484435047 Solution Manual for Digital Business and E Commerce Management 7th Edition by Dave Chaffey - Studocu - The first knowledge sharing application in Vietnam

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CHAPTER 1

Introduction to digital business

Learning outcomes 5
Management issues 5
Chapter at a glance 6
Suggested teaching and learning approaches 6
Case studies 8
Questions for debate 12
Exercises 13
Activity answers 19

Learning outcomes

After completing this chapter, the reader should be able to:

Define the meaning and scope of digital business and the difference between digital business
and e-commerce
Summarise the main reasons for becoming a digital business and barriers that may restrict it
Outline the ongoing business challenges of managing digital business in an organisation,
particularly tech start-ups

Management issues

The issues for managers raised in this chapter include:

How do we explain the scope and implications of digital business to staff?
What is the full range of benefits of introducing digital business and what are the risks?
How do we evaluate our current digital business capabilities?

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Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Chapter at a glance

Main topics

The impact of digital communications on traditional businesses
What is the difference between digital business and an e-commerce business?
Digital business opportunities
Business adoption of technology by digital business stakeholders
Barriers to consumer digital adoption

Case studies

1 The Uber business model

1 Amazon ñ the worldís largest digital business?

Suggested teaching and learning approaches

Notes on use of Figures in slides:

Please refer to the slides prepared for each chapter when reading this section. The headings below
are intended to mirror those in the text to assist cross referencing.

Slides within the deck focus on line and block diagrams to help lecturers explain and discuss
issues.

We have not included the screen capture slides since it is clearer for lecturers to visit the example
sites or others during lectures.

The opportunities of digital business?

Start by generating interest in the digital innovation made possible through familiar consumer
facing examples of start-up brands in Table 1. Ask students about other innovative digital
businesses that have been launched which arenít on the list.

The challenges of digital business management

These can be discussed by asking students to read the Uber Case study 1 and asking them to
think of the challenges of a new digital business disrupting a traditional business environment.

Typical issues to discuss with students include:

The rate of innovation ñ techniques like social media and search engine marketing, as well as
mobile marketing, evolve each month so companies can lose market share
Reviewing new business and revenue models

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Transactional e-commerce site
Services-oriented relationship-building website
Brand building site
Portal or media site
Social network.

Of course, these arenít mutually exclusive ñ most sites will have elements of all of these.

Digital marketing

Introduce the different type of Paid-Owned and Earned media (Figure 1) and the six key types
of digital communications techniques (Figure 1) which need prioritisation of investment and
management to achieve digital visibility for a brand.

To introduce these tools, ask students to match against the definition of the terms.

Figure 1 is the classic categorisation of sites by audiences with examples. The Craiglist and
Gumtree case studies (Mini case study 1) give examples of applying these digital media to build
a brand.

Digital business opportunities

Box 1 introduces the ReachñRichnessñAffiliation model for success.

Drivers of digital technology adoption

Consumer adoption (listing drivers and barriers to adoption) can be discussed using the boxes at
the end of the slide deck. Ask students to suggest drivers and barriers and how businesses can
persuade businesses to overcome these.

Barriers to the adoption of technology by digital business stakeholders

Consumer adoption (listing drivers and barriers to adoption) should also be discussed, perhaps
through taking an example such as grocery retail e-commerce and relating this to studentsí
adoption and Table 1 and Figure 1.

Case studies

Case Study 1 The Uber business model

Questions

1. As an investor in a digital business such as Uber, which financial and customer- related
metrics would you use to assess and benchmark the current business success and future
growth potential of the company?

From comments in the case study, the main revenue model a proportion of the price of a ride.

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Give thought to the issue around surge pricing, different pricing in different countries and
different kinds of vehicle/ride on offer.

A basic answer will provide:

Understanding of financial metrics. Revenue, costs and growth.
Clear framework of different metrics types ñ efficiency vs. effectiveness.
Customer engagement and satisfaction metrics.

A more competent answer will reference elements of profitability e. cut of revenue, marketing
costs, infrastructure and operating costs, operational costs of managing business.

2. Complete a situation analysis for Uber focusing on an assessment of the main business
risks which could damage the future growth potential of the digital business.

