Assignment on Business Skills for E-Commerce

Introduction:

            Retail industry of UK are too much competitive and every company are doing competition to reach number one by providing better service, cheap price and other benefits. Iceland Food Ltd is number 5^th in retail industry and number 2 in e-commerce business. It is now fasted growing retail supermarket of UK. It started its operation in 1970 and doing good business. Their dark age began in 2001 and terminated in 2005 when Malcolm Walker CBE joined back again in Iceland. From 2005 their selling is increasing more than two digits which make them fastest growing superstore retailer.
At the moment they have more than 750 stores all over the UK. Normally they are reputed to sell frozen foods and chilled food. Those two kinds of food items make them to regain their reputation after the dark stage. Iceland has around 1.8% UK food market share. E-commerce means selling and buying products in internet or other computer network. There is various kind of e-commerce business like B2B, B2C, C2B, and C2C and so on. All retail shops doing the B2C e-commerce. In e-commerce we can do selling, marketing, delivering, developing, servicing and paying for products and services. Iceland started their e-commerce business in 1999 but they stopped in 2005. But later they started it again in 2005 with new management system. Their e-commerce business give them huge profit as they provide unique home service delivery if any customer buy more than £ 25. Tesco is the number one in e-commerce business. Here in this assignment I will describe the aim and structured of Iceland Food Ltd, the impact of e-commerce and better e-commerce solution for Iceland Food Ltd.

Understand the structure and aim of business organization:

1.1  Assess an organization’s core business functions:

            At the moment their business improvement is too high. Their sales are increasing day by day and they are the fastest growing retailer. In three months report their revenue is increased by 5.7% on May16, 2011. More than 750 stores they have right now and they are increasing their stores every year and making more space for new employees. Their food quality is unique and they are really popular for their chilled and frozen food which last longer times and comparatively cheap in price.

[1]

From this graph it is easily visible how they are improving and doing business. In Dark Age they did loss but from 2005 the scenario is changing. Their revenue is increasing more than 10% in each year. From their 2010 annual report, we can see

·         In 2009, EBITDA was £165.6 million and increased by 11.2% and reached to £ 184.2 million in 2010

·         In 2009, net profit was £113.4 million and increased by 19.4%  and reached to £135.4 million in 2010

·         In 2009, their debt was £ 85.4million and they reduced it to £7.6 million in 2010

·         In 2009, their sales was £ 2.043 billion and increased by 10.4% and reached to £2.256 billion in 2010

·         Iceland Foods like-for-like sales increase by 4.3%

·         They opened 74 new shops including 51 ex Woolworths stores

·         They create more than 2500 works  [2]

They are providing various kinds of foods but customers have great attraction to their chilled foods, grocery and specially the frozen foods. Its foods have great customer demand for unique quality and innovation. They provide the Bonus card facility and home service delivery which has great customer focus. They always maintain round price policy. Most of their food price is either £1 or £2 or £3. For improving customer service they initiate mystery shoppers system where employees are regularly checked.  

1.2 Evaluate an organisation’s business aims and show how they relate to stakeholders:

            Stakeholder is very important for an organization for their different roles. All people who are related to business are called stakeholder. Stakeholder may be customer or supplier, employees or government. All of them have a great impact on business. Following part I will mention different stakeholders of Iceland and how they will contribute in future to achieve the business achievements.                  

