Flower Cosmetics: Evaluation of the role of E-business in the company

Flower Cosmetics is a mid-sized company that sells a wide variety of cosmetics, including lipstick, nail polish, and various body and beauty creams. It also sells fragrances for men and ladies. The company is situated in California and services customers throughout the state, with intentions to grow abroad.

The purpose of this study is to assess the role of e-business and its applications in enabling the organization to digitize its activities. It is therefore separated into four portions. The first section evaluates the role and applications of e-business in transforming the business operations while the second section appraises the opportunities for the business to expand internationally. The third section provides a formal business development plan while the final section provides a summary of the paper as well as outlines recommendations for the business.

Evaluation of the role of E-business in the company

Combe (2006:1) describes electronic business (e-business) as the use of the internet to network and empower business processes, e-commerce, and communication between the organization and its customers, suppliers, and other stakeholders. E-business as such, is concerned with utilizing electronic and internet technologies in streamlining everyday business activities.

Combe (2006:1) adds further that a significant difference exists between e-business and e-commerce in that e-commerce is a subset of e-business. While e-commerce describes digital commercial transactions conducted over the the internet, e-business takes the definition further to incorporate processes that encompass internal transactions within the organization. As such, e-business details transactions relating to procurement, logistics, supply chain management, payments, stock control, and tracking of orders.

The current business operations in Flower Cosmetics are manual and yet to be digitized. For instance, customer and supplier details are maintained in manual books while files are used to store sales records. This not only makes it difficult for the company to manage its transactions efficiently, it also makes analysis and future forecasts difficult. The following section details how the company can leverage on e-business to ease its business processes.

Identification of areas where e-business can be employed

Flowers Cosmetics is organized into five main departments to run its business processes. These include: the production department that manufactures and packages the products, the sales and marketing department responsible for identifying new outlets for cosmetic products and ensuring sales are done, the procurement department responsible for ensuring raw materials and other packaging materials are received from suppliers on time, the accounts department responsible for maintaining all books of accounts and ensuring that the company is tax compliant, the company management that is responsible for ensuring that all departments run smoothly and offering managerial solutions in cases of conflicts, the customer care department responsible for keeping in touch with customers to ensure that all their needs are met, and the IT department that ensures that IT operations in the company run smoothly.

These departments are potential areas for the use of e-business in order to increase the efficiency of the business. The following section elaborates further on how e-business can be employed.

Sales and Marketing

König (2005:87) postulates that sales and marketing are different concepts though used interchangeably. She opines that while marketing refers to all activities designed to make a business known to customers who are not yet familiar with its operations on the one hand, sales refers to all activities that are related to winning orders from customers who are already familiar with the company.

E-Marketing

E-marketing, a subset of e-business, describes the use of electronic medium to achieve marketing objectives. Smith and Taylor (2004:44) outline marketing objectives to encompass activities related to sales, share of the market, penetration of distribution, and launching of new products. For instance, a business’ marketing objectives would be to increase sales within a period by 10% or to increase the market share by 8%. Dibb, Bradley and Simkin (1996:89) add that marketing objectives are essential in the execution of the marketing strategy as without them, there is no record that the marketing strategy is achieved.

An application of e-business in marketing involves the use of email campaigns to target new customers. By developing email marketing campaigns geared towards familiarizing customers about its cosmetic products, the business is sure to gain various advantages. Hesilirige (2017) outlines several advantages such as: the strategy offers a high return on investment given that email marketing is cheap compared to its reach. Second, email marketing is global and the business can reach customers from different geographical regions. The campaigns are also easy to create, share and track.

Apart from email marketing, the business could develop a cosmetics website both to sell and market its products to potential customers. Though the website mainly falls under e-commerce, marketing functionalities are as well achieved through the placement of advertising banners at pivotal locations in the website. In addition, setting up social media marketing platforms as well increases awareness of the products.

However, developing e-marketing strategies for Flowers Cosmetics is faced with various challenges. First, due to the transparency of pricing initiatives by the company in a bid to familiarize customers, this sets up increased price competition from its competitors dealing with cosmetics. Second, by adopting a technology based marketing method, the business finds that it competes for customer attention from other companies offering different products. Thus, over-reliance on technology begins to lessen the impact of campaigns for the company.

E-commerce

Corbitt, Nabeel and Al-Qirim (2004:2) describe electronic commerce (e-commerce) as the use of internet technology and applications to support business activities of a small business. Mariga (2003:29) adds that most businesses are adopting e-commerce from the numerous advantages that accrue to the technology. The technology is enabling and facilitating electronic markets thereby allowing businesses to cut costs while improving speed of delivery while simplifying business processes. It is also instrumental in enhancing the image of the firm as well as enables businesses to access to new customers and generate new opportunities.

Flowers Cosmetics can adopt e-commerce through the development of a dynamic website that enables customers to shop and pay for cosmetic products from anywhere in the world. The products would then be delivered to them. Through the website, the company will also market new products thereby creating more opportunities to gain customers.

