The rise of e-business

Citation

(1999), "The rise of e-business", Work Study, Vol. 48 No. 6. https://doi.org/10.1108/ws.1999.07948fab.001

The rise of e-business

The rise of e-business

Researched independently by the London School of Economics and Political Science (LSE), for Novell, a recent survey ranked 100 of the world's largest multinational companies to analyse how they are implementing Internet strategies. In a market predicted to have risen from practical non-existence in 1997 to $150 billion next year and $500 billion by 2002 (International Data Corporation, 1998), key findings reveal that:

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  European companies, previously considered slow to develop e-commerce strategies, are closing the gap on US competitors, with six out of the top ten rankings being European firms. Deutsche Lufthansa AG, Tesco plc and BT plc, occupy the top three positions.

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  In regional terms, the USA dominates e-commerce activity with 17 companies represented in the top 30. The Europeans followed with 11 companies and Asia finished with two companies within the top 30 places.

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  European companies lead all rivals in four of the eight business sectors surveyed. In travel and transport, Lufthansa and British Airways (5th overall) fare better than rivals Delta Airlines (12th), American Airlines (14th) and Japan Airlines (17th). The telecommunications and utilities sector is dominated by BT and Deutsche Telekom (8th). Tesco and Deutsche Bank (7th) lead retailing and banking respectively.

A presence on the World Wide Web is no longer a gimmick. Thirty-six per cent of the companies surveyed now offer some form of e-commerce, in the form of online order and settlement, on their corporate Web sites- up from just 15 per cent last year.

Travel, transport, media and entertainment companies have seized the lead in today's blossoming cybermarkets, outpacing the more publicised online retailers. Some industry sectors lend themselves more readily to the practice of e-commerce. Travel and transport companies, media and entertainment firms, computer makers and retailers tend to be more service focused and enjoy the obvious market advantages of dealing directly with consumers. Owing to the nature of their markets, fully developed e-commerce is virtually non-existent in sectors such as automobile manufacturers and pharmaceuticals companies.

Although Japan was the second highest represented nation overall, only two Japanese companies- Japan Airlines and Toshiba- ranked among the top 30 scores in the survey.

Steve Smithson, the author of the report and head of LSE Information Systems department, sees e-commerce as dramatically changing traditional business practices. "The new information landscape is fast changing as each year Web technology becomes more flexible and more powerful. Those companies that ignore the emerging opportunities of e-commerce will soon be left behind. It's no longer a question of whether or when to launch, but rather what to launch and how," explained Smithson.

Dr Eric Schmidt, chairman and chief executive officer of Novell, commented: "This survey shows that companies with successful online business models are those that are creating personalised relationships with their customers. Novell has developed the infrastructure, with its directory-enabled networking initiatives, necessary for companies to realise not only these strong relationships but to embark on completely new classes of business applications and categories of Internet activities."

Professor Dr Voigt, chief information officer for Lufthansa, the top-placing company in the survey, sees the Internet as invaluable to sales. He said: "When Lufthansa started its online service in 1995, we really had to run around to drum up interest. Today the perception internally is that the Internet is a very important integral part of Lufthansa's whole business strategy. Online business gives you more control over your customer relationships because you have first hand knowledge of what the customer wants."

"Lufthansa's Web development goes well beyond being an electronic corporate brochure or simple promotional tool, it offers real online benefits to customers, providing a glimpse of the future of Web and e-commerce in action," added Steve Smithson.

LSE assessed 120 Websites across eight industry sectors, with nearly all companies drawn from the Fortune 500 global rankings. The Web sites of the largest (by revenue) 15 firms in each industry sector were analysed according to a specially devised E-Audit methodology. The audit mimicked all the stages of real online business transactions from the seeking of the price and product information, through order and settlement and culminating in after-sales service.