V Международная студенческая научная конференция Студенческий научный форум - 2013

Motivation

The growing number of Russian executives faces the following questions: whether their business should enter the Internet market or not; how it should be launched into it and what level of quality is acceptable to their target audience. The answer lies in a smart Network where the Network is a set of computer technologies for business management (figure 1).

Figure . Motivation of E-Business.

Considering electronic business in Russia, it is necessary to note that it has a relatively short history of few years. This is largely due to features of the Russian economy, which in the period of reforms provided enough space for the ordinary methods of doing business. Another reason for our lagging behind the West, where the first electronic transactions were recorded in 1995, was a low level of computerization in the percentage of the number of residents. Besides, in 1995 the Internet in Russia took only the first steps, therefore there were no incentive factors for organizing a sustainable e-market. First online shopping appeared in Russia in 2000. Until 2004 electronic business in Russia grew steadily [4]. Today there is a trend of dramatic improvement of service and gradual transformation of the "web-showcase" into full-fledged online shopping is observed. Throughout this paper the term “web-showcase” will be used to refer to a relatively simple and inexpensive site representing the goods in the form of a standard catalog [5].Creating a consumer-oriented Web-portal allows the retailer to increase its market share, to reduce time on sale and get an additional channel for marketing and advertising.

In recent years, there has been an increasing interest in electronic business, which is largely determined by rapid expansion of Internet technologies into everyday life. People have to deal with Internet technologies even if they are specialized in other spheres. That is why the theme “Models of E-Business Implementation within the Russian Economy” is of particular interest. In addition, it gives me an opportunity for future career development in the sphere. Moreover, this area requires a detailed study for the promotion of any goods and services, because today electronic business is a promising direction and many companies aspire to transfer their business to the Internet. It provides opportunities to gain a competitive advantage; reach a new market segment and abandon low-profit business. However, companies, trying to implement these technologies face with serious obstacles.

Serious obstacles of E-Business in Russia

First of all, most businessmen and officials consider that there is already a sufficient legislative base for electronic business, but, in fact, there is no complex statutory act directly describing conditions and rules running an electronic business. The documents used today as normative basis were written in 1992-1998 and do not contain anything relevant to e-business [6]. In addition, there are serious risks both for buyers, and for suppliers of the goods, which are connected with legitimacy of the transaction, safety of calculations and information security.

Secondly, in case of any disagreement between the partners or between the seller and the buyer it will be difficult to prove both the fact of existence of the contractual relations, and conditions of their execution by the parties.

Other main obstacles for development of electronic business in Russia are few regular Internet users and undeveloped system of credit cards [1]. Therefore, companies which have decided on transition to electronic business are experiencing significant difficulties.

The purpose of this paper is to investigate models of implementation of e-business in order to increase of business processes’ efficiency in the Russian economy.

The aim foresees the following tasks:

• make the scientific literature analysis;

• identify criteria of estimation the ways of electronic business’s organization;

• develop models of existing types of e-business;

• justify the selection of an effective e-business model in the Russian economy.

This paper attempts to show that a business model implies the architecture of a firm and its network of partners for creating, marketing and delivering value and relationship capital to one or several segments of customers in order to generate profitable and sustainable cash flow [3]. The e-business model approach will help a firm to structure its organization in a way to become more efficient, more flexible and responsive to customer demand, to forecast possible future scenarios and therefore to stay competitive in the Internet era.

E-Business model approach – method solving the problem

In general, e-business modeling has goals similar to enterprise modeling. Modeling helps firms develop business visions and strategies, redesign and categorize business knowledge about the business and its vision and ensure the acceptance of business decisions through committing stakeholders to the decisions made (figure 2) [3].

Figure . E-business model approach.

Therefore at the initial stage of e-business modeling it is necessary to categorize business models and to propose a limited number of generic business models. Principal dimensions for classifying business models are the following:

• The user role: How is the client or the prospect considered by the company? As a client or as a provider of a product/service those other clients may want to buy from, or as a participant to whom nothing is sold but information or services are offered against information about the participant?

• Interaction pattern: Is the service provided by one or many people/companies to one or many people/companies?

• Nature of the offerings: Is the company offering information, services or products to its visitors? In some cases, the company is giving away its content for free against information gathering and/or is getting money from ads. Another option could be that the company does not want to sell on the web but just wants to use its site as a promotional tool.

