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Cause and effect of E-commerce on small family owned businesses
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Introduction
The last few years have seen the integration of the internet in business operations as a business strategy. Specifically, the 20th century has seen the adoption of E-commerce in most businesses, both large and small, so as to assure continuity of business. As research studies explain, the adoption of E-commerce in businesses and enterprises has been advantageous to businesses but some businesses have failed in their adoption of this strategy. In their study of the issue, MacGregor and Lejia state, “Over the last decade, the Internet and Internet technologies such as electronic commerce have experienced phenomenal growth. However, research shows that small businesses have been slow to adopt and to implement e-commerce due to a variety of barriers or impediments.” (MacGregor & Lejia 1-24). Small family owned businesses have especially been slow in their adoption and implementation of E-commerce as a business strategy, and for that reason, they tend to fail in their business operations. Accordingly, researchers have focused their studies on identifying the causes and effects of E-commerce on small family owned businesses so as to discover the benefits of E-commerce on small businesses.
This paper examines the causes and effects of E-commerce on small family owned businesses.
Causes and Effects of E-commerce on Small Family Owned Businesses
Small family owned businesses have long been influenced by E-commerce since the introduction of this phenomenon in the business industry. As a business strategy, E-commerce has enabled most small businesses in their continuity of operations, thus ensuring the success of these businesses. To understand the importance of E-commerce in small businesses, one must first consider the causes and effects of E-commerce on small family owned businesses.
Causes
One main cause of E-commerce on small family owned businesses has been identified. Market penetration has been identified as the main cause of the application of E-commerce in small family owned businesses. The business market is hard to penetrate especially for small businesses, as they are forced to compete with other larger companies. The application of E-commerce as a business strategy allows small companies to market their products and services to a wide market range. This, sequentially, allows small businesses to penetrate their respective markets with minimal trouble arising from having to compete with the larger and bigger companies.
Effects
“…the key objectives of most businesses remain as follows: 1. improve productivity, 2. manage inventory more cost effectively, 3. improve cash flow, and 4. improve customer service. Electronic commerce is one of the few tools available that can favorably impact all 4 objectives. To fail to aggressively adapt this tool is to miss the opportunity to re-engineer an inter-organizational playing field that is becoming the successful business domain” (Boynton 126). Not only does E-commerce reduce the costs of marketing and advertising for the company, it also increases productivity for the businesses. E-commerce exposes companies to a broad environment, thus encouraging more productivity by both the employees and the business as a whole. E-commerce has also been identified as being a tool for the improvement of customer service. This is primarily so because it allows more personalized services with customers, as customers have direct contact with the company. This, therefore, allows customers to provide immediate feedback to the company regarding their products and services.
Conclusion
The identification and recognition of the causes and effects of E-commerce on small businesses is necessary for the recognition of its importance in small and medium business enterprises. “The article focuses on the effect of electronic commerce (e-commerce) on the business world. It says that e-commerce will play a vital role in the success of companies. However, there are several issues which need to be addressed to succeed the e-commerce including process creation and resolution of inherent channel conflict.” (International Journal Of Retail & Distribution Management 122-123) Small family owned businesses can use the information gathered regarding the causes and effects of E-commerce on small businesses to successfully run their business operations. Only through the identification of this can small businesses succeed in their operations in the industry, and to gain competitive advantage.
Works Cited
Boynton, Allan G. Electronic Commerce: Focusing on Success. Chain Store Age 70.1(2004):
126. ABI/INFORM Global. Web. 18 Dec. 2011.
MacGregor, Robert C., and Lejia Vrazalic. E-Commerce Adoption Barriers In Small Businesses
And The Differential Effects Of Gender. Journal Of Electronic Commerce In Organizations, 4.2 (2006): 1-24. Business Source Elite. Web. 18 Dec. 2011.
“The Realities Of Web-Based Electronic Commerce.” International Journal Of Retail &
Distribution Management 26.3 (1998): 122-123.Business Source Elite. Web. 18 Dec. 2011.
