1. Based on the Case Study and Your Own Research on Competitors, Summarize the Strategic Approaches Which Have Helped Tesco.Com Achieve Success Online. Paper
1. BASED ON THE CASE STUDY AND YOUR OWN RESEARCH ON COMPETITORS, SUMMARIZE THE STRATEGIC APPROACHES WHICH HAVE HELPED TESCO. COM ACHIEVE SUCCESS ONLINE. Strategic decisions are ones that are aimed at differentiating an organization from its competitors in a way that is sustainable in the future. (Porter, 2002) Porter strongly advocates that decisions in business can be classified as strategic if they involve some innovation and difference that results in sustainable advantage.
According to Porter, (2002) operational effectiveness and efficiency are the key elements of success in any organization. A company can outperform its rivals or competitors in the market only with superior management and efficient control creating a difference from the others which eventually attracts customers. Porter defines operational effectiveness as performance of similar activities as its rivals but better than them. A company can perform its rivals only if it can operate in different ways which are not in practice as seen in Tesco. com.
After the establishment of various virtual supermarkets, a new phase began when established brick and mortar supermarkets entered the online grocery shopping arena by adopting a ‘click and mortar’ strategy. In the UK there are Tesco, Sainsbury’s, Asda, and Waitrose. com. These players, by combining the strength of traditional retailing with Internet shopping, have achieved rapid growth. The SWOT analysis of Tesco. com reveals that it is most powerful retail brand, reputation for money, value, commitment, and provides wide range of products.
It is growing at a brisk pace with expanding its horizon to other parts of world through acquisition and merger. Tesco. com has good opportunities in markets of European and Asia and focuses on acquiring the market through acquisition of smaller stores and merger or partnering with leaders in the specific markets. Also the success factors of Tesco reveals that Tesco had formulated its strategies around its core competence. These core competences are: PROVIDE POTENTIAL ACCESS TO A WIDE VARIETY OF MARKETS: Enables the creation of new products and services. For instance, Tesco has established a strong leadership in food retailing industry.
The core competence that enabled Tesco to enter retailing of food and non-food products was a clear distinctive brand proposition that had a focus on a properly define market segment. Tesco is recognized as the company, providing the most customized and efficient service, based on a good customer relationship management. TESCO MAKES A SIGNIFICANT CONTRIBUTION TO THE PERCEIVED CUSTOMER BENEFITS OF THE OUTCOME: Delivers a fundamental customer benefit. In order to identify core competences in a particular market, the question of – why is the customer willing to pay more or less for one product or service than another- needs to be addressed.
For example, Tesco have been very successful in capturing the leadership of the retailing market. This shows that Tesco designs and implements effective supply systems and deliver an efficient “customer interface”. Tesco was the first UK grocer to launch a loyalty card and has been the most effective. Palmer (2004) claims that until recently, it was the only grocer to use the information to mail customers every month. DIFFICULT FOR COMPETITORS TO IMITATE: Highlights the need for a core competence to be competitively unique.
This indicated the importance of product differentiation. For example, for many years up to 2003 (In 2003 Tesco has been recognised a leading UK food retailer) Tesco had a very strong position within the retailing industry. It had a different approach to the service concept, providing good corporate reputation and introducing new premium quality products (MarketWatch, 2004). Tesco. com bases its business strategy on these capabilities. Capabilities result from Tesco’s ability to combine and exploit these resources in uniquely different ways. STRATEGIES OF TESCO. COM
Tesco has been pursuing a dual strategy of cost leadership and differentiation, which has led to an increased importance placed on customer service. Drawing upon Keynote (2010), this dual strategy is exhibited through the development of self-service kiosks, financial services, focused direct marketing and promotions. In order to put Tesco’s value chain analysis into perspective, despite its cost leadership strategy the company has been able to create a high degree of value in comparison with its key competitors. The relative analysis of the value created by the big four supermarket chains, i. . , Tesco, Asda, Sainsbury’s and Morrisons has been provided as follows: [pic] The following strategic approaches were adapted from the two generic strategies been used by Tesco. com which had made them successful online are as follows: FIRST MOVER OR PIONEER STRATEGY Tesco is seen as the most innovative food retailer in the UK retail market, enjoying the advantages of a first mover or pioneer of online retailer but also striving to avoid the disadvantages that become advantages to followers (Lieberman and Montgomery 1988), such as and continual innovative of products and services.
