E Business - Introduction To Business - ثاني ثانوي

9.2 E-Business Link to digital lesson www.ien.edu.sa Learning Outcomes Once you have completed this lesson, you should be able to: 9.2.1 Define what e-business is and describe the fundamental models of e-business. 9.2.2 Explain what is meant by the Fourth Industrial Revolution and describe examples of disruptive technologies. Key Terms E-Business (or Electronic Business) Outsourcing Revenue Stream Business-To-Business Business-To-Consumer (B2C) Model Disruptive Technology Fourth Industrial Revolution Focus on REAL LIFE Hasan runs a small local business repairing watches and replacing watch batteries. The business struggles to make a profit, as the footfall is not as high as Hasan had expected, despite the high rent and utility bills he pays on his workshop. Hasan regularly buys the parts and supplies he needs from online auction sites. Every now and then he sells back surplus or unneeded items online. Recently, he joked to his friend, "This week, I made a better profit selling old stock online than I did from the customers in the workshop. I'd be better off doing that full-time from the comfort of my own home!" His friend replied, "Well then, why don't you?" This conversation has got Hasan thinking. There are literally millions of potential customers all around the world and he could market his products to them directly from his smartphone. Perhaps it's time for a new strategy focused on e-business. (B2B) Model LO 9.2.1 DEFINING E-BUSINESS AND ITS BUSINESS MODELS E-business (or electronic business) can be defined as the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs through the facilities available on the Internet. Sometimes people use the term e-commerce instead of e-business. In a strict sense, e-business relates to all business activities and practices conducted on the Internet by an individual firm or industry. On the other hand, e-commerce is a part of e-business and usually refers only to buying and selling activities conducted online. This chapter generally uses the term e-business because of its broader definition and scope. Organizing E-Business Resources To be organized, a business must combine human, material, informational, and financial resources. This is true of e-business, too (see Figure 9-2), but in this case, the resources may be more specialized than in a typical business. For example, people who can design, create, and maintain websites are only a fraction of the specialized human resources required by e-businesses. Material resources must include specialized computers, sophisticated equipment and software, and high-speed Internet connections. Computer programs that track the number وزارة التعليم Ministry of Education 2024-1446 GE44.PATHWAYS.G02.ITB.SB.PP1.indb 265 9.2 E-Business | 265 08/05/2024 09:14

Does the term "e-business" just refer to online shopping? FRAGILE of customers who view a firm's website are generally among the specialized informational resources required. Financial resources are the money required to start and maintain the firm and allow it to grow. In an effort to reduce the cost of specialized resources that are used in e-business, many firms have turned to outsourcing. Outsourcing is the removing work from one company and sending it to another company that can complete it at a lower cost. For example, a firm that needs computer programmers and specialized software to complete a project may turn to an outside firm located in another part of Saudi Arabia, or collaborate with developers across the globe. HUMAN RESOURCES • Website designers • Programmers Web masters MATERIAL RESOURCES • Computers . Software ⚫ High-speed Internet connection lines BUSINESS These resources might all need to be specialized for use in e-business. FIGURE 9-2 Combining E-Business Resources 266 Chapter 9 | Business and Technology Ministry of Education 2024-1446 INFORMATIONAL RESOURCES • Customer tracking systems • Order fulfillment and tracking systems • Online content-monitoring systems · FINANCIAL RESOURCES Investors interested in supporting e-business firms • Electronic payment from customers

