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University of Ulster Department of International Business MSc International Business E-Business BMG814 2013

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Abstract IT enabled business or E-business adds value to the growth of global market. The growth of the firms and the better services for the customers both have improved due to the digitisation of the business. The firms management systems have been improved due to the internet enabled business. Smartphone is a new generation phone. This is an innovative device with new features that was different from typical mobile phones in the market. The business of the smart phone was started with digitisation. The innovation in the resources of typical mobile phone to Smartphone added value to the customers as well as for the firms. In the report the supply chain of Smartphone has been presented in the first part along with the advantages of information sharing between the companies. In the second part of the report value creation by Porters value chain and importantly by resource-based view has been critically analysed. In the last part of the report the impacts of online price comparison sited have been discussed. The assessment is done to identify the supply chain of the Smartphone and its value creation and overall on the advantages that the firms are getting due to E-business.

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Table of contents: Contents 1. Introduction 2.1. Supply Chain of Smartphones 2.2. Supply chain management: 2.3 Information sharing between all companies in supply chain 3. Creating value 3.1 Porters value chain 3.1.1 Primary activities 3.1.2 Support Activities 3.2 Resource-based view 4.1 Impacts of online price comparison sites for Smartphones 4.2. Price comparison sites for Smartphones 5. Conclusion 6. References 7. Journals Appendix Page number 4 5 8 9 9 9 10 10 13 14 15 17 18 19 20

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1. Introduction: According to IBM, E-business is the transformation of the business process by using the internet technology and overall digitisation of the business for the betterment of firms and customers. IBM is one of the first suppliers in 1997 who used this term to promote their business. (E-usiness 2011) In this era of internet, E-business is one of the popular ways of doing business. In this global marketplace, E-business has introduced new opportunities for the large and small organization to compete. The electronic communication has introduced the new approaches of transmission and transformation of information from the company to the customers for their competitive advantages. (Dave 2002) For example, the E-business information combined with the internet technology has three characteristics that have great impacts on the marketplace. These are: 1. Reach: The potential number of customers with which a business can interact within the marketplace. 2. Richness: Information of the products, prices and availability. 3. Affiliation: Effectiveness of links with partners. The business with richest links gains larger reach and influence. (Evan and Wurster 1997). That is how eBay, Amazon, Google and Yahoo! have successfully made partnerships with other companies to provide diverse information services. Smartphone is a new generation mobile phone with an operating system and internet facility. This is the multi-use device with lots of user-friendly apps and functionality like digital camera/video, music player and GPS. The exceptionality of Smartphone from the typical mobile phone is the wide touch screens and mobile-optimized internet browsing. Smartphone has added value to the mobile user. In the era of internet, Smartphone is a new addition to the digitalised life of global world. Smartphone has become very popular all over the world since 2007 when Steve Jobs launched Apple iPhone and pioneered the Smartphone business. UK is no exception in the Smartphones use. In researches done in January 2012 by eDigitalResearch and the Interactive Media in Retail Group (IMRG), it was found that 6 of 10 UK residents use Smartphone. So it is just half of the
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total population of UK uses Smartphone in 2013. In the same research it was found that half of the UK Smartphone users shop via their Smartphone and more than one-third of the total users purchased via their device in 2013. So in E-business Smartphone has an important role as well as in its business the IT based technology has helped in the growth. (Boyle C 2013)

2.1. Supply Chain of Smartphone: A supply chain is a global network of organizations that cooperate to improve the flows of material and information between suppliers and customers at the lowest cost and the highest speed. The objective of a supply chain is customer satisfact ion. (Govel and Proth 2002) The partners cooperate in the supply chain. So this is a unique entity with unique strategy. Smartphone is a new generation mobile phone marketed with new and attractive features other than the typical mobile phones. Apple Inc. s iPhone is the leader of this Smartphone market that was introduced in 2007. Following the iPhone other companies like Samsung, Motorola, HTC, Sony, Blackberry also have brought Smartphones on the market. Now due to the strong supply chain of the Smartphones, they have gained the market at a very short time. They have retail shops and online store selling the Smartphones all over the world. The supply chain includes: Materials flows Information flows Financial flows

Materials flows: Smartphone is an integration of different hardware and software. So for the manufacture of the Smartphone, the company needs supply of different materials from different suppliers. In the image the material flows of a product such as Smartphone has been shown.

