Unit 14 Digital Business in Practice: Approaches Report

This report, submitted for a BTEC Level 5 Higher National Diploma in Business (Accounting and Finance), explores digital business approaches and their impact on key performance indicators (KPIs) within global organizations. The report examines various digital strategies such as innovating by experimenting, incremental approaches to radical transformation, and gaining sustainable advantages through temporary advantages, providing examples from companies like Amazon, Alibaba, and Walmart. It investigates the influence of digital technologies like social media, big data, and cloud computing on business operations. The report also analyzes the effectiveness of these technologies in achieving business objectives, using examples like Netflix's use of machine learning. Finally, the report discusses how digital approaches encourage the growth of new firms in the context of globalization, particularly within the e-commerce business.

BTEC LEARNER ASSESSMENT SUBMISSION AND DECLARATION
When submitting evidence for assessment, each learner must sign a declaration confirming that
the work is their own.
Learner Name:
Assessor Name:
BTEC Programme Title: BTEC Level 5 Higher National Diploma in
Business(Accounting and Finance)
Unit or Component Number and
Title: Unit 14: Digital Business in Practice
Assignment Title: DBP1: Digital Business Approaches (1 of 2)
Date Assignment Submitted: 20/02/2022
Please list the evidence submitted for each task. Indicate the page numbers where the evidence can
be found or describe the nature of the evidence (e.g. video, illustration).
Assessment Criteria Page no Evidence submitted
P1Explain the range of digital approaches taken by
organisations. 3 - 4
Report:
- 1850 words
- 5 pages
P2Explore the relationship between contemporary
approaches to digital business and their impact on
meeting KPIs successfully.
4 - 5
M1Evaluate the importance of digital business to
organisations in a global context. 6
P3 Investigate a range of digital technologies used
by organisations to achieve business objectives. 5 - 6
M2Assess the effectiveness of the use of digital
technologies on business objectives in a range of
global organisations.
6 - 7
D1Critically evaluate a range of digital business
approaches within global organisations to promote
new business growth.
7
Learner declaration
I certify that the work submitted for this assignment is my own. I have clearly referenced any
sources used in the work. I understand that false declaration is a form of malpractice. I am aware
that any case of plagiarism will be handled according to school policy.
Learner signature: Date:

Table of Contents
Introduction.................................................................................................................3
1. Digital approach (p1).........................................................................................3
2. Relationship between KPI and Digital Approach (P2)......................................4
a) Amazon, the online retailer, sold 100 million products in April 2018...........4
b) Alibaba - Singles' Day sales will climb 1.5 times by 2020.............................4
3. Digital Technology (P3).....................................................................................5
4. Functions of digital business (M1).....................................................................6
5. The effectiveness with which technology is employed to accomplish a
commercial purpose. (M2)..........................................................................................6
6. Encourage the growth of new firms (D1)..........................................................7
Conclusion...................................................................................................................7
References...................................................................................................................8
2

Introduction
I am part of the Digital Services and Transformation promotion team, understanding digital
businesses of all sizes. The purpose of this summary is to gather information and knowledge so
that our team can provide seminars and forums to solve SME issues.
1. Digital approach
To apply these above-mentioned emerging trends in digital transformation, companies have to
adopt suitable and potential approaches to be successful. When examining the current adoption of
digital transformation among big and forefront organizations, three common and contemporary
approaches are defined.
The first contemporary approach to digital transformation is innovating by experimenting. The key
feature of this approach is that companies will use experiments to assess, adjust, and improve
strategy implementation (Li, 2020). Under the unpredictable digital business environment,
generating and implementing a new strategy over a lengthy period of time is no longer suitable
and effective. Meanwhile, companies use strategies as a broad direction, which allows them to
regularly assess and adjust to fit with changes and trends. From that basis, firms can better react to
changes in the external and internal digital business environments (Li, 2018b). This is the reason
why many multinational firms and big enterprises have applied this approach to digital
transformation. For instance, Alibaba, which is a Chinese global technology firm specializing in
retail, e-commerce, and technology, has applied the innovating by experimenting approach. The
company’s key secret is to experiment with different business ideas and apply effective and
potential ones while eliminating ineffective ones. Such an approach significantly contributes to the
company’s success (Li, 2018a).
The second approach to digital transformation by forefront organizations is the incremental
approach to radical transformation (Li, 2020). The key idea of this approach is that companies will
adopt a central radical transformation, followed by a series of interlinked steps and strategies to
gain increasingly profound changes (Li, 2020). Companies can dramatically innovate numerous
initiatives at once in modest increments by separating huge projects into strategic investments and
monitoring competence at each level. This strategy also reduces the chance of a single large
project failing and helps firms to choose which initiatives will provide the best returns or have the
most impact on their investment (Armstrong, 2020). An example of the incremental approach is
Walmart, which is an American multinational retail corporation. Instead of adopting disruptive
innovations, Walmart has broken down its digital transformation processes into smaller areas and
implemented digital into every area (Roy, 2021). The company digitalizes many aspects of its
business, including supply chain, marketing, sales, customer service, store operations, etc. For
example, the company collaborated with Microsoft to grow its AI, machine learning, and data
3

