留学生dissertation写作：E-commerce Opportunities for the Chin

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11-22, 2010

Dissertation

E-commerce Opportunities for the Chinese Enterprises in Telecommunications Industry

Name: Shi Maoqing

Student Nr: 000310763

Date: November 2009

E-Mail: [email protected]

University: Hanze Hogeschool Groningen

Institute: MBA in IB&M

Supervisor: Bernoud Jonker

Abstract

The rapid development of internet and impact of the new economy mode make the world get into the e-commerce age. The new business environment brings profound changes to the mode of enterprises’ management. It increases the profit of enterprise. At the same time it makes the competition more fiercely than before. Customers are important resource by which e-commerce enterprises make profit and get competitive advantages. The market competition changes to the quick respond to the market and the CRM. Customer-centered e-commerce becomes new development trend of enterprise operation pattern.

Yuanquan Company is a telecommunication equipment manufacturing enterprise. The rapid development of Yuanquan Company benefits from the development of the industry. But the factors of market competition of the new comers and price rise in raw materials cause the lasting rise of production costs and gradual drop of enterprise’s profitability. For changing the company’s management state, the company decides to develop e-commerce referring to the competitors in the same industry. The e-commerce can decrease the purchase and marketing costs, provide high quality service to customers, establish company brand, introduce new products and promote the company’s core competence to increase the profit of Yuanquan Company.

In this thesis Yuanquan Company is taken as the background. According to introducing e-commerce countermeasure theory and traditional manufacture enterprise e-commerce application mode, the marketing environment of telecommunication equipment manufacturing industry and the implementation of e-commerce in the same industry are analyzed. Combing with the company’s management state, the Yuanquan Company’s countermeasures of e-commerce is put forward to improve Yuanquan Company’s management state. The problems and influence of implementation e-commerce are analyzed. The countermeasures of these problems are put forward.

At last the A company’s countermeasures of management, business, personnel, information system, marketing, customer services and network security are introduced. The implementation suggestions of decision are put forward. The author strives to combine theory with practice. Through verifying the feasibility of the theory by practice, the author hope that the implementation enterprise e-commerce scheme is discussed in theory and practice and e-commerce are used better in enterprises.#p#分页标题#e#

Key Words: E-Commerce, Network Purchasing, Countermeasure

Acknowledgement

Many people helped me during this research. Especially thanks for the company manager Mr. Chunhua for his time and patient with me. He has assisted me greatly and provided me with all the necessary information that made this report possible.

Next Mr. Jonke Bernoud, My supervisor at the “Hanze Hogeschool Groningen” for his comments on my previous reports and guiding me during this research. Again thanks for his practical advice on approaching all the report’s problems I have encountered and explaining patiently with me. Furthermore I would like to thank the students of MBA IB&M who have shared their thoughts with me.

And last but not least, without wanting to leave anyone aside I would like to thank all the persons that helped or tried to assist us during this assignment. I appreciated and enjoyed working on this assignment and I am certain that the valuable experience and knowledge gained will be of help in the future.

Table of Contents

Acknowledgement…………………………………………………………………....3

Chapter 1 Introduction…………………………………………………………….…6

Chapter 2: Literature review of theories of e-commerce…………………………....14

2.1 The review of E-Commerce…………………………………………………......14

2.2 The definition of e-commerce models………………………………………......17

2.3 The meaning and features of e-commerce countermeasures………………….....18

2.4 E-commerce and customer…………………………………………………........21

Chapter 3 Research set-up…………………………………………………………..23

3.1 Problem statement………………………………………………………………23

3.2Research objectives……………………………………………………………...23#p#分页标题#e#

3.3Research scope…………………………………………………………………..24

3.4. Research questions…………………………………………………………......24

3.5 Explanation type of research…………………………………………………….26

3.6 Introduction of literature……………………………………………………...…27

3.7 Introduction of data sources…………………………………………………......29

3.8 Introduction of models/theories……………………………………………….....29

3.9 Anticipated problems…………………………………………………………….32

Chapter 4: Descriptive chapter……………………………………………………....33

4.1 The macro environment……………………………………………………….....33

4.2 5 Forces Industry Analysis of the telecom equipment industry in the world and China…………...42

4.3 Value Net analysis of Yuanquan Co Ltd…………………………………………49

Chapter 5 the analysis………………………………………………………………...56

5.1 The SWOT analysis………………………………………………………………56

5.2 SWOT confrontation analysis of Yuanquan Co Ltd…………………………….61

5.3The strategies to take…………………………………………………………......63

Chapter 6 the design………………………………………………………………….69#p#分页标题#e#

6.1 The basic preconditions for the new e-commerce system………………………..69

6.2 Value Net analysis of the e-commerce model of Yuanquan Co Ltd…………….70

6.3 The cost of the e-commerce system……………………………………………...82

Chapter 7 Advice on the Implementation………………………………………….....83

7.1 Gaps…………………………………………………………………………...….83

7.2 Advice on the plan………………………………………………………………..84

7.3 The advice on the implementation……………………………………………….85

Chapter 8 Conclusion……………………………………………………………..….86

Biography and References………………………………………………………......88

Appendix1……………………………………………………………………………95

Appendix2……………………………………………………………………………96

Appendix3……………………………………………………………………………97

Chapter 1 Introduction

1.1. The general context

Relying on the comparative advantages of labor force and land, Chinese enterprises have create a "Made in China" legend, while at the same time, the waste of environmental resources also has left a series of problems, for instance, the environmental pollution. With the advent of the Internet, e-commerce has gradually become the main concern of scholars and entrepreneurs because its provision of support through the information network, unique virtualization, openness, low-cost, and high - efficiency, and all these features enrich people’s life, change the traditional way of business transactions and provide a competitive weapon for enterprises to gain advantages in business. Hackbarth and Kettinger (2000) , regard e-commerce as an effective and efficient way of doing business and trade. Chinese scholars also point out that e-commerce can be the major influencing factors to obtain business enterprise's core competitiveness in the 21st century.#p#分页标题#e#

At the beginning, the enterprises regarded e-commerce as informationization and establishment of websites, but with the development of e-commerce, they realize that the e-commerce model is not the same as the traditional business model, but influences all aspects of the management. For instance, e-commerce and information technology facilitates the information exchange within the enterprise so that the management structure can get flatter than before, for example, different management departments can get direct access to the basic sales information easily and make analysis to facilitate their own decisions. And e-commerce proposed new requirements for the sales strategy, businesses will have to directly face the consumers who have dominance in the transaction while the intermediary's role will be weakened, and at the same time, the business has to greet and satisfy the customers. Besides, e-commerce calls for its better performance in the sharing of information. As e-commerce, the resource management system, customer management systems, and information systems have shared parts, all these systems should share an interactive platform to cooperate in the logistics, capital and information flow to achieve the effective implementation and communication. But at present stage, the application of the enterprises is more as a separate operation of different systems, resulting in the retarded reaction to the market change, ineffective allocation of resources and low competition in the process of conducting e-commerce.

So it is necessary to make more researches and attempts to make use of e-commerce as not only a technical weapon but also a means of management to promote the enterprise’s performance. This dissertation aims to do a case study with a company of Chinese telecom equipment industry to attest the possibility of integrating e-commerce with different aspects of its management.

1.1.2 China’s E-commerce Development

Compared with the United States, China's enterprises pay more attention to the application of electronic technology in the e-commerce but less to the impact of e-commerce on the business and management model. Nowadays e-commerce helps form the buyer's market, in which market-oriented and demand-centric model of e-commerce will become the main trend, and this market requires better management of the products and the customers and corresponding policies to guarantee the implementation of e-commerce.

China's e-commerce began in the 90's at the end of the 20th century, in recent years, it is gradually moving toward the road of rapid development. If we say that the U.S. e-commerce is "business-driven", then e-commerce in China is more "technology-pull" , which can be regarded as the biggest difference between the e-commerce in the United States and China. (Rauseo, 2001) In the United States, the e-commerce practice emerged earlier than the concept of e-commerce, as the business needs promoted the network and e-commerce technology, and contributed to the formation of the concept of e-commerce. When the Internet era came, the United States has already developed the basis for e-commerce. In China, the concept of e-commerce ran before the business practice based on e-commerce. The pushers were IBM and other IT vendors, who built up the network and e-commerce technology to pull the business needs.#p#分页标题#e#

E-commerce in China is broadly divided into three stages. In 1997 and 1998, China's main e-commerce body is composed of some IT vendors and the media, which in various ways stimulated and guided people and enterprises for e-commerce awareness, interest and needs. After this stage, in 1999 and 2000, the main feature of the e-commerce in this period was that e- commerce companies, which provided service through their websites with the support from the venture capital, became the main body of the Chinese e-commerce. As E-business applications are deepening, with the capital market bubble burst, enterprises, especially large-scale traditional enterprises have begun to enter the e-commerce domain. And since 2001, e-commerce in China has entered the third phase; e-commerce of the enterprise is the main part according to The Report of China’s E-commerce Development of 2007.

As we all know, the United States is one of the best the e-business applicators, and its e-commerce application is built on a more advanced and developed the e-commerce basis, which has the effective integration and configuration of information resources. In the United States, the e-commerce has a sound business ERP system and information system; enterprises also have the shared information platform of superhighway to conduct e-commerce, which can guarantee a highly effective management of the logistics, capital flow and information flow. In the development course of e-commerce in the United States in these years, the enterprises have formed a suitable e-commerce management models to conduct the treasury operations, develop advanced security network and means of payment. If the e-commerce in the United States is business based, then the Chinese e-commerce is technology driven. E-commerce is not a simple combination of technical and business capacity but the effective integration of the real business and e-commerce. Looking at the development of business as a whole, information technology has been accompanied each progress of business activities, information technology and business model evolve and continuingly integrate with each other. Therefore, e-commerce is no longer that business pluses information technology but a new business model matched and integrated with e-commerce .

