LSC UoS BA Digital Business Report: Trends, Models, and Alliances

This report provides a comprehensive analysis of digital business, examining its impact on the global environment, key trends, and advantages of digital technology. It delves into various digital business models, including Freemium, Free, and Subscription-based models, and discusses their associated business issues. The report also evaluates the impact of strategic alliances and collaborative relationships facilitated by digital technology. Furthermore, it explores the application of e-commerce principles in a business context, providing valuable insights into how companies like Otto can leverage these principles for success. The report covers aspects like digital presence, contactless services, and the implications of digital business in a competitive global market, including discussions on cost efficiency and innovation.

Digital Business

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
Impact of virtual business on the global environment and the key trends and advantages of
digital technology...................................................................................................................2
Discuss Digital business models and their key business issues.............................................4
Impact of strategic alliances and collaborative relationships through the digital technology6
The usage of e-commerce principles in business...................................................................7
CONCLUSION..............................................................................................................................10
References:.....................................................................................................................................11
Books and Journals...............................................................................................................11
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INTRODUCTION
Digital businesses are the businesses that use technology and its development in order to enhance
their business models and internal capabilities in order to provide best in class experience to their
customers. It is important to understand that this includes both digital as well as traditional
businesses that are trying to incorporate technology in their workings and operations (Andersson
and et. al., 2018.). In context to Otto, the company is one of the world’s largest e commerce
companies that are providing services and products to consumers. The company has its presence
in more than 20 countries. The company was incorporated in the year 1949 and the founder of
the company was Werner Otto. The company is headquartered in Hamburg Germany and has a
revenue of approx 14.3 billion EUR. In this report, the impact that the digital businesses have on
the global environment is given. Also the key trends and advantages of technology is given. The
report also includes the digital business models and the importance and benefits of collaboration
relationship and strategic alliance. It will also include the principles of e commerce which can
help the company.
MAIN BODY
Impact of virtual business on the global environment and the key trends and advantages of digital
technology
Digital businesses are the one that have incorporated technology in their operations and are now
working digitally. Their is a need for businesses to become digital in order to make sure that they
are ahead of their competitors(Apinantham and et. al., 2020.). Also technology that is new and
effective will help the company in not only easing the processes of company but will also help in
gaining competitors advantage in the market. In context to Otto, the company has a missive
digital transformation and is now and e commerce company. Some of the key trends are as
follows:
Digital presence and availability of support- As the demand and supply of products and
services on online channels are increasing day by day, it is important for the companies to
make sure that they are providing continuous support to the customers. In context to Otto,
they believe that availability of the company on the online platform makes it even more
essential for them to be present 24/7 in order to help the customers related to the orders they
have made with the help of technology.
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Contact less services- As the customers nowadays have to be more concerned about contact
less services because of the pandemic, it is important for the companies to make sure that
they are providing services which requires little or no contact with the customers (Arbatani
and et. al., 2019.). In context to Otto, they are providing contact less payment services and
also contact less delivery services to their customers.
The advantages of digital technology has been discussed in context with Otto-
Faster communication - The technology has made it possible for the company to make sure
that they in constant touch with the customers regarding their issues and queries. With the
help of technology the company is able to make fast and efficient communication with the
customers. The customers can demand their products and services according to their suitable
time and will also contact the company as and when needed.
Better adaptability - The company will be able to adapt efficient management techniques with
the help of technology which was not possible in traditional management (Choudrie and et. al.,
2020.). It will help the company in coping up with the external environment and will also make
sure that the company is adapting the technology and having competitors advantage in the
market.
Wider Reach- With the help of technology the company will be able to have a wider reach to
the audience as the company is having its presence on the online platforms. It can also help the
company in reaching to their potential customers and make sure that they can convert these
potential customers into actual sales. In context to Otto, the company is having its presence in
more than 20 countries and are one of the world’s largest e-commerce companies.
Disadvantages of digital business in context to the company:
Dependability issues: With the digitalization of businesses the company starts to
become more and more dependent up on the technology which is not always good. Their is a
high possibility of system crashes and network issues that the company may have to face
(Filosofova, T.G. and Surkova, Y.A., 2020.). In case of Otto, the company is an e-commerce
company and is highly dependent upon technology which have its own limitations and
consequences that the company needs to be aware of in order to avoid serious issues in the
workings of the company.