However, the company faces restrictions that may hinder adoption of e-commerce to drive its business. Lee (2016:1243) outlines some of these challenges to include: the company may lack the financial capability to design, develop and manage e-commerce systems, regulatory requirements involved in adoption of e-commerce may end up straining the management, and the company may be faced with logistic challenges that make it difficult for them to deliver products to final customers.

Stock and Inventory Control

Currently, the company uses manual stock and inventory control mechanisms which may end up being too strenuous as the company grows. Lee (2007:167) highlights several aspects of inventory that pose a challenge to firms and as such, a system is required to help manage them. First, is the level of inventory released to customers in various outlets. The business needs to be aware of this level in order to anticipate the expected revenue from sales. Second, is the level of inventory in the warehouse. This is important as it helps ascertain whether the firm has enough stock to replenish its various outlets. Flowers Cosmetics manufactures its own products which translates to its need to ascertain how much inventory is both produced and how much is shipped out to outlets for the customers. Adopting e-business to manage inventory enables the firm to easily manage stock levels and replenish stock in outlets through analysis performed in the system.

Challenges that hinder the business from adopting e-business in managing its stock and inventory include high costs of integrating both e-commerce stores to the company’s ERP (Enterprise Resource Planning) software. The aim would be for the company to have a central inventory repository that reflects the real position of the firm in terms of stock and inventory. As such, the production department would update the repository with new stock produced while the sales department would update it with sales made in various outlets. Similarly, sales made from the website would update the repository automatically thus giving real-time stock levels.

Evaluation of business performance and forecasting

Another major addition brought about by adoption of e-business would be the aspect of the evaluation and analysis of business performance as well as enabling forecasts for the future. Barnes and Hinton (2008:47) highlight various metrics that are important in measuring the performance of business activities. They cite issues such as customer satisfaction, costs, order fulfilment times and response times.

Various software solutions are available for the company to implement in a bid to analyze its performance – especially with its e-commerce website. These solutions enable the firm to ascertain its best and poorest performing products in order to inform its marketing strategies. The challenge to the adoption of such e-business systems pertain to financial costs.

Opportunities for the business to expand and operate internationally

Pahl and Richter (2007:1) describe the SWOT analysis strategy (Strengths, Weaknesses, Opportunities and Threats) as a business strategy that is all embracing, that is, that analyzes both the internal and the external environment of a firm. Griffin (2016:68) adds that while strengths and weaknesses are focused on the internal workings of the firm on the one hand, opportunities and threats are focused on the organization’s external environment on the other hand. He describes opportunities as areas where a business could generate higher performance.

Smallb.sidbi.in (2017) considers various areas that offer potential opportunity for a business. First, is the identification of market inefficiencies where a firm could offer a solution to take advantage of the opportunity. For the cosmetics company, an opportunity arises from the current lack of e-commerce websites that enable customers to shop for cosmetics in and around the region. This is a potential opportunity that the firm can leverage on in order to expand its reach to international markets.

Second, the cosmetics industry is a growing sector that has been receiving increased attention. Various businesses ranging from fashion houses, beauty salons etc. are vital consumers of cosmetics. As such, the company should leverage on the uniqueness of its industry and invest into product development for a wide range of users. A third area that presents opportunity for the firm is the growing need for consumers to experience new cosmetic products. This implies that the firm should invest more in products that offer unique value addition for its customers in contrast to what its competitors are currently producing. For instance, in order to expand to the African market, the company should conduct research on the various skin problems that Africans face and manufacture products that meet those needs. This will not only help it to grow in sales volumes, but as well, it will help it have a global reach.

Summary and Recommendations

The report has assessed the operations of Flowers Cosmetics, a cosmetics company based in California. The evaluation of the role of e-business in the firm indicated that the business can adopt e-business in various departments. In marketing, e-business is useful in enabling email marketing campaigns that have a global reach, are traceable and have a huge return on investment. Similarly, e-marketing is cheaper compared to traditional marketing for the same reach.

In sales, e-commerce outlined multiple advantages for the firm including digitizing its stores, reducing its operational costs and increasing sales volumes. In stock and inventory control, e-business is useful in controlling stock levels that are produced and shipped to customers in order to avoid overstocking and understocking. Finally, e-business is useful in analyzing performance as transactions are digitized hence become easily traced.

The report as well identified areas of opportunity that the business can leverage on to increase its reach to international levels. First, is the inefficiency of the market where competitors are seen to avoid embracing e-commerce technology. Second, is the notion that the industry is growing thus offering many benefits and third, is the growing need for customers to experience different cosmetic products.

It would be recommended that the firm adopt e-business in its operations as the use of technology simplifies business processes while making them more efficient. Similarly, with e-business, the firm is able to undertake analysis of its performance through online tools.

References:

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