The most important advances were that Tesco was first to the first to introduce internet shopping, first to introduce cut-price products under its own brand name in 1993, first to introduce a customer loyalty programme with the Tesco Club card which was followed by the rival UK chains like Sainsbury and Safeway. Also noteworthy was the launch of its first credit card in 1997 through a joint venture with the Royal Bank of Scotland, which offers points towards its loyalty programme and so has supported the latter and finally it has become the first to launch electronic shopping in the mid-1990s.
Through the effective use of information technologies, it was the first retailer to introduce a completely automated replenishment system, aimed at linking in suppliers, and use an advanced scanning programme (barcode reader) from Siemens Nixdorf, aimed at cutting cashier training by up to 60 percent while simultaneously detecting the available stock in the supermarkets. Referring to all these innovations and efforts, IT director, Ian O’Reilly said that they wanted the advantages of being first mover, despite this helping the competition somewhat (Hollinger 1998).
Until the follower retailers adapt these novelties to their markets, Tesco is able to exploit the advantages arising from their pre-emptive investments. This is discernible in its turnover and profit. For example By September 2005 online sales in the first half of the year were ? 401 million, a 31% year-on-year increase, and profit increased by 37% to ? 21 million. Tesco. com now receives 170,000 orders each week. Soon it should reach an annual turnover of ? 1 billion online and is generally recognized as the world’s largest. All these revenues were advantages Tesco. com got from being the first mover of online retailer.
CUSTOMER FOCUS The best way to make sure customers buy your products and services is to give them exactly what they want. Companies need to take a step back from their offering and try to put themselves in the shoes of their customers. Observing people carefully and analysing how they live their everyday lives needs to be central to the design process. Tesco. com is a prime example. Realising that many of its potential customers didn’t have personal internet access during the day, it made a new online retail outlet available from pocket PC devices and Smartphones, allowing them to shop at home, at work or on the move.
Customer-focused design is about getting feedback right through the design process. It’s always effective and can occasionally throw up the unexpected. The company is also very successful in terms of customer loyalty due to its loyalty cards system and its general approach to customizing services to the needs of every customer. This is truly evident in terms of tremendous growth of on-line sales where the company has a strong platform to further develop this revenue stream.
After considering the fact that, nowadays majority of people have less time for shopping, Tesco employed this on-line systems and now became the biggest online supermarket. The key business strategy of Tesco is continually to increase value for customers and earn their lifelong loyalty, a strategy that is related to the staff, through appreciation of their contribution, and to the consumers by providing innovative services to meet their needs and wants. Tesco’s strategy is based on ‘customer services’, whose components can be depicted as a pyramid with a cumulative perspective from bottom to top (see Figure 1).
The biggest challenge for any business is to keep in touch with customers and be aware of how their needs are changing and be able to respond quickly to their changing needs. Since Tesco want to maximise usage of online channels (web, e-mail and wireless or interactive digital TV where relevant), a distinct, detailed online value proposition (OVP) or online customer value proposition was developed for the target audiences. the online customer proposition did not simply replicated the existing service proposition or brand promise that it is available from offline channels, but it was extended to offer unique online benefits. pic] Source: www. bized. ac. uk/compfact/tesco/tescoindex. htm From the case study Tesco. com focused on improving the customer experience online, the time it takes for a new customer to complete their first order has been decreased from over an hour to 35 minutes through usability work culminating in a major site revision. For their existing customers, e-mail marketing and direct mail marketing were used to provide special offers and promotions to customers with the intent to satisfy the customer. Tesco also offer delivery to your home service which is an obvious extension of the home-delivered groceries oncept. Tesco claims that its success in online shopping derives from its store-picking approach; Asda fills its online orders from central warehouses. Tesco’s marketing strategy is based on price, quality and service competitiveness. Their ways of achieving these included policies concerning customer service, pricing, product promotions, product range, store design, store refurbishment and advertising on TV, and in the local and national press. These strategies along with the Tesco Club card, which has 10 million active members in the UK, help to preserve customer loyalty. In addition Tesco. om use what they describes as a ‘commitment-based segmentation’ or ‘loyalty ladder’ which is based on recency of purchase, frequency of purchase and value which is used to identify six (6) lifecycle categories which are then further divided to target communications: • “Logged-on” • “Cautionary” • “Developing” • “Established” • “Dedicated” • “Logged-off” the aim here is to win back). Tesco then use automated event-triggered messaging created to encourage continued purchase. For example, Tesco. com has a touch strategy which includes a sequence of follow-up communications triggered after different events in the customer lifecycle.