analytics activities, as well as with Google for voice-enabled purchasing (Roy, 2021). This
incremental approach allows Walmart to achieve radical transformation and success.
Thirdly, another common contemporary approach to digital transformation is gaining forceful
sustainable advantages through the development of different temporary advantages (Li,2020). The
major feature of this approach is that firms will use continuous temporary strengths to generate
sustainable and long-term advantages (Li,2020). Competitive advantages of firms are usually
fleeting in the digital business environment due to its fast-paced nature. As a result, long-term
profits can be achieved by implementing a plan for consecutive and gradual temporary advantages
(Armstrong, 2020). Although the achievements and benefits from each temporary advantage can
be small, the accumulation and long-term growth from these advantages can be significant
(Li,2020). The effectiveness of this approach is evident in the case of Uber. Uber failed in the
Chinese market and ended up selling its business to its biggest competitor in China - Didi Chuxing
(Li, 2019). However, it is important to note that Uber is a globally successful ride-hailing
business, operating in about 10,000 cities across 71 countries (Anwar, 2018). The reason is that
Uber has diversified its temporary advantages in different markets and areas. Therefore, Uber can
still be successful in its digital transformation processes without the Chinese market (Li, 2019).
2. Relationship between KPI and Digital Approach
a) Amazon, the online retailer, sold 100 million products in April 2018.
Amazon Prime Day, which debuted in 2015, is Amazon's annual shopping event that provides
exclusive bargains to Amazon Prime customers. The event has swiftly grown to be Amazon's
largest event, surpassing Black Friday and Cyber Monday (Jess, Kelsey, and Kelly, 2018). The
major purpose of Amazon Prime is to leverage hot offers to get people to join up for Prime
membership. Amazon's use of incentives to attract new members and sell its products and services
has rapidly grown into a more prominent campaign (Jess, Kelsey and Kelly, 2018). In 2018,
Prime members' daily sales hit 100 million units, with a yearly conversion rate of 6%.
Furthermore, 2018 was the year with the newest members in Amazon's history (Jess, Kelsey and
Kelly, 2018). A variety of elements contributed to Amazon Prime Day 2018's success. Prime Day
2018 has been extended to a day and a half with the finest prices; Amazon is also rewarding
shoppers with goods that are only available to Prime members.
b) Alibaba - Singles' Day sales will climb 1.5 times by 2020.
Singles' Day, a 24-hour shopping event, takes place on November 11th (Huy, 2019). Regardless
of whether Alibaba's November 11 revenues were 268.4billion yuan, Jack Ma declared the firm a
financial catastrophe (Huy, 2019; Ren, 2020). As a result, by 2020, we will have witnessed
Alibaba alter. The following year, Alibaba expanded the event to an 11-day shopping
4

