E-BUSINESS MANAGEMENT
MHN212839

JOSEPH BEAVER
BA(HONS) – MANAGEMENT, TECHNOLOGY AND ENTERPRISE

REPORT ON TOYBOX

WORDS:-2292

SUBMISSION:26TH NOVEMBER 2015

Contents 2 INTRODUCTION 3 2.1 Company 3 2.2 Purpose of Report and What it will Cover 3 3 E-BUSINESS 3 3.1 What is E-Business 3 3.2 Definition 4 3.3 Why is it Relevant to Toybox – Discussion of Concept 4 4 STRATEGIES 4 4.1 Definition of a Strategy 4 4.2 Strategy Definition Stage 5 4.3 Decisions That Toybox Should Take At This Point 5 4.3.1 Decision 1: Strategy To Assist with Market and Product Development 5 4.3.2 Decision 2 – Look at the Capabilities of Having a Supply Chain 6 4.3.3 Decision 3:- Looking at Business, Service and Revenue Models 6 5 E-BUSINESS REVENUE MODELS 7 5.1 Definition of a Revenue Model and Why is It Relevant to Toybox 7 5.1.1 Recommendation 1 – Cost Per Click Model - Advertising 7 5.1.2 Recommendation 2 – Auction Models 7 6 CONCLUSIONS 8 7 REFERENCES 9

INTRODUCTION

Company

Toybox is a toy manufacturer that is continually growing, providing traditional, wooden and educational toys aimed at a specific age group i.e. from birth to eight years old. The toys that they sell are sold in various price brackets ranging from pocket money toys through to toys that are retro inspired.
Within the organisation, they have fifteen members of staff who are allocated duties which include designing the toys, purchasing the materials in which to build and manufacture the toys and then through their two outlets in Glasgow and Edinburgh, sell the goods.
Toybox has a basic online presence at the moment with a basic website containing only information about the business. Within the organisation, they do have various information systems but these re in no way linked to the internet site. Companies that use Toybox only find out about their services through the adverts within the local newspapers and local radio station.

Purpose of Report and What it will Cover

A report has been commissioned by the management of Toybox in which they have asked for further investigation into using e-business in which to grow their business and make it more attractive and improve the overall strategy of the company. To do this firstly, the report will look at definitions of e-business and why using it will help the Toybox company. Further to this, the report will also advise Toybox on how to utilise e-business to grow all areas of the business, with focus on the Strategy Definition Stage and recommendations as what decisions Toybox should take at this stage. The final part of the report will discuss the various E-Business Revenue Models that are available for Toybox to use along with suggestions as what models they should use and how it improve their business and potentially bringing in more revenue. The final section of the report will bring together conclusions from what has been discussed and the way forward for Toybox.

E-BUSINESS

What is E-Business

Combe (2006) suggests that businesses that have an e-business function whether it be for business or for selling (commerce) can be split into varying categories, an example being companies who exist solely online and don’t have an offline presence i.e. shops and companies who have an online presence to complement their existing offline presence. To further look into e-business as a whole, the definition’s need to be looked at.

Definition

Li (2007) explains that IBM came up with the term E-Business in the 1990’s. At that time, they defined E-Business as being the transformation by using the internet of important business processes whereas Jelassi and Enders (as cited in Li 2007) improves on that definition by explaining that e-business is the means to conduct all activity within a business whether it be their internal business or external business.

Why is it Relevant to Toybox – Discussion of Concept

It is extremely relevant for Toybox to introduce the concept of e-business within their organisation. At the moment, their only online presence as outlined within the introduction is that their website setup consists of basic information pertaining to the company only with no facility available to contact the company via electronic means or to even place orders on line. There are two stores within the organisation so the Internet could be used to link their two shops with Toybox creating the e-business facility i.e. Improved Internet Site for its customers therefore allowing potentially a lot more sales revenue. Singh and Waddell (2004) suggests that you will be reaching out to a greater number of customers from further distances that are unable to go to the Toybox stores and who will therefore be able to order on line. It creates the illusion of having 24 hour opening by having online shopping available. For the staff within the Glasgow and Edinburgh stores having e-business available can also assist with the improvement of communications by the use of an Extranet site.

Toybox must also use e-business as it will create a competitive advantage for them over their other competitors who like them at the moment, may not use e-business.

