E-Commerce and Value Chain

Typical business organizations (or parts within a business organization) design , produce , market , deliver , and support its product(s)/service(s). Each of these activities adds cost and value to the product/service that is eventually distributed to the customer. The value-chain consists of a series of activities designed to satisfy a business need by adding value (or cost) in each phase of the process. In addition to these primary activities that result in a final product/service, supporting activities in this process also should be included :

• Managing company infrastructure 
• Managing human resources 
• Obtaining various inputs for each primary activity 
• Developing technology to keep the business competitive

The Internet can increase the speed and accuracy of communications between suppliers, distributors and customers. Furthermore, the Internet's low cost allows companies of any size to be able to take advantage of value-chain integration. E-commerce may improve value chain by identifying new opportunities for cost reduction.

For instance, using e-mail to notify customers instead of using regular mail helps for reducing cost. Selling to distant customers using the company web site may allow revenue improvement or generation. These sales may not have been materialized otherwise or selling digital products such as songs or computer software or distributing software through the Web. Offering online customer service or new sales channel identification helps for product/service improvement.


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