E-Business Research and Analysis

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Student’s name (Surname) Abdullah

(Given names)

Omar

Student’s I.D. number: 21837473 Phone number: +6017277369

Unit name Introduction to Electronic Business Unit Code MKW 1601

Title of assignment E-Business Research and Analysis

Name of lecturer

Name of tutor

Dr. Uchenna Cyril Eze


Tutorial day /time Wednesday – 2pm

Due date: 04/05/2012 Date submitted: 04/05/2012

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Student’s name (Surname) Chowdhury

(Given names)

Amid Hossain




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Student’s name (Surname) Hassan

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Ifaz Khorshed




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Acknowledgement

I would like to take this opportunity to express my sincere appreciation to my supervisor Dr.

Uchenna Cyril Eze for his guidance, patience and encouragement in helping me complete this

project on time.

My deepest gratitude to my family members, to whom I owe all my achievements, and also to

my friends for their support. I am also indebted to my friends and course mates who assisted

and encouragement me throughout the period of this research.

Abstract

This report begins by giving an introduction that provides a brief background of Sony,

purpose of the report and highlights of the electronic marketplace. Further research has been

carried out on the e-business components of Sony: a) organization, b) technology and

c) value of the e-business system.

The report also highlights the possible e-business issues that Sony faces and might face in the

future. Most common threat on business is security. So its importance is emphasized in the

report. The marketing channels that Sony uses in its electronic business model have been

explained as well.

The analysis has been done through research from sources such as books, websites and

various articles where information about the company has been published. The opportunity

discovered through the analysis is to come up with a detailed illustration of how Sony

functions in the E-market.

Table of Contents Acknowledgement ..................................................................................................................... 4

Abstract ...................................................................................................................................... 5

List of Tables ............................................................................................................................. 7

1. E-Business System ................................................................................................................. 8

a) Name and purpose of the system:- .................................................................................. 8

b) 1.2 The E-Marketplace:- ............................................................................................. 8

2. Research into e-business components:................................................................................... 9

a) Organization...................................................................................................................... 9

i) Possible Internal organization Functions:- ..................................................................... 9

ii) Firms, Suppliers and Business Partners involved with the systems: ............................. 9

iii) Business process associated with the system: .............................................................. 9

b) Technologies ............................................................................................................. 10

i) Hardware, Software and network: ............................................................................. 10

ii) Payment systems and security technology:- .......................................................... 10

c) Value of e-business system ........................................................................................... 11

i) Tangible benefits ....................................................................................................... 11

ii) Intangible benefits ................................................................................................. 12

iii) Alignment with the vision and mission of the organization: ................................. 13

3. E-Business Issues ................................................................................................................. 14

i) Security and privacy issues: .......................................................................................... 14

ii) Marketing issues:....................................................................................................... 16

4. Conclusion ........................................................................................................................... 17

Bibliography ............................................................................................................................ 18

List of Tables

Table 1: Displaying appropriate customer service and the resulting customer satisfaction .... 13

1. E-Business System

a) Name and purpose of the system:-

Sony was founded in 1946 and since then it has become a pioneer in audio and video

electronic equipment both for consumer market and business market. In the 1990s when the

internet was growing popular, Sony launched its website to benefit from the e-business

concept that was rapidly gaining widespread interest at that time. Over time the website

(www.sony.net) has become an e-commerce hub for Sony which facilitates the selling of its

products to customers and also helps provide customer support.

b) 1.2 The E-Marketplace:-

Sony operates a sell side private e-market place because it is owned and controlled by a

single company. It is a storefront: a place where buyers and sellers meet electronically to

facilitate the exchange of goods and achieve secure payment in order to conduct business

(Mcquitty & Peterson, 2000)The website of Sony (www.sony.net) has several features such

as catalogue, payment gateways, order tracking, customers service etc. Moreover, Sony uses

intermediaries such as Amazon to sell its products online to exploit a broader market (Sony,

2012). Sony’s payment system has been mainly outsourced to various payment service

providers namely Visa, MasterCard and so on, to provide consumers with a secure payment

facility.

2. Research into e-business components:

a) Organization

i) Possible Internal organization Functions:-

Much of the success of the Sony e-business model can be attributed to the

effective sales and marketing operations and the efficient business operations

of the company (Osterwalder & Pigneur, 2002)The website provides catalogue

and all the relevant details of the product, provides an easy to use online order

and payment system and also provides shipment tracking of the system.