1.1.2 E-commerce in traditional manufacturing enterprises

As to traditional manufacturing enterprises, the applications of e-commerce should be in the fields of electronic procurement, zero-base, co-design and production, online marketing, customer relationship management and other aspects.

E-commerce can bring a competitive advantage for businesses, more precisely, it can bring cost advantages for businesses. Since its birth, E-commerce involves a variety of economic activities of enterprises due to its unique virtualization, openness, low-cost, and high – efficiency characteristics, which benefit the enterprises with lower cost. In the procurement process, e-commerce uses the network to complete the transmission of information about all kinds of red tape to reduce labor, printing and mailing cost. And as well, since the internet provides 24 hours’ service, the suppliers can visit the site to determine the raw materials required by the daily production in time to achieve non-stock so as to reduce the cost in stock. In addition, enterprises establish their own commercial website in the Internet other than spend a lot of money on advertising publicity, marketing staff sent around to promote their products, a large number of research staff going around to collect data.#p#分页标题#e#

It has long-term strategic significance to promote the sustained and healthy development of China's economy through e-commerce to upgrade and improve Chinese traditional enterprises. In our modern society, global economy and competitions in the market are becoming increasingly fierce; the use of E-business technologies could achieve cost savings and resources and improve the business market reaction speed and enterprise management level. It is important for improving the overall productivity level and international competitiveness of China's enterprises. Even in the whole society, E-commerce which is based on the Internet has great concern by enterprises and the government.

1.2 Introduction of Telecommunications equipment industry

1.2.1 International communications equipment manufacturing industry

Global communications equipment industry reached a peak in 2000. Due to the the global economic recession and network bubble in 2001, the growth has slowed down and reached a lowest point in 2002, but then it maintained the rapid growth, especially in 2003 . Later, fast-growing wireless communications industry, especially for global action, and strong market demand have driven wireless communications equipment industry to a fast developing phase.

In the above-mentioned conditions, in order to get closer to the world's major telecommunication countries and customers to shorten the transportation costs, every continent has seen many important production bases, for example, China mainland, Taiwan and Malaysia in Asia , Mexico in the North American market, and Hungary, the Czech Republic, Poland, Romania in Western European market. Sometimes the companies have set up their own factories, and some companies are setting up manufacturing plants .

In addition to the good production environment, which attracts the multi-national enterprises into the local production base, the emerging and increasing national market in developing countries is also an important factor to attract companies. At this stage, many developed countries have already suffered from market saturation, and emerging countries is important to expand new markets. Among them, pushed by its rapid economic development and its huge domestic market, China has become the world's second-largest national communications equipment output.

But chance is always accompanied by challenge. From 2004 to 2007, China's raw materials prices are rising as the prices of semi-guided body, steel, plastic, electricity soared, resulting in an overall rise in the cost of the telecommunications industry; and fierce market competition makes the industry communication equipment run down, as a result, the main business revenue growth slow, enterprises must find a solution to transform their operational disadvantage.

1.3 Introduction of the Yuanquan Co Ltd

The company chosen in this research is the Yuanquan Co Ltd and is founded in 2003 engaged in the development sales of application software and network communication product, professional website building, and provision of a range of telecommunications value-added services, cooperating with China Telecom, ASUS, GIGABYTE, MSI, soft-cast International, Inc. and so on. Yuanquan’s products are mainly network switches, routers and other communications equipment. In addition to the sales of professional equipment, the YuanquanCo Ltd also provides professional services and solutions to various sectors of the IT and internal communications for other companies. #p#分页标题#e#

Since its establishment in 2003, Yuanquan Company has operated mainly in the production and sales of switches, routers, network communications equipment. In 2003, its general sales was about RMB 1.02 million, the general cost was RMB 0.88 million; and in 2008, its sales is about RMB2.47million, while its cost is RMB2.22million. With the development of the industry, more and more companies enter the industry; the company is faced with competition from rivals on the market. As the communication equipment industry is characteristic of innovation, cost control, economies of scale, customer service, etc. to establish superiority.

1.4 Introduction of problem

Yuanquan Company, a Chinese company of telecom industry, faces a series of management problems concerning the customer management, new products promotion, and information management etc, besides bearing heavy competition from other competitors. As the above literature review and the investigation of the application of e-commerce in the world show, the advantages and function of e-commerce in the management process of some enterprises are possible to achieve, such as in business processes, staffing, information integration, marketing and customer service areas, despite there is cost and risk of establishing the e-commerce. This is the basis and ground for the possibility to solve the problems faced by Yuanquan Company. In order to test the possibility of e-commerce, the dissertation, firstly, the dissertation looks in detail the company’s present problems; secondly, the dissertation matches the function of e-commerce and problems faced by Yuanquan Company; and then to make clear what needs to be done to bring the required improvements and what changes must be made. The dissertation is going to test the hypothesis: e-business is the solution. The main research question is what problems Yuanquan Company is facing with the possible solution provided by the implementation of e-business and what changes must be made to realise this implementation.

1.5 Thesis reader and chapter outline

The dissertation is composed of 7 chapters. Chapter 1 is the introduction of the research context and problems. And chapter 2 is about the organization of the dissertation and methodology. Chapter3 is the literature review, including the definition of E-business and its impact. Chapter 4 is about the survey and analysis of the YuanquanCo Ltd ’s current conditions. Chapter 5 attempts to establish a new mode of E-commerce for the Yuanquan Co Ltd. Chapter 6 gives out advice on the implementation of the new mode. Chapter 7 talks about the reflection on methodology and personal learning.

Chapter 2: Literature review of theories of e-commerce

2.0 Introduction of this chapter

This chapter focuses on the theories #p#分页标题#e#of e-commerce, e-commerce models and e-commerce countermeasures necessary and related to the analysis of the use of e-commerce strategies for Yuanquan Co Ltd. Firstly, the chapter talks about the definition and features of e-commerce as the base for the further review of e-commerce models. Secondly, the e-commerce model is defined and two representative e-commerce models are mentioned for the further analytical purposes. And thirdly, the definition of e-commerce countermeasure, its meaning and features are reviewed. In the review of e-commerce countermeasure, the chapter sums up three basic requirements of e-commerce countermeasure for traditional enterprises.

2.1 The review of E-Commerce

2.1.1 The definition of e-commerce

At present, there is no clear and authoritative definition for E-commerce. From its literal meaning in English, E-commerce is to make use of a wide range of advanced electronic technology to engage in commercial activities. The electronic technology mainly refers to the computer network environment which is connected through a certain protocol taking use of computer hardware, software and network infrastructure. A variety of organizations, governments, companies, academic institutions ... ... are all based on their understanding of E-commerce and the need to define it. There are a number of which are more comprehensive and representative.

Zwass(1996) regards all these activities through the internet are e-commerce, such as the share of business information, the maintenance of business relationship, business transactions, and all the other activities by using the technological activities.

Kalakotah and Whinston(1997) have defined e-commerce in 4 aspects:

1) The definition from the telecommunication is e-commerce is to distribute the information, products, service and payment through the calls, computer network, and e-mails.

2)The definition from the business process point of view: E-commerce is the automation of the business transaction and production processes；3)The definition from the service point of view：e-commerce is a tool to improve the products and service at a lower cost.4)The definition from the aspect of online :e-commerce provides the internet and other online services, purchases, and sales.

Rayport&Jaworski(2001) defines e-commerce as the exchange between the different economic parties, including the activities inside and outside of the organizations based on the electronic exchange. [7]

This dissertation has the research from the innovation of economic system. Each of the progress of information technology will promote the development of E-business models and operational mechanism changes.#p#分页标题#e#

In short, from a macroeconomic viewpoint, e-commerce is another revolution in computer networks: through electronic means, it is possible to make the establishment of a new economic order, which involves not only the electronic technology, and business transactions of the economic bodies, but also the areas such as finance, taxation, education and other aspects of society; from the micro perspective, e-commerce refers to the ability of various entities , such as production enterprises, commercial enterprises, financial institutions, government agencies and individual consumers, to conduct various business activities by applying the internet and advanced digital technology to the commercial and trade activities, in which

two points to be emphasized: point one is that the activities have business background, and the other is that the activities involve network and digital.

2.1.2The features of e-commerce

E-commerce features can be summed up as follows: commerciality, service, continuity, scalability, security, and coordination.

 Commerciality The most basic characteristic of e-commerce for business is to provide services, means and opportunity for buy and sell. It offers a powerful and comprehensive trading and feedback platform through Internet for suppliers, vendors and customers.

 Service In the e-commerce environment, customers are no longer subjected to geographical constraints as before, they no longer simply focus on finding the lowest prices but also the best quality. Thus, the quality of service becomes the key in business activities.

 Integration E-commerce is an emerging product, which uses a large number of new technologies, but it does not mean that the emergence of new technologies must lead to the death of the old equipment. The real commercial value of the Internet is to coordinate the old and new technology so that it enables business to increase effective use of their available resources and technology to effectively carry out its tasks .

 E-commerce integration also means integrity and unity in transaction process, as it can regulate the transaction of workflow and make the manual and electrical integration of information processing as an indivisible whole. Besides, e-commerce can improve the use of human and material resources to improve the rigor of the running system.