Stakeholders	Main Objectives	How they will contribute
Directors	·      They are the decision maker and decide the strategies and strategic plan ·      They have controlling power ·      As the business grow their power and status also spreading.	Iceland has good management and directory system for that reason they are doing good business and future they will continue this practice. For bad management system they faced great loss in their dark ages.
Shareholders	·  Shareholders take dividends after tax profits. ·  Shareholders share business profitability and success through a realistic share price	Shareholders will pay more money if company needs more money to expand the business. Shareholders will get profit share
Workforce	·  All employees get fair salary ·  They make the work place very favourable and elegance.   ·  They serve customers in a very effective ways and help the authority to expand the business. Otherwise for declining in business may start job cut?	Iceland employees are really dedicated to provide better service every time and they are really willing to enhance the reputation of their customer service. They will continue the same practice in future.
Customers	·  They get ‘good value of money’ by purchasing goods and services from Iceland. ·  Customer service is really awesome and customers get proper feedback all times. ·  Home service deliveries give extra benefits to customers and bonus card provide bonuses, winning prizes and so on.	Customer will come to Iceland to do their shopping and Iceland also provides some lucrative and unique facilities to customers for attracting them in a larger number.
Suppliers	·  They provide products in Iceland and get reasonable price ·  They are being paid quickly and fully by Iceland authority.	In future supplier will provide new product which can attract customer’s attention.
Bankers/ Lenders	At the moment Iceland has few debts but before 2005 they had a lot. Every year they are minimizing their debt and hopefully in 2011 they will pay all of the debts.	Banks are always ready to give money to the business. If Iceland needs money they can borrow it from any bank.
Community	·  By opening new store Iceland provide new job opportunity to the community ·  They are always trying to mitigate environmental pollution and create healthy environment for office workers	By opening new stores in near future they will provide employees opportunity to the community.
Government	·  Iceland paid tax to government from their profit. ·  Government monitor Iceland activities   ·  Government monitor rules and regulation of the organization ·  Government assist Iceland to follow local and national policy	Government will do those things as well in future. They will assist Iceland to run their business in a proper way without violating any rules and regulations.
Competitors	·  Iceland prefer lawful competition with other retailer ·  Iceland want to make their product unique and brand ·  Iceland always try to compare their performance with other retailer and provide best of their performance which come inherently.	Without competition life is really worthless. Iceland is also doing that to retain number 1 position in retail sector by providing better products and services.

[3]

Understand the impact of e-commerce:

2.1 Analyse the impact, including the risks, of introducing an e-Commerce system to an organisation:

            E-commerce is gaining popularity all over the world but most probably first world countries using it in a high volume. E-commerce enhances the product reputation. E-commerce makes life easier and comfortable as we can choose any product on line, no needs to go market. Iceland started their e-commerce business in 1999 and stopped it in 2005. They started this service again in later part of 2005. I will describe the impact of e-commerce to Iceland in the following part:         

Widening digital divide: e-commerce facility mainly for urban peoples because for e-commerce business people must have internet connectivity and computer literacy. Otherwise they cannot feel the outcome of e-commerce. So majority of the customers of e-commerce are urban people.

A threat of information warfare: copyrighting, information licking and virus attacking are the main treats and risks of e-commerce.

Encouragement of monopoly: Government involvement makes a monopolistic market situation in e-commerce business. Cheap government decisions sometimes make the e-commerce market very vulnerable.

 Impact on tax, trade and regulatory policy: government impose tax on e-commerce business. Here business organizations don’t have any physical assets but they have to pay the tax. Sometimes taxation is not accurate. Both customers and organizations are paying those taxes. Sometimes government impose more tax than usual.

Impact on employment and labor policy: after initiating this business they need to train up their employees regarding internet access and customer service facilities. They need to train up how to do the transaction online. Sometimes few employees need more training than usual.

Economic and infrastructure development, regional and multinational cooperation can be achieved by e-commerce. [4]

 Ricks of e-commerce system to Iceland:

Information risk: Information can be leak any time by any source. So privacy is really vulnerable here. Textual posted content, digital scanning and morphing are processes of doing copyright. Hacking and virus attack are great threat of e-commerce business. [4]

Technological risk: protecting virus attack, authority sometimes use very adverse and hard software which is really very difficult to handle by employees. Sometimes virus attack main system and gather information about customer account or customer’s card information. Sometimes if there is a huge pressure in server for a lot of transaction, it may crash down for limited bandwidth. [4]   

Business risk: the total business depends on internet connection. Sometimes internet service provider interrupts their service. Shipment charge increase sometimes causes great loss to business. Delaying in shipment or out of stock sometimes make bad relation between business organization and customers. [4]   

Doing loss in four consecutive years they stopped e-commerce in April, 2005 but they started it again in later part of 2005.

