How Is E-Business Helping Companies to Comepete?

Topics: InterContinental Hotels Group, Small business, InterContinental Pages: 7 (3628 words) Published: December 11, 2012
How is e-Business helping companies to compete?
The internet is an extremely important new tool in business; it has received great interest from companies in all industries (Dien 2003), it is up to individual firms to decide how the internet should be used alongside traditional methods of operation to maximise strategic advantage (Porter 2001; Chaffey 2009). E-business is the use of the internet to empower the business process, changing relationships with customers, suppliers and other stakeholders (Barney 2010; Sadowski 2002). E-business tools can be used to increase revenue, decrease costs and improve customer service, thus allowing companies to be more competitive. This essay will discuss how e-Business can be used to combat threats and weaknesses in both large and small to medium sized enterprises. I will do this by identifying generic weaknesses and threats and discussing them in relation to four case studies.

The European Commission defines a medium sized business as one with less than 250 employees and turnover of less than €50 million, or balance sheet total of less than €43 million. A small business has less than 50 employees and €10 million turnover, a micro business with fewer than ten employees and €2 million turnover. (European Commission 2003) This suggests that a large enterprise consists of more than 250 employees and has a turnover of more than €50 million.

Weaknesses and threats are both part of a SWOT analysis, the aim of which is to improve corporate strategy by building on strengths, exploiting opportunities, eliminating weaknesses and addressing threats (Hill and Westbrook 1997). Weaknesses are internal factors which prevent a business from achieving its full potential; these can range from having a narrow product range to large debts or a high employee turnover, weaknesses are controllable and they must be minimised or eliminated. Threats however are external to the business, they are aspects of the environment that jeopardize the profitability of a business, generally they are uncontrollable, however in some circumstances threats can be reduced through the use of technology (Management study guide 2012; Poon and Swatman 1999). A generic threat to large enterprises is the economic downturn; the ‘credit crunch’ of 2008 posed a massive threat to the majority of organisations. It meant that borrowing money became harder than ever for both individuals and corporations (Pirraglia 2010). After the economic slowdown began hotels experienced a sharp slump in demand and faced the most challenging trading conditions for 17 years. Demand for both leisure and business travel fell (PricewaterhouseCoopers 2009, Keynote 2012). Consequently it was more important than ever for hotel owners and chains to compete for the available customers. The management team at the Intercontinental Hotel Group (IHG) knew that modern travellers were searching for almost all their travel needs online. This led them to aim to increase their online presence through search engine optimization. As well as addressing site traffic issues the team decided that in order to grow a loyal customer base they must operate cutting edge websites which are easy to navigate, can be operated on a variety of devices and in multiple languages (marketingweek 2010, Murphy 1996). In order to deliver the service that they desired they would have to update their existing infrastructure. After market research IHG decided to use StrongMail for its marketing and transactional email, Unica for offers and campaign management and Teradata for its data storage. This combination of platforms allowed IHG chains to send tailored instant messages regarding bookings to customers in real time as well as sending instant offers to potential customers on IHG’s data base but not users of the Priority Club Rewards app (StrongMail n.d.). This system upgrade has allowed IHG to provide its customers an improved end to end experience, this will ultimately build customer...
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