 Coordination Business activity is a coordinated process that requires the employees and customers, producers, suppliers and business partners to coordinate to improve efficiency. Therefore, many organizations provide an interactive protocol. And on the basis of this agreement, Yuanquan Co Ltd may, if the implementation of e-business strategy is carried out, it is necessary to look squarely at the enterprise and beyond the coordination of the various factors of production, and be market-oriented, emphasize customer service ,management, the integration of various systems to establish a perfect and effective management system to achieve the operation and management of enterprise objectives.#p#分页标题#e#

2.2 The definition of e-commerce models

An e-business model is the mechanism to construct the business’s operation process in order to reflect the creation of corporate value, based on the understanding of the operation of the electronic virtual market e-commerce. When people talk about e-commerce, they usually refer, to a large extent, the e-commerce model because the operation of e-commerce in an enterprise depends on the specific e-commerce model it chooses. In different angles, e-commerce models usually can be divided into different groups: business to business (B2B), business to consumer (B2C), consumer - Consumer (C2C), business to the government (B2G) and so on.

2.2.1 B2B e-commerce model

B2B (business to business) e-commerce: B2B refers that a business conducts product, service and information exchange with another business via the Internet. B2B e-commerce is a category based on the subjects of the business transaction and exchange. This form of e-commerce transactions between enterprises not only reduces the cost of the transactional workflow and management, but also provides the basis for the strategic cooperation between the enterprises.

2.2.2 ERP e-commerce model

ERP (Enterprise Resource Planning): enterprise resource planning model is a mechanism for an enterprise to effectively share and use its resources .ERP optimizes information systems to fully organize an effective communication, so that its resources in purchasing, storage, production, marketing, human resources, financial, material and other aspects can be reasonably confabulated and used , in order to achieve business efficiency. In essence, ERP is a set of information system and managemental tool. In the design of the ERP, it can be integrated with certain management ideas to help enterprises improve management level. [13]

2.3 The meaning and features of e-commerce countermeasures

In the course of the continuous development of e-commerce, people start to pay attention to solve a problem in e-commerce, or the demand of e-commerce to make a set of practices and strategies. It is natural to use the term "countermeasures" to refer to the approaches and strategies in commercial area.

A representative view is that e-commerce countermeasures have broad and narrow sense. Broadly speaking, any approaches that can contribute to the achievement of e-commerce can be subsumed under the scope of e-commerce countermeasures, such as the virtual master machine, domain name registration business etc. While in a narrower sense, e-commerce countermeasures focuses around a series of transactions to provide decision-making, such as building e-commerce site, business process reengineering, management reform. E-commerce countermeasures must concentrate on the whole process from the beginning of the process of development of electronic commerce until the final success.

To sum up, the e-commerce countermeasures refers to a series of measures in the implementation of the e-commerce for an enterprise regarding the influence and function of the e-commerce on the enterprise. These measures are proposed for the business management issues, and there are two notable features: diversity, integrity. Diversity, that is, for different needs, different enterprises and at different stages of development, there are different levels and objectives of the countermeasures. Integrity, that is, countermeasures involve every aspect of building e-commerce for their strong vitality, scalability and sustainability.#p#分页标题#e#

E-commerce is the integration of e-finance, management, information technology, information network, and paperless office. And its impact on business is manifold. Then how can a traditional enterprise respond to this impact in globalization? There are three requirements for the traditional enterprises to establish the e-commerce countermeasure system.

2.3.1The integration of information management and business management

In the age of e-commerce, the focus of the enterprise management, should transfer to find effective means to gather information, develop information resources, collation, analysis, digestion, creating and communication, transmission of the information in the entire process, as the management objectives, content, means and the benefits are all closely related to the information resources. Information-centric management is the major management mode in this age and represents the inevitable trend of development for enterprises of traditional industries. The management efficiency relies mainly on the efficiency of information management, the efficiency to create, collect, analyze, use, disseminate and send messages. Through a large number of information of price and sales volume reflected only in e-commerce era, and through the high-speed messaging devices and information highway around the world, businesses can truly understand the market and consumers’ response, then timely deliver new information to the outside world, thus significantly adapts to the environment with speed, accuracy and efficiency. As to currently the heatedly discussed process reengineering and business reengineering, the essence is to use and manage the latest information technologies in the information era.

2.3.2The establishment of information system

 A high-speed data network

The enterprise should establish a high-speed data network as the core of information system and the material base. The infrastructure of the data network is the first step and material base for the information system.

 A large dynamic database

In the establishment of e-commerce countermeasure system, it is important to establish a large dynamic database. On the internet, the enterprise can establish its own personnel, finance, inventory, and some other large-scale and basic dynamic database, collecting information from all aspects of business to create a dynamic data center and provide a platform for effective decision-making.

 A new workflow management mechanism

In the establishment of the e-commerce system, it is also create a new workflow management mechanism throughout the production process. This new type of management is no longer the traditional operations, sales and production process, but supported by effective management of data flow in high-speed network, which can be an efficient management system to enable the enterprise to quickly adapt to market changes and to provide a number of personalized services in order to win market share.

2.4 E-commerce and customer#p#分页标题#e#

The integration of the information and management is based on the collection of information through the website of a company, which can attract the customers through the most effective product shows and their deeper understanding of the productsWinn&Beck(2002) . The e-commerce is an effective way to guarantee the customers loyalty.

The loyalty of customers as Tsai-Thin (2004) in her dissertation has pointed out that the possible 11 factors influencing the customers’ loyalty through a systematical and detailed analysis: price, product types, product information, endeavour, entertainment, precision, fame, sense of belonging, characteristics, security and reliability. The 11 factors were first raised by Winn and Beck (2002), and in their research, they borrowed the theory of rhetoric, comparing the website as a orator to attract its own customers by convincing them of its ideas and information. Winn and Beck grouped the 11 factors into 3 categories：1)logos refers to the factors that are real and true, including the price, the types of products, and efforts；2)pathos refers to the factors that move the customers including the characteristics, entertainment and precision ；3) Ethos refers to factors related to the fame of the website, including the fame, sense of belonging, security and reliability. Tsai-Thin made a investigation based on Winn and Beck’s theory and proved that logos exerted greatest influence on the customers, ethos followed，and the least influential factors are pathos. Among all the factors, the fame is strongest influential factor while entertainment is weakest.

Srini(2002) summed the factors influencing the customers’ loyalty as 8C：Customization, Contact interactivity, Cultivation, Care, Community, Choice, onvenience, Character. According to the analysis of 1211 questionnaires，they found out that besides Convenience，all the rest 7 factors are prominent in their influence on the loyalty. And they also showed that the customer’s loyalty is beneficial to the company as they like to make recommendations to others.

Both in the traditional commerce and e-commerce, the loyalty is crucial to the success of the company. It is helpful in reducing the cost, especially the ad spending, and the market share, and increase of the sales.

2.5 Summary

E-commerce can bring the enterprises e-commerce countermeasures with solutions to different aspects of its production, sales and services system. And in the establishment of e-commerce system, the website and production should aim at the improvement of customer loyalty. The summary of the features of e-commerce features and the e-commerce models as well as the necessary requirements of e-commerce measurements for the traditional enterprises provides the bases for the e-commerce solutions for Yuanquan Co Ltd.

Chapter 3 Research set-up

This chapter starts by mentioning the purpose of the project, its scope, and the problem statement includes the main research questions and sub-questions that help to develop the structure of the chapters; afterwards it is given the source of data as well as the literature, theory and models to be used in the research and their limitations. A forecast of the problems is also provided, with some suggestions of how to solve them.#p#分页标题#e#

3.1 Problem statement

Although China is a big promising market of telecommunications equipment industry and has the advantage of cheap labor advantage. But the fierce competition of innovation and the rise of production cost generated from the price rise of raw materials are posing serious threat to the development of this company. Yuanquan Co.Ltd faces a steady increase of cost from raw materials and cost of labor and needs to define new strategies to stay competitive. In the industry e-commerce is developing to a common business model. This dissertation is up to answer the how e-commerce integrates with the different parts in a manufacture factory to be more competitive in the telecom equipment industry. The main problem is: what problems Yuanquan Company is facing with the possible solution provided by the implementation of e-business and what changes must be made to realise this implementation.

3.2Research objectives

The dissertation analyses the present condition of the company and makes an appropriate e-commerce model to improve its management, operations, personnel, information systems, marketing, security, customer service, etc. The objective of my report is to define a strategy which makes theYuanquan Co Ltd more competitive from the perspective of possible usage of e-commerce.

3.3Research scope

As the e-commerce is developing into the third phrase in China, it is time to investigate and better understand its application and impact on Chinese enterprises to find out a suitable model to improve the management. This company is a typical hi-tech company in western and southern China, the place where many early Chinese enterprises started. So it is significant to investigate the importance of e- commerce in this company which can shed light to other Chinese enterprises.

The dissertation tries to draw a whole picture of the company, including its the external and internal environment. The investigation starts from the survey of the telecommunication equipment industry and moves on to various aspects from the procurement, operation, personnel, marketing, security to customer services. The research involves the other studies of the function of e-commerce from other countries.

3.4. Research questions

The main research question is：What problems Yuanquan Company is facing with the possible solution provided by the implementation of e-business and what changes must be made to realise this implementation.

In order to find solutions to the main question, it is necessary to look at the following questions.

3.4.1 Descriptive sub questions

It is a must to look into the general situation for the Yuanquan Co Ltd to find out the challenges it faces and the possibility of using E-commerce to solve the problems inn its management. To sum up, the descriptive sub questions go as the following:

1) What is the situation of the e-commerce and the Telecom industry in the world, and how in China? #p#分页标题#e#

2) What is the current e-Business/e-Commerce status of the studied company?

3)What are the possibilities of e-commerce to solve the management problems of Yuanquan CO Ltd?

