The Significance And Challenges Of Electronic Commerce: A Case Study Of AirAsia

To help you pick a topic suitable for the coursework, first, consider choosing a scenario type from the options below:

a.Analysis and critical evaluation of current e-business strategy and activities. (There must already be some significant e-business activity.)

• You decide how to carry out the appraisal, using your own selection or those techniques taught on the module.

b.Proposal and justification for a systems architecture to support e-business. (The organisation must have little or no significant e-business activity now).

• Summarise the applications that are needed.
• Outline their interfaces with each other, and any necessary standards.
• Explain how the applications differ from current systems.
• Identify the benefits and how they will be measured.

c.A migration plan to develop e-business capability from scratch.  (The organisation must have little or no significant e-business activity now.)

• Identify impacts on the organisation and changes to infrastructure.
• Identify major benefits, with suggestions for how to measure them.
• Identify major risks, with strategies to avoid or minimise them.

What is the significance of electronic commerce on the economy of business companies?

What are the challenges that face electronic commerce operations?   

How do businesses conduct their electronic commerce business?  

Choosing a Suitable E-Business Strategy

The dawn of the 21^st century has come with a myriad of emerging international advancements regarding the economy, e-commerce as well as e-business. E-commerce has increasingly become a basic requirement of business strategy which is acting as a catalyst for economic progress. All these advancements have become a reality due to the integration of information alongside communication technology (ICT) in commercial operation relations among companies and between corporations and individuals (Fuza, Ismail, and Isa, 2015, p. 255). Particularly, the usage of ICT in business is improving productivity, stimulating greater customer involvement, support of mass customization apart from cutting on the costs of operation. As a result of the recent developments taking place in the Web-based and the Internet technologies, differences between traditional markets and international electronic marketplace like the capital size of the venture are gradually being pinned down (Bt Khalifah, Bing, and Hashim, 2014, p. 3450). The majority of the big investments are now made and built of enterprise resource planning system. Despite their massive progress these enterprises are still striving to achieve timely information which is a requirement for making effective business decisions and to make sure that they keep a continuous development of enterprises.

Nearly, a majority of the most successful corporation are placing “e” before any of their processes or operation since I seem to be the magic medicine for a never-ending story of quick return and success for enterprises. For instance, e-sales, e-banking, e-procurement, e-payment, e-CAD, e-CRM, e-business, and e-delivery are only but a few that have been embraced by most of the successful organizations. The internet has become the heart of every business and the most widely used medium for data transmission. It has become possible for users to access any information overs short period unlike with the traditional methods that waste a lot of time. Therefore, the internet is said to the backbone of business transformation internationally for doing business. Consequently, it has become a major business turnaround both in the business environment as well as individuals lifestyles. Indeed, the most fundamental prerequisite for the existence and survival of e-commerce is the internet. Electronic commerce or e-commerce is defined as the capability to make transactions that include the interchange of services or goods between two or more parties with the use of electronic technique and devices (Izzah, Rifai, and Yao, 2016). Certainly, the detonation of E-commerce has resulted in a novel phenomenon both in individuals’ lifestyles and shopping activities. With the coming of the World Wide Web and the Internet, consumers can easily make purchases on services or products such as airline tickets and e-pay using the internet.

The Significance of E-Commerce on the Economy of Business Companies

The report will focus on providing the definition for e-commerce, the overview of electronic commerce, assessment and evaluation of the current electronic business and specifically that of the company under research AirAsia, how the company transacts its e-commerce business operations, and how AirAsia has made stride in developing its e-commerce and finally provide a conclusion regarding electronic commerce.     

Apart from the initial definition by Turban et al. (2018) the National Office for the Information Economy describes e-commerce as a type of business interaction whereby the partakers carry out business transaction electronically. The process covers a wide range of activities starting from the usage of electronic email (e-mail), all along to internet built sales dealings and Web-based marketing. In accordance to Brown a professor of Economics from Harvard University, the scholar notes that electronic business (e-business) is the running of business with the aid of electronic components as well as telecommunication devices. On the other hand, electronic commerce is the carry out of commerce in products and services using telecommunication tools and electronic devices. Accordingly, individually make use of terms such as ‘electronic purchasing,’ ‘electronic trading,’ ‘electronic procurement’ and ‘electronic marketing’ differently. Based on the above definition, I can be concluded that electronic commerce is in most cases employed in a broader sense to essentially mean the same as “electronic transaction.” In other words, electronic commerce entails the buying of goods, services as well as other financial transactions through an interactive procedure that is facilitated by digital technology or information at different ends of the exchange. In this case, transactions involve the specification of the needed goods and services and committing to purchase them. As a result, e-commerce exchange models cab one regarding business to customer (B2C), business to business (B2B) and even customer to customer (C2C), business to government (B2G) and Mobile commerce (m-commerce).

