Digital Business: Models, Advantages, and Disadvantages

This report provides an overview of digital business, including its models, advantages, and disadvantages. It explores the impact of digital technology on business models, cyber security, ethics, and strategic alliances. The report also discusses the usage of e-commerce principles. The case study focuses on BT Group, a UK-based multinational telecommunications company.

Digital Business

EXECUTIVE SUMMARRY
Digital business organisations are continuously evolving and expanding their territories.
This report focuses on digital businesses and various models used by them to create value.
Advantages and disadvantages of business models and e-commerce are provided in this report
along with information about strategic alliance and collaborative relationship.

Table of Contents
EXECUTIVE SUMMARRY .........................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY .................................................................................................................................4
Summary of digital business with merits and demerits in context of BT group........................4
Evaluation of digital business models in relation to key business issues such as cyber security
and ethics ...................................................................................................................................7
Evaluation of the effect of cooperative relationship and strategic coalition through digital
technology...................................................................................................................................9
Discussion of usage of e-commerce principles.........................................................................10
CONCLUSION ...........................................................................................................................12
REFRENCES ................................................................................................................................12

INTRODUCTION
Digital technology is transforming the corporate world and has been used to create digital
business organisation. Digital business firms are present in various industries and growing
constantly. Swift growth of digital business organisation is attributed to increasing role of digital
technology in daily activities of the modern day consumers. The organisation selected for this
report is BT group. BT group is UK based multinational telecommunication company and
leading member of the British telecommunications industry (About BT, 2021). The company is
part of the FTSE 100 Index and listed in London and New York Stock exchange. The company
is present in 18 international markets and offers broadband telephone and subscription television
services to global consumer base along with telecom services to corporates and governments.
This report is revolves around various aspects of a digital business organisation. Merits and
demerits of digital business are provided in this report along with evaluation of emerging
business models. Effect of strategic all coalition and collaborative relationship through digital
technology in relation to BT group is given in this report along with discussion about e-
commerce principles.
MAIN BODY
Summary of digital business with merits and demerits in context of BT group
Digital business firms utilise advanced technology to enhance consumer value provided
by business models, increase positive consumer experience and build advantageous internal
capabilities which provide assistance in enhancing core business activities. Establishments which
offer conventional products or services and have modified their business model through digital
technology are also included under this term along with business entities which solely provide
digital goods.
Digital business organisations leverage digital technologies such as mobile, social media,
cloud, and big data to echinacea consumer value equation and secure beneficial position in their

industry. The main aim of digital business organisations is to initiate unexampled confluence of
people, business and technologies which disrupt currently used business models (Chaffey,
Edmundson-Bird and Hemphill, 2019). This aim is accomplished by forming technological
connections with people, information and procedures.
Merits of digital business Increases Agility: Utilisation of digital technologies to enhance process and models
increases agility of the company. The business organisation is able to swiftly respond to
consumer demands and enforce continuous improvement plans. This increases agility of
the organisation and helps the firm maintain high innovation within their company and
develop a culture of continuous improvement (Ferreira, Fernandes and Ferreira, 2019). Enhances productivity: Digital business organisations gain the ability to enhance
productivity of their workforce by connecting their staff members with digital
technology. Constructing effective technological structure which eliminates manual
labour with through automation and help the company keep track of employee progress
builds efficient workforce.
 Enhances consumer experience: Digital technology assist business organisation
increase enterprises provide exceptional consume experience and gain competitive
advantage in their industry. Digital technology such as Big Data, social media and cloud
technology is helpful in providing satisfactory and personalised consumer experience in a
cost effective way. Digital business firms which offer digital services or traditional goods
gain benefits from this feature of a digital firm as consumer satisfaction and sale of the
company is increased.
Demerits of digital business Cyber security: One of the main demerits of digital business is the threat of cyber
security. The current digital technology is not completely safe from cyber crime and
expert hackers and criminals are able to accesses sensitive information about an
organisation easily. There has been a rise in cases of ransomware in few years which is a
serious danger for digital organisations. Continuous up gradation: Digital technology is continuously changing and digital
business organisation need to update their technological infrastructure in order to protect
company data from cyber criminals and utilise the most effective digital technology