3.4.2 Analytical sub questions

After the description of the telecommunication equipment industry and this company’s condition, the dissertation analyses the chances and challenges brought by the industry to the investigated company. The following questions are supposed to be answered:

1) How can the situation of e-commerce in the world and China influence the business management?

2) How can the situation of the telecom industry influence the studied company?

3) What are the advantages and disadvantages of the present e-commerce models?

3.4.3 Design sub questions

After the analysis of the company and its needs, it is possible to make corresponding e-commerce policies to remedy its inadequacy in the application of e-commerce. In order to achieve this goal, in the design part, it is of necessity to answer the sub questions below.

1) What are principles of the policies to cure the inadequacy in the present e-commerce of this company?

2) What are the objectives of the improved e-commerce model of this company?

3) What are the parts and measures of present excellent e-commerce models to integrate into the company’s new models?

4) What are the other exact policies to improve different aspects of the value chain of the company?

3.4.4 Implementation sub questions

Certainly, it is far from enough to make plans, it is more important to implement the e-commerce model appropriate to this company. The most important is to carry it out. The questions to be considered in this part are listed as the following：

1） What are the suitable steps to carry out the company’s e-commerce policies?

2） What are the points and aspects to be notified in the implementation of the new e-commerce model?

3.5 Explanation type of research

The whole research follows the thread of problem and solutions: the problem- the analysis of the problem- the possible solutions - the implementation.

There is a diagram to illustrate the development of the dissertation.

In the raising of the problem, the dissertation applies the quantitative and qualitative analysis to the statistics and forms in order to find the core and causes of the problem. In the analysis of the existing solutions of e-commerce, the dissertation utilizes a case study of this company. Apart from that, the dissertation uses induction analysis to sum up the drivers in e-commerce such as virtual economies of scale, exclusive resources, pre-emptive and expansive business process reengineering.

All in all, the research uses methodologies as definition, comparison, case study, induction, and other theoretical tools.

3.6 Introduction of literature

The following is the literature relevant to this research as a reference to elaborate this project and obtain the best output.#p#分页标题#e#

 Literature related to Theories of E-commerce

 The Yearbook of World Electronics Data. This is a yearbook about the statistics on the development of the telecom industry necessary to the analysis of the industry situation.

 Ministry of Commerce of PRC. This government department releases data of the total B2B e-commerce marketing in china in 2002-2008 related to the analysis of the application of e-business in the telecom industry and its effectiveness.

 The Yearbook of Telecom Equipment Industry in Chongqing. This is about the data of the development of telecom industry in Chongqing, where Yuanquan Company Co Ltd locates.

 The Yearly Information Release of the the Yuanquan Co Ltd in 2003-2008. This release is about its Business circumstance necessary to the defining and solution of the research problem.

 The laws related to E-commerce development in the world and China. This is related legislation which helps and limits the e-commerce, which provides both opportunity and challenge to the company.

 Related concepts and their literature. In the literature review part, the dissertation talks about the definition of e-commerce from various sources and comes to a definition from the micro-level and the macro-level to get a better understanding of it. And at the same time, the definition of e-commerce model, B2B and ERP are mentioned to draw a full picture of e-commerce. By giving these definitions, the author prepares the readers for the further study of the e-commerce. Apart from that, the literature on the advantage of e-commerce is listed to show its strengths. And the conception of e-commerce countermeasure is discussed based on the former literature. The definition and discussion of its advantages and countermeasures are ready for the solutions for the problems faced by this company.

Above all, the literature of e-commerce, the advantage of e-commerce and e-commerce countermeasure is introduced as the theoretic bases of the research. The possible limitations of the literature are the lack of the researches of the similar Chinese companies from the perspective of e-commerce countermeasure.

3.7 Introduction of data sources

The current research requires the collection of information based on primary and secondary data necessary to support the development of this dissertation. The primary data of this company are obtained from the company as the profitability, the economic scale and rates of customer’s satisfaction etc. And they are first hand information. The secondary data of the description of the telecommunication industry are from the government report and public data bases.

3.8 Introduction of models/theories

There are three analytical models used in the research: PEST for the analysis of macro- level economic situation in the world and China, the 5 Forces Industry Analysis Model for the analysis of the telecom industry situation in the world and China, SWOT as well as its SWOT confrontation matrix model for the analysis of advantages and disadvantages of Yuanquan company in the telecommunications industry. As the e-commerce situation exerts power on the development of the world macro-economy and the telecom industry at large, the present research will add e-commerce as an important factor to the PEST Model as PEST-E. And the value-net analysis model for the possible solutions for the difficulties of this company.#p#分页标题#e#

 E-PEST. E represents e-c0mmerce in this model. The model helps the dissertation to talk about the current political, economical, social and technological factors in the world and China, in addition to the e-commerce and its development, in order to draw a full picture of the outside environment, which provides the base for the companies to solve the management problems. The model is limited, and lacking in the depth and detail analysis of the microeconomic situation related to the telecom equipment industry, therefore, the dissertation adds E-commerce to give out information on the e-commerce development in China and the world. The model cannot address the e-commerce and telecom industry fully as many other factors besides the E-PEST affecting the situation.

 Porter’s 5 Forces Industry Analysis Model. After the analysis the macro-level situation of e-commerce, the dissertation tries to draw a big picture of the telecom industry by referring to the 5 Forces Industry Analysis Model, especially to analyze the possible threat and rivals in the industry. This model is helpful in revealing the main information about the telecom equipment industry, but as the industry has strong Chinese characteristics and does not enjoy a completely free market economy, it is possible the 5 forces model misses some information related to the industry. The main feature of the telecom equipment industry in this economy is that the number of the individual customers cannot match the weight with the group customers. So it is necessary to pay more attention to the role of group customers and the individual customers in the new and changing market.

 SWOT and SWOT confrontation matrix. As to the internal analysis of the company, the SWOT and SWOT confrontation matrix are applied to find out its strength and threats. After the analysis of the general macro-level situation, the industry and the outward and inward situation of the company, the dissertation exams the existed e-commerce models to find out the experience to learn from. Although it is possible for the present research to get near to the real situation of the studied environment and industry, it is still far from the realistic and whole picture of what they are. The weight for each factor is not so completely grounded, but just for the convenience of the research.

 Value Net analysis of Yuanquan Co Ltd. When it comes to the Yuanquan Company, the model is used to look into the detailed parts of the company, the different aspects in the management process. And in the discussion about the e-commerce countermeasures designed for the company, the value net model is again used to show the possibilities of the e-commerce solutions for this company. Although the e-commerce is related to nearly all the parts in the value net, it is still possible the e-commerce can be integrated with other parts in the company, and the dissertation will not deal with the other parts.

These 4 models cover, certainly the major parts of the company’s management, but it is also possible some more detailed and important parts are left out in the analysis. It is possible for the company to find out more aspects to integrate the e-commerce with the microeconomic and industrial situations.#p#分页标题#e#

The above is just a short introduction of the four analysis models, what is more important to come is the detailed application in the descriptive and analytical parts.

Research Methods:

This project makes use of two research methods: case study and literature research for the purpose of this research.

In order to find suitable e-commerce solutions for the similar small and medium sized Chinese enterprises, the dissertation takes the Yuanquan Co Ltd as an example. The research defines the problems existed for the company, and tries to find a strategy by resorting to the possibilities of e-commerce.

In order to show the problem, the dissertation quotes the related statistics and uses the quantitative and qualitative analysis to find the core and causes of the problem. And the review of related theoretic literature sheds light on the importance of e-commerce in modern business and look for the possibilities of e-commerce for the problems in modern business .

All in all, the research uses methodologies as case study and literature research to find a suitable model for the Chinese enterprises.

3.9 Anticipated problems

Since the implementation of a new e-commerce model is a large scale project, it is possible the research can hardly cover all the possible countermeasures to the questions faced by this company.

And other factors may intervene the implementation of the new model, for instance, the international and national social and economic changes. It is hard to cover and study all the factors in this dissertation.

Chapter 4: Descriptive chapter

4.0 Introduction

This chapter serves as the description of the background and current situation of Yuanquan Co Ltd. Firstly, it starts from the introduction of the situation of e-commerce in the world and China by referring to E-PEST analysis, PEST analysis pluses a direct description of the Ecommerce. In the detailed description of e-commerce situation, every factor starts with the depiction of the world situation or the representative countries in the world, followed by the depiction of China. Secondly, it goes on with the detailed introduction of the telecom equipment industry in China by referring to 5 Forces industry analysis model, which shows the great potential in this industry. Thirdly, the chapter makes a description of the Yuanquan Co Ltd by referring to SWOT analysis model to point out the strength and weakness of the company. Fourthly, the chapter comes to the SWOT confrontation analysis of Yuanquan Co Ltd to draw the whole picture of the company and possible strategies to get solutions to the challenges found in the SWOT analysis. And finally, the chapter ends with the summary of this chapter.

4.1 The macro environment

In this section, since e-commerce exerts influence on its macro environment, therefore, the e-commerce situation in the world and in China is also included in the depiction to draw a whole picture. In order to show the macro environment of Yuanquan Co Ltd, the dissertation refers to the PEST model. To get the descriptive work of the world and China’s situation done, the E-PEST model is applied.#p#分页标题#e#

4.1.1 E-commerce environment

The e-commerce not only gets support from the government but also makes great progress in development in the use of enterprises. And certainly, the development of ecommerce in China gets support from the thrive of the internet and also encounters difficulties in the legal and cultural aspects.

Firstly, Chinese government puts emphasis on E-Commerce work extremely. Legislation, policy and financial support made significantly progress in 2004, the government established and launched Electronic Signature Law, issued Several Opinions of General Office of State Council on Speeding up the E-Commerce Development (State Office send [2005] 2), the National Development and Reform Committee, the Department of Commerce also promulgated Notice of General Office of National Development Reform Committee on Organizing E-Commerce Special Implementation and China E-Commerce Development Report respectively, creating favorable policy environment and confidence encouragement for E-Commerce development.