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Figure 1: Supply flow of Smartphone [Image] (Corporate social responsibility: Supply chain 2013) In the figure, from the tier 2 and tier 3 suppliers different materials, parts and components are ordered to manufacture and supply. These all generally goes to a manufacturer where all the materials are manufactures. Then this goes for storage, inventory control, pick and pack services and lastly shipping to the distributers. The product is then sent to the consumer the retailer and to the markets and also to online shops for the consumers.

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For example, the material flows in the supply chain of Apple iPhone are given below:

Figure 2: Supply chain of iPhone [Image] (The Apple iPhone Supply Chain 2007) So, any disruption of material flow from any of the suppliers into Apple Shenzhen, China facility will cause slow down or halt of production.

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Information flows: According to the demand from the markets and consumers the Smartphone firms places orders to the suppliers. The demand and requirements may change time to time; so the firm keep a flow of information with the orders, shipments, returns and schedules. By the information flows, the consumer of Smartphones can get their required phones at time to time. Financial flows: The transfers of money to the suppliers or distributer or retailers or consumers of Smartphone are included in the financial flows. The most popular payment is e-payment via IT based technology. For example, Apple iPhone does and accepts payment by following methods: Credit cards Debit cards Direct deposit Cheque or money order PayPal and Apple financial services (Apple 2013)

2.2. Supply chain management: Supply chain management is the upstream and downstream relationships with suppliers and customers that deliver value to the customers at less cost. (Christoper, M. 2005) The supply chain brings product to the market with the alignment of the partners. The digitally enabled supply chain helps to reduce costs, time and creates value to the manufacturer to the end customers. The proper supply chain management also enhances the quality of the services and product availability and appropriate planning and information sharing between the companies enhances the performance of the service. In case of Smartphone business, the supply chain management is very important as the market of supply chain in UK is vast. There are more than 50% of the phone customers uses the

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Smartphone. The popularity of iPhone increased due to the proper supply chain management in the business. (Boyle C 2013) 2.3 Information sharing between all companies in supply chain: Information sharing between all the companies helps to reduce costs and provide better service to the end-customers. Internet enabled supply chain of Smartphone has increased the service quality to the end customers. For example, the information sharing between suppliers have reduced 15-20% costs in memory and screens that have cut off 50% cost of iPhone. According to the requirement and complain of the consumers Apple improves their services of iPhone. Apple iPhone has their own surveillance teams to identify the customer needs. Proper information sharing helped Apple iPhone to manufacture the innovative mobile at lower costs. Taking the parts from 6 Taiwan suppliers has reduced the costs.

3. Creating value to Smartphones: 3.1 Porters value chain: Creating value chain of a firm helps to identify its key activity and help to have potential competitive advantage for the firm. The value chain framework is an interdependent system or network of different activities that are connected by linkage for better services (Porter 1990). In the value chain the linkages can be a vital source of competitive advantage to the firm when the systems or networks are managed carefully (Pathania-Jain, 2001). The value chain analysis is mainly the linkages of two areas. The first one is the links in the value of the firms activities with its functional parts. The contribution of each functional part adds value to the overall business (Lynch, 2003). The value chain analysis is divided into two parts: Primary activities Support activities

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Figure 3: Value chain analysis for Smartphone [Image] (Concept of value chain approaches 2011)

Smartphones have been designed by the firms through their own resources and funding. Smartphones are manufactured with the suppliers and then are marketed.

3.1.1 Primary activities: 1. Inbound Logistics: The raw materials from the suppliers go to the manufactures where separated parts of Smartphones are produced. 2. Operations: Then all the parts of Smartphones are assembled in a factory. For example, all the parts of iPhone are assembled in Foxconns Shenzhen, China. 3. Outbound Logistics: The finished goods are then sent to the wholesalers, retailers or the final consumer of Smartphone.
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4. Marketing and Sales: Smartphone has identified its target customers for marketing. Due to its value and power of the innovation the Smartphone is getting the competitive advantages. For example, Samsung Smartphones have maximum market all over the world that is about 22%. (Alex 2007) A table of target segment and customer need for Smartphone is given below:

5. Service: The Smartphones have service centres for iPhone servicing all over the world that helps with troubleshooting, tutorials, service, and information for new users. (Apple 2013) And also repairs and replaces for the customers.