Privacy issues: In order to provide personalized experiences to the customer on the
websites of the company it is essential for the company to have access to the personal
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information of the customers. It is a major concern for the company to protect that information as
this information can be easily misused. In case of Otto, they make sure that they only take
personal information of customers by permission and will also provide access to that information
to only some employees that need them. Otherwise not all employees and management staff of
the company have the access of the information.
Implications of digital business in the global environment-
 High competition in the market - One of the major implication of digital businesses is
increase in the rate of competition in the market (Ghajari, H. and Naghavi, A., 2020.). The
attractiveness of the industry and low entry barriers make it easier for the competitors and new
companies to enter the market. Increased competition will make it difficult for the companies to
make profit and sales as the market share of the company can decrease.
 Higher innovation in the processes - The technological advancement in the workings of
the businesses is a major implication as the company have to cope with the technology
constantly. It is important for the company to make sure that they have the technology that the
competitors possess in order to survive otherwise the company will not be able to cope with the
competition in the market and will not be able to survive.
 Cost efficiency - The company will be able to achieve reduced cost with the help of
technology. The marketing and promotion cost of the products and services will be reduced with
the help of digital marketing which is highly involved in digital businesses which is a good part
(Hughes and et. al., 2020, January.). In context to Otto, the company uses search engine
optimization, social media advertising, etc which is highly cost efficient and also has wider reach
to the audience.
Discuss Digital business models and their key business issues
The digital business models helps the companies in forming a value based system which can
provide benefits to the customers with the help of digital technologies. The aim or the motive of
the digital technology is to make sure that the products and services of the company is creating
some value for the customers because of which the customers are willing to pay the price
(Lázaro, M.J.S., 2019.). The digital business models re based on the business innovation or the
services that are new in the market. The company uses digital technologies in digital business
models in order to reach to their potential customers and can generate leads. It will help the
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company in converting those leads into actual sales which is the ultimate motive of the company
in order to fulfill their goals and objectives.
 Freemium model- This model refers to the offering of the company which is initially
free and after a certain period of time the customers in order to use those offerings needs
to pay a certain amount to the company. This model offers the customers to use the
offerings of the company on trial basis and pay only if they like the offerings (Le Dinh
and et. al., 2018.). This type of model includes high cost for the company as the services
that the company is providing to its customers are free for the customers but not for the
company. The cost that is involved is needed to be paid by the company and if the
customer didn’t like the offering then they will not pay any price after the free trail which
is a complete loss for the company. The company will be able to take advantage of this
model only if they successfully convert those free services into paid services.
 Free model- This type of model refers to the services and offerings that are provided by
the company absolutely free of cost. These includes the basic services that the company
can offer to the customers in order to encourage them to try the offerings of the company.
It is important for the company to understand the importance of effective marketing in
this type of model as the company will only be able to get the returns of the offerings
through marketing and advertising (Limani and et. al., 2019.). This type of models attract
a large amount of audience for the company that are interested in their offerings. It will
allow the company to have a wider reach to the audience and will also help the company
in making a loyal customer base. It depends on the company to provide additional
services or feature in return to those features the company may charge prices.
 Subscription based model - This type of model is based on the services that the
company provides in return of some cost. The customer in order to avail these services of
the company needs to pay a certain amount of price refers to as subscription after which
the company can use the offerings of the company. The subscription of the offerings of
the company by the customers can be on the monthly basis or yearly basis according to
the preferences of the customers (Mkrttchian and et. al., 2021.). This model is beneficial
when the company believes that the offerings of the company have some value and the
customers are willing to pay for these offerings.
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Impact of strategic alliances and collaborative relationships through the digital technology
Collaborative relationship refers to the engagement of two or more parties in an
agreement which states that the companies are having a collaborative relationship and the
companies can use each others resources as and when needed. Also they agree to share the
profits and the losses of each other.
On the other hand, Strategic alliance comprises multiple collaborations that can make a
relationship between two or more parties. It is similar to collaborative relationship.