The China National Network Information Center (CNNIC) gives "15 statistics of the China internet development” in Beijing in January, 2006. The report shows that the users access to internet is totally 94 million in China, increasing by 8% compared with that of half year ago, in which the users access to internet on broad band is 42.8 million, the computers access to internet is 41.6 million, increasing 14.6% compared with half year ago.

Secondly, the application of e-commerce in Chinese enterprises demonstrates accelerating development trends. Sinopec, CNPC, Sinochem, COFCO and China Minmetals etc have all introduced various E-Commerce models, which effectively develop business, improve efficiency of commercial activity generally, extend the range of commercial activities, and reduce transaction cost. At present, under vigorously promotion of all levels of national governments and economics and trade departments, various E-Commerce activities are developed and promoted all over the country. The third party network service platforms, such as Alibaba.com, Ebay.com.cn, Taobao.com, have led the development of massive small and medium enterprises and individual E-Commerce, and promoting internationalization of E-Commerce. According to statistics, there are more than 4,000 E-Commerce websites in China currently, the total transaction amount of E-Commerce in 2004 already achieved RMB440 billion Yuan, in 2005 it is expected to over 620 billion Yuan. But lack of specialized third party logistics distribution system, weakness in payment system and unhealthiness of credit system are still three major bottlenecks restricting the development of E-Commerce.

Thirdly, the development of e-commerce is supported by the fast development of internet, domestic logistics, payment and credit system, further development of information infrastructure, increasingly exploitation and cultivation on network access and the websites. In China, the Internet poses a great impact on traditional business methods, large enterprises have gradually changed business model to develop electronic business. As the use of E-business in the commerce is growing in-depth, people hope to accept better business services and information without place restrictions. Mobile devices can carry in pocket and can achieve real-time communication, users’ identification, positioning that produced a multifaceted impact to change the roles of partners in the value chain. As to the channels of communication, the major impact of mobile technology reflected in the communication between client and the company, also between the two companies.#p#分页标题#e#

With gradually establishment and improvement of domestic logistics, payment and credit system, further development of information infrastructure, increasingly exploitation and cultivation on network access demand of enterprises and individual users, practicing and innovating of a number of business websites, as well as the international capital favoring China E-Commerce market again, the development of China E-Commerce market obviously picks up, market vigor of E-Commerce market significantly strengthens.

At present, the domestic E-Commerce websites, such as online store, online commercial platform, speciality shop, online auction website, online tickets reservation, online traveling, online education, online health care, as well as those provide various electronic commerce information and transaction, emerge continuously, E-Commerce application is deepening, and service patterns are also innovating. E-Commerce is expanding from large cities such as Beijing, Shanghai and Guangzhou to coastal and inland big cities.

Fourthly, the development of e-commerce encounters difficulties from different aspects from privacy protection, security, and information infrastructure. Citizens and consumers need to be educated to recognise and ensure their privacy, access, equity and consumer interests are preserved against the onslaught of technology, government efficiency and aggressive and innovative business practices.

In china, when respondents were asked for the awareness of information systems security, 92.2% of the respondents considered that the security of information systems will influence the operation of company, the rest do not think that was very important have not yet established internal network. So, the companies enjoying the sharing of information have fully aware of the importance of network security. On the fields of information security, the respondents have different opinion on the importance of them. 90.3% of the respondents considered that the most important is virus protected, 81.7% of the respondents think that is the second important thing to prevent malicious intrusion from the Internet, the third is the server and database access control, internal users password management, security audit with 75.9%. Then there are 59.4% of them thought data encryption and virtual network are more important and 58.8% choose identification and electronic signature.

In these companies, 68.2% of them have suffered from the threat of the security of networks. 35.8% of the respondents considered the main threat come from the external unit, and 32.4% of the respondents considered the main threat from the internal.

Investigation reveals the of China's domestic enterprises is still rather backward as a whole that they have fewer input and lack of adequate attention on the security of network information. The outlook of network information security is not optimistic.

To sum up, the development of e-commerce is supported by the fast development of internet and websites both in the world and China. Although there are still some drawback factors, e-commerce is on the way and will go on with its development. In China, there are huge demands for the e-commerce and more pressures from these factors as well. It has a long way to run and learn from others.#p#分页标题#e#

4.1.2 The political situation

The Chinese government has provided the support for the telecommunication industry development from the state policies and the benefits enjoyed by the telecommunication equipment industry.

Government has carried out its market-oriented economic reforms since 1979. It recognized the importance of information in the country’s modernization process. In 1984, the State Council actually declared that the telecommunications sector was significantly backward and that there was a huge gap between supply and demand. Even by the end of the 1990s, switchboard capacity growth lagged far behind economic growth. It order to enhance the development of the telecom industry, the government gave high priority to this sector and carried out a series of reforms. For example, the government raised the proportion of the total state investment allocated to this sector from about 1% in the 1980-85 period to 1.4% in the 1986 - 90 period. As a result of the serious reforms, China’s telecom sector has undergone significant changes in its infrastructure and services supply over the past two decades.

Since the 1980s, the central government has adopted various policies to stimulate the development of the local telecom industry. In 1984, the State Council announced a “Six-Point Instruction” to speed up the postal and telecom reforms. According to the instructions, 90% of profits and foreign exchange earnings from all PTEs could be retained by the MPT and 90% of central government investments put into this sector were not regarded as repayable loans. See Lu and Wong (2003).In addition to the favorable tax and loan treatment, PTEs could obtain favorable interest rates, until 1994, to expand their businesses.

In 1988, the central government issued the “16-Character” policy for telecommunications infrastructure development. Postal and telecom investments were largely decentralized under this policy. To further support this sector, the central government raised the capital depreciation rate for this sector. FTEs used savings from capital depreciation for technical upgrading and transformation investment. In 1995, the gross fixed capital depreciation rate was as high as 16% and the total capital depreciation was 40 billion yuan, reaching 40% of total fixed capital investment. Furthermore, all fixed capital investment in the postal and telecom sector enjoyed zero interest rates until 1998.

With state policy support, this sector’s capital accumulation increased sharply over the past twenty years. The share of the telecom sector in China’s total fixed capital investment has increased continuously since the late 1980s, from about 0.5% in the late 1980s, to more than 4% in 1994 and to over 7% in recent years.

As a member of the telecom equipment industry, the supplier and lower industry of telecom service industry, which enjoys liberty and policies support, Yuanquan Company also enjoyed great profit at the early years after its establishment in 2003. But as the industry is so profitable, many more competitors join in, as the government encourages the small and medium sized companies to enter the telecom equipment industry, Yuanquan Ltd faces more competition from large scale competitors like Siemens, Zhongxing , and Huawei, but also the new entrants. The profit of it is getting smaller and competition is more severe.#p#分页标题#e#

Yuanquan Ltd, as a medium sized company in the telecom equipment industry, on one hand, has a share in the profitable and fast developing telecom industry because it has set up business network with the big servers, who benefit from China’s favorable policies since 1980s. But it also faces more severe pressure as the nation encourages more entrants into the telecom equipment industry.

4.1.3 The economic Environment

The development of the telecom and telecom equipment of industry results partially from the fast growing economy in China while the rise of the raw material price poses threats to the development of the telecom equipment industry.

Before the reforms, the MPT controlled the prices and fees of most telecom services. For the purpose of supporting other sectors of the economy, those fees were set very low. To reduce the distortion, the MPT adjusted the rates upward on a wide range of services. As a result, the rate of return to capital increased from 9% in 1986 to 17% in 1990. Later, the MPT set a price cap on telecom service charges so that intra-city rates could not exceed the ceiling. Moreover, a special fund was set up to ensure that the funds collected by PTEs were used only for telecom developments. To give economic incentives to local PTEs, managers and workers, their salaries and compensation packages were linked to the enterprise’s sales revenue.2 These reforms were very effective in raising local PTEs’ incentives to improve their performance. As service prices and fees on long-distance communications were set by MPT and local rates were capped, increasing sales revenues was equivalent to increasing output. Thus, local PTEs had strong incentive to increases their supply.

In addition, favorable government policies on taxes, interest rates and capital investments have encouraged the expansion of local telecom services. These economic incentives stimulate the fast development of telecom industry and put Yuanquan Ltd onto a quick development tract.

But the increase of price of the raw materials of the telecom industry in recent years put more pressure on the production and sales of the telecom equipment industry. On one hand, the present economic incentives are beneficial to the development of the telecom equipment industry; and on the other hand, the increase of the price of the raw materials puts pressure on the industry. As a medium sized supplier of profitable telecom service industry, Yuanquan Ltd has a share in the market, but with less profits compared with the servers in telecom industry. But as a buyer of the raw materials, Yuanquan Ltd suffers from the increase of price directly. In general, Yuanquan Ltd faces more pressure in economic field at present than in its earlier years.