Case Study on Reverse Logistics
Case study on Reverse logistics
Reverse logistics is process of handling goods from their intended final destination to the point of origin with the aim of acquiring their value or for the purpose of proper disposal. The process involves planning and controlling of the inventory process to ensure cost efficiency. The physical processes are remanufacturing and refurbishing of tangible goods. It also involves handling of returned merchandise as a result of recalls, damage, salvage and inventories. The reverse logistics manages the hazarders’ waste materials and asset recovery from the previous dispatches (Rogers & Tibben-Lembke, 1998).
The factors that are driving companies in implementing reverse logistic strategies include the information on the benefits of reverse logistics have resulted to great interest in other companies and legislatives on waste management that require the companies to manage on the disposal of their products from their customers. Other factors are cost reduction and customer satisfaction. Technological developments are rapidly changing the electronic consumer market. This makes companies dealing with electronics the major players in implementing reverse logistics (Price water House Coopers, 2008).
Reverse chain processes involving commercial returns occur when the goods being retuned have value in another market. Electronic products in markets within the developed nations become outdated at a rapid rate due to emergence of new products. The products that had been distributed to the market may lose value as new models of those products are made. Outdated electronics in developed countries are of great value to poor countries like in Africa. The reverse chain strategy employed in dealing with such products involves shifting them to other markets. Commercial returns are caused by customer dissatisfaction, overproduction and other factors.
Products under warranty forms a chain on return based on repairable products or components. Companies develop strategies to deal with the products that are covered under warranty. The repairable returns may be used as modules in other products. Exchange repair can also be carried out in which the returned products are repaired using good components from previously returned products. Manufacturing companies develop strategies on possible product recalls. The recalls may occur due to a manufacturing defect that is identified after the products are already in the market. The manufacturer takes the full responsibility of rectifying the defects. Strategies on refurbishing of products deal with end of user returns in which product may be of no use to the original user but still have value. End of life returns are the products in which their use is void accordance to the set rules. Companies use these products to reduce on the cost of production. The products may be refurbished to add value (Price water House Coopers, 2008).
The process of reverse chain involves five general processes that include: product acquisition, product collection, product sorting testing and deposition, product recovery and product redistribution and sales. Product acquisition involves the retrieval from market or from the consumer use. Acquisition of products from the market requires cooperation with the supply chains especially at the final end of the distribution chain. The collection of products involves shipment and storage in the facilities that will handle processing of the products. The products are then sorted to classify them on their quality. Sorting determines whether the products will be used in the next stages of reverse chain or they will be disposed. Products with quality undergo through recovery process in which they can be repaired, refurbished or dismantled into valuable components that can be reused. The recovered products are then reintroduced in the supply chain and their value obtained through sales (Rogers & Tibben-Lembke, 1998).
Reverse logistics implementation occurs for different reasons which in turn creates two different forms of reverse chains based on cost. Policies on product recall involves a process where the cost incurred is on the manufacturing company. The benefits of value addition are passed to the customers in case of a product recall. In the other forms of product returns the company benefits from the redistribution and sale of the products (Rogers & Tibben-Lembke, 1998).
The barriers to implementation of reverse logistics are costs that cannot be quantified in reverse logistics especially on products which leads to more cost. Lack of a proper management system makes it difficult to keep track of the products in the market especially for big companies. The time of processing claims and returns by customers creates a negative effect to the companies.
The awareness by top management on the benefits of reverse chain has created cross functional collaboration with other partners. Auctioneers form an important part in redistribution of returned products to the market. Products such as furniture can be easily refurbished and auctioned back to the market. The perception of the returned products as waste makes the reverse chain to be easily analyzed in obtaining an insight in cost and performance (Price water House Coopers, 2008).
Reverse logistics are an important part in managing costs that are associated with unprecedented product performance in the market and in sustaining customer needs. The level of awareness on the reverse logistics determines the benefits obtained from the process. Collaborations in the implementation of reverse chain are essential especially in managing product returns and redistribution of products.