2.2 The global impact of e-Commerce on society:

E-commerce has various impacts on society and it dominants most of the sector of a society. I will briefly describe few of those factors:   

Strengthening the social infrastructure: E-commerce business needs internet connectivity and computer literacy. For computer literacy some technical institutes or some ICT organizations will be built. For internet connectivity, internet service provider will be spread their business even rural areas. So e-commerce has great impact on social infrastructure. [5]   

Education and training: e-commerce business needs more computer literacy. And e-commerce is expanding all over the world. So teaching computer education, more and more technical and computer institutes are being made. So e-commerce is influencing education and training. [5]

Health: there are some health organizations that run their business online. They provide medical information, online treatments and so on. Those are really cost effective. So e-commerce has an impact on health service. Previously people have to wait to meet doctor but now they can get prescription from online service. [5]   

 A sense of community: Nowadays it is really easy to communicate anyone who lives too far away from us. We can communicate with them by phone but it is costly some time but we can do it by internet. We can share our voice, image simultaneously. E-commerce help us to do our work from any place of the world even our homes. [5]   

Time: e-commerce saves our time as we can choose our product online. We don’t need to go market or don’t need to do negotiation we can check product online and choose from them. So it is saving of time as well saving of energy. [5]

Income: e-commerce creates job opportunity and people can earn money from their home as well. Sometimes people can do it for their extra income. But one thing is that most of the rich people and urban people are really interested to do this job and they earn good amount of money from this service. [5]

Gender: both men and women are benefited from this e-commerce service. Women are really interested to use this service and majority of customers of e-commerce are women. They don’t need to go market; they can choose their product from home and get their delivery at right time. [5]               

 Some other issues like ethnic and race, disability, small business and work places are affected by e-commerce. [5]  

 Design e-commerce solution:

3.1 investigate market potential for an e-Commerce opportunity:

            Iceland has great market potential for e-commerce business. I am describing those factors in following part:

·         Iceland provides chilled and frozen foods which can last for longer period of times and have great attraction to customers.

·         Customers like their fair price tagging policy

·         They provide home service delivery if any customer do shopping more than 25 pounds and they give the deliver just in time with proper care and maintenance.

·         Their food price is comparatively low than other retailer and they are number 2^nd in position in e-commerce business in retail industry

·         They offer buy one get one free which has a great customer demand.

·         They have more than 750 stores all over the UK so if anyone gives any order he can get his delivery on proper time.

·         They provide good customer service either online or in store.    

3.2 Evaluate current e-Commerce systems in use by organisations:

            Iceland use hybrid model of e-commerce. The main features of Iceland e-commerce are:          

·         They always use their own product and own brands for online shopping.

·         Iceland runs their business both in store and online. If any product is not available online sometimes there is some option like in which store this particular product is available. He can collect it from them. So they are not losing any customers.  

·         Iceland offer substitute product to a customer if a customer does not find his particular product. On that moment Iceland gives him some discount or some other extra facilities.

·         They checked every delivery very properly like they sealed the parcel, proper packing, saving food from any kind of contamination and so on.   

·         Iceland deliver the delivery on time but if there any problem in their way of journey that time they give sms or email to customer.

·         Iceland provides free return policy and they give full money back to customer.    

In future they will provide better offers to attract more customers.