4.1.4 The social environment

The strong demand stimulated the expansion of the telecom market and spurs the fast growth of telecom industry. The growth of mobile phone users exceeded the government’s predictions. For example, in 1999, the Ministry of Information Industry (MII), which had replaced the MPT, predicted that the number of mobile phone subscribers would exceed 70 million in 2000, but the actual number turned out to be 84.5 million. The number of mobile phone subscribers exceeded 200 million in 2002. This rapid growth in mobile phone demand resulted in an increase in the length of mobile phone numbers to 11 digits since 1999. As a result, the capacity of mobile phone numbers increased from 50 million to 500 million. This rapid growth and improvements of the post and telecom infrastructure give China the largest telephone subscriber base. In 1985, China’s telephone network was ranked 17th in the world, but it had risen to the first runner up position in 1997. In 2001, China had 145 million mobile phone subscribers and surpassed the U.S. as the world’s largest mobile phone market. In 2002 China replaced the U.S. as the world’s largest telephone network in terms of capacity and user base. China had 214.42 million fixed line subscribers and 206.62 million mobile phone subscribers in 2002.3 As shown in Table 2.3, the telephone penetration rate, measured by the number of telephones per 100 persons, increased rapidly from 0.6% in 1985 to 1.11% in 1990 and then to 33.60% in 2002. The mobile phone penetration rate was 0.3% in 1995, but then grew to 16.10% in 2002. The teledensity, measured by major telephone lines per 100 residents, was 3.36% in 1995 and then rose to 16.8% in 2002 .#p#分页标题#e#

Another aspect of information technology development is the Internet market. In China, the number of Internet users increased rapidly from 6,000 people in 1995 to 15.35 million in 2000 and then to 49.7 million by the end of 2002 (see Table 4.1).4 The growth is more than triple each year on average. Note that these numbers are registered users only. As Internet account sharing is common in China and a lot of Internet bars serve a huge number of unregistered Internet users, the total number of Internet users in China is far greater than the numbers given in Table 2.4. China is one of the world’s largest Internet using countries. China’s telecommunications industry has reached significant achievements in infrastructure development and services provision since 1979. This rapid growth can be attributed to several important factors. On the demand side, fast economic growth and the resulting improvement in people’s living standards constitutes a strong and sustained demand for telecom services. On the supply side, reform and restructuring of the local telecom sector provide incentives for local PTEs to expand and improve their businesses.

Table.4.1 Number of Registered Internet Subscribers in China (million)

_____________________________________________________________

1995 0.006

1996 0.080

1997 0.620

1998 2.100

1999 8.900

2000 15.350

2001 32.040

2002 46.700

______________________________________________________________

From economic prospective, the fast development of telecom industry is derived from the demand of the companies and other individual demands, which is the ever lasting pushing force of the telecom equipment industry. The same is true of Yuanquan Ltd, and its development can be guaranteed and sustained by the demand, although the demand can be taken by other telecom equipment companies.

4.1.5The technological environment of Yuanquan Ltd

Telecommunication equipment industry is accelerated by its technological innovation in order to achieve its expansion of production scale and the share in the market. Its life relies on the innovative power; otherwise it would be drop out of the market. After the recession in 2004 to 2005, the industry embarks on the fast development tract, and it is still in the premature period, and ready for further innovation and expansion of the market. The best way to development is through the technological innovation.

Yuanquan Ltd is one of the earlier entrants in the telecom equipment industry, which accounts for its earlier stage of taking over a fairly large of the market and steady relationship with the major telecom service companies. But as time goes by, the old production equipment is no longer an advantage but rather a lagging behind.

Through the analysis these factors, it is obvious that the macro environment for the company is favorable because, firstly, the development of China’s economy boosts the needs for the telecom equipment; secondly, the Chinese government realizes the power of the e-commerce and the necessity of the participation in the world economy through the internet, both of which demand the infrastructure provided by the telecom equipment companies; thirdly, the technology development facilities the development of the Yuanquan company with challenges from the new entrants as well; fourthly, the ever increasing of the family users and group users spur the development of the Yuanquan Company; and the e-commerce means the urgency and benefits for the company. Generally speaking, the company faces more chances than challenges, although the latter needs attention as well.#p#分页标题#e#

4.2 5 Forces Industry Analysis of the telecom equipment industry in the world and China

Global communications equipment industry reached a peak in 2000. Due to the global economic recession and network bubble in 2001, the growth has slowed down and reached a lowest point in 2002, but then it maintained the rapid growth, especially in 2003 . Later, fast-growing wireless communications industry, especially for global action, and strong market demand have driven wireless communications equipment industry to a fast developing phase.

4.2.1 The threat of the entry of new competitors in Chinese telecom equipment industry

Accession to the WTO brings both opportunity and challenge to local telecom equipment manufacturers. As the telecom equipment market has been open to foreign investment for several years, albeit with some restrictions, local equipment firms have experienced competition with foreign enterprises. Besides the local telecom equipment producers also experience the competition for the domestic companies.

The telecom industry is divided into an upstream and a downstream. The upstream is the telecom equipment industry and the downstream is the telecom services industry. Producers of telecom equipment, i.e., the upstream manufacturers, are suppliers to the telecom services operators, i.e., the downstream firms, such as China Telecom. Generally speaking, China’s market is more open, to both domestic firms and foreign firms, in the telecom equipment industry than in the telecom services industry. China allowed foreign investment in certain types of telecom equipment manufacturing, for example, mobile phones. In 2000, 17 Sino-foreign joint ventures and wholly owned foreign enterprises in China together provided 50 million units of mobile telephony machinery to the domestic market, which made up about 94% of total domestic production. The remaining 6% was produced by ten local Chinese enterprises, which supplied 3.4 million units. These 10 domestic firms obtained licenses from the MII to produce mobile handsets. The government hoped that they could take some market share from the foreign suppliers that were dominant players in this market. To further protect domestic producers, the MII had informed foreign suppliers in China that they had to satisfy a 50% export requirement and a 60% local content requirement. These were implicit policies that were not written down explicitly in official regulations. According to the MII and SDPC statistics, foreign invested companies sold 40% of their output to domestic enterprises in 2000. According to the sales figures in 2000, exports of these Sino-foreign joint ventures and wholly foreign owned firms accounted for 46.7% of their total sales of the locally made handsets. Their exports contributed to 99% of China’s mobile telephone exports. However, the market was very closed in some other telecom equipment production. The government restricted foreign-invested firms from importing and producing China Telecom’s products such as traditional telephone sets and switching equipment. The rationale was that local Chinese companies could produce these products by themselves.#p#分页标题#e#

After the liberalization of the telecom equipment industry, domestic telecom service firms may switch their suppliers. Moreover, even though many domestic telecom services firms such as China Telecom and China Mobile are mainly owned by the state, the government has declared that major telecom operators do not have to follow the government procurement process. That is, they have freedom to choose their suppliers and bargain with the suppliers.

Some large domestic equipment manufacturers are already very competitive and they have also entered foreign markets. Examples include Datang (大唐), Jinpeng (金鹏), Zhongxin (中兴) and Huawei (华为).These companies have developed their own technologies in special fields such as data exchange controllers that have reached international standards. In mobile phones, China has developed its own technology, the time-division synchronous code-division multiple access (TDS-CDMA), which has reached the standards of the WCDMA used by Japanese companies. ITU’s (International Telecommunications Union) telecom division has already approved TDS-CDMA as one of the three international 3G standards. TDSCDMA is an advanced mobile radio standard that supports both mobile Internet access and applications in multimedia technology. This provides an opportunity for the local telecom manufacturing companies to successfully compete with foreign multinational enterprises (MNEs) in the mobile phone mark.

4.2.2Rivalries among Current Competitors

Different from the telecom service industry, the telecom equipment industry is much more open and the competition is fiercer for many new entrants enter into the market. Although the Datang (大唐), Jinpeng (金鹏), Zhongxin (中兴) and Huawei (华为) as large companies have their own advantages. The government has encouraged and supported the small companies to enter into the competition. In 2007, the small and medium enterprises account for 79.69% of all the industry.

The competitors in the telecom equipment industry are all making efforts, firstly, to produce new products as their core competition power; secondly, to cut the cost of the human resources and raw materials; and thirdly, to improve the sales and service quality. In order to achieve the latter two purposes, they use the e-commerce to help them make purchases and reach more customers. The above mentioned companies have already set up customer service front end to provide professional and 24hours service. And Huawei has put much energy and capital into the new products innovation and recruited talents under its banner. For most small to medium sized company like Yuanquan Ltd, it is more common to improve the allotment of resources and the services to make more profits. Therefore, it is very important to make use of e-commerce.

4.2.3. Threat of Substitutes

The telecom equipment industry is a promising one in the world and China, on the wheel of long-term change and improvement, from the basic handset to the G3 internet services. There is no cession for the time being but new room for new products.#p#分页标题#e#

Telecom services cover a broad range of communications, including fixed line telephones, long distance calling, mobile phones and the Internet. They have become necessities to people, especially in urban areas. Since the coverage is already very broad, there are no close substitutes that can replace telecom services. Perhaps people still rely on letters by mail for some purposes (e.g., formal documentation), and some still use postcards and fax machine. But they are no longer substitutes for telecom services. They can even be considered as complements.

Given the above discussion, in this section, we analyze substitutions between various types of telecom services rather than substitutions between telecom services and other services. That is, we focus on intra-telecom services substitution, especially fixed lines, mobile telephony, long distance calling and IP telephony.

Data- and Internet- related services experienced the fastest growth in 2003, reaching 46.1%. Mobile telephony services had 17.3% growth and remained the major source of revenue in the telecom services industry. In contrast, the revenues from satellite and pager services declined by great magnitudes, which were 46% and 40%, respectively.

China Telecom and China Netcom have seen their profits from fixed line services decline due to the increasing popularity of mobile phones as well as decreases in fixed line fees. In fact, the profit decline can be also attributed to their promotion of Xiao LingTong. This local wireless service attracts a substantial amount of potential users from the mobile phone market and also makes some fixed line users switch to it. China Telecom had 18.35 million Xiao Ling Tong users in China. This reflects a potential threat atomobile phone services.