Advantages-
 Division of profits as well as losses: In collaboration and strategic alliance the company
have an advantage that they do not have to suffer from the losses alone. It will help the
company in taking bigger risks and will also make them able to take expert advice from
the other party involve which can also be very beneficial for the company (Prince, C.,
2018.). The company will be able to take financial support from the other party as well
because of the collaboration.
 Resources - The company will be able to use the resources of the other company as and
when needed as in collaboration and alliance the resources of the companies are also on
sharing. It will help the company in cutting the cost of renting resources and of buying
new resources. The resources of the company also include financial resources which
means that the company will be able to take financial support from the other company as
well.
 Building network - The company will be able to increase their networking as the people
from other company will also came into contact. It will help the company in making sure
that the advantages or benefits of the networking is availed by them as well (Ramón-
Saura and et. al., 2020.). It is important for the companies to have big networking which
can help them in problematic situations.
Disadvantages-
 Conflicts in working style - The working styles of the company may differ from each
other which can create conflicts in the management of the company. The companies
apply the working styles in their management according to their suitability but the other
entering the organization may not be familiar with the particular style and may find it
difficult to understand which can create conflicts.
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 Lack of trust among staff- The staff of both the parties may have trust issues among
each others. The trust issues in the workplace is not good for the working environment of
the company. It will create negative impact on the operations of the company and on the
performance of the employees (Santos, G., Murmura, F. and Bravi, L., 2018.). This will
also disturb the management of the company and may have an effect on the growth of the
company. Trust issues within organization will stop the company from achieving their
goals and objectives and will also leads to misunderstanding.
 Clashes in work culture - The work culture of every company is of different type. The
company chooses their work culture according to their management and workings. If the
working styles or culture of two companies mixed into each other it can create a severe
impact on the workings and environment of the company. The employees may not
support the change in the organization culture and may lead to strike. It is not good for
the company and its reputation. The workings of the company may slow down as it will
have an impact on the productivity of the employees as well.
The usage of e-commerce principles in business
The e-commerce principles are used by the companies in order to provide est in class services to
their customers which can also help the company in retaining their customers. The variety of
ways in which the business can use e-commerce principles are discussed below in context with
Otto -
 User friendly- The first principle that the company must have to follow in order to make
sure that they have more user engagement ad traffic on their website is to make user
friendly website. It means that the company must make their websites easy to use so that
the customers ca use the website without having any technical knowledge (Shaughnessy,
H., 2018). It will also benefit the company as all age groups of the target audience will be
able to reach to the offerings of the company and will provide an opportunity to make
higher sales. In context to Otto, the website of the company is extremely easy to use and
provide proper instructions to new users as well.
 Unique design elements- The company must make sure that their is a specific unique
element on the website of the company which can attract larger audiences and will make
sure that the website of the company have high traffic. The unique design element will
help the company in differentiating them from competitors as well (Sinha, S. and Al
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Huraimel, K., 2020.). The company will be able to make sure that the company have a
customer base and will help the company in marketing as well. In context to Otto, the
company has a unique column in the website of the company which contains coins that
the company provide at every purchase to the customers which they can redeem on their
next purchase.
 Security is the center- The center or the focus of the company must be on the security
of the website and the information. Customers nowadays want personalized experiences
on the website and in order to provide that experience the company needs to use the
private information of the customers (Temel, S. and Durst, S., 2020.). The information
taken from the customers are their personal information and it is important for the
company to keep it safe as it can be easily misused. In context to Otto, they make sure
that he personal information of the users are safe in the system and only some employees
of the company have a reach to the information.
 Upgraded Technology- It is important for the company to use upgraded technology so
that the company can survive I the competitive market. The e commerce market is highly
competitive and it is important for the company to invest funds in upgrading their
technology so that they can have competitors advantage in the market (Thakur, R.,
2019.). In case of Otto, they are the one of the worlds largest E commerce companies,
they make sure that they have innovative as well as upgraded technologies.
 Check on target audience- It is essential for the company to make sure that they have
the right information about the target audience and they are making efforts in context to
that audience only otherwise the efforts of the company will be wasted and the company
will not be able to attract customers. In case of Otto, the company target their customers
on the basis of their potential customers.