References
Price water House Coopers (2008). Reverse logistics. Retrieved on April 14, 2012 http://www.remanufacturing.org.uk/pdf/story/1p293.pdf
Rogers, D. & Tibben-Lembke, R. (1998). Going Backwards: Reverse Logistics Trends and Practices. University of Nevada, Reno Center for Logistics Management Retrieved on April 14, 2012 http://www.rlec.org/reverse.pdf
Case Study Cindi Bigelow and the R.C. Bigelow tea company
Case Study: Cindi Bigelow and the R.C. Bigelow tea company
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(Institutional Affiliation)
Case Study Questions
What are the issues and problems that the company faces?
How do these issues and problems affect the company’s overall performance?
What are the possible solutions and alternatives for these problems?
Who will be responsible for implementing these solutions?
What are the consequences of implementing these solutions and alternative strategies for the company?
Summary
The R.C Bigelow Tea Company is a company located in Kentucky that specializes in the production and sale of tea products. Specifically, the company specializes in the blending and sales of both traditional black tea and herbal tea for its consumers. Accordingly, the company is well known in the food service industry, and for that reason, has a great market share, with most of its products being readily available in the market. As a family-owned business, the company has been and still is being run by the Bigelow family with Cindi Bigelow as the current chief operating officer. R.C Bigelow’s Tea Company’s operations are guided by four main principles including establishing strong relationships with both suppliers and consumers, employee satisfaction, customer satisfaction, as well as, ensuring the practice of corporate social responsibility. Evidently, these principles have successfully assisted the company in building and maintaining itself as a great brand in the market. These principles have also assured the company of competitive advantage in its industry, hence the success of the company.
Because of the changing trends in the industry, the company identified the need for new product development so as to keep up with the competition. Accordingly, based on an examination of the company’s customer base, the chief operating officer considered the introduction of new tea flavors as a way of attracting the younger customers. Accordingly, the older customer base is important to the company, and for that reason, still needs to be maintained even with the company’s entry into the younger customer base. However, a problem arises when the company discovers that the greatest majority of its home country’s population prefers ice tea to hot tea. Additionally, the younger customers that the company intends to attract will also take time to convince and influence into drinking hot tea, as opposed to, iced tea. This is because, the company had previously made wrong decisions regarding the production of ice teas, which in turn caused their iced tea products to fail in the market. Fundamentally, the company seeks to expand its market share to include the younger customers, as they believe that this will assure market growth for the company. This decision has come about because the company feels like the company is not experiencing growth with the current customer base, which is the older customers.
Issues and Problems
Upon a closer examination of the case study presented it is evident that the R.C Bigelow Tea Company faces two main problems. The first problem is the expansion of its market share in a bid to embrace the younger customer base, while still maintaining the older customer base. The second problem revolves around the introduction of new products, as well as, the need for product specification as a marketing strategy. At the outset, the company needs to maintain itself as a preferred brand in the market, as well as, promote the sale of its teas to consumers. In essence, the company has a superb customer base, which has been loyal to the company thus assuring its existence in the market. The older customer base, which is holds majority of the company’s market share, has allowed the company to grow and develop into what it is at the moment. For that reason, the company, even when developing new strategies for business, needs to ensure that they do not lose this customer base at all costs.
Because the company is aware of the needs of its older customer base, it has been able to provide these customers with the services they require accordingly. Evidently, the older customer base is more inclined to the hot teas, products that the company is comfortable and willing to provide to these customers at any time. This, has, in turn, compelled the company into providing hot teas as their key products. Accordingly, a problem arises when the company wishes to expand its customer base and bring in younger customers. This is because these two customer bases have different needs and requirements, and for that reason, the company will need to rethink their product strategy. As previously mentioned expanding the customer base causes a problem to the company, as it will force the company to rethink its strategies.
The company needs to devise products that are attractive to the younger customer base, which may be a difficult task, especially since the company deals with the production of tea. Fundamentally, the company wishes to attract customers between the ages 18 and 34, which is one of the most difficult customer bases to attract. The company deals with tea products, something that the younger customer base may not be willing to spend their money on. Accordingly, attracting the younger customer base may be tasking to the company, and for that reason, the company needs to invest heavily for the attainment of this. The second problem identified regards product specification. This problem is related to the first problem, as it revolves around the younger customer base that the company wishes to attain as a way of expanding their market share. As explained in the article, R.C Bigelow Tea Company is distinctively concentrated on the production of hot teas. The company also wishes to expand its customer base to encompass the younger customer base.