When we focus on long distance calls, we can see a clear pattern of substitution. In IP telephony gained increasing market share in long distance calls (measured in minutes) from 16.6% in year 2001 to 37.2% in 2002, a 190% growth rate, and then to42.2% in 2003, a 40.7% growth rate. Then mobile phone companies’ market share in long distance calls remained quite stable at about 28%. The market share of fixed line long distance calls reduced from 51.5% in year 2001 to 30% in 2003. The reduction is largely due to its high charges compared to IP services.

4.2.4. The Suppliers: The Telecom Equipment Industry

Semiconductors, steel, plastics are the main raw materials to power communications equipment manufacturing. Their price can determines the cost of the telecomm manufacturing industry. Ad the raw material prices soared in 2007 and in years to follow, increasing the production cost of the telecom equipment enterprises.

4.2.5. Bargaining Power of the Buyers

Before the mid 1990s, China Telecom dominated almost all telecom services and prices were determined by the MPT and later the MII. Local consumers had no choice but to use China Telecom’s services. Even if customers were not satisfied with the quality and charges for the services, they had no power to affect the operator’s performance since substitutes were not available. Since the mid 1990s, competition has been introduced to the market and there were some choices available for consumers to choose among different service providers. However, even today, the number of operators and prices on certain basic telecom services are still under the control of the government. Individual consumers or small groups of consumers remain quite passive in the market.#p#分页标题#e#

There are two main factors hat affect the aggregate demand for telecom services in China: the rapid growth in per capita GDP and urbanization. China has experienced rapid growth in per capita GDP since the reform began in 1979. In last decade (1992-2002), the average annual growth rate was 13.6%. The rapid rise in living standards has increased demands for telecom services in both quantity and quality. There exists a strong positive correlation between GDP per capita and business volume of telecommunication services. China has also been increasing its pace of urbanization. This will continue to stimulate the demand for telecom services.

As the telecommunication services increase, the related telecom equipment industry increases accordingly.

China’s telecommunications services industry was a typical industry under the socially planned system, which has since gone through many reforms. Before the late 1990s, the domestic industry had been highly protected. Incumbents in the market were protected by the government from foreign competition as well as from domestic competition. China Telecom was the monopolist in this market for a long time. Prices were set or controlled by the government. As a result of this, Chinese people had to consume low-quality services but pay high prices. Since the mid 1990s, reforms have been introduced to this industry and China Telecom’s monopoly position has been changed. The restructuring of China Telecom and the establishment of a few telecom services groups brought some degree of competition into the market. In recent years, local telecom services have been improved in terms of quantity, quality and price. However, the telecom services market is dominated by six major local telecom companies. Although they have engaged in some competition, have adopted modern management and technologies and have provided higher quality services, they are not facing foreign competition. China’s entry to the WTO will change this situation and we are expecting to see rapid change in this industry again.

As the downstream industry of telecom service industry, Chinese telecom equipment industry also enjoys high profits from both the dominating positions of the upper industry and the Chinese potential market. But as the result of protection from the foreign competition, the innovation of the telecom equipment industry is limited. It faces both huge chances and challenges in the future development.

To make a summary of the situation of the industry, it is to find that it has passed the era in the early 1980s and 1990s of vast margin of profits, and entered the period of many competitors for a still reasonable profit but of large market typical for China. Firstly, the purchasing power is on increase, but the customers are shrewder to choose the most favorable conditions and quality products. The type of customers highlights the necessity of the establishment of e-commerce system to emphasize the customer services. Secondly, there are new entrants and increasing competition in the industry, while it still means adequate development room for the studied industry and company for its former sales network and technology. Thirdly, the innovation in technology and management in this industry is a must and pave the road for the company to make further use of the e-commerce. In short, the industry has the advantage of large and potential market, which means opportunity and time for its promising development.#p#分页标题#e#

4.3 Value Net analysis of Yuanquan Co Ltd

It is important to know the present real condition of Yuanquan Ltd in all its production and sales process to draw out a new e-commerce system for it. In the following part, the dissertation is to describe different aspects of its value net to show the possibility for further development through e-commerce. As the dissertation has mentioned the history of Yuanquan Co Ltd, it is necessary to make a detailed introduction of it referring to value net analysis to get a better understanding of the company.

4.3.1 Inbound Logistics

It is important to have a sound logistics system for the preparation for the production and sales. Goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. Yuanquan Ltd relies mainly on the China Post to get goods from the suppliers, which means a waste of time in the transportation of raw materials, as the logistics in China is still backward relatively and the transaction of the raw materials on the internet is not as common as the small shops like dressing, and gifts. Especially when the large quantity of goods is involved, the fare and cost are fairly high. It generates difficulty in the production process, gives pressure to achieve a smooth move of the raw material and the whole production process.

4.3.2 Operations

This is where goods are manufactured or assembled. In the manufacturing process, there exists the waste of raw materials as the factory management needs more attention. Besides, the employment of the higher quality workers is in great demand as present employers are not experienced enough to enhance the quality of the products. The communication channel between the raw material store and production process is not smooth.

4.3.3 Outbound Logistics

The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. The sales team is qualified and Yuanquan’s relation with group customers, the most powerful buyers in the telecom service industry, is on good term, but the information and communication with the individual customers are not so satisfactory. The sales channel needs improvement by the use of e-commerce. Although the company has the basic e-commerce system as CRM， it is independent from the SAP system responsible for the internal manufacturing, which causes the delay of information transfer between production and sales. And at the same time, the information from the customer’s requirements cannot easily reach the production and reduce the efficiency of the management.

4.3.4 Marketing and Sales

It is the weak point of Yuanquan Ltd, as a manufacture factory, it has not paid enough attention to the market research and the needs of customers, especially the individual customers, who are more educated in computer and internet use than the early customers . In true customer orientated fashion, at this stage the organization prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. As the important role played by the individual customers through online purchases, Yuanquan Ltd has not yet switched the focus on to it.#p#分页标题#e#

4.3.5 Service

Yuanquan Ltd has assigned all the after-sales service to the other electronic installation company. It lacks adequate management of the after-sales. The complaints of customers are not collected and analyzed and go without notice. There are no professional personnel to direct the services of all the employees. As the after-sales service is done by other company, there is no record and information share with the internal SAP system and CRM system. And the personnel are not skillful enough to analyze very limited information of customer complaints.

4.3.6 Procurement

Besides the above aspects in the value net, the support activities are also important in the value net analysis.

As the raw material prices are going up, it is critical to cut production cost by make a worthwhile procurement. Although Yuanquan Ltd has its e-commerce system, the online procurement accounts little in the whole. The real procurement demands more human resources and cost than the online purchase. Yuanquan Ltd pays a large sum of money for the travels and boarding of its personnel in procurement. And it lacks the monitoring on the purchasing activity of its involved employees, which usually means the loss of the sum of money such as the commission, the banquets and the relatively high prices of raw materials than the existed low price in the market.

4.3.7 Technology Development

Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. As to Yuanquan Ltd, the production technology is among the middle level group in the telecom equipment industry as there are some big companies, and also relatively small new entrants. Its advantage is that it has the backup of the head company and the accumulation of technological technicians. It is weak in the production promotion and advertises in the internet as it relies a lot on the former regular customers. The company is weak in the publicity of new products both on its website and the other important trade fairs. It has put little emphasis on the CRM researches, especially the re individual and young customers, as it rank itself as the supplier of big server in the telecom industry. The already exited researches are general and stereotype, and costly, covering a small number of former regular customers.

4.3.8 Human Resource Management (HRM)

Employees are an expensive and vital resource. An organisation would manage recruitment and selection, training and development, and rewards and remuneration. The mission and objectives of the organisation would be driving force behind the HRM strategy. When it comes to the employees in Yuanquan Ltd, it has a store of experienced engineers, but the human resources of management and service are limited as the customers-oriented market is forming in this industry. Even the technicians of research and development department are mainly the equipment engineers, and the recruitment of new engineers are costly and difficulty as the newly graduates from universities lack the research ability. It is rare to find a capable employee without the company’s own training, and meanwhile the experienced ones are hopped to other companies with large scale and higher pay.#p#分页标题#e#

Since the company is not individual customer –oriented from its establishment, it lacks able sales team and training courses available for its employment unless very few courses given by the lectures from some training school. The exited e-commerce system is designed by another website design company, there is a shortage of the programmers to overlook the updating and data process staff to work out the information from the CRM and SAP system. It is urgent to train and keep its own e-commerce and research teams.

4.3.9 Firm Infrastructure

This activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and control such as the accounting department.

There is CRM and SAP system forming the main structure of the e-commerce of Yuanquan Ltd, but the technical personnel is not managed by the company .The connection and unification of the two systems are not sound, which causes trouble for nearly all the departments involved, such as the production and customer demands analysis information.

And the infrastructure of the factory and its production equipment are in need of replacement of new ones, which in turn requires the attention and careful plan of finance of the account department.

It is just to say that the Yuanquan Company has the base for the fast development of both itself and its e-commerce. But the base needs the connection and optimization of the different parts in the value-net, especially the soft parts such as the human resource management and the interregional parts.

This chapter describes the situation of the Yuanquan Co Ltd. As an early member of Chinese telecom equipment industry, it has experienced high profits generated from the business relationship with the dominant Chinese telecom service operators and the large and potential Chinese market. As the economic and technical reforms in China, the company faces some challenges from other competitors both home and abroad. Making use of its strengths and the opportunities brought by the fast development of e-commerce in the world and China, the company is to optimize its information system and design a new e-commerce model. Different from the large companies as Huawei, which emphasize the production research and development, Yuanquan Company, as a member of small and medium sized company, hopes to make use of e-commerce to improve its services and sales.