 Have effective and encouraging products descriptions- The product description that is
provided by the company must be efficient as the description will encourage people to
buy the offerings of the company (Weill, P. and Woerner, S., 2018.). By looking at the
product description the customer decide whether the product have some value for
customer or not. In case of Otto, the company makes sure that the description of the
offerings of the company are made with the help of professionals and are efficient in
describing the specifications of the products.
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CONCLUSION
From the above report it is concluded that the companies needs to incorporate technology in their
workings and operations in order to make sure that they are according to the trends of the market.
Digital technology will also help the company in getting competitors advantage in the market
and will also make sure that the company have a wider reach. The technology enables the
company to attract potential customers towards the offerings of the company and will also help
the company in achieving effectiveness in the workings of the company. Technology helps the
company in achieving their goals and objectives and will also help in creating a positive working
environment in the company.
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References:
Books and Journals
Andersson and et. al., 2018. Managing digital transformation. SSE Institute for Research,
Stockholm School of Economics.
Apinantham and et. al., 2020. The Development of an Essential Competency Model for
Managers of Online Businesses in the Digital Economy.
Arbatani and et. al., 2019. Competitive strategies of mobile applications in online taxi services:
The cases of Snapp and Tap30 in Iran. International Journal of Emerging Markets.
Choudrie and et. al., 2020. The digital divide and older adult population adoption, use and
diffusion of mobile phones: A quantitative study. Information Systems Frontiers, 22(3),
pp.673-695.
Filosofova, T.G. and Surkova, Y.A., 2020. Peculiarities of competitive behaviour of successful
businesses in digital economy. Russian Journal of Industrial Economics.
Ghajari, H. and Naghavi, A., 2020. Factors affecting on employment in internet advertising
businesses; Digital marketing. Interdisciplinary Studies in the Humanities, 13(1),
pp.125-149.
Hughes and et. al., 2020, January. Introduction to the Minitrack on Digital Transformation and
Government: Empowering Businesses and Citizens. In Proceedings of the 53rd Hawaii
International Conference on System Sciences.
Lázaro, M.J.S., 2019. Digital marketing plan for the Portuguese Family Businesses
Association (Doctoral dissertation).
Le Dinh and et. al., 2018. Towards a living lab for promoting the digital entrepreneurship
process. International Journal of Entrepreneurship, 22(1), pp.1-17.
Limani and et. al., 2019. Digital transformation readiness in higher education institutions (HEI):
The case of Kosovo. IFAC-PapersOnLine, 52(25), pp.52-57.
Mkrttchian and et. al., 2021. The Cross-Cultural Analysis of Australia and Russia: Cultures,
Small Businesses, and Crossing the Barriers. In Research Anthology on Digital
Transformation, Organizational Change, and the Impact of Remote Work (pp. 1138-
1158). IGI Global.
Prince, C., 2018. Do consumers want to control their personal data? Empirical
evidence. International Journal of Human-Computer Studies, 110, pp.21-32.
Ramón-Saura and et. al., 2020. Technology-Based Tourism Businesses: Extracting Actionable
Knowledge and Insights from Social Networks. In Technological Progress, Inequality
and Entrepreneurship (pp. 47-65). Springer, Cham.
Santos, G., Murmura, F. and Bravi, L., 2018. Fabrication laboratories: The development of new
business models with new digital technologies. Journal of Manufacturing Technology
Management.
Shaughnessy, H., 2018. Creating digital transformation: strategies and steps. Strategy &
Leadership.
Sinha, S. and Al Huraimel, K., 2020. Reimagining Businesses with AI. John Wiley & Sons.
Temel, S. and Durst, S., 2020. Knowledge risk prevention strategies for handling new
technological innovations in small businesses. VINE Journal of Information and
Knowledge Management Systems.
Thakur, R., 2019. The moderating role of customer engagement experiences in customer
satisfaction–loyalty relationship. European Journal of Marketing.
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Weill, P. and Woerner, S., 2018. Surviving in an increasingly digital ecosystem. MIT Sloan
Management Review, 59(2), pp.26-28A.
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