E-commerce is among the most significant applications of the latest communication technology. Currently, both traders, consumers, and manufacturers can arrive in the market at a very fast speed, and access more information unlike it was before. The electronic commerce has invaded different business environments in various ways. Consequently, e-commerce has tremendously lessened the costs of the transaction together with sales, purchases, operations, inventory holding and financial cost (Ali, Mat, and Ali, 2015, p. 148). The implementation of e-commerce due to the advancement of websites has helped to improve the potential worldwide sales and market revenue, goods, prospective customers’ geographical regions and services. On the other hand, on the side of non-financial advantages, electronic commerce has greatly supported advancement in the quality of services, human resources, customer satisfaction, timeliness, as well as other indirect effects. The dominance e-commerce solely relies on assessment and evaluation. So as to be in a position to evaluate and connect data electronic commerce stand out as a requirement because it is not readily available. The existing data is gathered by dissimilar agencies through some approaches and definitions employed by these groups. Without the presence of dependable data, it would be problematic for business communities, policymakers and researchers to arrive at constructive decisions which can echo the modifications as a result of electronic commerce. By using appropriate and accurate information on e-commerce, both researchers, as well as policymakers, stand a better place to critically analyze the influence of electronic commerce on the market structure and operation, labor market distribution changes regarding goods and services, changes in consumer pretenses internationally. Therefore, it allows them to make a well-organized decision concerning the policies and investments in electronic commerce-related industry (Yau, and Tin, 2016, p. 171). It is projected that e-commerce shall be accountable for over 85% of the global sale of products and services by 2020. The potent for electronic commerce is bright, particularly in those market that consumers and traders are inspired to decline expenses and intensify efficiency and reduce the time of delivery.

The Challenges of Electronic Commerce Operations

AirAsia is a Malaysia-based low-cost airline which is the leading no-frills, low-fare as well as the pioneer of low-cost airline in Asia. The airline operations are scheduled as both local and global flights that cover over 450 destinations across the world. AirAsia’s heart is the Low-Cost Carrier Terminal (LCCT) located at the Kuala Lumpur International Airport (KLIA). AirAsia is utilizing electronic business to enhance its sales by advocating for customers getting their ticket online. The airline has made it possible for its clients to make a booking directly through the online purchasing of tickets and only make use of the ticket number to check in (Seng, and Wei, 2015, p. 370). At the same time, the AirAsia has a highly flexible website that consists of several different dialects which comprise its Malaysian location in addition to registered associates also getting elevation online via electronic message.

AirAsia is among the leading airlines in Malaysia; the airline offers a unique kind of service that is in line with the country’s aspirations to benefit all its people and international travelers. Therefore, to achieve supply both national and international service, AirAsia turn towards electronic commerce in its operations. Consequently, AirAsia was one of the earliest airlines in Malaysia to offers its clients with electronic tickets what is commonly known as e-ticket service. The electronic ticket is used to representing the procurement of a seat on a passenger carrier, which is normally done via a website. When advance booking is made, an e-ticket will only exist as a alpha numeric record in the commercial airline processor. Therefore, customers are only required to print out a copy of their receipt that contains the record booking number or locator as well as the electronic ticket number. With the aid of such services, it takes the form of a no frails that is low airfares flight offering which is approximately 40% cheaper than the current airfare offered by other Asian airlines. Additionally, AirAsia adopts e-commerce to make sure that it works in line with its motto “Now Everyone Can Fly,” to ensure that it offers readily affordable airfare without interfering with Flight Safety Standards.

Accordingly, AirAsia was founded in 1993, but it began its operation in 1996 as a full-service but regional airlines rendering airlines services at slightly reduced fares as compared to its chief rival Malaysian Airlines. However, only after the dawn of the millennium, AirAsia was failing because of inefficient inspiration to win the market and fascinating enough customers from Malaysia Airlines in strive to create its market niche (Did AirAsia flight stall? 2015). Nevertheless, in 2001 AirAsia experience a major come back which is laid out and facilitated by Tony Fernandes. When Fernandes arrives at AirAsia, he brings on board experts to who crafts a low-lending cost platform as a strategy for restructuring the organization’s business model. Therefore, towards the end of 2001, AirAsia is re-hurled in Malaysia as a no-frills, trendy operating with three B737 airplanes as a low-fare, low-expense local carrier.