• Pricing system: Is the user paying according to its usage rate, to a fixed subscription to get access to the service, to a fee system (percentage or fixed amount), to a price list or to a dynamic price mechanism (i.e. auction and reverse auction)?

• The level of customization: This level is ranging from mass content to customized content.

• The economic control: It goes from self-organizing (no single company drives the content of its transactions or the economic outcomes) to hierarchical (some webs have a boss who controls the content, the pricing, and flow of transactions).

• The level of required security to monitor and verify purchases in your system.

• The level of value integration: Some webs facilitate the creation and the delivery of specific product/service offerings that coherently integrate components from multiple sources. In contrast, other webs provide low value integration and do not change the nature of the products actually offered.

• The value/cost offerings: Are the product offerings more positioned as an added value product/service or as a low-cost low-price proposal?

• The scale of traffic: Does it require significant site traffic or is it viable with a moderate traffic site?

• The degree of innovation: It varies from essentially an electronic version of a traditional way of doing business to more innovative ways, for instance, by offering functions that did not exist before.

• The extent to which power is more on the buyer’s or the seller’s side. [3]

Therefore, most experts have identified four components of e-business:

• Business to Business (B2B) - the sector focused on the organization of work with partners when producing goods or services.

• Business to Customer (B2C) - the sector focused on work with consumers of the goods or services;

• Customer to Customer (C2C) - communication of the consumers united by visiting one website.

• Customer to Business (C2B) - the sector giving the consumer an opportunity to set their own price for the various goods and services, offered by the companies.

The B2B direction is the most popular and developed today. It includes the following B2B models:

1. Aggregation model (electronic trading facility) - a universal place for material support purchase for the company.

2. The model of the trading concentrator (a trading hub) - online trade community of buyers and sellers.

3. Board - is a structure where buyers and sellers can post something that can attract sellers and buyers, and make them buy.

4. Model of auctions - buyers and sellers put competing claims for contracts.

5. The broker site - works as an intermediary between buyers and sellers, which exists in order to receive online orders from one company and place them with another business.

6. The corporate website - designed to communicate information about the company to other partners and potential investors.

7. On-line shops - the model can be integrated into the overall corporate site or function separately.

8. Procurement Service - allows the company to carry out procurement directly through its website. [2]

Thus, the benefits of B2B are the following:

1. The system enlarges market share;

2. Internet platforms provide lower prices;

3. On-line intermediaries reduce operating costs of their customers;

4. Web-systems allow to identify the best ways of doing business.

However, there are two groups of risks that may arise from B2B customers:

• Technological risk - low-quality provider communication, internal threats of leakage of confidential information, possible refusal of service, etc. [2];

• Business risk - the risk of low-quality products, the risk of losing prepaid money, the risk of non-payment or late payment, the risk of reducing profit margins for suppliers and buyers.

B2C - business focused on the end user. The considerable circle of the enterprises of electronic commerce belongs to this category of business: online shops, paid services for individuals, electronic casino, numerous companies selling consulting and information services. In addition, three main features characterize B2C systems: 1) the seller itself trades directly through their managers, rather than using an automated trading system, 2) an individual or legal entity, acting as the buyer is in a better position if interface of online shop has no links with the company, and 3) each business process is automated and oriented on a particular user, so there is a chance to have no access to the whole system [1].

C2C - business, providing interaction between a large number of physical users, encourages consumers to exchange commercial information. The C2C direction allows entering into transactions at any moment, to reduce overheads and save the end user’s money. This is the same area and form of trade between individuals, embodied in the online auctions. To participate in the auction, the buyer or the seller is required to become a client of one of the servers and set the auction to sell your product or express the desire of buying online.

Bidding at the auction is conducted through the following schemes:

1. Standard or English auction. The open format of the offer is used when all buyers know about the proposal of each other.

2. Dutch auction - starts with obviously inflated prices, is also using the open form of bids and proceeds until one of buyers agrees to accept it.

3. Auction of the simultaneous offer - all buyers at the same time fix prices and the one who offers the maximum wins.

4. Double auction - when the bids come from the buyer and seller together. As a result, the equilibrium price is charged.

5. Auction of the closed bids - where the buyer and seller make closed (secret) bids in a timely manner. Winner buys the goods at the price preceding maximum. [2]

The least developed type of electronic business today is C2B. The American company “Priceline.com” is a good example. Its customers call the price for which they would like to buy service or goods, thereby creating demand, which, however, does not mean that the sales take place at the requested price. The final decision is made by the seller, previously having analyzed data of the current demand.