Creating E-Business Profit and Increasing Sales Revenue E-business activities can help companies to increase profits, either by increasing sales revenue or reducing expenses. Each source of sales revenue flowing into a firm is referred to as a revenue stream. Today, there are many different ways to use technology to increase sales revenue. For example, selling merchandise on the Internet to a global customer base, 24 hours a day, seven days a week. The goal is to find new customers and generate new sales so that total revenues are increased. Intelligent information systems can help to generate sales revenue for online retailers. Such systems store information about each customer's purchases, along with a variety of other information about the buyer's preferences. Using this information, the system can assist the customer the next time he or she visits the website. For example, if the customer has bought household electronic gadgets in the past, the system might suggest similar or complementary electronic products. Many Internet companies generate revenue from commissions earned from sellers of products linked to the site. Although some customers may not make a purchase online, the existence of the firm's website may lead to increased sales in the firm's physical stores. For example, a car manufacturer's website can provide basic comparative information for shoppers so that they are better prepared for their visit to a showroom. E-business revenue streams are also created by advertising placed on web pages and by subscription fees charged for access to online services and content. For example, many sites make some of their online content free for anyone who visits the site, while more detailed information is available only by paid subscription. Reducing expenses is the second major way in which e-businesses can help to increase profitability. Providing online access to information that customers want can reduce the cost of dealing with customers. As standard, many companies maintain an extensive website where potential customers can learn more about products and services, and where current customers can access personal account information, send questions to customer service, and purchase additional products or services. As a result, these companies do not have to maintain as many physical store locations. Models of E-Business Each of the models discussed in the following text represents a primary e-business model. Regardless of the type of business model, planning often depends on whether the e-business is a new firm or an existing firm adding an online presence (see Figure 9-3). It also helps to keep in mind that in order to generate sales revenues and profits, a business— especially an e-business-must meet the needs of its customers. وزارة التعليم Ministry of Education 2024-1446 How can e-business help a company increase its profits? 9.2 E-Business | 267

The approach taken to creating an e-business plan will depend on whether you are establishing a new Internet business or adding an online component to an existing business. SUCCESSFUL E-BUSINESS PLANNING Starting a new Internet business Building an online presence for an existing business • . Will the new e-business provide . a product or service that meets customer needs? Who are the new firm's potential customers? • How do promotion, pricing, and distribution affect the new e-business? • Will the potential market generate enough sales and profits to justify the risk of starting an e-business? • Is going online a logical way to increase sales and profits for the existing business? Are potential online customers different from the firm's traditional customers? Will the new e-business activities complement the firm's traditional activities? Does the firm have the time, talent, and financial resources to develop an online presence? Is there any advantage to creating a new online business compared to building an online presence for an existing one? FIGURE 9-3 Planning for a New Internet Business or Building an Online Presence for an Existing Business Business-to-Business (B2B) Model Some firms use the Internet mainly to conduct business with other businesses. These firms are generally referred to as having a business-to-business (B2B) model. There are two main types of B2B firm. These are: 1. A firm that sells directly to other businesses. For example, a business might order computers for its employees directly from the company that makes them. By buying directly from another business, the extra costs of retailers can be avoided. 2. Linking suppliers to businesses online. Suppliers can use the Internet to find business customers. For example, automobile manufacturers have developed a B2B model to link thousands of suppliers that sell the automobile makers parts, supplies, and raw materials worth millions of Riyals each year. 268 Chapter 9 | Business and Technology Ministry of Education 2024-1446

Business-to-Consumer (B2C) Model In contrast with the B2B model, many businesses are focused on individual consumers. These companies are referred to as having a business-to-consumer (B2C) model. In a B2C situation, understanding how consumers behave online is critical to a firm's success. Typically, a business firm that uses a B2C model must answer the following questions: Will consumers use websites to simplify and speed up comparison shopping? Will consumers purchase services and products online or end up buying at a traditional retail store? What sorts of products and services are best suited for online consumer shopping? Are consumers willing to wait for purchases to be delivered, will they pay for next-day delivery, or will they collect online purchases from a convenient pick-up site? In addition to providing round-the-clock global access to all kinds of products and services, B2C firms often attempt to build long-term relationships with their customers. Often, firms will make a special effort to make sure that the customer is satisfied and that problems, if any, are solved quickly. Most B2C firms, for example, have liberal return policies and often pay for returning merchandise that the customer does not like. Specialized software can also help build good customer relationships. Tracking the decisions and buying preferences as customers navigate a website, for instance, helps management to make well-informed decisions about how best to serve online customers. By tracking and analyzing customer data, an online travel company, for instance, can provide individualized service to its customers. Although a "little special attention" may increase the cost of doing business for a B2C firm, the customer's repeated purchases will repay the investment many times over. Other models there Today, B2B and B2C models are the most popular business models for e-business. And yet, are other business models that perform specialized e-business activities to generate revenues. With consumer-to-business (C2B), consumers originate online transactions through price offers to businesses. An example of C2B might be a blogger sharing an affiliate link that directs readers to buy something. The affiliate link means that the blogger will receive credit or payment for every reader who uses the link. Consumer-to-consumer (C2C) is an increasingly popular model. In the long economic tradition of bartering and auctions, buying and selling among consumers is growing in cyberspace. The ease and speed of transactions among online parties is encouraging more C2C exchanges. The online economic activities between businesses (B) and consumers (C) can be represented in a matrix (Figure 9-4). Business Seller Consumer Seller Business Buyer B2B C2B Consumer Buyer B2C C2C How does the Internet help each of these e-commerce models operate efficiently? FIGURE 9-4 E-Commerce Matrix وزارة التعليم Ministry of Education 2024-1446 9.2 E-Business | 269

