Technological

change:
e-commerce
BUSS4 Section A
2016

www.time2resources.co.uk

Technological change: e-commerce

E-commerce

involves digitally enabled

commercial transactions between and
among organisations and individuals

Focus

on the impact of e-commerce on

businesses and industries
What is e-commerce?

What other terms

can be used to mean
e-commerce?

Introduction
The

internet and the world wide web

Produce summary notes on the history and growth

of the internet. What conclusions can you reach?

How would you

update this time
line?

What factors are important to the success of e-commerce?

To what extent will e-commerce continue to grow in the future?

Read and discuss these comments before starting your research in detail.
What does this mean to you?

Chief Examiners Report 2015

The better responses were ones that had clear arguments

supported by their research. Students thought about the
arguments they wanted to make and substantiated their analysis
with evidence. While weaker responses tended to be descriptive.
Students may have learnt a case study and be able to recall a
story but in the more limited answers their research was not used
to good effect and tended to be descriptive. When researching the
theme students need to consider the underlying business issues
and theory and then research to find evidence that supports their
arguments rather than just collecting a series of stories.

If students are studying business cases they must focus on

analysing the issues rather than merely describing what has
happened. They should also try to understand what they have
learnt from a case that can be applied to other situations.

Which industries?
Rank

these industrial sectors based on the value of

total e-commerce sales?
INDUSTRIAL
SECTORS

Wholesale

Retail

Transport &
storage

Utilities

Construction

Accommodation
& food

Information &
communication

Manufacturing

What

factors influenced your ranking?

E-commerce importance of
B2B as well as B2C
Website
What

sales v EDI

is EDI?

2013

EDI sales = 364 billion (65%)

Website sales = 193 billion (35%)
Major types of e-commerce
Review your rankings of industrial sectors? Read pages
5,6,8,10,11 and12. What conclusions can be reached?

Trends
2013

total e-commerce sales 557 billion

(66% increase since 2008)
46% of all e-commerce sales made by UKs
largest businesses (over 1000 employees)
557 billion = 20% of business turnover,
18% in 2012 and 14% in 2008

E-commerce and ICT Activity 2013

ONS Statistical Bulletin

AQA Research
Task 2016

Technological change: e-commerce

the impact of e-commerce on the competitive
environment within industries
the impact of e-commerce on businesses and their
functional areas
the impact of e-commerce on different stakeholder
groups
the extent to which e-commerce creates
opportunities and poses threats for businesses
the factors influencing if, why and how businesses
respond to the growth of e-commerce
the impact of e-commerce on business performance
and on strategy, both nationally and internationally

BP1: The impact of e-commerce on the competitive

environment within industries
Points to consider include:
Competitive environment is the number and type of businesses
operating in one industry
Relative power of businesses within that industry

Degree of competition (recap BUSS2)

How may this have been affected by e-commerce?

Porters Five Forces
Information asymmetries

Price comparison sites

How firms compete, has this changed?

Winners and losers

Porters Five Forces

NEW COMPETITORS
Ease/barriers to entry
Strategy by new entrant
and/or existing
businesses
Geographical factors
SELLING POWER OF
SUPPLIERS
Availability of
substitutes
Differentiation
Brands
Supplier competition

COMPETITIVE RIVALRY
Degree of competition
Dominant business
Industry size and trends
Differentiation
THREAT OF SUBSTITUTES
New product development
Research and
development
PESTEL factors

BUYING POWER OF
CUSTOMERS
Bargaining power
Degree of choice
Price sensitivity
Availability of
information

Porters Five Forces

In pairs:
How is e-commerce
changing the fashion
industry?

SELLING POWER OF
SUPPLIERS

NEW COMPETITORS

COMPETITIVE RIVALRY

THREAT OF SUBSTITUTES

BUYING POWER OF
CUSTOMERS

Research
activities
The impact of e-commerce on the
competitive environment within industries

Research

activity 1
The music industry
Research activity 2
The supermarket industry

Remember: be active, keep a research book or folder,

highlight key points, analyse your research

Assessment Activity

Practice

question 1

50 minutes = 10 minutes reading and

planning + 40 minutes writing

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

L1

Limited response

Level

Descriptor

E3

Good evaluation with evidence of research (+QOL)

E2

Reasonable evaluation with evidence of research (+QOL)