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3.1.2 Support Activities

1. Procurement Using IT-based technology, Smartphone purchases all the goods, materials and parts from the suppliers at low costs. 2. Technology Development For example, Apple has competitive advantage as they produce both the software and hardware. Their operating system (OS) is much stable and reliable than Windows; so it has strong brand power. Apple iPhone has more than 10,000 Apps that has increased their popularity among the customers. 3. Human Resource Management (HRM) For the production and marketing Samsung Smartphone, the company has five divisions in Human Resource Management. And it has four divisions for marketing, distribution and post sale product support. And it has a number of administrative divisions for the HR activities. (Khurana A 2011) 4. Firm Infrastructure The infrastructure of Samsung Smartphone business is controlled and managed by the Samsung Companys strategic planning. The planning to do business with other companies is also included in this infrastructure including the accounting department.

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3.2 Resource-based view: Smartphone is a revolutionary mobile of new generation with unique consumer friendly features. Apple iphone is the pioneer of the Smartphone market. The resource-based view Smartphones are discussed below with an appropriate example of iPhone. Apple iPhone is an integration of three devices: wide and touch screen control of iPod, an innovative mobile phone and internet enabled device. Apple took advantages of their existing products and created value to the innovative mobile phone by resource-based view. The device became outstanding in 2007 by Steves Jobs with its wide screen and touch control. The design of the phone was separated from other mobile manufacturers in some respects: it had no main button, no key board like typical mobile phones but only a big screen. And the device was finger touch enabled. And this innovative mobile created from the existing resources of Apple was called Smartphone. This product added value to the end customers as well as new opportunities to the mobile firms. Apple iPhone got the competitive advantage by becoming the leader of the Smartphone market. Apple iPhone enabled the firm to sustain the competitive advantage with its own software program. The designs of Apple products have similarities in the software as well as external appearance. Apples own software for its iPhone hardware has the capability that no other mobile possesses. This resource and capability has brought competitive advantages for Apple iPhone. (Lenguyen G A 2011) So the Apple iPhone has all the VRIN characteristics: Valuable: As Apple iPhone is an innovative mobile device which is the integration of three resources of Apple s existing resources that had brought in the competitive advantages. Rare: Compared to the existing mobile phones in the market iPhone features were different that attracted the customers. Inimitable: The unique software of Apple for the iPhone hardware cannot be controlled by any other competitors in the market. This capability has brought it competitive advantage in the market.

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Non-substitutable:

The features of iPhone are unique and the software cannot be

substituted by any other software in the market such as Nokia mobile operating system (MeeGo), RIM with Blackberry, Android of Samsung and HTC.

4.1 Impacts of online price comparison sites for Smartphones: There are a number of price comparison sites on online that have enabled the customers to compare with other Smartphones as well as with the old typical mobile phones. Smartphone is an innovative mobile phone that is considered as the revolutionary outbreak of IT based technology. The unique features of Smartphones of different companies have attracted the customers since 2007 when Apple launched iPhone June. The features of Smartphones had added extra costs to mobile phones comparing to old phones in the market. The online comparison sites have added competitive advantages to Smartphones in respect to its features on the other hand disadvantages in respect to its price. The customers can compare prices between other Smartphones before buying them easily. But the features of Smartphones sometimes become worth buying even with higher price. Different company and distributers add different prices to the phones. This also gives advantages to the customers while comparing the Smartphones prices.

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4.2. Price comparison sites for Apple iPhone There are number of price comparison sites online for comparing price of Smartphones in UK such as: 1. moneysupermarket.com 2. mobilechecker.co.uk 3. uswitch.com A number of examples are given below: 1. moneysupermarket.com

Figure 4: Price comparison of iPhone 5 [Image] (Compare iPhone 5 16GB black Deals 2013)

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2. uswitch.com

Figure 5: Price comparison of Samsung Galaxy S4 [Image] ( Samsung Galaxy S4 16GB deals 2013)

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5. Conclusion: The report is on the impacts of E-business on the Smartphone business. The supply chain in the E-business is strong factor that can add competitive advantage to the firms. IT enabled supply chain helps in proper management and reducing costs of the product. The customers can also get advantages from the E-business as the firms are concerned about the price and quality awareness of the customers. Porters value chain and resource-based view adds value to the product by creating a proper management and responsiveness. The end-customers are mostly benefited from the digitalised supply chain as the online comparison sites gives them advantages to choose their desire product at lowest price. So the E-business on the other hand helps in the growth of firms in the global market.