2024-1446 XXX XXX XXX W Business Insight Green Technology Supports Saudi Businesses The Saudi Green Initiative (SGI) was set up under the patronage of His Royal Highness, the Crown Prince Mohammed bin Salman, as part of the wider Saudi Vision 2030 program. His Royal Highness has said: "Climate action will enhance competitiveness, spark innovation, and create millions of jobs." For example, the initiative has set a target to reduce carbon emissions by 278 mtpa by 2030, through a range of actions, including: "implementing energy efficiency programs," "developing carbon capture technology," "increasing public transportation," and "growing its renewable energy capacity." Each of these areas relies upon technological innovations to find new ways of tackling the challenge, and each requires people to put the plans in action. Indeed, going green is not just good news for the environment, it can make good business sense too. Through investing in green technologies and sustainable practices, Saudi businesses can make long-term economic savings, reduce waste in their own spheres, and hence set themselves up for future success for generations to come. THE LINE is part of the exciting project NEOM, led by HRH Prince Mohammed bin Salman. It brings together the expertise and knowledge of the most forward-thinking minds in architecture, engineering, and construction. THE LINE will eventually house 9 million people and will be built on a footprint of just 34 square kilometers. It will only be 200 meters wide but 170 kilometers long, making the idea of vertical living a reality. The whole environment of THE LINE has been designed to provide an optimal balance of sunlight, shade, and natural ventilation. It will have a zero-carbon initiative with 100% renewable energy which, together with the many open spaces, will provide clean air for everyone. Indeed, the community will live at one with nature. There will be no cars or emissions which means no pollution or traffic accidents. A high- speed rail network, with end-to-end transit of only 20 minutes, will provide an efficient public transport network that is powered by artificial intelligence. People's health and wellbeing will be prioritized which, with a world-class preventative health care system, means people will live longer. THE LINE will be the vertical garden city of the future, improving people's work-life balance, providing exciting business opportunities, and allowing its residents to live in harmony with nature. Think Critically 1. Explain why it makes good business sense for companies to adopt green practices. 2. Research green technology initiatives that are being enacted as a result of Saudi Vision 2030. Describe how they might provide benefits or opportunities to Saudi businesses. 270 Chapter 9 | Business and Technology Ministry of Education

