How the Internet Transforms Organizations

What is E-Business: How the Internet Transforms Organizations

Abiodun, Raimi

What is E-Business: How the Internet Transforms Organizations Feng Li Blackwell Publishing (2007) 244 pages, Softcover, $39.95

Reviewed by: Raimi Abiodun

University of Phoenix

The book ”What is E-Business, How the Internet Transforms Organizations” by Feng Li, presents basic tenets of information technology and the impact the technology paradigm shift has had on organizational performance and development. The author’s goal was to introduce organizational leaders to the radical changes that are happening in the business environment. This book combined the terrific power of information technology, the Internet surge, and the changing nature of the economy to explain the differences between the old rules of the industrial economy and the emerging new rules of the e-economy. These new rules are making information more accessible, cheaper than ever before, and have called on each individual and organization to regulate behaviors and change the way they trade, think, and compete with each other.

According to Li, the modus operandi in organizations is changing; organizations all around the globe are exploring opportunities and challenges brought about by the Internet and related technologies. Li further explained that the success of any organization in the 21st century will depend on how the organization is exploring and implementing new ways of conducting business through well-developed information technologies and exploitation of the new capabilities available through Internet technology. The new rules, according to Li, call on organizations to develop a community network that is customer-oriented.

The new business environment demands that organizations be adaptable to new rules and structures. For an organization to succeed and fit with the new environment, it has to adjust, adapt, and evolve with the new rules. A negative reaction to market forces may lead the organization to extinction from the market. To survive, organizations must develop new strategies, new business models, and new organizational designs, and be able to manage those disruptive innovations effectively.

Feng Li defined e-business as a “broader concept that is concerned with using the Internet and related technologies to integrate and redesign an organization’s internal activities, processes and external relations, and create new ways of working that are significantly different from, and very often far superior to, what was possible in the past” (p. 1 ). According to Li, there are two fundamental changes that are new in the new business environment. First, the nature of the economy has changed because of the informational elements of the by-products, the services, and the production processes. second is the multiplication of knowledge workers. These knowledge workers have become the most important resource upon which the efficiency and competitiveness of the organization depend.

The new business environment is seen as being different from the old industrial economy. In the industrial economy, according to Li, interaction and collaboration costs are high, while in the new economy of e-business, the rapid development of the Internet and related technologies have contributed to a significant reduction in the cost of interaction and collaboration, with profound implications on the organizational structure and its boundaries.

The new economy has also contributed to the virtual channels that are being used to secure, promote, sell, deliver, and support goods and services in the new markets. This alone makes penetration into the new markets less difficult for business managers and entrepreneurs. Penetration into new markets was difficult and often a waste of time to buy or sell during the industrial economy. The information during this era was often difficult to get: it was expensive, and little information on consumer products was made available to consumers. Now, with the new business environment, the process has been simplified and more accessible to people. Manufacturers are offering more and better choices that are tailored to consumer’s preferences.

Discussing the implications of the e-economy on the organizational performance, the author examined the advantages of web strategy on organizational future. Web strategy, according to Li, can be seen as clusters of companies collaborating around a particular technology. Examples mentioned in the book include the Microsoft Intel platform, Novell PC networking system, as well as Netscape and the Sony PlayStation. The web strategy is divided into economic web, technology web, value web, and the market web. The author stated that the economic web is the most important and most common among corporations; it is a cluster of companies that uses a common architecture to deliver independent elements of an overall value proposition to final consumers.

Because of the enormous implications of web strategy, it demands a new mindset: a new thinking about the structure, strategy, and industry relationships between companies and how they create values for their products. Some of the implications range from risk management, competition, and innovation because of the effects the new e-economy has on information sharing. Information is now distributed differently and far more widely and comprehensively than in industrial economy. The web strategy was attributed to the emergence of virtual organizations. According to Li, the unbundling of the integrated business model in a series of industries, combined with rapid growth of simple and strategic outsourcing, is leading to the emergence of virtual, network organizations.

The most unique sections of the book introduced the readers to some important contributions of e-business and why e-business has helped to change how business is done. These sections focused on why organizations must determine how to maximize the advantages presented by the new economy. Organizations must be able to examine the current process and look for the weaknesses and the opportunities that will lead to a high competitive advantage for the organization. This can be done by reviewing the way businesses at all levels are connected to each other and how different activities are structured, linked, and coordinated. Any internal restructuring has to be designed in such a way that it relates to customer needs and employee satisfaction.

Finally, e-business and the new economy produce a new shape for the organization. This new shape brings with it a new structure that is aimed at improving the performance of the organization by being more efficient, cost-oriented, more flexible, and more responsive to all external changes. The new economy helps reinforce the new language of the new organization and management principle that says bureaucracy is bad but flexibility is good. The old rigid form of working environment can no longer serve the organization’s best interest; the organization needs new models that will bring flexibility and innovation to the organization.

The remainder of the book supported the arguments for new organizational strategy and structure. The urge for a new environment that promotes innovation was also presented in the latter part of the book. This book is easy to read and understand, is informative, and embedded in it are numerous examples on organizational innovations. The book effectively combined some basic theoretical principles with practical realities of today’s business environment. ‘What is EBusiness, How the Internet Transforms Organizations” provides some initial inputs that are needed by organizations that are going through major technological changes or cultural changes.

Reviewed by: Raimi Abiodun

University of Phoenix

Copyright Nova Southeastern University, H. Wayne Huizenga School of Business and Entrepreneurship Jul 2007

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