eBusiness Research Paper
The content regulation of the Internet has become the fore of public debate as an issue that both government and Net users are concerned about. Many companies have benefited from the use of e-Business in terms of revenue, capturing its marketing mix and driving shareholder value. However, governmental regulation can have a major effect on both the strategy and financial survival of e-Business. As technology continue to evolve at a rapid pace, governmental regulation struggles to keep up with its pace (McGraw-Hill). This paper will outline legal and regulatory issues with E-Business. Ethical issues such as invasion of privacy and deceptive advertising will be addressed. An e-Business failure and “Managing a Retail Website” simulation will be discussed that will include challenges that was faced and offering recommendations to overcome those challenges.
In the beginning of the Internet era, there was no kind of regulation in place. As the internet and e-Business started to expand rapidly, government struggled in determining how rules and regulations would a key role in online business practices. In our text, its states new technology and the lack of physical borders associated with the Internet are changing the way societies are looking at laws (McGraw-Hill). Because of hacking and cyber crime which continue to become more common and complicated, it is necessary to set standards in order for business to continue to thrive. There are several key regulatory issues that have impacted e-Business.
Privacy and Security
Just recently, the government has become more involved in internet privacy and security. Congress has responded to the public with concerned for privacy and security especially in the areas of children, banking, and healthcare (gcglaw.com). With the HIPPA regulations, businesses must provide guidelines and notices that will protect the privacy for customers from improper disclosure of healthcare information. With online marketing and internet advertising, companies must ensure that they comply with those laws to reduce liability, build trust and maintain good relationship with their customers (J.Heath Dixon). The Federal Trade Commission prohibits unfair or deceptive acts or practices in Internet advertising, marketing, and sales. There are disclosures that is required to prevent advertisement from being misleading, ensuring that customers receive information about transactions ( J. Heath Dixon). On the business website, the privacy disclosure is required to provide customers a hyperlink that will take them directly to the disclosure. In spite of the growing regulations, many companies realize that standards need to be in place but in the same token it may hinder e-Business. A lot of companies feel that website have prohibited their power to collect and distribute personal information. However, because of the increasing concern of privacy, if customers feel the company lacks privacy and security protocols, they will be driven to go to competitors who will be more secure. As a result, the image, profit, and customer base is the driving force for companies to keep up these standards. Businesses have to be accountable for protecting themselves from malicious intent. It is important to have virus scan and firewall software to prevent unwanted or hostile traffic coming into your computer.
Copyright
Today, trademarks and patents has been one of the biggest concerns with intellectual property protection. The copyright laws has a been a big challenge of businesses and consumers ( McGraw-Hill). Copyright laws are designed to protect intellectual property from misuse by other individuals. A person must obtain permission to use copyright material. The copyright Act protects intellectual property from misuse by other individuals. A person must obtain permission to use copyright material. The copyright Act also protects original works of authorship such as literary, architectural, pictorial, and graphic works, sound recording and music works including any accompanying words (www.copyright.gov). Websites have defended their right to make content available to customers. The courts have tried several times to draw a balance of fair use and protection between copyright holders and internet users.
In the event of creation of a tangible or intangible product, e-Business must be careful to review policies and procedures on copyright protection. As of today, the copyright laws do not have an answer of how Internet content will be affected in the future (McGraw-Hill).
There are several considerations to be made when protecting creation of products in e-Business and using copyrighted work. Business need to file copyright certification or check the expiration dates of copyright material (copyright). Businesses need to check if the use of work is fair use. They need to identify the copyright owner. By examining the copyright of the work, businesses need to look for copyright notices. The absence of a copyright notice does not indicate that the work is not available for public use. The US Copyright Office keeps a record off all copyright registrations. Conducting a search or the internet may be easier to discover the identity of copyright owner (copyright).
For trademarks, infringement occurs when one party utilizes the mark of another in a way as to create a likelihood of confusion or deception with the public (Bitlaw). For website developers, they should be aware of trademark issues with internet discussion of products and services.
Taxation
Internet taxation refers to taxes applied to Internet access fees or sales and the use on e-commerce (accaglobal). E-Businesses have benefited in not having to pay the high cost in collecting sales tax. The Internet Tax Freedom Act has restricted new taxes from being on E-commerce purchases (McGraw-Hill). Many businesses that have online and offline operations have purposely kept their two businesses separate for tax purposes and saving costs. As the internet sales to continue to boom, it is possible that the government will consider posing sales taxes. All of the issues raise a concern of the ethics.
In today's competitive business environment, having a code of ethics should serve as the foundation which employees make decision based on honesty, integrity, confidence, and trust. If ethical behavior becomes an in issue, it can affect the reputation of the business and its profit and growth. All employees should undergo ethical training in order to be aware of the policies in order to make and know when or where to report unethical conduct. Companies need to keep in mind how ethical behavior being perceived and allowed by employees will determine the kind of ethical behavior will be exhibited by employees (construct.Laifa). There are three areas of ethics are of major concerns:
Invasion of Privacy
Many customers have become increasingly concerned about the how organizations collect, use and share their personal information. Having a privacy statement will not only minimize legal challenges, it can also serve as a marketing function allowing companies to attract and retain customers (e-future). Presenting personal information to third party marketers for exchanges of monetary favors is illegal and subject to jail and penalties. If it wasn't informed and permitted by customer, it would be a violation.