STRATEGIES

Definition of a Strategy

To understand what a strategy is, Chaffey (2015) explains that
“Strategy is defined as what an organisation or part of an organisation does to improve the future direction and actions of what they do”
Grover (2007) suggests that an e-business strategy should not be rushed into. It should be planned as any strategy could be important as to the future viability of the organisation. It must be well thought out.

Strategy Definition Stage

At this particular stage, Toybox, by now should have created their mission statement and outlined their future drive for the company. It is said by Chaffey (2015) that any form of strategy is based and designed on having a suitable vision and objectives designed for the company so it is at times necessary to continually look at the them again, perhaps tweak them.
At this point, also, Toybox should have considered what way to develop their e-business whether it is to have an improved website that includes an online catalogue in which customers can view the varying types of toys that are available to purchase or are they going to have a website that has all of these functions as well as the facility for companies to carry out transactions i.e. payments, orders etc.
Within the Strategy Definition stage there are varying strategic decisions that can be made and at this point Toybox should be ready to make these decisions. Three of these decisions will be looked at in the following section.

Decisions That Toybox Should Take at This Point

Decision 1: Strategy to Assist with Market and Product Development

At this point and as explained by Chaffey (2015), Toybox needs to look at what markets they are targeting by the use of this strategy. Should they maintain their existing technologies to tackle this or should the adopt new technologies? Within this specific strategy there are four specific areas which are very similar to what Ansoff (1957) suggested when he created these areas in which to assist managers with product development. These areas are: -

* Market Penetration
Market Penetration is utilising digital facilities or channels in which Toybox can sell their existing products into current and existing markets

* Market Development
This is where Toybox should look at if there are any new markets that they should be looking at. To do this, they can utilise the internet for advertising purposes as it is extremely low cost to advertise online compared to using their current means.

* Product Development
Can Toybox develop their products any more. Can they utilise the internet to allow customers to change the specifications of any of the products that they offer by personalising them by using different styles or colours etc. Chen (2001) explains that personalisation means that the company should offer products with varying features in them.

* Diversification
Can Toybox diversify into other markets, can they tap into other businesses and promote other services. Can they utilise their website to promote other products to customers that may be slightly less related to the toys that they sell at the moment? Can they integrate with their suppliers which in turn can assist with the supply chain aspect of the company?

Decision 2 – Look at the Capabilities of Having a Supply Chain

A further decision that Toybox should look at is their use of a Supply Chain which enables the company to follow the flow of information and material that are required within the operation of the organisation (Chaffey 2015).
There are various relationships that are currently in use by Toybox with their suppliers but through the use of ebusiness and the creation of a Supply Chain, these relationships could be carried out more closely i.e. be using communication through an extranet site which in the long term could reduce costs, maybe also decrease the time it takes for Toybox to manufacture the products and making them available to sell within their two outlets.

Decision 3: - Looking at Business, Service and Revenue Models

When Toybox are formulating their new strategies for e-business, they should also look at any options they have via product development by possibly introducing new business and revenue models – revenue models will be looked at in detail within the next section. If they don’t look into any potential new models and just ignore it, then their competitors might or almost certainly will change their own models therefore leaving Toybox with less competitive advantage over their competitors.
E-BUSINESS REVENUE MODELS

Definition of a Revenue Model and Why is It Relevant to Toybox

According to Chaffey (2015) a revenue model is a term used to describe varying techniques in which to increase the revenue of companies, obviously by using electronic means. There have been many revenue models created for use by companies using online to further their business and by looking at a more simplified definition, The Business Dictionary (2015) further suggests that a company can predict their mid and long term projections to increase the company’s profit.
Having a revenue model is vital to the future success of Toybox as it will open up more opportunities by using the internet to its full potential rather than just using their website for information purposes.

Recommendation 1 – Cost Per Click Model - Advertising

There are many ways in which Toybox can utilise e-business in which to generate more income outside of the revenue from sales. One such way is to generate revenue from the number of times a user looks or clicks on an advert that Toybox has created to be shown on other websites. This is a reasonably easy way to bring in more money for Toybox although may have some problems for people that might not click on the adverts therefore not making them viable. Cheon (2004) suggests that people may avoid clicking on advert links as there is too many of them online now which can clutter up the user’s screen. This model can be costly in initial setup, but end result should justify the investment i.e. More people will find out about Toybox that may not have known about them in the past. There are similar variations available within this namely Affiliate Revenue, where Toybox could allow another site to market related products on their site and ask the other site for a percentage from every sale that has been generated through Toybox. This type of model is more commonly known as a Cost per Acquisition. They could also allow the affiliate companies to advertise on their site as well, Having a Advertising model is not a new idea as mentioned by BNNOW.com(2015) but it is constantly evolving with the adverts becoming more complex and creative.