3.3 The financial implications of an e-commerce solution:

          Financial implication will be transparent for doing good e-commerce business. For easing the selling, buying, transaction e-commerce is created. But e-commerce business is not that much easy as it seems. E-commerce business will be profitable if an organization get too much customers. E-commerce focuses on quantity. It’s them is to spend customer’s pocket money. For spending money from customer pocket Iceland provide some lucrative offers like buy one get one free, round price tagging, bonus card, special home service delivery and excellent customer service facility. Iceland follows the hybrid model which helps them to increase their sales and overall revenues. Iceland can provide a new offer, like a free credit system for its customers. The credit will be provided according to their credit score or credit history and they will payback thin money by weekly or bi-weekly or monthly. Collecting payment is very important in e-commerce. For making payment, customer can use his visa, master card or AMEX. They can use their Paypal account because it is quite safe. After making payment they will get delivery or delivery man can collect it when he is delivering the products. Bonus card provides the free home service delivery and for every home delivery some bonus points are deducted from customer account.

  

3.4 Design an e-Commerce solution:

            For designing an e-commerce solution for Iceland we have to remember those things in our memory that its business strategy make it superior than its competitors, product quality will be unique and online shopping service will be available for 24/7, 365 days a year.

The design of an e-commerce solution:

·         Flexibility of standard: here product information will be updated every time. If there is a new product online web page will highlight this product, online webpage will show which product is available, what is the current offer, what will be the most lucrative offer and so on. 

·         Full accounts system integration: After doing any transaction system will update customer information very quickly and the system must be secured. Any kind of information leaking will hamper their business so encrypted data exchange is mandatory for e-commerce.

·         Simplicity and efficiency in E-commerce

·         Extensively customisable

·         Seamless payment solution

·         Professional branding consistency

·         Advertising: for attracting more customers need to do more advertising on public pages like yahoo, facebook, or most of the popular websites.

·         Credit system: Iceland will provide some credit for shopping which I mentioned previously which will attack more customer attention.

3.5 Evaluate the suitability of an e-Commerce solution:

                For gaining number one position Iceland has to follow the above design where they will provide not only the frozen or chilled food but also some other retail groceries. Tesco is number one retailer of UK market. They provide all kind of groceries and retail foods. Iceland is number 2 in e-commerce and number 5^th in retail sector. They can easily gain number 4^th position in retail sector but gaining number 1 is really tough. They have to provide various offers and need to expand their business. This design is quite suitable for Iceland because this solution is user friendly and employees can give good feedback as they don’t feel any kind of uncomfortable to operate the solution. Webpage will focus great offers, upcoming events, and customer benefits and so on. If they really provide credit to customers then they will do good business because none of the retailer provides this facility. Some risk is involved in providing credit to customers but sometimes business need to take risk. Overall the solution has the acceptance.              

Conclusion: 

            At last I want to say Iceland Food Ltd doing good business right now as their sales growth is more than 10% for last 5 years. They came back very strongly from their dark stages. Iceland is now number 5^th in retail industry and number 2^nd in e-commerce business. Every year they are opening new stalls which provide job opportunities to new employees. They are also participating in charitable activities to help people all over the world. Their e-commerce policy is quite good but need some change if they want to do more profit by attracting more customers. They are unique for their chilled and frozen foods but expanding their business they need to sell other groceries. They have unique food quality and home delivery service. Those things make their e-commerce profitable. They are doing profit and expanding their business. Hopefully in near future they will come number one position in retail industry.          

Reference:

1.       Iceland’s operating profit since 1981, Access on: 07-06-2011, Available on: http://www.iceland.co.uk/page/view/about_iceland_facts_and_figures

2.       Record results and major expansion for Iceland, Last modified: 07-06-10, Access on: 07-06-2011, Available on: http://www.iceland.co.uk/uploads/File/Iceland_2010_results.pdf

3.       Business strategy for A2, By David Dyer & Peter Stimpson, Access on: 07-06-2011, Available on:http://assets.cambridge.org/97805210/03650/sample/9780521003650ws.pdf

4.       Seo-e Commerce and the future implications on Business by Oliveria23, Published on: 23-05-2011, Access on: 07-06-2011, Available on:http://bizcovering.com/business/seo-e-commerce-and-the-future-implications-on-businesses/

5.       The economic and social impact of electronic commerce, Access on: 07-06-2011, Available on: http://www.oecd.org/dataoecd/3/12/1944883.pdf