E1

Limited evaluation (+QOL)

knowledge only

12-8
7-1

Mark
14-11
10-6
5-1

Key terms
Competitive

environment
This looks at the degree of competition in the market and the
buying and selling power of customers and suppliers within
that market
Porters Five Forces
A framework that helps firms to analyse their position, and
therefore attractiveness, in that market
Each of the Five Forces will affect the profitability of firms in
the industry
Information asymmetries
When some parties in a transaction have more information
regarding the product than others
This leads to market failure
Without having full information about a product it is difficult
for consumers and producers to make decisions regarding
price, quality and other relevant factors when buying and
selling

BP2: The impact of e-commerce on businesses and their functional

areas
Points to consider include:
o
o

Significance of impact
Finance
o Online payments
o Cash flow
o Profitability
Human resources
o Skills
o Changing roles
o Job losses or gains
Operations management
o Logistics e.g. delivery and returns
o Supply chain
o Mass customisation
Marketing
o Digital marketing
o Pricing strategies
o Marketing mix
Customer service

How might consumer

expectations affect
marketing in the retail
sector?

Amazon: The truth

behind the click

Research
activities
The impact of e-commerce on businesses
and their functional areas
Research

activity 1
The media industry
Research activity 2
Low cost v highly differentiated
Analysed in relation to impact on functional
areas

Assessment Activity

Practice

question 2

50 minutes = 10 minutes reading and

planning + 40 minutes writing

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

L1

Limited response

Level

Descriptor

E3

Good evaluation with evidence of research (+QOL)

E2

Reasonable evaluation with evidence of research (+QOL)

E1

Limited evaluation (+QOL)

knowledge only

12-8
7-1

Mark
14-11
10-6
5-1

Key terms
Mass customisation
Where firms employ flexibility, providing tailor made or customer
specific products, into a mass production line
A form of producing to order that matches supply to demand
It offers both cost efficiency and customer satisfaction through products
designed for the individual but produced by larger-scale methods
Multi-channel distribution
Where firms distribute their products through a range of routes so that
they can be bought by their customers in a number of ways
A good example of a market that effectively employs multi-channel
distribution is supermarkets who offer the ability to buy in store, click
and collect or buy online
With technological advances customers are expecting ease of access
and multi-channel distribution more often
Businesses are having to respond to this demand and offer more flexible
shopping which in turn is affecting the nature of shopping and physical
stores
Omni-channel distribution
Providing customers with a fully integrated shopping experience through
the seamless interaction of multiple channels

BP3: The impact of e-commerce on different stakeholder

group

Stakeholders are anyone with an interest in the actions

of a business
These includes:

Customers
Employees
Shareholders
Government
Community
Suppliers
Financial institutions

Stakeholders can be categorised

as:
internal or external
primary or secondary

Primary stakeholders have a direct

relationship with the business
whereas secondary stakeholders
although affected by the actions
of a business are not directly
related to the business.

Summary grid
In pairs: draw a copy of the table below on A3 paper. Complete
with theoretical points and where possible supporting evidence.
Stakeholder

Positive
impact

Negative
impact

Relative
weighting
i.e. +ve v. -ve

Research activities

The impact of e-commerce on different stakeholder

group
Research activity 1
The fashion industry
Research activity 2
The technology industry

Key

points for discussion:

What are the factors influencing the impact on stakeholders?

Why does the impact differ?
Why is the impact different in different situations?

B2B

B2C
Business objectives
Nature of business
Stakeholder objectives

Assessment Activity

Practice

question 3

50 minutes = 10 minutes reading and

planning + 40 minutes writing

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

L1

Limited response

Level

Descriptor

E3

Good evaluation with evidence of research (+QOL)

E2

Reasonable evaluation with evidence of research (+QOL)

E1

Limited evaluation (+QOL)

knowledge only

12-8
7-1

Mark
14-11
10-6
5-1

Key terms

Stakeholders
Anyone with an interest in the actions of a business
Different stakeholders can put pressure on businesses
The degree of pressure depends on the relative power of
stakeholder groups
Stakeholder mapping
This is a tool to help in managing stakeholders effectively
Levels of interest and power are plotted in a matrix
Low levels of interest and power = minimal effort
High levels of interest and power = key players
High levels of interest and low levels of power = keep
informed
Low levels of interest and high levels of power = keep
satisfied
Stakeholder conflict
Stakeholders have different objectives and therefore when a firm
makes a decision e.g. to move to e-commerce there may be
disagreements between some stakeholders

BP4: The extent to which e-commerce creates

opportunities and poses threats for businesses
Opportunities: the external aspects of the business
environment that can benefit businesses that are able
to positively exploit them
Threats: the external aspects of the business
environment that can harm businesses that are not
able to avoid them or turn them to their advantage
Opportunities and threats posed by e-commerce and
to e-commerce

Threats within e-commerce

How will this impact

on M&S?

obstacles are only obstacles if you think theyre

obstacles, otherwise theyre opportunities Jeff Bezos

In pairs draw out the table below on A3 paper. Complete the grid writing
theoretical points in one colour and supporting evidence in a second colour.
You may wish to refer back to your research notes so far.
After you have completed your research for this bullet point add to your
theoretical points and evidence points.