Product related customer services as well as problems solving tools are also

provided. Thus it can be concluded that the Sony website mainly caters to the

sales and marketing department of its operations and also establishes an easy

to use sales system for the consumers.

ii) Firms, Suppliers and Business Partners involved with the systems:

Sony has developed partnerships with many ‘third party’ companies to retain

its competitiveness in the electronics business sector. It has a strategic

partnership with the application service provider Altoros. Altors helps Sony

remain competitive by developing web based service applications and services

for Sony faster than its competitors (Customers Speak, 2012). As a result Sony

has reduced its operating cost and capture greater market share increasing its

profitability. Another strategic alliance of Sony is with BroadVision, a leading

and cutting-edge software developer (BroadVision Sets Date to Announce

Fourth Quarter Fiscal Year 2010 Results, 2011). BroadVision has used its soft

wares to develop web based applications and also develop the one to one

marketing for Sony. Also its software has helped Sony to improve its support

service which has helped to enlarge its customer base.

iii) Business process associated with the system:

Several of the business processes are combined to provide the quality and the

product to the Sony consumer. Sony uses mySAP Customer relationship

management system to select targeted customers and launch a series of target

marketing campaigns for individual customers (Adorna, 2006). In addition to

the targeted marketing Sony also offers customer support through its FAQ and

regular product updates on its online catalogue. The website also permits

download of software and manuals for its products to enhance customer

services. Such close marketing alongside good services like free software

updates builds a strong relationship with customers.

b) Technologies

i) Hardware, Software and network:

Sony is known for constantly upgrading their networks and also for upgrading

its software as well as hardware. They specially use Microsoft® Commerce

Server and Microsoft® SQL Server technologies have been put in place to

drive more customer penetration and build online customer loyalty.

Microsoft® Commerce Server includes crucial components for establishing

and expanding online customer focused businesses by allowing product

catalogue setup, and an on-going administration and personalization. On the

other hand, Microsoft® SQL server permits extensive OLAP(online analytical

processing) and data mining functionality, thereby facilitating better decision

making (Microsoft Corporation and Intel Corporation, 2006).

ii) Payment systems and security technology:-

Sony protects its online customer exchanges through the use of SSL protection

of its website. This is very hard to break by hackers. Also Sony customers

have to login online by using their own accounts. Thus authentication of the

identified customers helps make their products secure. Moreover,

communications to and from Sony only takes place on the email account of

the customer registered under Sony. Accordingly, it is understood that through

such online interactions with Sony are secured.

As mentioned earlier, Sony uses Mastercard and Visa credit cards to secure

online payment. By having the secured payment by Visa card logo, customers

have to directly use password created for online payment with the respective

Visa card. The process usually involves TAC (transaction authorization code)

numbers which is only sent to the customer’s registered phone number

(Combaluzier, 2000). This further secures the online transaction. The SSL

protocols are another means of security which helps to protect the online

payment system.

c) Value of e-business system

i) Tangible benefits

The value of e-business in today’s world is irrefutable and new concepts are

on the rise revealing the benefits of such systems. The concept of shortening

the supply chain or "disintermediation" caused by electronic commerce is a

relatively new concept. According to one researcher, the word has only been

around for three or four years. In its widest sense, disintermediation means the

elimination of intermediaries such as distributors and retailers (Barros,

Billante , Deley, & Nores, 1998)

Among the many benefits the e-business system of Sony provides are,

boosting profit, improved productivity, enhancing various relationships,

opening new marketing channels, and the list goes on. Already enjoying its

highly populated and dedicated consumer base, Sony responds to its global

consumers by taking the advantage of the value of information technology in

e-business environment. Similarly, Sony is able to capitalize on new

opportunities by taking the open platform of the internet resulting in removal

of geographical and physical barriers. Another notable benefit is the direct

customer advantages:

- Web stores are open 24 hours a day,7 days a week

- Access to numerous search systems that makes the customer’s search

activities much easier

- Global accessibility from all over the world

Through expansion, Sony can target customers worldwide subsequently

increasing both its sales volumes and sales revenue. Another thing in effect is

the growing customer enlargement which enables Sony to establish itself as a

universal brand, helping it to build its business goodwill; thereby successfully

vying for international customers’ loyalty. The e-business system helps the

online store to attract and target the right segments and aids in the retention of

loyal customers by catering to their needs which will ultimately sustain long

term profitability and reduce costs. Even though e-business environment is

becoming increasingly competitive and electronically linked (Henderson,

Dooley, Boehlje, & Akridge, 2001). Sony’s brand reputation quite efficiently

rules out the former.

E-business encourages the exploration of multi-channel marketing (Banta

Corporation White Paper, 2004)Online marketing strategies are more efficient

as most of its customers are highly regular internet users and substantial online

buyers. The novel and inexpensive marketing approach permits Sony to carry

on personalized marketing and focus on customer needs. This is evident in the

company’s website (www.sony.net) where it is mentioned that it continues to

be more than just about the product but also about the people who use it and is

fuelled by customers demand.