systems in their company (Goodwin, 2018). Constant up gradation of digital technology
requires huge financial investment as the company has to purchase the latest version of
digital technology and train employees associated with the company. This is demerit of
digital business firms as they need constant investment in order to gain effective results.
 Dependence on digital technology: Digital business face the risk of relying on digital
technology for various business activities which creates a work culture dependent on
digital technology. This reduces creative thinking skills of employee as they gain the
habit of using technology for their daily tasks. This is highly disadvantageous for the
company as it reduces ability of the workforce to present unique solutions.
Application of digital business with merits and demerits in context of BT group
British Telecommunications utilises digital technology to enhance consumer experience
and increase organisational capabilities. BT is a digital business firm and has invested in digital
technology to provide their consumers effective telecommunications services.
The firm's networks platforms and IT system include various types of digital technology
which helps the company continuously improve consumer experience and drive sales of the
company on a global scale. One of the main merits of digital business which help British
Telecommunications gain success in various business endeavours is the ability to provide
personalised and effective consumer experience. Digital technological infrastructure of the
company has helped the firm recover from damaging effects of COVID-19 and provide effective
services despite pandemic. The digital technological progress of the respective company has
given the firm advantage of increased productivity. The digital learning application Plurasight
was used by the respective company to train their employees which helped the company up skill
their employees and enhance productivity (BT technology, 2020).
The company has adopted wide range of digital technology and focuses on developing
innovative digital technology as the pandemic has accelerated widespread usage of digital
technology. Internet of things, artificial intelligence, cloud systems, full fibre broadband and 5G.
High usage of digital technology has made sensitive data of the respective firm open to cyber
attacks and cyber crime. This is one of the demerits of digital business which effect the
company. In order to deal with the threat of cyber crime the company has launched cyber
security operations centre in India which employees 100 IT professionals to protect digital assets
of the firm from cyber attacks (BT sets up new cyber security operations centre in India, 2018).

Evaluation of digital business models in relation to key business issues such as cyber
security and ethics
Freemium digital business model
This business model involves providing certain basic features of a service without any
charges to the target consumer base. Once the consumers starts using the free services, the
company offers upgraded or premium features of the service at an additional cost. This model
widely used by digital organisations as it allows the company to reach a large number of
consumers quickly.
The main advantage of this service is that the company is able to attract a large number
of consumers and build effective bonds with them quickly. This relation later allows the firm to
generate profit by persuading the consumers to purchase premium services of the product. The
low consumer acquisition costs along with high lifetime value of the consumer is another
advantage of this business model. Consumers purchase premium services of the product in this
business model if they want to support the organisation (Heinze and et. al., 2020). This creates
loyal consumer base for the company which is another advantage of this business model.
Primary disadvantage of the freemium business model is that this business model
requires huge and constant monetary investment from the organisation for gaining successful
result. Converting non-paying users of the service into consumers of the organisation requires
huge financial investment and the process is time consuming which financially burdens the
company.
Subscription digital business model
This business model involves consumers subscribing to the firm in order to gain the
product or service of the company. Consumers have to pay for the subscription which expires
after a certain time period which is usually a month or year. The consumer has to pay
subscription charges on a regular basis after expiration of the subscription in order to gain access
to the service.
Primary advantage of the subscription business model for digital firms is that it provides
the company predictable revenue after certain time interval. This ensures that the company gain
constant stream of revenue. In addition to this, subscription business model also enables the
company to build strong relations with their target consumer base as they are in constant contact

with their consumers (Kache and Seuring, 2017). Apart from this organisations which use
subscription model can increase their revenue through cross selling and up selling.
Subscription model has several disadvantages which include offering different services
every month as the consumer s can get bored of the services. If the subscription model is utilised
by product based digital organisation, it has to maintain diverse range of products in order to
offer consumer variety of subscription packages after expiration of their subscription model. In
addition to this consumer retention is another problem faced by organisation who utilise the
subscription model.
Marketplace digital business model
This is one of the most widely used business models used by digital firms. Business
organisation facilitate transaction of payment from the consumer to the service or product
provider and charge a small fees for using their platform to complete the transaction.
The primary advantage of this business model is the the provider is not charged until
they are paid by their target consumer base. This feature of the commission business model
attracts creative product or service provider to the digital platform of the company (Le Dinh, Vu,
and Ayayi, 2018). This attracts a large number of consumers as they are able to purchase a wide
variety of products or services at the same platform. By using their platform the company is able
to gain certain amount of fees for every transaction completed through their digital platform.
This business model does not require high investment as the products or services bought by the
consumer are produced by the providers using the platforms to reach a large number of
consumers.
The commission model has various barriers which are disadvantageous to digital
organisations. The biggest barrier related to this model is giving value to the consumer and
provider while ensuring profit generation. The transactions completed on the platform of the are
not controlled by the company and low quality providers can easily damage the reputation of the
organisation which reduces overall sales of the firm.
Discussion of digital business models
Fermium Model
Ethical Issues: the ethical issue related to this digital business model is that the products
or services provided in this model are usually of addictive nature in order to ensure that the

consumer gains premium subscription as soon as possible. This ethical issue is a major demerit
related to this issue (Remane and et. al., 2017).
Cyber security Issues: Fermium business model has various cyber security issues as the
company gains constant information about users data which is used to ensure that their user
purchases premium service. This is an issue of cyber security as it breaches consumer data and
misuses their private data.
Subscription Model
Ethical issues: The main ethical issue related to this model is that the consumers are
charged for additional services which is part of their subscription but is left unused. This is
because the consumer have less control over their products.
Cyber security issues: The main cyber security issue related to this topic is that this
model strengthens cyber security of digital platform as users gain access to the services of the
company after payment which reduces risks of cyber fraud (Rudenko and et. al., 2018).
Marketplace model
Ethical issue: The main ethical issue related with this model is that the provider does not
gain full amount of their labour as they have to share it with the company.
Cyber Security Issues: The main cyber security issue related to this model is that the
digital platform of the company is available to large number of users and providers and it can be
used for cyber fraud.
` British telecommunication needs to utilise fermium model for some of their services to
attract a large number of consumers.
Evaluation of the effect of cooperative relationship and strategic coalition through digital
technology
Collaborative relationship: This is defines as the relation which is shared by individuals
who work together for attainment of a conman goal.
Advantages: The main advantage of this relation is that task of the company is finished in
a timely manner.
Disadvantages: Formation of collaborative relations in the workplace creates disputes
between employees.