Abusive Marketing and Advertising
Another ethical issues concerning e-business is abusive marketing and advertising. According to Journal of Business Ethics, there is increasing concern with its fraudulent activities. As the number of companies continues to develop in the Internet world, there is still great deal of uncertainty of potential ethical issues associated with marketing. There has been little research conducted in this area. Promoting fraudulent activities such as deceptive advertising used to lure customers to your website where there's false information of products and services is illegal. Also, unsolicited e-mail and abusive advertising through spam by promoting negative campaigning is wrong and can turn off customers. The purpose of marketing is to enhance customer relationships and increase brand awareness. Businesses also viewed online marketing as a strategy for the business to grow and maintain it market share and mix and gain competitive edge. Unethical behavior can hamper the development of relationship of customers.
Defamation
Defamation refers to a false statement made about someone or an organization that is damaging to their reputation. The statement is published to a third party and the person publishing this statement must have known the statement was false (BitLaw). This can lead to unethical behavior. Again, there is minimal regulation relating to Internet defamation besides liability if proven to defame someone's character. When developing new e-Business or operating an existing one, web page developers need to be aware of ethical issues and consequences in creating pages. Careful analysis should be taken when statements are made that may cause damage the reputation of a person or an organization. They need to make sure the statement is not defaming (BitLaw).
Having a vision and purpose for a need is important when discovering an e-business operation. The business plan would outline the objectives and goals and have steps to achieve those objectives and goals. The basis for an effective business strategy is to have an understanding of your mission and vision. Without an understanding and process in place, you will likely be setting yourself up for failure.
An example of a dotcom business failure was a website called Nikolai.com. Owner, Isabel Hoffman, was the creator of this website and was forced to shut down her business. The company located in Canada was a network of focused websites that included an online store called Toyboutique.com, educational sites, offering other types of entertainment. The company employed more than 125 employees and had a market value estimated at $75 million. The portal attracted 500,000 visitors a month. Poor marketing strategies and the funding for the company became increasingly scarce, forcing the company to restructure several times in order to cut costs. The owner signed a merger deal with a distribution company in Florida that would have helped the business. Before the company could get back to profitable levels, the landlord terminated the lease where the distribution site and office was held. During the time of the operation, the company had partnered with US Netscape Communications Corporation. Hoffman had big plans wanting to transform its characters into an animated cartoon series for television. Then, Hoffman decided to partner with a Montreal-based corporation called Cinar Corp. but withdrew rights after Cinar became involved in a government scandal. The downfall of Nikolai was investor felt it was too risky to invest; government didn't want to deal with the company because problems with paying taxes and big competitors made it difficult for this company to survive.
Based on reading this article, this company focused on making quick money. The owner didn't properly research strategies in order to market her business. In order to keep up with competition, it seemed that the company rushed to promote its products, ignoring the high costs, had lack of direction and leadership, and not staying alignment with its mission and vision. In order for this company to thrive, care analysis should be taken by having a business plan, setting out a budgetary guideline and time in order to accomplish the objectives.
In viewing the simulation, I had to decide what marketing strategy would be best when selecting a target segment for selling records. I chose Rock and Pop Music because it was viewed to cross over in more than one target group. It was difficult to decide how much net income would be achieved that has a high market share. Choosing a multiple target segment group would impact the net income. I thought offering online and offline would increase my advertising opportunities. Also, offering distribution of “free delivery above a minimum order” would be beneficial because it would boost sales.
Another challenge was to determine what type of media option would be beneficial and what kind of conversion would have an impact. Television would be an effective option because it would reach both online and offline markets. Strategic decision-making and researching advertising and promoting options would be important because it will affect the market share. Recommend also to stay within budgetary guidelines and review other competitors to see how they are responding to the market.
The last challenge from the simulation was to decide how to reduce inventory-holding and reduce distribution cost or boost sales. I chose boost sales. However, because of high distribution costs it would not be a good idea. I choose volume discounts but realized the existing expenses would also be high. It is important to forecast and develop an effective business plan, research purchasing patterns that increase the market share.
It is important to be mindful of regulatory issues concern with e-commerce. Knowing what boundaries you need to stay in is important. Knowing code of ethics is important and informing employees of ethical and unethical behavior is also important in keeping your brand strong and in good reputation. It is also important to take time to understand why you want an online business. You need to develop a sound business plan, setting out an objective and mission to achieve those objectives is also important if you want your company to thrive. Reviewing other dotcom failures is beneficial because companies can learn from the mistakes that were made. In today's competitive and emerging technology, you need to have a strategy in order to position yourself successfully in the business. Otherwise your business will likely fall.