In the example given below, communications after event 1 are intended to achieve the objective of converting a web site visitor to action; communications after event 2 are intended to move the customer from a first time purchaser to a regular purchaser and for event 3 to reactivate lapsed purchasers. i. Identify customer profile characteristics. This is a traditional segmentation based on the type of customer. For B2C e-retailers this will include age, sex and geography. For B2B companies, this will include size of company and the industry sector or application they operate in. iIdentify behavior in response and purchase. As customers progress through the lifecycle, by analysis of their database, they will be able to build up a detailed response and purchase history which considers the details of recency, frequency, monetary value and category of products purchased (RFM analysis). iii. Identify multi-channel behavior (channel preference). Regardless of the enthusiasm of the company for online channels, some customers will prefer using online channels and others will prefer traditional channels.
This will, to an extent be indicated by RFM and response analysis since customers with a preference for online channels will be more responsive and will make more purchases online. A flag within the database which indicates the customers channel preference and by implications, the best channel to target them by. Customers that prefer online channels can be targeted mainly by online communications such as e-mail, while customers who prefer traditional channels can be targeted by traditional communications such as direct mail or phone. iv. Tone and style preference.
In a similar manner to channel preference, customers will respond differently to different types of message. Some may like a more rational appeal in which case a detailed e-mail explaining the benefits of the offer may work best. TOUCH STRATEGY To deliver relevance also requires a plan specifying the number, frequency and type of online and offline communications and offers. This is a contact or touch strategy. A good starting point is to ask ‘what will annoy’ the customer. Clearly if e-mail communications are too frequent, then the customer is less likely to have the time or inclination to open an e-mail.
Therefore one approach is to monitor the response for e-mail communications. But higher frequencies will likely lead to higher response. This helps explain the high volume of e-mails sent by Tesco. com to its consumers, which averages between 1 and 2 per week. But Tesco. com have recently been exposed as ‘bombarding UK consumers with a massive e-mail marketing campaign’ Based on the E-mail tracking service E-mail Monitor from Interactive Prospect Targeting Services, Tesco is blitzing the nation with 16-20 million e-mails per month.
It reports that in September it issued 44 separate e-mail campaigns last month which was more than Sainsbury, Asda, Waitrose and Somerfield put together. Part of this activity can be explained by Tesco’s market share. A Tesco spokesman was reported as saying ‘More people shop with us online than with anyone else and we do communicate with a lot of them by email. For existing customer E-mail marketing and Direct mail marketing is used to provide special offer and promotion to the customers. In addition Tesco. om basically relies on in-store advertising and marketing to the supermarket’s Clubcard loyalty scheme’s customer base to persuade customers to shop online. DIVERSIFYING THROUGH DIFFERENT RANGE OF PRODUCTS AND SEVICES WHICH LEADS TO CUSTOMER SEGMENTATION In a rapidly changing business environment with a high competitors’ pressure Tesco have to adopt new expansion strategies or diversified the existing in order to sustain its leading market position in an already established retailing market.