Typical risks are:

Legal factors
Driver and competitor driver action
Autonomous private vehicles
Non-Uber ride-sharing, and ride-sharing apps
Other similar businesses that are more localised

Students could be encouraged to create a SWOT analysis. The likely probability and impact of
each risk should also be reviewed.

3. For the main business risks to Uber identified in Question 2, suggest approaches the
company could use to minimise these risks.

ëAn Uber forÖ..í ñ review different forms of activity that Uber could move into (e. Uber
Eats).
New entrants ñ developing proposition to lock-in existing users, forming partnerships to
approach new audiences.
Share ownership amongst drivers

Case Study 1 Amazon ñ the worldís largest digital business?

Questions

Assess how the characteristics of the digital business together with strategic decisions taken by
its management team have supported Amazonís continued growth.

Students should be guided as to whether they review the whole Amazon business or one of the
core sources of revenue.

It is best to divide this question into two parts.

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Global expansion ñ Amazonís global proposition makes it a familiar offering in different parts
of the world.

Introduction to how to use Questions for Debate in classes

The text below shows how the debate can be introduced for students. This example is taken from
an approach Dave Chaffey developed at the University of Derby. Students were assessed on their
presentations and contribution.

Two debates each week will take place during normal tutorial sessions. Each debate will be argued
between two groups of two or three students.

For each debate, the format will be as follows:

An initial vote will be taken amongst the non-presenting members of the tutorial group for
an initial benchmark.
The team presenting the case FOR the statement will make a 10-minute presentation
supporting the topic statement.
Each team in the opening part of their presentation should take care to define terms used in
the topic in question.
The team presenting the case AGAINST the statement will then make an appropriate
10-minute presentation.
The teams presenting each side of the case question the other in turn for 5 minutes each.
Questions and discussions involving the whole tutorial group will follow for 10 minutes.
FOR followed by AGAINST, each to make a short summary of their key points and
observations.
Final vote to take place FOR and AGAINST the statement ñ this will reflect the success of
the various arguments presented.
Remember tutors do not play a role here and students must take ownership of classroom
management, etc.

Assessment

Assessment will be made by the tutor of each presenterís performance. Criteria will include the
following:

Strength of argument
Use of current Information System (IS) industry examples
Use of academic references
Quality of presentation (visual and verbal)

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Response to questions and counter arguments
Accuracy of observations and conclusions
Discretionary mark for involvement in other debates.

The voting will not influence the marks awarded unles s it is clearly the result of a poorly presented
case. A ëdifficultí case well-presented and defended will not be penalised even if no- one agrees
with it!

Questions for debate

Debate 1 How new is the digital business concept?

ëDigital business is just a new label ñ there is no distinction between the role of digital
business and traditional information systems managementí.

Summary of arguments for are as follows:

The tools are the same ñ hardware, software and communications technology are not new ñ
witness use of EDI (Chapter 3).
IS strategies have always looked at portfolio of applications across the business and links with
third parties and how they can be utilised for competitive advantage (Chapter 4).
Control of digital business usually resides with the IT department.
Only the largest companies tend to have specific responsibilities and departments for digital
business ñ typically part of IS function.

Summary of arguments against are as follows:

The emphasis is different ñ away from technology to how information can support business.
The expenditure on digital business has exceeded traditional IS expenditure.
New organisational structures and new processes have been introduced (see Chapter 4).
Digital business is seen as a board-level issue with board-level responsibility.

Debate 1 Limited SME adoption of digital business

ëAdoption of digital business by established SMEs is generally less than that in larger
businesses. This is principally a consequence of the negative attitude of managing directors
and CEOs to the business benefits of digital businessí.

Summary of arguments for are as follows:

Refer to any data you can identify which shows that SME adoption is lower than larger
businesses.

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Social streaming
Company user-generated content and community.

The benefits can be explained with regard to the customer life cycle and RACE mnemonic
described later in the book, i.

Reach audience ñ social media sharing gives ëamplificationí of a message through
sharing.
Encourage interaction lead to lead or sale ñ includes interactions with share buttons, or
completion of forms.
Convert to sale ñ online or through traditional channels ñ social proof of seeing other
recommendations can help here.
Engage ñ develop long-term social media engagement to encourage repeat purchase.
Also includes social customer-service.