However, the younger customer base has been identified as preferring iced teas and other beverages, thus causing a problem for the company. Evidently, the company was slow in the diversification of their products to the production of ice teas. This implies that the company’s ice teas do not do well in the market as expected. This, in turn, causes problems to the company, as it cannot offer its potential younger market products that they inherently, prefer.
Alternative Courses of Action
Having established some of the problems faced by R.C. Tea Bigelow Tea Company, it is crucial that the company develop at least three alternatives and courses of action to help deal with these problems. These strategies will assist the company in achieving its goals and objectives regarding market growth, as well as, increasing its sales. Three main alternative courses of action have been identified including disregarding the younger customer base, changing the younger customer base’s perception of tea, and changing the company image.
Disregarding the Younger Customer Base
This alternative implies that the company will need to forgo their need for market share expansion. Instead, the company will focus its marketing and operational activities on the maintenance of the current customer base, which is women above 45. By disregarding the younger customer base, the company will escape the pressure and possible failure of expanding its market share. This will allow the company to specialize their products based on the needs of its current customer base, which is the older customer. The company will shape their products and services in such a way that they meet the needs of this group of people. The company will also discount the younger market as part of their market share, and will, therefore, not produce teas that are suitable for the younger market.
Changing the Younger Customer’s Perception Regarding Tea Consumption
The second alternative that the company may consider for their problems is changing the perception of tea consumption for the younger customers. This is directly aimed at the younger customers because they are the customer base that the company wishes to attain for the expansion of its market share. Changing the younger customer’s perception on tea consumption will allow the company to attain the market share that it requires for its growth and development. Changing the younger customer’s perception regarding tea consumption will demand that the company develop strategies to persuade the younger clients into taking hot tea, as opposed, to the iced teas and sodas. This will require a marketing campaign that is specifically fashioned for the younger generation to encourage this group to purchase the company’s hot tea products.
Changing the Company Image
Changing the company image is the last alternative to the problems faced by the company, and it is a business strategy that demands the company to change its representation in the market. This change of image may come in many forms including product diversification, and market stratification among other things. The company may also need to restructure its customer base as a strategy for changing its image in the industry. The decision, in such a case, will be that of the company, and it will be dependent on what the company feels will be most advantageous to it. Changing the company image will demand that the company also changes some of its business and operational strategies, and for that reason, demands a lot of investments from the company.
Advantages and Disadvantages
The three alternatives presented above will have a great impact on the company, as well as, its activities in the industry. The impacts of these alternatives are both positive and negative and for that reason, need a careful analysis so as to determine which alternative is the best choice in such a case. In relation to the alternative of disregarding the younger customer base as part of the company’s market share, the advantages and disadvantages are largely related to its effects on the company’s market growth. As an advantage to the company, disregarding the younger customer base will not assure the company of growth and development in the industry. This implies stagnant movement in market growth as the company will be solely focused on sustaining its current market customer base. This alternative may also be advantageous o the company because, it allows the company to focus on one particular customer base, and establish this customer base as a stronghold for the company’s business operations. Focusing on one particular customer base will fortify the company’s strength with the existing customer base, thus assuring the company of a strong market share with this customer base.
In relation to changing the younger customer’s perception regarding the consumption of tea, the advantages are more than the disadvantages. Accordingly, this strategy allows the company to expand its market share, hence growth in its respective industry. This is because this strategy compels the customers into purchasing and consuming the company’s products and services. This, in turn, implies an expansion in the customer base, thus an increase of the market share in the industry. This further assures the company of an increase in business activities, hence more sales for the company and an increase in profit for the company. The only disadvantage of this alternative is that it requires a lot of investment by the company. The company will need to invest almost all its resources, so as to, assure the company of the achievement of the intended goal of the alternative. For that reason, if the company suffers from a financial deficit, then there is a possibility that this alternative will not achieve its intended purposes. In addition to this, this alternative risks the possibility of failure, especially of the company fails to persuade the younger consumers into tea consumption. Failing to convince the younger customer base will not assure the company of attaining the large market share that it intends to attain.