Johnson and Scholes (2003) believe that changes in the business environment may create demand for new products and services at the expense of established provision. Ansoff’s matrix also suggests that if new products are developed for existing markets, then a product development strategy has to be considered by the management level of a company. This is what management (Laura) of Tesco did. They diversified in both product and services PRODUCT DIVERSIFICATION The Product range development of Telco is also one of the key areas of heir success. From the case, it was noted that they fulfilled all the Grocery order and also offer more intangible offering such as E-diets and music download etc. Tesco also offers broadband and dial-up ISP services, but believe the market for Internet telephony (provided through Skype and Vonage, for example) is not sufficiently developed. Tesco. com concentrated on more traditional services which have the demand, for example, Tesco Telecom fixed-line services attracted over a million customers in their first year. By May 2005, Tesco. om had 30,000 customers signed up for DVD rental, through partner Video Island (which runs the rival Screen select service). As they were diversify into new area such as Tesco Personal Finance and the telecoms businesses, as well as services offered in partnership with specialist companies, such as dieting clubs, flights and holidays, music downloads, gas, electricity and DVD rentals. It does not currently sell clothing online but in May 2005 it introduced a clothing web site (www. clothingattesco. com), initially to showcase Tesco’s clothing brands and link customers to their nearest store with this range.
They also started to make home delivery services to the customers like white goods and other products. In addition to achieve growth in non-foods, Tesco has focused on building its capability in four non-foods Areas: Entertainment Health & Beauty Household Clothing. Services diversification Services: Tesco Financial Services Tesco financial services products [pic] Source, tesco: a case study in supermarket excellence july 2004, www. coriolisresearch. com The company build a web site that acts as a portal to most of Tesco’s products and services, including various non-food ranges (for example, ooks, DVDs and electrical items under the ‘Extra’banner), Tesco Personal Finance and the telecoms businesses, as well as services offered in partnership with specialist companies, such as dieting clubs, flights and holidays, music downloads, gas, electricity and DVD rentals. It does not currently sell clothing online but in May 2005 it introduced a clothing web site (www. clothingattesco. com), initially to showcase Tesco’s clothing brands and link customers to their nearest store with this range. PARTNERSHIP AND STRATEGIC ALLIANCES Tesco also formed partnership, alliance with other companies in order to stay competitive.
From the case study the offer services in partnership with specialist companies, such as dieting clubs, flights and holidays, music downloads, gas, electricity and DVD rentals. For example they formed partnership with Video Island (which runs the rival Screen select service) to provide DVD rentals. By May 2005, Tesco. com had 30,000 customers signed up for DVD rental, through partner Video Island. There was another partnership with eDiets and its partnership with eDiets was promoted through the Tesco Clubcard loyalty scheme, with mailings to 10m customers a year.
In July 2004, Tesco. com Limited paid ? 2 million for the exclusive licence to eDiets. com in the UK and Ireland under the URLs www. eDietsUK. com and www. eDiets. ie. Through promoting these services through these URLs, Tesco used the dieting business to grow Tesco. com service and in-store sales. In addition Tesco Mobile, the joint ‘pay-as-you-go’ partnered with O2 which is mainly serviced online, to promoted in-store and via direct mail. BRAND VALUE The company has a strong brand image, and is associated with good quality, trustworthy goods that represent excellent value.
Tesco’s innovative ways of improving the customer shopping experience, as well as its efforts to branch out into finance and insurance have also capitalized on the brand name and value. There are companies that have always understood that they were selling brands before the product. Tesco is a brand and also serves as the core strategic advantage. The company was spreading like wildfire transforming the generic into the brand-specific, largely through carefully branded packaging and the promotion of an “every penny counts” environment.
The company has a strong brand image, and is associated with good quality, trustworthy goods that represent excellent value. For eample while all private label products are labeled Tesco, the company uses sub-brands to segment the Market. Tesco private label architecture [pic] Source, tesco: a case study in supermarket excellence july 2004, www. coriolisresearch. com Wal-Mart/Asda challenge: Since the US shopping giant Wal-mart purchased Asda, Tesco’s rank as the top UK supermarket has been threatened. Asda can now compete extremely well on price and range of goods.
For the moment, Asda is the third largest supermarket in the UK, just behind Sainsbury’s and then Tesco. However, Asda closed the gap on Sainsbury’s in 2003, leaving the company to directly challenge Tesco’s dominance. Tesco is well aware of this, and has so far been quick to keep up with price cuts or special offers at Asda. Wal-mart may also decide to wield its buying power more heavily in the UK, and this could spell the end of Tesco’s brand dominance in the future. Sainsbury was the UK’s biggest grocer until 1995, but was recently relegated to third position behind Tesco and Asda.