Recommendation 2 – Auction Models

A further recommendation that could be operated successfully if planned correctly by Toybox and which bring in a good source of continuous revenue is to use the Auction Model as a way of revenue. This way has been proved by other companies to be extremely successful with one of the primary examples being that of ebay.com. EBay has grown and grown and is used by not just single users but companies as a way of generating income.
If Toybox opt to use the Auction Model as a way of generating income, there are various auction models that Klein (as cited in Chaffey 2009) has identified which can assist them in deciding what type of auction to arrange on line. Looking at these in detail, they are.

* Price Discovery: This is classed as a standard auction. There are not standard prices available for this type of auction, but any goods sold this way should by the end of the auction have reached a suitable market price by the coming together of several buyers * Efficient Allocation Mechanism: Has Toybox retained stock that is difficult to sell, is it a selection of toys from a previous range that they have marketed. By arranging an auction using this style of auction. This can also bring in valuable income. * Distribution Mechanism: To use this model is meaning you are having an auction that is arranged towards a specific audience i.e. Children’s toys, Adult toys etc.

By following these models, it will bring great advantage to Toybox as it will bring in revenue from outside sources that they might not have considered in the past It may also show their products to a completely new audience.

CONCLUSIONS

Throughout the course of this report, Toybox has been found to have used technology very little in which to improve their business. It is therefore vital that they immediately improve their setup to include e-business. Having a basic website that just has basic information about their company won’t bring in the income. Customers from outside Glasgow and Edinburgh may want to see the products and toys that they market and to do this they must use the internet to its full potential and create and receive new business from outside customers who will obviously need to use the internet to liase with the company over payment, delivery etc.. They should perhaps look at the websites of some of their competitors as well, perhaps answer the question ‘How do they use the web to increase sales’. They obviously cannot copy the same designs but taking examples from the likes of fellow manufacturer OZBOSS toys (www.ozbozz.com) – could be a good starting point.

Having E-Business designed and setup correctly will benefit the company greatly and may also complement or streamline the existing operations in Glasgow and Edinburgh with the potential if they do streamline of making some savings.
REFERENCES

Ansoff, H.I;. (1957). Strategies for Diversification. Harvard Business Review. - (24), p113.
BMN. (2013). Revenue Model Types - The Quick Guide. Available: http://www.bmnow.com/revenue-models-quick-guide/#Chapter D. Last accessed 22nd November 2015.
Business Dictionary. (2015). Revenue Model. Available: http://www.businessdictionary.com/definition/revenue-model.html. Last accessed 12th November 2015.
Chaffey, D; (2015). Marketplace Analysis for E-Commerce. In: Pearson Education Digital Business and E-Commerce Management. 6th ed. Harlow: Pearson Education Ltd. p62.
Chaffey, D; (2009). E-Commerce Fundamentals. In: Pearson Education E-Business and E-Commerce Management. 4th ed. Harlow: Pearson Education Ltd. p86.
Chen, S; (2001). Digital Products and Services. In: John Wiley the Economics of E-Business. Chichester: John Wiley and Somns. p170.
Cheon, HJ;. (2004). Why do People Avoid Advertising on The Internet? Journal of Advertising. 33 (4), p89-97.
Combe, C; (2006). E-Business Markets and Models. In: Elsevier Introduction to E-Business - Management and Strategy. Oxford: Butterworth-Heinemann. p55.
Grover, J; (2007). The Importance of an e-Business Strategy or Look Before You Leap. Available: http://www.ecomhelp.com/kb/internet/kb_ebusiness-strategy.htm. Last accessed 14th November 2011.
H Grossman Ltd. (2015). Welcome. Available: http://www.ozbozz.com/. Last accessed 22nd November 2015.
Li, F; (2007). What Is E-Business and Does It Still Matter. In: Abel, a; Jennings, B; Wilson K What is E-Business - How the Internet Transforms Organisations. Malden: Blackwell Publishing. p9.
Singh, M; Waddell, D; (2004). E-Business Innovation and Change Management. London: IRM Press. p4.