For instance, digital marketing permits the online store to tag its content with

metadata unfolding it in micro format where other organization like

Facebook’s open Graph Protocol and Google Rich Snippets power such

metadata to facilitate sharing of information and improve search engines

therefore increasing the site’s visibility and popularity compared to that of the

rivals. Online marketing similarly allows the firm to save both time and cost

by designing tailored-made advertising campaigns and catalogues via inferred

data of the shoppers (Chao & Wei, 2010), customer profiles and their

shopping history which helps in boosting sales and demand (Anumba &

Ruikar, 2008)

ii) Intangible benefits

Strategic position, customer service and quality of life are the intangible

benefits favouring the firm. The integrated systems used by ‘sony.net’ enable

necessary customer services upgrades to improve the firm’s strategic position.

Sony’s main focus on customer care is executed with the help of some 2000

customer service staff, resulting to customer satisfaction followed by a

strengthened strategic position.

Like most click-and-mortar organization, Sony understands the importance of

customer satisfaction, as an important element of competitive quality which

results in customer loyalty. Its site’s image as been improved by its strong

customer services and the aftermath is over one million hits per month

supported by regular usage of thousands of customers. By 2006, only 7 years

into e-business Sony, had over 170,000 visitors to its web site every day and is

regularly placed in the top ten UK ranking for shopping and classified sites in

the ‘ Shopping Appliances and Electronics’ category. The following table

displays appropriate customer service and the resulting customer satisfaction:

Table 1: Displaying appropriate customer service and the resulting customer satisfaction

Employers of Sony are provided with the latest technology, appropriate and up-to-date

software, and networking requirements. In addition, it also provides ease of communication

among the employees, the customers and the suppliers. The hassle of administrative paper

work and processing time for employees when focusing on challenging work is also

eliminated by wise supply chain management .The employees are highly trained to deal with

technical problems and the site engages into one employee for one customer rule, thus

improving the employees’ motivation and accuracy.

iii) Alignment with the vision and mission of the organization:

Vision: ‘Sony will be the most comprehensive entertainment company in the

world' or 'the world will look to Sony for comprehensive entertainment’.

Sony has been very successful in steadily establishing itself as one of the

leading providers of audio/video electronics and information technology

products for the consumer, academic, and the corporate world. Sony

manufactures electronic appliances that heavily support the IT industry and its

course into the gaming market has also seen fireworks. The company’s deep

involvement in the music and movie industries (i.e. Sony BMG and Sony

Customer service Customer Satisfaction

Customer Relationship The CRM software is able to forecast the wants of a customer. Sony has user

profile covering shopping history and personal information of the customers where

employees have direct contact with them. Personal emails are sent to them which

are addressed to their names and products are suggested based on their shopping

preferences.

Service and Support Customers are able to track shipment through the site and separate services exist

for handling returns and any past questions asked will be visible in the user’s

profile. Sales activities are supported by dealer locator and accessory finder.

Furthermore, repair and service are available in its site as well.

Privacy and Security The site in its contract states that the customer profile is confidential. It also

ensures that customers are safe and are not victims of fraud by reserving the right

to check any credit cards background. The site uses user ID/ password, firewalls,

server segregation, application controls and Secure Socket Layer (SSL).

Pictures) has given Sony a competitive advantage in the entertainment

industry and today Sony is seen to be universally acclaimed.

Mission: ‘Bring new technologies, content and services together in

unprecedented ways that enable people to re-shape their perception of the

world and enhance their lives’.

Sony has been at the cutting edge and a leading innovator of some state of the

art of technologies for more than 50 years; certainly impacting the way people

live. Its innovation has become a part of popular culture, including the first

magnetic tape and tape recorder introduced in 1950 until the latest Hi-scan flat

screen TVs. Undoubtedly, Sony has been multitudinously successful in

accomplishing its mission in becoming a leader in product innovation,

principally based on the on-going R&D (Research and development)

initiatives and convergence of various technologies.

3. E-Business Issues

i) Security and privacy issues: A website’s security and privacy keeps customer satisfied and secured,

safeguarding the organization’s image. However, online businesses are often

victims of security issues like hacking, malware attacks, botnets, and phishing

which lead to privacy issues like identity theft and customers’ information

exposure.

Sony has been seen in numerous incidents to be highly concerned with security

not just limited to tis web stores. In the wake of an April hack that took down its

PlayStation Network for almost a month in 2011, Sony hired a former

Department of Homeland Security official to head up information security and

privacy issues. Philip R. Reitinger was named Sony's senior vice president and

chief information security officer (Albanesius, 2011)

The fact that security and privacy issues are closely linked to customer loyalty and

data loss can incur very high cost highly encourages Sony’s security and privacy

concerns to be of gigantic importance. Widely known as the PlayStation Network

outage, it was the result of hackers accessing to some 77 million accounts under

PlayStation Network and Qriocity services (Richmond & Williams, 2011). As a

result users of PlayStation 3 and PlayStation Portable consoles were restricted

from participating in online games (PlayStation Network Restoration Begins,

2012). Furthermore, a ‘consumer class action’ was filed against Sony, connecting

to the data cracks in its Sony PlayStation and related services and the company

suffered a significant cost (BBC News, 2011).