Internal problems and strategic errors have left Sainsbury struggling. The company believed it could abandon the classic focus on ‘price’ in favour of refurbishing store ‘fascias’ (their own term for aesthetic design) and supply-chain improvements. Its loss of market share illustrates that price is still the key for many consumers. Asda, owned by US Corporation Wal-Mart since 1999, is the only supermarket with the potential to become a thorn in the side for Tesco. Wal-Mart, with global sales of $256bn in 2003, is the biggest company in the world with annual sales eight times bigger than Tesco’s.
Asda is rumoured to be about to acquire Matalan, the giant discount clothing and home furnishing store. Already, Asda’s George range of clothing is the best-selling brand in the UK. Two million of its ? 4 pairs of jeans were sold during 2003-4. Tesco’s latest strategy is to launch ‘Tesco Telecoms’, which includes Tesco Mobile and Tesco Talk, a land line service. Tesco Personal Finance has proved a big success as one of Europe’s fastest growing financial service providers, with over 4 million customer accounts by August 2003, and 50,000 new accounts opening each week. 35 GROWTH STRATEGY
First, Tesco developed new products and services to sell to existing customers [pic] Source, tesco: a case study in supermarket excellence july 2004, www. coriolisresearch. com Next, Tesco developed new store formats to capture more customers [pic] Source, tesco: a case study in supermarket excellence july 2004, www. coriolisresearch. com Table 2: Online Survey: Elements Of Business Models In UK Online Supermarkets [pic] [pic] [pic] [pic] [pic] [pic] [pic] Source, 17th Bled eCommerce Conference eGlobal, Online Supermarkets: Emerging Strategies And Business Models In The UK
In addition From the beginning Tesco. com used one more channel through which toreach its existing customers as well as some new ones. It tried to provide a multi-channel experience to customers it had already attracted. ” And that strategy allowed Tesco. com’s online grocery business to thrive. Tesco’s strong brand, good use of design and innovative approach has helped to minimise customer capture costs. Coupled with its existing IT, retailing and logistics skills, this ‘clicks and mortar’ front-runner looks set to lead the e-retailing pack for some time to come.
In summary Tesco explains its growth strategy with two basic diagrams [pic] Source, tesco: a case study in supermarket excellence july 2004, www. coriolisresearch. com CONCLUSION The success of the Tesco shows how far the branding and effective service delivery can come in moving beyond splashing one’s logo on a billboard. It had fostered powerful identities by making their retailing concept into a virus and spending it out into the culture via a variety of channels: cultural sponsorship, political controversy, and consumer experience and brand extensions. 2.
DISCUSS SOME OF THE LEGAL AND ETHICAL ISSUES THAT MUST BE ADDRESSED BY MANAGEMENT AS IT EMBARKS ON MOBILE TRANSACTION, DEALING WITH CLIENTS FROM DIFFERENT PARTS OF THE WORLD. Businesses that operate on the Web must comply with the same laws and regulations that govern the operations of all businesses. If they do not, they face the same penalties—including fines, reparation payments, court-imposed dissolution, and even jail time for officers and owners—that any business faces. Laws in the physical world do not apply to people who are not located in or do not own assets in the geographic area that reated those particular laws. For example, the United States cannot enforce its copyright laws on a citizen of Ghana who is doing business in Ghana and owns no assets in the United States. Any assertion of power by the United States over such a Ghanaian citizen would conflict with the Ghanaian government’s recognized authority over its citizens. Ghanaian citizens who bring goods into the United States to sell, however, are subject to applicable U. S. copyright laws. A Ghanaian Web site that offers delivery of goods into the United States is, similarly, subject to applicable U. S. laws.
The level of power asserted by a government is limited to that which is accepted by the culture that exists within its geographic boundaries. Ideally, geographic boundaries, cultural groupings, and legal structures all coincide. When they do not, internal strife and civil wars can erupt. Once businesses begin operating online, they found that traditional effects-based measures did not apply as well and that the laws based on these measures did not work well either. For example, France has a law that prohibits the sale of Nazi memorabilia. The effects of this law were limited to people in France and they considered it reasonable.
