iterations. Each iteration is reviewed and critiqued by the software team and potential end-users; insights gained from the critique of iteration are used to determine the next step in development. Data models or sequence diagrams, which are often used to map out iterations, keep track of what has been tried, approved, or discarded, and eventually serve as a kind of blueprint for the final product.

(software quality 2008)

Figure. (Iterative usability tuning, source-google)

Marketing Strategy

 

We need to have some marketing objectives for our venture. These objectives help us for the research of marketing strategies and action to be performed. There are two types of objectives that we must think about: Financial and Marketing. In Financial objectives we should think about the long term return on investment hence knowing the profit for the current year. According to researchers, Marketing Objectives must be obtained from financial objectives. After setting up marketing objectives we should think about the orientation that our venture is having.

There are 3 types of orientation Product or service, Market and sales orientation.

According to the case study AusNat is having a Product Orientation as we are having more stress on providing the customer of easy accessibility of the product. Now we should think about the various marketing tools and techniques which can be helpful to AusNat to achieve their marketing objectives basically think about 4P’s to target a market.

1.         Product: In this part we should think about the different varieties of product since we are providing a product we should think about the added features which will force the consumer to purchase that product from them. The quality of the product is very important while selling through websites. In order to have loyal customers product quality plays a major role.

2.         Price: We should list different prices for different product which should be less from the market, also we need to check our payment period and credit terms.

3.         Promotion: What should be our advertising modes? Like leaflets, via emails, via text messages, how we going to promote, what is our marketing force?

4.         Place: What are the different channels that we are going to cover? What should be our location? What is our transport mode?

So we can say that different unique features in our venture as explained above. We are going to advertise on internets, via leaflets, through emails etc. We will provide support with in Coventry and according to postal code. Initial transportation has to be arranged to cover within our planned range. We can also talk about E-Marketing, as we are using digital technologies also there are various advantages of using digital technologies like it can be find out easily, 24 hour of service.

Ethical issues

 

One of the major concerns of internet is securing the data online or secured data transitions. Quite recently we heard about lots of news related to social networking websites that the personal information has been shared with 3rd party. Regular internet users might have came across multiple spam emails which seeking your details for various proposes. Securing the date over the internet will be a difficult task due to the access of information’s to any individuals. Any one over the internet can steal others work and rephrase it and claim it as their work.

Business Ethics are very important to establish a good relationship between client and organization, it generate a confidence on the customer to trust the organization. When ethics related to marketing then we have to consider B2B ethics and B2C. There are a number of B2B & B2C legal, marketing ethics and client ethics in advertising variables to consider closely.

Privacy related to the security aspect of an individual or information. The definitions of privacy can differ across individuals and cultures. The invasion of privacy can be avoided by the issue of privacy laws.

There are millions of millions of websites scattered all over the internet with full of individual and organizational details.  Web sites which lie within open, unrestricted areas of access those are interconnected using hyperlinks. This has the result that any user can access, view and downloads pages, as in principle every text is linked to every other. This will violate the piracy laws.

All e-commerce businesses must protect its customers with privacy policies. In the design of our website we been taken special care that we will not share any personal information of any user. As per our venture we don’t required to share any information of the users with 3rd party. Our venture is completely focused on dealing with consumer products which has less after sales support or helpless customer cares.

 

 

 

Legal issues

 

Legal issues are the major issues we all should be considering before we introduce any business plans. Every company has to follow the law and order to do any kind of online marketing.

Majority of the people is under the impression that e-commerce as being focused on developing products, setting prices, creating promotions and deciding how customers can purchase products. But people who market them deal with many more issues such as legal issues. We also need to consider how the society will respond to all the legal implications on an internet shopping experience.

Obtaining a “domain name” is typically the first step in setting up a Web site. Developing a webpage will be next tedious task. In most cases, this will involve contracting for the services of software and Web developers. Use of a Web development agreement is important to ensure that costs can be better managed and that ownership issues can be properly addressed.

The increased popularity of on-line communications and increased amount of online fraud actives made the people afraid to do online trading. People are frightened to involve any credit card uses over the internet. There are different kinds of online companies which implement secure transactions over the internet such as “Paypal”, paypal offers secured money transactions over the internet. But it’s again up to the user whether to believe them or not.

The set of legal and policy options is shaped not just by culture, history, and politics but by the constraints of technology. The political, legal and ethical issues on the Internet are regulated by national legal constitutions. Other legal laws to be observed are the Disability Discrimination Act of 1995; Freedom of Information Act 2001, the Human Rights Act and the Electronic Signatures Directives. All these laws will enable NURV to operate its online business legally, ethically and morally.

Our online venture will be completely follow the following laws which are applicable in Australia.  As per government rules we have to follow all the laws which are been passed in Parliament, following are few major ones.

• Data Protection Act
• Human Rights
• The Consumer Protection (Distance Selling) Regulations
• Electronic Commerce (EC Directive) Regulations

All these laws will enable e-mechanics to operate its online business legally, ethically and morally

Conclusion & Evaluation

 

The result of the strategy will be shown in the revenue performance of the company. It should go and touch new heights. If it is reflected in the financial results we need to indentify the gap and find out why the results are not reflected as e-commerce is a key tool in the current time of globalisation.

Undertaking a project in ecommerce is a big project and a challenging one as the area of development for ecommerce website is big. The project will consume a lot of time to design and implement an e-commerce website; this is due to the amount of development stages that will require building a dynamic e-commerce website. The drop down navigation menu allows the user to browse through the site, ensuring usability and the application is user-friendly.

 

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