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References: Abilla P. 2007, The Apple iPhone Supply Chain, Retrieved on 14 July, 2013 from http://www.shmula.com/the-apple-iphone-supply-chain/304/ Alex 2007, iPhone marketing plan, Retrieved on 14 July, 2013 from http://www.iphoners.com/threads/iphone-marketing-plan.141/ Apple 2013, Support, Retrieved on 15 July, 2013 from www.apple.com/support/iphone/ Apple 2013, Payment and Security, Retrieved on 18 July, 2013 http://store.apple.com/au/help/payments Boyle C 2013, Retrieved on 17 January, 2013 from http://www.emarketer.com/Article/UKSmartphones-Become-Rule-Not-Exception/1009903 Compare iPhone 5 16GB black Deals [Image] 2013, Retrieved on 16 January, 2013 from http://www.moneysupermarket.com/mobile-phones/brands/apple/iphone-5-16gb-black/ Concept of value chain approaches [Image] 2011, Retrieved on 17 January, 2013 from http://www.scribd.com/doc/45779295/Value-Chain Corporate social responsibility: Supply chain [Image] 2013, Retrieved on 17 January, 2013 from corporate.tomtom.com/ethics.cfm?csr=11943 Dave, C. 2002, E-Business and E-Commerce Management: Strategy, Implementation and Practice, 7th edn, Pearson Education Limited, Edinburgh Gate E-business 2011, Retrieved on 17 January, 2013 www.ibm.com/e-business Govil M. & Proth J. M. 2002, Supply Chain Design and Management: Strategic and Tactical Perspectives Elsevier, Portland, OR Khurana A 2011, Human Resource Management of Apple.inc, Retrieved on 15 July, 2013 from http://www.managementparadise.com/forums/human-resources-management-h-r/213747human-resource-management-apple-inc.html Lenguyen G A 2011, Apple, iPhone a look from a resource-based view, Retrieved on 14 July,

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2013

from

http://qa-no9blue.blogspot.com/2010/10/apple-iphone-look-from-resource-

based.html Lynch, R. 2003, Corporate Strategy, 3rd edn, Financial Times, Prentice Hall Porter, M E 1985, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York Porter, M E 1990, The competitive advantage of nations, Free Press, New York. Samsung Galaxy S4 16GB deals [Image] 2013, Retrieved on 16 July, 2013 from http://www.moneysupermarket.com/mobile-phones/brands/apple/iphone-5-16gb-black/ The Apple iPhone Supply Chain [Image] 2007, Retrieved on 14 July, 2013 from http://www.shmula.com/the-apple-iphone-supply-chain/304/

Journals: Evans P. B. & Wurster T. S. 1997, Strategy and the new economics of information, Harvard Business Review Journal, Vol. 75(5), pp. 70-82 Pathania-Jain, G. 2001, Global parents, local partners: A value-chain analysis of collaborative strategies of media firms in India , Journal of Media Economics, Vol. 14, No. 3, pp. 169187.

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Appendix: Paragraph 1:

Figure 1: UK Smartphone owners, 2010-1013

Paragraph 1:

Figure 2: UK mobile buyers, 2010-1013 (% of Smartphone owners)

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Paragraph 2.1: Top five Smartphone sellers in the markets are: Samsung Apple Sony Huawei ZTE

Paragraph 2.1:

Figure 3: Top five Smartphone seller of UK

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Paragraph 2.1:

Figure 4: World wide mobile phone sales by different companies

Paragraph 2.1:

Figure 5: World wide mobile phone sales to end users by different companies

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Paragraph 3.1:

Figure 6: Extended services of Smartphones

Paragraph 3.2: SWOT analysis of Smartphones: Strengths Reputation for value for range of products Has grown substantially over recent years Resistance to computer viruses Combined functions in one device Cool device designs/very sleek Different applications that are user friendly Weaknesses Choice of distribution to only AT&T AT&T phone assistance is not great Very expensive, does not offer lower priced models

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Opportunities Expand to other companies to gain customers Allow a 1 year contract Future hardware upgrades

Threats Target for competition Not affordable due to current market

Paragraph 3.2:

Figure 7: The comparison between the old mobile phone and Smartphones in the market

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Paragraph 4.2:

Figure 8: Top 8 deals of Smartphones of UK, 2013

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