4. Summarise the consumer and business adoption levels in your country. What seem to
be the main barriers to adoption?

Do a search for ëdigital marketing trendsí for the year you are in or the next year to come. See if
itís possible to identify from different sources common factors that might stop adoption of new
trends.

5. Outline the reasons why a business may wish to adopt e-commerce.

The Six Cs are a good framework here:

Cost reduction ñ less use of physical resources and staff.
New capability ñ for example, to sell into an overseas market.
Improved communication ñ internal and external.
Control ñ better visibility/information for managers of trading relationships.
Customer service ñ more detailed information, faster response can be provided 24 hours,
and 7 days a week.
Competitive advantage ñ any of the above.
Factors may provide this, but it is likely to be short-lived.

6. What are the main differences between business-to-business and business-to- consumer
e-commerce?

Please refer to the table below for a summary of the differences. Note that this table was originally
included in earlier editions of the book.

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Table: Differences in characteristics of B2C and B2B trading

Characteristic B2C B2B
Proportion of adopters
with access

Low to medium High to very high

Complexity of buying
decisions

Relatively simple – individual
and influencers

More complex –
buying process
involves users,
specifiers, buyers, etc.

Channel Relatively simple – direct or
from retailer

More complex, direct or via
wholesaler, agent or
distributor
Purchasing
characteristics

Low value, high volume or
high value, low volume. May
be high involvement

Similar volume/value. May
be high involvement. Repeat
orders (rebuys) more
common
Product characteristic Often standardised items Standardised items or
bespoke for sale

7. Summarise the impact of the introduction of digital business on different aspects of an
organisation.

The McKinsey 7S model is a useful framework for looking at the different aspects of a business
that may be affected by the move to digital business.

Strategy ñ new strategic responses are required.
Structure ñ new structures and responsibilities may be required.
Systems ñ new information systems and new processes will be required.
Style ñ less likely to change, but some organisational styles are more responsive to change.
Staff ñ new responsibilities.
Skills ñ new skills.
Superordinate goals ñ higher level aims may be updated depending on the business.

8. What is the relevance of intermediary or influencer sites to a B2C company?

Companies must think about whether they are represented on such intermediaries. If they are not,
they may lose potential business. They also need to consider the positioning of their products
relative to competitors who also use the intermediary.

Have a look at comparison sites for insurance and holiday booking. Have a look at marketplaces
where Google effectively operates as an intermediary.

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Reach audience ñ social media sharing gives ëamplificationí of a message through sharing.
Encourage interaction lead to lead or sale ñ includes interactions with share buttons, or
completion of forms.
Convert to sale ñ online or through traditional channels ñ social proof of seeing other
recommendations can help here.
Engage ñ Develop long-term social media engagement to encourage repeat purchase.
Also includes social customer-service.

3. Similar benefits and barriers exist for the adoption of sell-side e-commerce for both
B2B and B2C organisations. Discuss.

It is recommended that students review the common benefits initially from the point of view of
the business using e-commerce to sell services. Then look at exception by business type.

Common benefits:

Wider, potentially global reach
Opportunities to improve brand preference through content and services
Lower cost of reach (e. through organic search visibility)
Lower cost of service (self-service).

Barriers:

Organisational changes needed
Cost of set up

With B2B organisation, there are more potential channel conflicts if someone is already selling a
product.

4. Evaluate how social media marketing techniques can be applied within an organisation
and with its stakeholders.

This question is similar to Question 2 in this section since it asks how social media can be applied
across a business. The customer life cycle of RACE is a suitable technique that can be used to
review how social media can be applied. This question also looks at the organisational issues of
managing social media, so the Mckinsey 7S framework introduced at the end of the chapter is
suitable to structure the answer around.

5. The digital presence of a company has similar aims regardless of the sector in which
the company operates.

This question can be tackled in different ways, e. functions by position in customer life
cycle/conversion funnel, e. RACE.