After the existing types of e-business models considered, it was necessary to choose the most efficient model in the Russian economy. So, it was decided that the best method to be employed for this investigation was to use the cluster analysis - a method of multidimensional classification and segmentation. Initial data is divided into groups by cluster analysis, so that the items included in the same group were the most "similar" (according to some predetermined criteria), and elements from different groups have been the most "different" from one other [1].

Study’s Results

The results of the study were that there are 4 main clusters – B2B, B2C, C2C and C2B. Then within principal dimensions for classifying business models sets of indicators for each cluster were defined. So, for example, within the parameter “the user role” the number of clicks, the most frequently visited pages can be indicators. After that, based on the analysis of these characteristics in a particular cluster, the most effective model in the Russian economy was assumed. It was found that B2B and B2C clusters had most of the indicators. This is due to the fact that B2B model is still important for companies doing business transactions over the Internet, and the B2C model carries out direct sales offered by manufacturers or sellers of goods to customers.

In economic terms the B2B direction, is probably the most promising area of ​​e-commerce in Russia. In the domestic market this trend will create new commercial relations between Russian producers, and will greatly facilitate the acquisition of materials and equipment by Russian companies from each other rather than importing the same materials and equipment from abroad. At the international level, it will allow the Russian producers to become global players. However, the B2B platform is already well proven in the market of computers and electronics, pharmaceuticals and heavy industry. In other commodity niches advances of e-business are not obvious or absent. Advantages of B2C model include the fact that this model allows to equalize differences in access to goods and services between consumers who live in big cities and remote regions, by arranging Internet access, access and payment in the relevant region. As in the case of B2B, there is a chance for start-up companies as the opening a store or an online travel agency is a hundred times cheaper than opening a traditional retail outlet, and the chances of success depend on how original there will be a concept of a virtual store.

That is why a more reasonable solution is to create a new model, which will include the main characteristics of the B2B and B2C models. This model will allow users not only to place commercial offers, to receive information from the partners, create an account to pay for goods and services, or even to sign contracts, but will also create favorable conditions for purchase, as well as providing high-quality service and fast delivery.

Conclusions

To sum up, electronic business in Russia has a future, but its development is not easy. There are serious problems that must be solved. In this study the history of e-business development in Russia was analyzed, obstacles as well as principal dimensions for classifying business models were revealed. Based on these results, the indicators were identified for each model of B2B, B2C, C2C and C2B, respectively. As a result, the most effective model in the Russian economy was proposed. Thus, the purpose of this work has been reached and the following tasks are executed.

With regard to the prospects of e-business in Russia, it should be noted that e-business cannot develop faster than the Internet itself. In addition, e-business is nothing more than an extension or partial replacement of a real business. Its main advantage is reducing the time for making decisions by entrepreneurs based on commercial information, customers based on information about products and service consumers - by enabling them to quickly order at a distance. Furthermore, each Web-site should be a real business, which is designed to provide the basic functions and to perform the site tasks.

References

1. Bagchi S. E-business Models: Integrating Learning from Strategy Development Experiences and Empirical Research [Электронный ресурс] [Режим доступа: http://www.research.ibm.com/strategy/pub/ebbb.pdf] [Проверено: 20.12.2012].

2. Chaffey D. E-business and e-commerce management: strategy, implementation, and practice. Fourth Edition. Financial Times Prentice Hall, Harlow. 1963. 754p.

3. Dubosson Magaly E-Business Model Design, Classification and Measurements / Alexander Osterwalder & Yves Pigneur. Preprint on an article accepted for publication in Thunderbird International Business Review, January 2002, vol. 44, no. 1: 5-23.

4. Gottschalk Petter. E-business strategy, sourcing, and governance. Idea Group Publishing. 1950. 347p.

5. RappaM. Business Models on the Web [Электронный ресурс] [Режим доступа: http://digitalenterprise.org/models/models.html] [Проверено: 20.12.2012].

6. Spethman M. The Website Globalization and E-Business – Russia [Электронный ресурс] [Режим доступа: http://www.globalizationpartners.com/resources/website-globalization-and-e-business-russia.aspx] [Проверено: 20.12.2012].

Научный руководитель: доцент кафедры информационных технологий в бизнесе, А.Х. Шелепаева.

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