U. S. laws do not include a similar prohibition because U. S. culture makes a different tradeoff between the value of memorabilia (in general) and the negative cultural memory of Nazism. When U. S. -based online auction sites began hosting auctions of Nazi memorabilia, those sites were in compliance with U. S. laws. However, because of the international nature of the Web, these auctions were available to people around the world, including residents of France. In other words, the effects of U. S. culture and law were being felt in France. The French government ordered Yahoo! Auctions to stop these auctions.
Yahoo! argued that it was in compliance with U. S. law, but the French government insisted that the effects of those Yahoo! auctions extended to France and thus violated French law. To avoid pro-tracted legal actions over the jurisdiction issue, Yahoo! decided that it would no longer carry such auctions. The levels of authority and autonomy with which governments of various countries operate vary significantly from one country to another. Online businesses must be ready to deal with a wide variety of regulations and levels of enforcement of those regulations as they expand their businesses to other countries.
This can be difficult for smaller businesses that operate on the Web. Physical boundaries are a convenient and effective way to announce the ending of one legal or cultural system and the beginning of another. The physical boundary, when crossed, provides notice that one set of rules has been replaced by a different set of rules. Notice is the expression of such a change in rules. People can obey and perceive a law or cultural norm as fair only if they are notified of its existence. Borders provide this notice in the physical world. The legal systems of most countries include a concept called constructive notice.
People receive constructive notice that they have become subject to new laws and cultural norms when they cross an international border, even if they are not specifically warned of the changed laws and norms by a sign or a border guard’ s statement. Thus, ignorance of the law is not a sustainable defense, even in a new and unfamiliar jurisdiction. This concept presents particular problems for online businesses, because they may not know that customers from another country are accessing their Web sites. Thus, the concept of notice does not translate very well to online business.
The tasks of defining, establishing, and asserting jurisdiction are much more difficult on the Internet than they are in the physical world, mainly because traditional geographic boundaries do not exist. For example, a Swedish company that engages in electronic commerce could have a Web site that is entirely in English and a URL that ends in “. com,” thus not indicating to customers that it is a Swedish firm. The server that hosts this company’ s Web page could be in Canada, and the people who maintain the Web site might work from their homes in Australia.
If a Mexican citizen buys a product from the Swedish firm and is unhappy with the goods received, that person might want to file a lawsuit against the seller firm. However, the world’s physical border-based systems of law and jurisdiction do not help this Mexican citizen determine where to file the lawsuit. The Internet does not provide anything like the obvious international boundary lines in the physical world. Thus, the four considerations that works so well in the physical world; power, effects, legitimacy, and notice, do not translate very well to the virtual world of electronic commerce.
Governments that want to enforce laws regarding business conduct on the Internet must establish jurisdiction over that conduct. A contract is a promise or set of promises between two or more legal entities. If either party to a contract does not comply with the terms of the contract, the other party can sue for failure to comply, which is called breach of contract. A tort is an intentional or negligent action (other than breach of contract) taken by a legal entity that causes harm to another legal entity.
People or corporations that wish to enforce their rights based on either contract or tort law must file their claims in courts with jurisdiction to hear their cases. A court has sufficient jurisdiction to hear a matter if it has both subject-matter jurisdiction and personal jurisdiction. Businesses should be aware of jurisdictional considerations when conducting mobile commerce over state and international lines. In most states, the extent to which these laws apply to companies doing business over the Internet is unclear.
Because these procedural laws were written before mobile commerce existed, their application to Internet transactions continues to evolve as more and more disputes arise from online commercial transactions. The trend in this evolving law is that the more business activities a company conducts in a state, the more likely it is that a court will assert personal jurisdiction over that company through the application of a long-arm statute. One exception to the general rule for determining personal jurisdiction occurs in the case of tortious acts. A business can commit a tortious act by elling a product that causes harm to a buyer. The tortious act can be a negligent tort, in which the seller unintentionally provides a harmful product, or it can be an intentional tort, in which the seller knowingly or recklessly causes injury to the buyer. The most common business-related intentional torts involve defamation, misrepresentation, fraud, and theft of trade secrets. Although case law is rapidly developing in this area also, courts tend to invoke their respective states’ long-arm statutes much more readily in the case of tortious acts than in breach of contract cases.