How Businesses Conduct Their Electronic Commerce Business

AirAsia was the first airline to come up with online reservation structure in the whole of Malaysia. The online reservation system is whereby a person makes actual online internet booking for things such as hotel accommodations, flight and theatre tickets. Just after the introduction of the online booking system, AirAsia passenger rates skyrocketed to 350,000 from 200,000. In addition to that, AirAsia becomes the second biggest airline in the whole of Asia to completely do to a ticketless behind Sky Mark Airline of Japan (Feng, 2015). Among the major benefits of purchasing an airline ticket online is that it is more convenient because an individual can carry out this transaction just at the comfort of their house (Ali, Mat, and Ali, 2015, p. 148). There is no need of driving long way to a travel organisation booking point in town. It is only through a few clicks over one’s cell phone or personal computers or a laptop, and they are by this time compelling their credit card in preparation to authorize their booking (Chen, 2017). Similarly, the airline websites comprise a facility for making a comparison of the airline ticket prices across the difference in days. Thus, such websites allow the client to appropriately look at the difference in charges with regard to the difference in days and then decide on which price suits them best. Indeed, these are some of the enjoyments that come with business appreciating technology and going e-commerce way (Nathan, Chiun, and Suki, 2017, p. 4). The only thing that the customer is required to do is by only specifying the date and time that they are comfortable with and then leave the rest of the work to be done by the search engine. Accordingly, through the placement of the prices and making the booking of ticket online it has saved passengers a lot of time that could have been wasted on making visits every time to get the best deal of a flight ticket (Shetty, 2017).

Moreover, Air Asia offers its clients with web check-in services. Web check-in is a type of service which uses the internet to check-in besides making a print off boarding permit via the web or by downloading it to the cell phone (Kiu, and Lee, 2017, p. 375). Therefore, Air Asia introduces the web check-in service to cut down the time wasted by passengers in long queues at the airdrome since web check-in enable a person to make checks in between twenty-three hours and one hour before the time of departure.  Also, another advantage of web check-in is that it allows a passenger to drop off their luggage swiftly at a separate counter.

Overview of Electronic Commerce

Since AirAsia was the first airline organization in Malaysia to introduce online ticket booking system, currently it has fully implemented ticketless travel and unassigned seats. For one to make an online booking at AirAsia, it only takes several steps, and one will be done with the booking process.

The booking consists of five but easy steps

Search: Once the passenger has logged into their AirAsia online booking system they will be required to click on the “search” button to select in their type of trips such as One Way trip or Return Trip according to the matching text boxes.

Select: The subsequent step is choosing a deserting voyage date or homecoming date with the selected time and fare.

Guest & Contract: The third step involves clicking on the option “Choose your number of Guests or Child” in the corresponding text boxes.

Payment: It is the most significant step where the passenger is directed to do to AirAsia insure their Quality amount, where the name of guest (s) is exhibited.

Journey: The passenger’s airlift journey will be shown on the monitor and send to their electronic mail as soon as the fee has been sort out.

Appropriate and time-saving: AirAsia through its online service it has enabled customers to book air ticket with a lot of easy because it does not need the customer to purchase through a third-party or even through an agent anymore (Effendi, and Alfina, 2014, p. 125). Consequently, this type of service that AirAsia is offering its clients an easy way of reservation for air tickets done online. Thus this has aided in supporting the clients to save much time since it is not a requirement to journey to the airline pawn, to line as well as passageways for the car park space to purchase the ticket at the pawn. Indeed, this is much suitable for all customers both domestic and international to book air tickets online at any time they want by accessing the airline’s webpage. Apart from that, the website of AirAsia also offers a search engine on their website for clients who would like to book their ticket online with the aid of the search engine. All that is needed is to provide their journey terminus, the number of persons traveling both as a one-way trip or arrival trip and then the search engine avails them the result by clicking on the “search button.” Certainly, this process has brought a difference as compared to other airline organizations (Sukri, Abdullah, and Waemustafa, 2014).

Evaluation of Current Electronic Business of AirAsia

Cost saver: AirAsia has primarily majored in ticketless travel and online bookings that enables it to a lower distribution expense (Schallmo, and Williams, 2018). The corporation's target is to strive and maximize profits by providing quality services at reduced costs. AirAsia is doing this by running a quicker about-turn time to enhance the usage of the airplane as well as an efficient crew by offering “no frills” service and through the use of a single airplane type to save on the cost of training. Certainly, this strategy has enabled the organization to cut on its expenses and benefiting its clients with a lesser cost when they journey with them (Taneja, 2016). In accordance with the seller’s perspective, it is cheaper for AirAsia to practice the direct sales model unlike going through the travel agents. Using an e-ticket is cheaper as compared to printing tickets thus it plays a major part in supporting AirAsia collecting greater sales portions over the internet. So that to run at a lower cost AirAsia has opted to avoid using a third-party commission as well as ticket printing expenses (Taneja, 2016). Additionally, AirAsia has focused the sale of its products through the internet which makes its operations to become low (Wang, So, and Sparks, 2017, p. 773). The significance that electronic business brings to AirAsia is the support to decline its flight prices, standby crews, and cockpit, as well as maintenance to the homogenous fleet. From the passengers perspective, there is no need to make long queues and hassle to pick their ticket at the stand any longer but only require to enter the organization’s website to reserve a ticket’.