LO 9.2.2 THE FUTURE OF E-BUSINESS AND THE FOURTH INDUSTRIAL REVOLUTION Disruptive technologies are novel innovations that challenge the existing status quo through the introduction of new, alternative approaches. In business, this can apply to everything from marketing strategies to manufacturing processes and distribution. Even long-established companies must adapt their practices in response to the arrival of new technologies. These disruptive technologies present an opportunity for young aspiring business people to become the entrepreneurs of tomorrow. In every sector of industry, a range of disruptive technologies are shaking up accepted business practices and processes, from big data to nano-technology. Over the last decade, drones have found a variety of applications from aerial survey work to trials to deliver products to customers' front doors! The gaming industry and virtual or augmented reality are both likely to achieve major growth over the next decade. This rapid development of new technologies in the 21st century is known as the Fourth Industrial Revolution. Saudi Arabia is playing an active role in the Fourth Industrial Revolution, by supporting technological industries and innovation as part of the wider Saudi Vision 2030 goals. The Saudi Space commission is one example of a forward-looking initiative, that “aims to inspire generations in space sciences, develop capabilities, empower competencies, and prepare national cadres that will shape the future of the space sector." Robotics For many years, robotics have been deployed to carry out routine or repetitive tasks, such as factory assembly line work. Today's robots are extremely advanced and can handle more complex tasks. They can see, hear, smell, and feel. These computerized workers can perform in such dangerous settings as outer space, underwater, or underground. Newer robots are being developed that can roll, walk, run, and communicate with people. A growing subfield is 'microbotics' - tiny robots that could have endless applications, including being inserted into the body to perform precise operations. Al and Expert Systems Artificial intelligence (AI) is software that enables computers to reason, learn, and make decisions. It uses logical methods similar to the methods humans use to solve complex cognitive challenges. Computer programs that help people solve technical problems are called expert systems. They are now available for medical services, financial planning, and legal matters. Expert systems provide intelligent answers are based on the knowledge of human specialists. 'Chatbots' are regularly employed on websites to help consumers find what they are looking for. Entrepreneurial Success Tamara is a leading payments system in MENA. It was founded in 2020 by three entrepreneurs, Abdulmajeed Al-Sukhan, Turki Bin Zarah, and Abdual Mohsen Al-Babtain. Tamara's mission is "to empower people to shop through an honest, transparent, and inclusive financial solution." It follows the "buy now pay later" business model, and offers an alternative to credit cards or cash on delivery. Search for more information about the success story of this start-up, the reason for its establishment, and how it became the first company to obtain a permit from the Central Bank of Saudi Arabia in the field of modern financial technologies. وزارة التعليم Ministry of Education 2024-1446 9.2 E-Business | 271

A What types of businesses might use computer-aided design? Computer-Aided Design Computer-aided design (CAD) is the use of technology to create product styles and designs. CAD allows businesses to try different sizes, shapes, and materials for a new machine, automobile, or food package. This process can be used to experiment with many variations before spending time and money building a model or going into production. As noted CAD systems are used in conjunction with 3D printers to create models and final products, lowering the cost of customized manufacturing and the development of prototypes. An example of CAD is the use of 3D printers. Thanks to 3D printers, it's possible for small businesses to design and build products from their own offices or homes, without needing expensive factory equipment. What's more, items can even be customized to the individual customer - all through an automated online system. Telecommuting Telecommuting involves the activities of a worker using a computer at home to do a job. Telecommuting saves travel time and costs, and results in less traffic, noise, and air pollution. Many people around the world will be familiar with the idea of working from home, especially in the years since the COVID-19 pandemic. Technology such as virtual teams, online teleconferencing software, and cloud computing have made this possible. Internet Growth Potential While nobody can truly predict exactly what the next breakthrough technology will be, we can be sure that it is just around the corner. The Internet will continue to play a significant role in business. As of June 2022, over 58% of the global population uses social media – that's around 4.62 billion people! (Datareportal, 2022) While that is a huge number, there is still much more growth opportunity. The number of Internet users in developing countries is expected to increase dramatically. Experts also predict that the number of companies using e-business will continue to rise. Firms that adapt existing business models to an online environment will continue to dominate development. ليم 272 Chapter 9 | Business and Technology Ministry of Education 2024-1446 CHECKPOINT What is the Fourth Industrial Revolution?

9.2 ASSESSMENT Key Concepts Determine the best answer. 1. True or False. Insourcing is the removing work from one company and sending it to another company that can complete it at a lower cost. 2. True or False. Internet use is expected to decline rapidly over the next decade. 3. When a packaged food producer sells items to a restaurant, this is considered to be a. B2C b. B2B c. C2B d. C2C Make Academic Connections 4. Read Find a news article that relates to e-business. Read the article and outline the major concepts presented in the article using bullet points. Include a properly formatted citation for your source. Possible sources include printed and online versions of newspapers or magazines. You should also consider independent online sources that produce original content. 5. Culture Research other cultures to determine how people in these societies might react to various aspects of e-business. وزارة التعليم Ministry of Education 2024-1446 9.2 E-Business | 273