If the matter involves an intentional tort or a criminal act, courts will assert jurisdiction more liberally. Courts asked to enforce the laws of other nations sometimes follow a principle called judicial comity, which means that they voluntarily enforce other countries ’ laws or judgments out of a sense of comity, or friendly civility. However, most courts are reluctant to serve as forums for international disputes. Also, courts are designed to deal with weighing evidence and making findings of right and wrong. International disputes often require diplomacy and the weighing of costs and benefits.
Courts are not designed to do cost –benefit evaluations and cannot engage in negotiation and diplomacy. Thus, courts (especially U. S. courts) prefer to have the executive branch of the government (primarily the State Department) negotiate international agreements and resolve international disputes. The difficulties of operating in multiple countries are faced by many large companies that do business online. For example, eBay, which had struggled to compete in China for many years, finally closed its operations in the country in 2006. eBay entered China in 2003 with a $30 million investment.
In subsequent years, it poured another $250 million into acquisitions and advertising in China. But the effort to compete effectively against Alibaba. com’s TaoBao consumer auction unit failed. Some observers believe that a Chinese cultural tendency to favor home-grown online services was primarily to blame for eBay’s failure. But many others noted that the Chinese government made it difficult for eBay to operate in China by passing laws that favored companies that were majority-owned by Chinese entities and that blocked eBay’s PayPal unit from operating in China.
Some have even accused the Chinese government of intentionally blocking access to eBay’s site for a few minutes each day so that Chinese competitors (some of which are owned, in part or completely, by the Chinese government) would appear to be more reliable. Because eBay was a foreign company, it was at a considerable disadvantage regarding government regulation and many have argued that this disadvantage was a larger factor in its failure than cultural issues. [pic] Source, electronic commerce Conflict of Laws; In the United States, business is governed by federal laws, state laws, and local laws.
Sometimes, these laws address the same issues in different ways. Lawyers call this situation a conflict of laws. Since online businesses usually serve broad markets that span many localities and many states, they generally look to federal laws for guidance. On occasion, this can lead to problems with state and local laws. Jurisdictional issues are complex and change rapidly. Any business that intends to conduct business online with customers or vendors in other countries should consult an attorney who is well versed in issues of international jurisdiction.
However, there are a number of resources online that can be useful to non-lawyers who want to do preliminary investigation of a legal topic such as jurisdiction. The Harvard Law School’s Berkman Center for Internet & Society Web site includes links to many current Internet-related legal issues. The UCLA Online Institute for Cyberspace Law and Policy contains an archive of legal reference materials published between 1995 and 2002, important years in the development of online law. LEGALITY vs ETHNICS | |LEGAL |ILLEGAL |ETHNICAL |1 |2 | |UNETHNICAL |3 |4 | Illegal acts break the law while unethical acts may not be illegal. Any business process or activity that falls under quadrant 1 is considered legal and ethical; quadrant 2 is considered ethnical but illegal, quadrant3 is considered legal but unethical and quadrant 4 is considered illegal and unethical.
Depending on the cultural and religious background of the people in a geographical location which a company wants to operate in, management must decide the type of product or service that would fall either in quadrant 1 or 3 as any of the other two quadrant would mean the company is operating any illegal business. OTHER MAJOR LEGAL AND ETHNICAL ISSUES IN MOBILE COMMERCE In addition to the above Management must also address following; i. Privacy issues in relation to management of customer collected information and cookies design on the company”s website. i. Intellectual property iii. Free speech iv. Taxation v. Computer crime vi. Consumer protection REFERENCES Strategic Management: A Case study of Walmart Inc,http://www. articlesbase. com/strategic-planning-articles/strategic-management-a-case-study-of-walmart-inc-945260. html, Ivory Research Ltd. Tomlinson, H. & Evans, R. (2010), ‘Tesco stocks up on inside knowledge of shoppers’ lives’, Guardian, September 20, 2010. http://www. guardian. co. uk/business/2005/sep/20/freedomofinformation. supermarkets [accessed 07/07/2010] Turban, E. , Rainer, R.
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