A privacy policy has been established by Sony in Europe in cooperation with the

Federation of European direct marketing (FEDMA). FEDMA is the first trade

association whose data protection code of practice, which was developed in

negotiations with the European Data Protection Authorities (article 29 working

group) and recognized by the EU Commission (Sony, 2011).

To combat unfortunate happenings Sony Corporation has made significant

enhancements to the data security (Sony, 2011) (Seybold, 2011) (Sony, 2012):

- Using of Secure Sockets Layer (SSL) encryption when collecting or

transferring sensitive data: SSL is the most widely used technology for

creating a secure communication between the web client and the web

server. SSL encryption is designed to make the data unreadable by anyone

but Sony.

- SNEI (Sony Network Entertainment International) and its third-party

experts have conducted extensive tests to verify the security strength of its

network.

- Automated software monitoring and configuration management to help

defend against new attacks.

- Enhanced levels of data protection and encryption

- Enhanced ability to detect software intrusions within the network,

unauthorized access and unusual activity patterns

- Implementation of additional firewalls

- Orders placed over the Sony website are subject to strict verification

policies, a manual checking process to ensure that the card being used is

not being misused by another party. It also developed its own shipping and

billing policies to provide customers with protection from credit card

fraud.

- Sony is registered with VeriSign site identification authorities. This allows

customer’s Internet browser to confirm the identity of the website they are

using before any personal information is sent. If the site users are using is

not the authorized Sony site, users will be notified that the site looks

suspicious with an error message, before you send any personal

information.

- The Sony databases are stored with secure network architecture and are

protected by many Sony security measures. Customer’s credit card

information is not stored in any Sony database .i.e. Sony of Canada Ltd.

maintains strict enforcement of Private Information Management to ensure

that its customers are the best protected and not at risk. Information held

by Sony is not shared and protected under our Privacy Policy.

- The company has also initiated a number of ways to maintain its network

infrastructure like an early-warning system for suspicious activities that

could signal an attempt to compromise the network.

To summarise, the company’s e-commerce security strategy involves a mix of prevention and

detection measures to safeguard the confidentiality of data in the information system and

further uplift online trust towards the organization.

ii) Marketing issues: Although Sony has already established itself as an electronic giant globally, the

fact that e-business is still somewhat new in today’s world makes it prone to

fluctuations in demand and supply of its products. Most customers are reluctant to

buy online which is supported by the existence of high level of scam and

fraudulent activities feeding on credit card numbers and personal information.

Moreover, fierce competition invited by new companies means Sony faces the

challenge of short product lifecycle and changes in prices of the competitors’

products due to technological innovation. Another issue is shopping cart

abandonment; more than 60 per cent of online shoppers abandon purchases before

completing the credit card transaction, according to Gartner Group Inc. (Chin,

Wafa, & Ooi, 2009). Sony requires a swift sales turnaround of its product, as the

type of products it sells is most likely to get backdated (innovation in electronics

is exponential in new age) and hence prevention of obsolescence of its inventory

is critically necessary.

In order to combat marketing issues Sony marketing constructed a new sales SCM

(Supply chain management) system linked to many of its business processes,

including manufacturing, distribution, and sales. Two such schemes are given

below:

- Demand information creation system:

This system collects the actual data from Sony’s volume resellers. By

processing inventory and other related information it is able to predict the

demand for the next 33 weeks for the product under consideration. These

forecasts are then sent to EMCS (the division responsible for production)

and thereby necessary adjustments are done (Sony Marketing (Japan) Inc.,

2004).

- Delivery time forecast system:

It provides delivery time answers to order requests by collecting

production plan and inventory information. When there is no inventory, it

confirms the production finish dates by reference to the production plans

in the factories. If there are no production plans, it looks for replacements

products .When handling mixed orders, for instance PCs and displays,

whichever is the later product delivery time is the delivery time provided.

This systems database contains up to ten million entries and process one

hundred thousand orders a day and is able to calculate delivery times

within 0.1 of a second (Sony Marketing (Japan) Inc., 2004)

4. Conclusion Moreover, Sony can also utilize its strong brand name and adopt a brand extension strategy to

market new product categories and boost sales in the initial stage. Finally, in order to survive

profitably in the long run Sony Corporation may carry out on-going marketing research and

continue to develop innovative products that effectively fulfil customer needs, wants and

demand.

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E-Business Research and Analysis