Alternatively, but similarly, the answer can review the opportunities by methods of enhancing the
brand:

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Brand awareness, e. better visibility in search engines and social media
Brand familiarity ñ by explaining about the companies, products and services
Brand favourability ñ by providing free value-added services
Brand purchase intent ñ using the website to prompt sale through online or offline channels,
e. through promotions or communications (social or email marketing).

The answer can be tackled for different platforms such as desktop site, mobile site.

Examination questions

1. Explain the relationship between the concepts of e-commerce and digital business.

E-commerce is generally understood to be a sub-set of digital business. E-commerce refers to
financial and non-financial transactions between organisations. These transactions are often
considered in the context of a supplier organisation distributing and selling its product to
consumers. Digital business includes transactions from a buy-side and sell-side e-commerce
perspective and also the use of communications technology to improve internal process
efficiencies.

2. Distinguish between buy-side and sell-side e-commerce and give an example of the
application of each.

Buy-side e-commerce refers to electronic transactions concerned with the purchase and inbound
logistics of goods such as a supermarket coordinating purchases from its suppliers. Sell-side
e-commerce concerns transactions related to the sale and distribution of goods such as a
supermarket selling direct to its customers.

3. Summarise three reasons why a company may wish to introduce e-commerce.

Cost reduction in purchasing or selling through less human involvement and lower resource
costs.
Increased efficiency enabling faster cycle times for purchasing or sale of goods.
Capability to sell to overseas markets or previously untargeted markets.

4. Describe three of the main barriers to adoption of e-commerce by consumers and
suggest how a company could counter these.

Security fears ñ fraudulent use of credit cards.
Privacy fears ñ personal data held by companies or criminals.
Cost of access devices and online costs.
Lack of perceived need.

Education and reassurance via the website and offline communications can counter these.

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Monetisation ñ is it possible to gain revenue, for example, ad revenue from visitors.
Growth.
Publicity ñ this will help fuel the other success measures given above.

3. What do these services have in common that you think has made them successful?

Many global digital businesses come from the United States, so the funding and publicity
they can achieve is significant.
You will notice that many of these digital businesses were originally developed in the United
States, with the majority now used around the world. But in each country, similar types of
businesses have evolved, for example, Ali Baba and Ola.
Meet a fundamental consumer need.
Clear revenue model.
Memorable branding and experience.
Initially they had a straightforward proposition ñ offering one service.
Often they were first-movers.
Notable that many have taken several years before becoming widely known and used.

Activity 1 The most popular apps today

1. Identify the most popular categories of apps from the top 10 or 20 most popular ones,
including browser applications such as Googleís Chrome or Appleís Safari.

No suggested answer.

2. Discuss the opportunities for companies to promote their brands or services using apps
in comparison with mobile sites delivered through web browsers.

No suggested answer.

Activity 1 Understanding different types of digital presence

Review the popularity of the different site types in your country or globally.

Visit each of the sites below and then indicate which of the five categories of digital presence
are their primary and secondary focus:

Transactional e-commerce site
Services-oriented relationship-building website
Brand-building site

Chaffey et al ., Digital Business and E-Commerce Management, 7e, Instructor’s Manual

Portal or media site
Social network.

You should also indicate their secondary focus in terms of these four site types.

Transactional e-commerce site

Bank, for example, HSBC (hsbc), secondary purpose is relationship-building or
brand-building.

Travel company, Thomas Cook (thomascook), secondary purpose as for HSBC online
retailer such as Amazon (amazon). Secondary objectives are to be a portal.

Services-oriented relationship-building website

Management consultants such as PricewaterhouseCooper (pwcglobal) and Accenture
(accenture). Secondary aim ñ brand-building.

An end-product manufacturer such as Vauxhall (vauxhall.co). Secondary objectives are
building brand and referring leads or transactions to offline sources.

Brand-building site

Lingerie manufacturer, for example, Gossard (gossard). Secondary objectives are
linking to transactional sites.

Beverage manufacturers, for example, Tango (tango), Guinness (guinness).
Secondary objectives are supporting relationship building.

Portal or media site

Business site: Silicon (silicon) (secondary transactional site for subscriptions).
Consumer site Yahoo! (yahoo). Yahoo! is more than a search engine ñ it is an
online portal. Secondary objectives are encouraging transactions.