The last alternative identified is the change of company image, so as to suit the changing trends in the industry and market. This alternative will also allow the company to reestablish itself in the market, as a way of increasing its market share and reaching out to the younger customer base. The advantage of this alternative is that it allows the company to look into strategies that it would not implement on a normal basis, thus allowing the company to exercise new strategies for its business operations. Further, this alternative allows the company to keep up with the changing trends in the industry, hence the possibility of success. This alternative may pose a disadvantage to the company owing to the possibility of failure and the dilution of the company’s brand. For this alternative to succeed, there is need for the company to invest heavily, which may be complicated if the company does not have the necessary resources to achieve this. This alternative may also be disadvantageous to the company, as it will force the company into dilution. This is because the company will be forced into changing some of its activities and strategies, most of which constitute the company’s brand image. Branding is important for companies, and losing one’s brand may also imply the loss of its market share in the industry.
Solution
On a closer examination of the alternatives presented, as well as, their specific advantages and disadvantages, it is clear that some solutions are far much better than others. Evidently, the decision to change the younger customers’ perspectives regarding the consumption of tea would be the most applicable solution to the problem faced by R.C Bigelow Tea Company. This is because the company wishes to expand its market share so as to cover the younger customer base that the company is currently lacking. The other two alternatives do not match up with the company’s overall goals and objectives regarding the attainment of a larger market share for the company. Changing the customers’ perception regarding tea consumption demands a number of activities by the company. These activities include marketing activities for the company, as well as, the products and services it offers, and the benefits of these to the company. As mentioned in the case study, the younger customer base are not much of tea drinkers, and for that reason, may require an immense amount of persuasion regarding the consumption of tea. If R.C Bigelow Tea Company manages to persuade the younger customers into consuming tea, especially tea products from the company, then there is the possibility of the company increasing its customer base accordingly.
Rationale
Apart from the obvious advantages of this alternative for the company, changing the younger customers’ perception regarding tea consumption allows the company to rebrand itself in the market. Branding is a key ingredient for the success of business organizations, and for that reason, needs to be considered accordingly when developing business strategies. Changing people’s perception on tea consumption will assure the company of the opportunity to rebrand itself in its respective industry. This is because the processes involved in changing customer perception require that the company come into contact with the customers with which it wishes to attain. As previously mentioned, changing customer perception demands increased marketing activities, which may creating awareness on the importance of tea consumption, as opposed to, other drinking items. This alternative will also allow the company to expand its market share as is wishes to, and this will increase its sales, as well as, increase its profits. Changing the perception of younger customers on the consumption of tea will also help in gaining a larger customer base for the tea industry as a whole. This is because more consumers will be encouraged into tea consumption, which would in turn increase the sales of tea products in the industry. Persuading the younger consumers into tea consumption will assure vigor and vitality of the industry, thus keeping companies such as the R.C Bigelow Tea Company in business.
Lessons Learnt
The case study on R.C. Bigelow Tea Company exposes individuals to some of the problems that businesses face during their business life cycle. This case study also presents the solutions to these problems, as well as, their advantages and disadvantages. The case study allows individuals to understand some business principles and their application and practicability. At the outset, the case study allows students to understand the amount of work that goes into decision making in businesses and organizations. Through this case study, individuals are exposed to some of the problems that face decision makers in the business organization. Additionally, the case study also allows students to comprehend some of the negative impacts of making wrong decisions regarding the organization and its activities. This is clearly indicated in R.C Bigelow Tea Company’s decision regarding ice teas. On top of creating awareness on the importance of decision making on the organizational setting, the case study also exposes students to the significance of developing proper business strategies. With this, students have the ability to comprehend some of the strategies that a business can opt for in relation to expanding their market share, as well as, product specification. Information provided in the case study, as well as, some of the solutions suggested allows students to, deeply, understand the management process and the key concepts involved in this.