Opportunities
Posed by ecommerce to
businesses

Posed to ecommerce
businesses

Threats

Research activities

The extent to which e-commerce creates

opportunities and poses threats for businesses
Research

activity 1
The fashion industry
Research activity 2
Social media
All UK homes and businesses will
have access to "fast broadband" by
2020, David Cameron has pledged.
How does this create opportunities
and threats to businesses in the
FUTURE?

Assessment Activity

Practice

question 4

50 minutes = 10 minutes reading and

planning + 40 minutes writing

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

L1

Limited response

Level

Descriptor

E3

Good evaluation with evidence of research (+QOL)

E2

Reasonable evaluation with evidence of research (+QOL)

E1

Limited evaluation (+QOL)

knowledge only

12-8
7-1

Mark
14-11
10-6
5-1

Key terms

Opportunities

Threats

The external aspects of the business environment that can

benefit businesses that are able to positively exploit them
The external aspects of the business environment that can
harm businesses that are not able to avoid them or turn them
to their advantage

Cybercrime

Any criminal act that is carried out with the use of the internet
or a network

BP5: The factors influencing if, why and how

businesses respond to the growth of e-commerce

If, why and how

Recap:
discuss in relation to BPs 1 4
discuss in relation to trends

Impact on performance BP6

Nature of product and industry
Competitors actions
Business objectives
Skills and experience
Ability to manage change
Reactive or proactive

Research activities

The factors influencing if, why and how

businesses respond to the growth of ecommerce
Research

activity 1
The fashion industry
Research activity 2
Physical v digital

What are the factors influencing if, why and how Poundland
have responded to the growth in e-commerce?

Assessment Activity

Practice

question 5

50 minutes = 10 minutes reading and

planning + 40 minutes writing

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

L1

Limited response

Level

Descriptor

E3

Good evaluation with evidence of research (+QOL)

E2

Reasonable evaluation with evidence of research (+QOL)

E1

Limited evaluation (+QOL)

knowledge only

12-8
7-1

Mark
14-11
10-6
5-1

BP6: The impact of e-commerce on business performance

and on strategy, both nationally and internationally
Measures

of performance

Financial
Marketing
Reputation
HR
Ethical and environmental
Against objectives

National

and international

What measures could

be used for each of
these categories?

The impact of e-commerce on business performance and

on strategy, both nationally and internationally
Strategy

Within e-commerce
Low

cost v highly differentiated

Ansoffs matrix

Brick and/or click

Research activities

The impact of e-commerce on business performance and

on strategy, both nationally and internationally
Research

The fashion industry

Research

activity 1
activity 2

The media industry

Assessment Activity

Practice

question 6

50 minutes = 10 minutes reading and

planning + 40 minutes writing

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

L1

Limited response

Level

Descriptor

E3

Good evaluation with evidence of research (+QOL)

E2

Reasonable evaluation with evidence of research (+QOL)

E1

Limited evaluation (+QOL)

knowledge only

12-8
7-1

Mark
14-11
10-6
5-1

Chief Examiners Report 2015

It was pleasing to see evidence of students planning their

answers. A good introduction showed that students thought
about the arguments they wanted to make. The
introduction was used to provide an overview of where the
essay was headed. This often made for a clearer sense of
direction, a better structure and stronger judgement
because the student knew from the start what they wanted
to argue and the rest of the essay reinforced these initial
points. Very often it is how the content is used and how the
arguments are combined to address the specifics of the
question that makes the difference between a good and
reasonable response and it is worth students investing time
to choose the right question to answer and to plan their
approach.

Paragraph structure

Paragraph structure

Assessment Activity

Practice

50 minutes = 10 minutes reading and

planning + 40 minutes writing

question

Level

Descriptor

Mark

L5

Application/analysis

both good

26-23

L4

Application/analysis

1 good and 1 reasonable

22-18

L3

Application/analysis

both reasonable or 1 good and 1 limited

17-13

L2

Application/analysis

1 reasonable and 1 limited

12-8

L1

Limited response

Level

Descriptor

Mark

E3

Good evaluation with evidence of research (+QOL)

14-11

E2

Reasonable evaluation with evidence of research (+QOL)

10-6

E1

Limited evaluation (+QOL)

5-1

knowledge only

7-1