MBA's In E-Commerce
Business over the Internet is growing at a very fast pace.
The first domain name was registered Ion March 15, 1985; it took another 15
months to register the first 100 names, primarily by universities and
Fortune 1000 companies. Today, there are close to twelve million active web
sites, and it is predicted that by 2004 there will be 120 million registered
In terms of number
of users, it is estimated that one billion people will be using the Internet
by 2001. In a survey of 15, 000 online customers by dotcom.com, it was
observed that 67% of those surveyed . . planned to get a website within the
next year, and that a majority of them want to start an online business of
their own. Thus, a large percentage of consumers themselves are getting
ready to identify their own niches and start a business. Total retail sales
over the holiday period alone may reach $20 billion this year; yearly sales
over the Internet may reach 400 billion by 2002. The growth in Business to
Business (B2B) e-commerce is even more stunning. According to Gartner Group,
the worldwide B2B market will grow from $145 billion in 1999 to 7. 29
trillion in the year 2004.
The power of
the Internet has been harnessed in various ways, such as selling thing
identical to those sold in traditional stores, such as books by .com, which
dominates retail sales on the web. The Internet has also made some services
better than the previous mode of delivery, such as web-based training and
education. It is estimated that web- based corporate training alone will
grow to $1. 1. billion by 2003, from 1. . 1 billion this year. Still more
businesses arose because of the Internet itself, particularly the use of
e-mail for communication - Jupiter Communications predicts that the e-mail
marketing industry will reach over 7 billion by 2005. Even though most of
the growth in the past was business-to-consumer, most growth in the future
is projected to be in the business-to-business sector. The Gartner Group has
estimated that by 2004, 10% of e-business will be business-to-consumer, and
90% business-to-business. Theo Mantzanas, Senior Manager in Arthur D.
Little's e-Learning and Performance Practice argues that 'brick and mortar'
companies need to know how to make the transition to B2B in order to utilize
the Internet. This change is already taking place at some 'brick and mortar'
companies - at GE, for example, auction transaction has been estimated to be
$5 billion this year, up from $200 million last year.
Early entrants were rewarded handsomely in terms of both the market share
and stock evaluations. In the last few years, higher evaluations for these
companies were observed, as they were based on revenue projections and not
underlying profits. It was later observed that some businesses were using
different accounting practices to show higher revenue projections. In the
last few months, a large number of e-businesses saw a sharp decline in their
stock prices, an experience that underscored the point that the type of
business or the mode in which the business is conducted may change, but the
business fundamentals do not. The business still needs to be run
efficiently, still needs to address issues related to finance, marketing and
accounting, and one still needs to comply with various regulations. And, in
the end, the business must make money. Bill Clair, CEO, Innovate! EC,
compares the web-based system to the tip of the iceberg. Just as most of the
iceberg is under water and only the tip is visible above, in an e-business
only the web-based portion of the business may be visible, but a much bigger
effort to have all aspects of brick and mortar mode of business activities,
from capacity planning, to forecasting, to inventory management to shipping
has be done in the same way as for a 'brick and mortar' business. It is here
that knowledge of the whole business is important.
Students are struggling with the question of why to study an MBA in
E-Commerce. Some think that they could start working for a high_tech company
and pick up relevant information through training programs while on the job.
However, even tech-savvy individuals need to understand the fundamentals of
running a business to have a successful venture. To put it in context,
overall, US corporations spent $16. 5 billion on the training and education
of its managers. A Business Week survey found that when companies send their
executive for further training, the most wanted topics are leadership
skills, entrepreneurship and the Net. What the Internet has done is to
provide access to the customer as never before. The fundamentals of
business, however, have not changed, and a successful entrepreneur needs
both the knowledge of technology and fundamental aspects of business. An MBA
in E-Commerce is designed to address this need. .
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