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  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
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  • Number of pages: 2

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As a Finance Director, Gregory has made the right decision to expand their e-business. This is because, there will be a lot of strategic benefits if they widen their e-business activities for the company.

(i). Convenience and Easiness

One of the advantages is it will be easier and convenient for people to know their business.  Nowadays, people are tend to buy product or services online rather than going to the physical shop. Customer preferred to buy stuff from the online shop because they can save their time and energy. The buying and selling process will be quicker since it only takes a few clicks and customer do not have to que up to purchase the product. With online access, people from across the nation can also purchase the product thy want from the company's website. This will also help the company to broader their audience and widen their target customer. Other than that, they can also make their business available for 24 hours so customer can buy whenever they want.

(ii). Reducing cost

If the company expand their e-business activities, a lot of cost can be reduce such as cost of inventory management. This is because, they can automate the inventory management by using web-based management system. Other than that, customer can also save their money for travelling from their country just to buy product from them. Besides, other cost like personnel cost can also be lessen because when customer purchase product online, all the activities such as billing, inventory management and payment will no longer required a lot of employee. Thus, it will decrease the cost for employees' salaries and wages because the total number of employees are decreasing too.

(iii). Offer Detail Information

Usually, when employee trying to explain about a product to the customers, it will be a little bit difficult since of them are in a rush and the information are not delivered clearly. Thus, the company can take this opportunity by providing their business information on the website with more specific so customer can find it is easy for them to make a purchase. Customer can also communicate with the vendor if they have something to ask through few communication toosl like email, WhatsApp and etc.

2.0 Risk in E-Business

Risk is about the uncertainty of futures regarding deviation from expected earnings or expected outcome. Risk measures the uncertainty that an investor willing take to gaining profit from the investment. There are some risks that may exist on Afifu's e-business.

Systematic risk

Systematic risk is a risk that faced by company in term of market or their operation market.  Example of systematic risk in e-business market is “dotcom” incident that happened in years 2000 until 2001.  Several businesses published then bought by others business.  Most of the e-business having a little cash flow and cannot gaining profit.  These companies appreciate the stabilization of economy growth, creating an unsustainable economic bubble that burst, damaging lots of “dotcom” companies. Even though this systematic risk is not happen nowadays but most market segments more to operating in business cycles, develops, growing, reaching a plateau and contracting. Owner and e-business entrepreneur must get to assess their market segment and planning every stage in the business cycles.

Security risk

E-business is facing lots types of risk that related with security of their business information. Computer virus and hacker always trying to tap into online companies and steal customers' identity and their financial information. This security risk force e-business to use software and encryption codes that limit an outsider's ability to hack into their secure systems. Security risk in online also can bring the law issues to e-business because they are obligated to protect consumer information by state Law and federal law. The breaches in e-business will increases company's insurance risk because the insurer need higher premium for the company that having law problem if they want to take on the e-business as a client.

Business risk

Business risk related to the companiy risk facing business operation every day. This risk including inventories problem, labours, overhead or supply chains. This is because most of e-business doesn't have physical location or warehouse. They have relied supply chains for getting goods from customers. Whenever business time must rely to the individual or other business to help distributed goods, risk might increase. Business risk also happens if e-business doesn't get buy inventories and moving it through supply chains quickly and efficiently. inventories problem, labours, overhead or supply chains

3.0 How to deal with the risk

Every business is definitely not spared from any risk. Therefore, Afifu needs to take some steps to reduce the risk that has been stated.

Systematic Risk

Considering that systematic risk such as ‘dotcom' incident has contributed trillions of losses. In order to make better investment decisions and to reduce systematic risk, one should not assume popular websites is the best medium to make a profit for e-business. Popular sites like Facebook and Twitter receive high attention, but that does not mean it's worth investing. Instead of focusing on busy companies, it is best to investigate whether a company follows a solid business foundation. In the short-term hot Internet stocks will often be well done, but they may not be trustworthy as long-term investments. Stocks usually require a strong source of income to invest well in the long run.

Security Risk

​At present, no business can be calculated safely from security breach. Hackers often target large companies but do not mean that small businesses have no security risks as well. Usually, this situation arises as they do not update the security control system from time to time. However, there are some precautions that can be taken to minimize security risks. One is to make sure the digital system has good security and has a password protected. An employee should not give their access information even to other employees. For example, workers only enter confidential data on SSL certificate websites that are small data files that digitally bind cryptographic keys to organizational details. Each employee should have a specific user Account to help block access to the business computer. Network access for computers also needs to have certain limits in or around business locations. The default password should always be updated quarterly into a strong password.

Business Risk

​Among the ways to reduce business risk is to have a third party with a good and reliable background. Thus, before working with any third party, it is essential to appropriately check their services standards. For example, online sales and marketing companies, Lazada cooperates with various third parties who provide quality services such as banks and freight forwarders. Other than that, hire trained employees can also reduce business risk. Effective training can influence or alter the behaviour of employees to be more productive and further reduce business risks such as inventories problem, labours, overhead or supply chains.

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