extravaganza complete with celebrity performances on scoreboards and live view sales (Kharpal,
2021). Alibaba's total merchandise value (GMV) reached 498.2 billion yuan on Double Eleven,
shattering the previous year's record of 26 percent growth in a single day. (Ren et al., 2020)
3. Digital Technology
Digital businesses are operating and influenced by both macro and microenvironments. Similar to
traditional businesses, digital businesses are influenced by some major macro-environmental
factors, including economic factors (economic development, GDP, etc), political factors (political
stability, legal regulations, governmental support, etc), social-cultural factors (demographic
features, belief systems, and practices, behaviours of customers, etc) (Maqin and Hendri, 2017).
Digital businesses are especially significantly affected and enhanced by digital factors. Digital
technologies and innovations can act as game-changing factors, helping businesses to catch more
opportunities and limit threats. In particular, there are many digital innovations that considerably
influence how businesses operate, including social media to connect and communicate with target
customers, big data and analytics to understand customers’ needs, cloud computing for better
management and supply chain, etc (Dyk and Belle, 2019).
Besides, the digital business environment also includes micro-environmental factors, which
directly link and influence firms and their business activities. Some micro-environmental factors
are suppliers, intermediaries, customers, competitors, and the organizations themselves (Maqin
and Hendri, 2017). Internal organizational factors can be financial abilities to adopt digital
technologies, employees’ skills and abilities to apply digital technologies, digital strategies, a
digital-oriented working environment, etc (Wiliandri, 2021). In addition, other influential micro-
environmental factors are customers’ readiness to use digital services, the adoption of digital
technologies of competitors, etc. (Gašperlin, Pucihar and Borštnar, 2021)
Both macro and microenvironments are important to digital business because these factors can
influence how firms generate digital strategies, approaches and how these strategies and
approaches influence organizational performance and objectives (Bharadwaj et al., 2013). These
connections are represented in Figure 1 and will be further analyzed in the following sectors.
Figure 1: The interconnections of digital business environment, digital approaches, and
organizational performance
5

Source: (Bharadwaj et al., 2013)
4. Functions of digital business
The digital business is vital in the global economy; with the coin of import, on the market, there
will be more competitive competitors, greater market advantage than the bigger market market.
The digital business brings us a lot of business. It not only helps our clients save money and time
when looking for a product, but it also helps businesses work out, save money on marketing, and
lower the cost of their supply supply. The cloud electrical charge is a classic illustration of a
digital business benefit. Rather of investing a lot of money in the tech sector, buy certain Amazon
cloud services with affordable expenditures and highly conserved resources and resources.
However, technically, technological firms have the same hazards as the quality of product and
resources, it’s classified, classified security, and fraud. This exemplifies the C2C business model
at its finest. When people have intimate relations with one another, there is no security in the
world, and anything can happen. For instance, suppose you buy a dress on Facebook from a man
who ordered poison on Taobao and they require you to deposit 50% of the dress's value. There is
no assurance, however, that the vendor will ship your clothing to you. If the customer does not set
a price for the item, the seller may find themselves in a bind since they may not get paid. The
answer is to adopt the C2C business format because of the third party, of course, the third course
will pay the services of 2% and 3%.
5. The effectiveness with which technology is employed to accomplish a commercial
purpose.
Netflix's machine learning delivers tailored suggestions, video playing quality, thumbnails,
subtitles, audio quality, and so on. This technology has assisted Netflix in improving and
improving the user experience, allowing it to become the ubiquitous software that it is now ("How
does Netflix employ machine learning?", 2020). Netflix has seen some success as a result of
machine learning technologies. In 2015 and before, the average amount of time spent watching
6

Netflix was less than 2 hours (Dean, 2021). This figure has risen to 2 hours in 2019 and will
exceed 3 hours in 2020. Netflix's average revenue per member has also increased from $8.61 in
2016 to more than $10 in less than two years (Dean, 2021).
6. Encourage the growth of new firms
Any entrepreneur is familiar with the e-commerce business in the context of globalization. This
has compelled Amazon to expand its operations in order to compete. Amazon's primary market is
the individual consumer. However, by providing cloud computing services on Amazon, Amazon
has reached out to potential consumers, notably corporate and government customers, by utilizing
digital cloud computing technologies. Previously, Amazon's earnings were derived from service
fees for its B2C e-commerce platform. Amazon joined the digital arena after employing the cloud
network, offering more than 200 new cloud technology goods and services (What is AWS
Marketplace | Overview, 2022). Amazon has touched the target customer market.
Conclusion
In conclusion, digital transformation is a rising trend all over the world, which requires firms to
adopt digital technologies to survive and develop. Regarding emerging trends in digital
transformation, personalization of products and services, enhancement of brand association and
dynamic pricing are among the most common trends. Firms also have different approaches to
digital transformation, including innovating by experimenting, incremental approach, and
development of different temporary advantages. The application of digital technologies is proved
to be effective in achieving organizational objectives. However, this can only be achieved with the
effective and suitable adoption of digital technologies. Therefore, firms are suggested to choose
suitable approaches, take small steps and always consider ethical aspect of business.
7