Strategic alliance: This is defined as an arrangement between two organisations which
aim to complete a business task which is advantageous for every organisation while maintaining
their independent status (Sun and et. al., 2018).
Advantages: The organisation is able to increase their sales, gain new skills and enter into
a new market easily.
Disadvantage: The main disadvantage to of strategic alliance is that it creates
miscommunication and business firms face the risk of damaging their reputation.
British Telecommunications can construct strategic alliance with cyber security firm to
provide cyber security services to the existing consumers of the firm and utilise digital
technology to ensure success of this alliance.
Discussion of usage of e-commerce principles
Definition of e-commerce: Activity that allows buyers and sellers to buy or sell their
products online is known as e-commerce. Transactions between buyer and seller that takes place
on internet is called e-commerce. If a business has online presence doesn't mean that they are
involved in e-commerce (Vukšić, Ivančić and Vugec, 2018). It must involve the activity of
retail sale to shipping of good or services. Some of the examples of e-commerce websites are
Argos, amazon, eBay, etc. Two parties completing a transaction online is enough to be said as e-
commerce.
Their are different types of e-commerce transactions such as -
Business-to-business (B2B): It is said to be the most common type of e-commerce. It is
occurred when transaction is between two different business entities. The transaction that is
conducted between two businesses and not between business and consumer is known as B2B
transaction.
Business to consumer (B2C): Online transaction that takes place between business
and consumer is known as B2C e-commerce. When the customer is the buyer and the business is
the seller of goods and services online or on the internet then it is said to be B2C transaction.
Customer-to-customer(C2C): These transactions requires third party that can act as an
intermediary. Ebay is one of the company who is providing this service to their user although
third party does not provide shipping facility as this service is generally provided by the seller
(Hua and et. al., 2019).

Customer to business (C2B): This form of e-commerce is similar to C2C type. The
consumer acts as a seller and business as buyer. The business pays for the right of stock photo
which is uploaded by the consumer on the stock photo site.
The principles of e-commerce are :
Information circulation: The e-commerce websites must provide relevant and useful
information in order to be reliable in the eyes of the customer. E-commerce can be very useful at
the time of crisis or pandemic as it does not require any movement and customer can purchase
the good anywhere, anytime over the internet.
Data collection: E-commerce can collect information about the customer's preferences,
their likes and dislikes, what customer want specifically, what are the changes that can be made
in a product so that it can matches the requirement of the customer. Their are two methods of
data collection, first to have inputs manually and second to collect information through
automated techniques.
Marketing and promotion: There are two methods of promotion and advertising
namely, traditional and modern. Traditional methods include banner advertising, affiliate
programs, registration with directories, etc. These types of promotion are more time and cost
consuming. E-commerce businesses nowadays use modern marketing and promotion techniques
generally. As most of their presence is online, social media marketing is the most preferable
method of promotion and modern marketing techniques are also cost effective (Raharja and et.
al., 2019).
Deal with stakeholders: With the help of e-commerce the seller can display products
and services to the potential customer. Cross selling of products is possible through e-commerce.
A company can customize its website according to the needs and wants of the targeted audience
which will also help the company to improve its relationship with the stakeholder.
Application of e-commerce principles to the respective company
British Telecommunications need to understand various e-commerce principles in order
to gain success as a digital organisation in the highly competitive telecommunications industry.
The first principle of e-commerce revolves around giving correct information to the consumers
which need to be applied by the respective organisation in order to satisfy their consumer base.
In addition to this the company needs to collect consumer data from their digital platforms in
order to provide services which exceed consumer expectations. Marketing and promotion is one

of the most important principle of e-commerce which needs to be adopted by the respective
organisation by using effective, marketing tactics. The company also needs to consider their
stakeholders opinion and consider their insights in order to provide every stakeholders high
satisfaction. Cross-selling and up-selling are practices which can be used by the company in
order to gain high profitability.
CONCLUSION
From the above report it is concluded that the digital organisations utilise various models
to disrupt the market and drive sales of by giving consumers satisfactory services. Digital
business has various merits and demerits which need to be understood by corporates in order to
gain competitive advantage in their industry. Each digital model is associates with certain ethical
and cyber security issues which need to be considered by business organisations for adoption of
the most effective business model. Strategic coalition and alliances are helpful for a digital
business as it helps the company secure advantageous position in their industry. E-commerce
principles help business organisation set up their e-commerce portal effectively and increase
their online sales.

REFRENCES
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BT technology, 2020. [Online] Available through
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