Reach a broad customer base: As a result of AirAsia allowing its customers to make ticket booking online without going through intermediaries like traveling to agents to book tickets. Since the airline runs on an online service it is possible to reach a broader range of customers at any nation across the world using the internet where a majority of the clients can be in a position to book tickets through online without the hassle of going through third-party (Siachou, and Flouris, 2015, P. 185). Customers can make their ticket booking via the website Airasa.com.

Lessen the cost of marketing and advertising: Currently, AirAsia has launched an exclusive and operational approach to reach a greater number of a purchaser referred to as the Airspace advertising (Taneja, 2016). With the aid of this feature, AirAsia can place any present or advertising in the pages as well as any offer it would like to offer to the masses at no advertisement cost at all. The organization can make advertisement on its website homepage (AirAsia.com) (Elkhani, Soltani, and Jamshidi, 2014, p. 37). Since customers regularly stay on the webpage, it is stress-free to view the promotion and click on the advertisement to know much concerning them.  Consequently, through electronic commerce, AirAsia can decline its advertisement expenses since its clients can connect directly to the organization’s website (El_Rahman, and Soliman, 2016).

AirAsia's E-Commerce Business Operations

Security and privacy issues: before a customer can make an online transaction they are required to provide their personal information like credit card account, address, in order to make a purchase. Unfortunately, some electronic websites face a challenge regarding securing their client's information. Due to such insecurities, it can result in credit card fraud as well as identity theft (Hristoski, Kostoska, Kotevski, and Dimovski, 2017, 1083). Furthermore, it can make individuals feel like conducting an online transaction might comprise their personal information by making it being accessed by attackers. Such perspectives make people prefer purchasing from stores as compared to online buying. In the case of Air, Asia security continue as a major challenge whereby customer’s privacy is not a contract and does not establish any lawful rights which make some clients self-confident about the reliability of their private data with the online disbursement process.

Payment services: In most cases, e-commerce payment is made using a credit card, PayPal, and bank account. In accordance to Taneja (2016), online imbursement modes are novel and international in their view. Therefore complications are likely to arise once it comes to making application to all electronic commerce organizations. Also, some payment modes used for making payment are likely not to exist in certain countries. Thus this makes the e-commerce corporation to scuffle to match up to the standards of dissimilar monies as well as bank accounts. In the case of AirAsia, certain types of American credits cards cannot be used by clients for payment purposes of booking the flight ticket.  Yuan (2015) argue that some American credits cards may not be used and if used they take a long period for one to book the ticket.

Conclusion

Indeed, the advent of information communication technology (ICT) has resulted in the revolution of the whole business platform internationally. The airline industry to be specific as shown by AirAsia success implementation of e-commerce makes it to not only shine in the Asian region but also the entire globe. Certainly, with the fast growth of the technologies in business environment, it has made the airline sector to become highly dependent on technology in conducting all their operational as well as strategic management. That is to mean that electronic commerce is a major business changers in the 21^st century. Accordingly, e-commerce has come out as the most preferred approach of shopping, booking both in the airline, train and vehicle transport sector. Indeed, people across the world are now finding it more enjoyable to purchase products as well as services online because it is one of the easiest and convenient shopping approaches in the present highly growing technology. The goodness associated with e-commerce is that it allows people to purchase services or products at the comfort of their houses sat any time of the day. Consequently, the best thing with purchasing online is that it has a number of options which are fast, convenient and user friendly with the capability to convey money electronically. Therefore, as a result of its convenience, e-commerce saves customers a lot of time in addition to money as they can only search the products and services that they need in an easy way and make purchases online.   Nevertheless, regardless of the numerous benefits associated with e-commerce, it also faces various challenges such as increased incidents of fraud by hackers, customer issues going unnoticed, challenge of lack of verifications measures. Thus, such e-commerce related cases impact negatively to the highly growing business game changes. Therefore, it is high time that companies across the globe seek for a remedy for the threats to e-commerce business.   

AirAsia's Development of E-Commerce Technology

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