References
Amazon Web Services, Inc. (2022) What is AWS Marketplace | Overview. Available at:
https://aws.amazon.com/vi/mp/marketplace-service/overview/ (Accessed 10 February
2022).
Anwar, S.T. (2018) “Growing global in the sharing economy: Lessons from Uber and Airbnb,”
Global Business and Organizational Excellence, 37(6), pp. 59–68.
Armstrong, H. (2020) Research defines three new pathways for organizations to manage digital
transformation. Available at:
https://www.sciencedaily.com/releases/2020/07/200728113511.htm (Accessed: November
3, 2021).
Bharadwaj, A. et al. (2013) “Digital business strategy: toward a next generation of insights,”
Management Information Systems Quarterly, 37(2), pp. 471–482.
Dean, B. (2021) Netflix Subscriber and Growth Statistics: How Many People Watch Netflix in
2021?, Backlinko. Available at: https://backlinko.com/netflix-users (Accessed: 05
November 2021).
Dyk, R. van and Belle, J.-P. van (2019) “Factors Influencing the Intended Adoption of Digital
Transformation: A South African Case Study,” Proceedings of the 2019 Federated
Conference on Computer Science and Information Systems, 18, pp. 519–528.
Gašperlin, B., Pucihar, A. and Borštnar, M. (2021) “Influencing Factors of Digital Transformation
in SMEs – Literature Review,” 40th International Conference on Organizational Science
Development Values Competencies and Changes in Organizations [Preprint].
Harkiran78, 2021. How Does Netflix Use Machine Learning? - GeeksforGeeks. GeeksforGeeks.
Available at: https://www.geeksforgeeks.org/how-does-netflix-use-machine-learning/
(Accessed 15 February 2022).
Huy, Q. (2019) ‘For Alibaba, Singles Day Is About More Than Huge Sales’, Harvard Business
Review, 11 December. Available at: https://hbr.org/2019/12/for-alibaba-singles-day-is-
about-more-than-huge-sales (Accessed 11 February 2022).
Jess, H., Kelsey, R. and Kelly, U. (2018) Amazon Prime Day: What the real lessons are |
McKinsey. Available at: https://www.mckinsey.com/industries/retail/our-insights/amazon-
prime-day-what-the-real-lessons-are (Accessed 10 February 2022).
8

Kharpal, A. (2021) China’s Singles Day shopping event kicks off under specter of tech scrutiny
and Xi’s ‘common prosperity’, CNBC. Available at:
https://www.cnbc.com/2021/11/02/singles-day-chinese-shopping-event-kicks-off- 10 with-
a-new-feel-common-prosperity-tech-regulation.html (Accessed 12 February 2022).
Li, F. (2018a) “Innovating in the Exponential Economy: Digital Disruption and Bridging the New
Innovation-Execution Gap,” VMWare Technologies [Preprint].
Li, F. (2018b) Why Western Digital Firms Have Failed in China. Available at:
https://hbr.org/2018/08/why-western-digital-firms-have-failed-in-china (Accessed:
November 5, 2021).
Li, F. (2019) “Why Have All Western Internet Firms (WIFs) Failed in China? A Phenomenon-
Based Study,” Academy of Management Discoveries, 5(1), pp. 13–37.
Li, F. (2020) “The digital transformation of business models in the creative industries: A holistic
framework and emerging trends,” Technovation, 92–93.
Maqin, R. and Hendri, N. (2017) “Comparative Analysis: The Effect of Macro and Micro
Environment on Marketing Strategy and Marketing Performance of Small Medium
Enterprises (Survey on Group of Small Medium Enterprises of Food and Non-Food
Products in Cianjur Regency, West Java, Indonesia),” International Review of
Management and Marketing, 7(5), pp. 70–76.
Ren, D. (2020) Alibaba says Singles’ Day record sales show resilience in economy as firm seeks to
turn future editions into ‘fun-filled’ event | South China Morning Post, scmp. Available at:
https://www.scmp.com/business/companies/article/3110149/alibaba-says-singles-day-
record-sales-show-resilience-economy?
module=perpetual_scroll&pgtype=article&campaign=3110149 (Accessed 11 February
2022).
Roy, M. (2021) 4 Examples of Digital Transformation Success in Business. Available at:
https://searchcio.techtarget.com/tip/4-examples-of-digital-transformation-success-in-
business (Accessed: November 4, 2021).
Wiliandri, R. (2021) “A Conceptual Approach to Identify Factors Affecting the Digital
Transformation of Micro, Small and Medium-sized Enterprises (MSMEs) during Covid-19
Pandemic in Indonesia.,” EkonomiBisnis, 25(2), p. 66.
9