4.4 The summary

This chapter makes a description of the macroeconomic and social situation in China, in which the telecom industry and Yuanquan Coomany lives in. The social and economic background of China is favorable with many potential customers. As to YUanquan Company, the chapter digs into the every link in the value-net to demonstrate the real situation in the company.

Chapter 5 The analysis

5.0 Introduction#p#分页标题#e#

The analysis of Yuanquan Ltd is based on the SWOT analysis, the SW part comes first, which works on the internal analysis, and the next is the OT analysis on the external factors affecting the company. And in the analysis, the weight of different factors is given different weight, as each of which exert different influence on the development and formation of the new e-commerce network.

As the same to the SWOT analysis, the dissertation presents the SWOT confrontation in the same way, given the weight to different factors.

After the analysis part of different factors in the model SWOT, the dissertation proposes some strategies for the solutions of the existing problems, which help shape the new e-commerce network and Yuanquan Ltd’s own e-commerce model.

5.1 The SWOT analysis

5.1.1The strengths of Yuanquan Co Ltd

Too often elements of a SWOT analysis are not weighted. Naturally some points will be more controversial than others. So weight the factors. One way would be to use percentages e.g. Threat A = 10%, Threat B = 70%, and Threat C = 20% (they total 100%).In this dissertation the same practice is to apply into the SWOT analysis of Yuanquan company’s situation.

Brand advantages, Yuanquan Co Ltd has business relations with China Telecom and a number of leading multinational companies, such as the Gigabyte (the world's second largest main board supplier), MSI, Tencent, etc., to forming a huge strategic alliance network.

Information technology advantage. Yuanquan Co Ltd has the advantages of information technology as a comparatively early entrant in the telecom equipment industry . At present, the company implemented a CRM, ERP system, showing ability to establish database, with a certain more advanced hardware and software facilities. Moreover, the corporate leadership's understanding of information technology is profound, with the information management capabilities. This company has an information management group, which can collect, display, and analysis data.

Technological advantages, Yuanquan Co Ltd is a subsidiary of a larger group, therefore it can obtain technical support from the head office. The head office is strong in research and development with a large number of senior engineers of cutting-edge technology, among whom more than 80% are the undergraduate, masters, Ph.D., and post-doctoral, and among whom one third or more employees have overseas work and educational background, rich in Internet communications industry background and expertise.

Brand advantage is weighed as 20%. The advantage weighs less as the competition in this industry is fiercer than before and the political and economic support for the small and medium size enterprises brings more powerful entrants into this industry. And the competition among the telecom servers is severe as well, which means the major group customers have to consider about the reduction of their choice of suppliers.

The Information technology advantage is weighed as 30%, as the information technology is the basic infrastructure for the setup of e-commerce system. This advantage is not so peculiar to Yuanquan Ltd as there are similar advantages for other companies in this industry. Again, the core human resource does not belong to the company because it just maintains its daily running but the analysis and update of the system are done by its employed professional information analysis companies, which leads to the lagging behind of the application of the collected data in the new production and management.#p#分页标题#e#

Technological advantage is weighed as 50% among all the advantages as the store of human resources are important for its future new product innovation, the key factor in the development of telecom equipment industry. Although the human resource of technological team is main programmers of high level diploma, it is potential to train them as the e-commerce system developers as well as experienced new products developers. And as they are trained by the company, their beliefs and confidence in the company are deeply rooted and lasts longer than the other job-hoppers into the company from other companies. Although the company has the above strengths, it has certain weaknesses to retain its rapid development.

5.1.2 The weaknesses of Yuanquan Co Ltd

Technical staff weakness: The technical advantage of the company is established in its early period by its early technical staff, which is too occupied to manage the e-commerce information and technology. They are limited in number and update data analysis ability concerning the research on the customers, especially the younger individual customers. Company’s technical staff had yet to be recruited and trained to be qualified for the new e-commerce model.

Hardware and software weakness A company's hardware and software environment needs to be updated to cope with large amounts of information and to meet the need for the integration of information systems with e-commerce to ensure the implementation of e-commerce.

Management model weakness The company's existing management model and business process are all designed for the production stage of the traditional manufacturing companies, and realization of a suitable e-commerce model must restructure the existing management model and business process, for example, the new establishment of the professional procurement and after-sales management team.

Technical staff weakness weighs 20%in all the factors of weaknesses. This weakness affects the actual establishment and management of the e-commerce system. In addition, this weakness threats the market research and service quality improvement.

Hardware and software weakness weighs 30% in all its weaknesses as the investment in the hardware and software mainly involves the capital other than some complicated factors.

Management model weakness weighs 50% in all the factors of weakness as the company concentrates on the production other than the customers and sales. In fact, in time when the habits and interest of customers are more decisive in the whole production and sales process, without sound understanding of the customers’ needs, the whole production can lead to the large store of out of date products and the high cost in the opening up the new sales channels. And the backward management practice can lead to the delay of actual improvement of the e-commerce model despite its stress on the importance of an e-commerce system. Without the complete and through understanding of the importance of customers’ need, the empty emphasis leads the company to only the setup of the e-commerce setup but no further updating of the basic database and further analysis of the related date, eventually form useful information for the production process. Judging from the analysis of the strength and weakness of the company, it is summed up as the following:#p#分页标题#e#

The internal strength lies mainly on the store of technical human resource and its already setup CRM, SAP and EPR systems, ready for the setup of a new and improved model. As to its main weakness, it is the difficulty in the change of business mode from the manufacturer to the customer-oriented and sales oriented mode. The change of business mode demands the setup and long-term maintenance of the e-commerce system.

5.1.3 The opportunities Yuanquan Co Ltd

Comparative advantage of the labor price of production workers further enhances the tremendous benefits of Chinese local enterprises. And the entry into the WTO will promote the introduction of foreign investment and international demand. This cheap double sword, weighing 20%, as the improvement of labor quality can increase its price and better quality of the product, as well as the management. But for the time being, it still helps a lot in reducing the cost and provides the capital accumulation.

The improvement of the law and regulations. The telecommunications industry continues to improve and perfect the laws and regulations, and the telecommunications industry will enter a new phase of management according to law to create a fair and orderly competitive environment. This opportunity weighs 30% in all the factors, this high profit telecom industry also backup Yuanquan Ltd’s development, but the fierce competition to take the order means smaller share of the profit for this company.

The national economy's sustained and rapid development forms a huge potential market for the Telecom equipment industry and greater space for development as the analysis of the industry shows. This opportunity weighs 50% as it back up the customers sustained needs for new products and the source of their purchase power. It is hard to imagine the serious economic recession, which can eliminate the needs and the money.

5.1.4 The threats of Yuanquan Co Ltd

Meanwhile, Yuanquan Ltd faces certain threats from the other competitors and the disadvantages of its own. The company faces fierce competition from both domestic and foreign competitors while it is especially weak in the innovation and other core capabilities. And the new enters in the industry have the advantages of market follower's development priorities. The competition is regarded as the threat, weighing 50% in all the threats from its external environment. The competition is the pressing force to push it to go forward. This threat can never disappear but increase in intensity.

And just as other enterprises in China, the company is relatively backward in the technical aspects and suffers from the brain drain. Many companies at home and abroad adopt high salaries and high-welfare policies to attract talented people, causing a serious loss of talent as talent flow is the inevitable result of competition. This threat accounts 50% among the threats from the company external environment as the human resource quality is crucial for its development of management mode as well as the new product innovation.#p#分页标题#e#

To sum up the opportunity and threats from the outside of the company, the main opportunity is the fast developing economic factors as the opportunity to backup both the telecom and its equipment industry. The main threat is from the competitors both in the taking of market share and the talents.

Figure 5.1SWOT analysis and Weights

Internal factors S

Brand advantage：20%

Information technology advantage: 30%

Technological advantage;50% W

Technical staff：20%

Hardware and software：30%

Management model：50%

External factors O

Labor force:20%

Telecom service industry:30%

National economy: 50% T

Competition:50%

Brain drain:50%

5.2 SWOT confrontation analysis of Yuanquan Co Ltd

5.2.1Strengths vs. opportunities

As the company is a relatively pioneer in entering the Chinese telecom equipment industry, the company has advantages in the brand and technology, which lay foundations to take up the large potential domestic and foreign market. This company competes with the new entrants in the industry by taking advantage of its lower price and existing friendly business relationships with the telecom service companies. Its profound understanding of the importance of e-commerce can be helpful in the realization of the e-commerce model. In a fair and healthy competition atmosphere guaranteed by the legal system of China, the company still maintain its advantages in technology, information system and business relations. In order to unite the present information system and make use of the existing strength in information technology and technicians, the e-commerce of Yuanquan Ltd needs to set up and improve the e-commerce from the following aspects.

5.2.2 Strengths vs. threats

Facing with the fierce competition of others, the company tries to catch up by updating its information system and dropping the less competitive products while strengthening its fist products. As the competitive producer in the industry, it can enlarge its market through the perfection of its websites for the sales and payment system. Therefore, it still remains a strong competitor in general. Facing the brain drain, it tries to improve the salary and welfare of the main research and development staff and increase their training and education. It must pay attention to the technical staff good at the administration of the websites and information analyis.

5.2.3 Weakness vs. opportunities

The company is trying to learn to sustain in the competition. The backward hardware and software are updating as the technology of international enterprises are learnt and made use of. Meanwhile, the advanced e-commerce models of large and successful enterprises are studied and experiment in the company. The establishment of CRM, ERP system can serve as examples. Although the opening up to the international market put the company in greater competition, the company also gets shares from the international market for just its cheap labor.#p#分页标题#e#

5.2.4Weaknesses vs. threats

As the brain drain is serious, the company educates the new staff by enforcing the company culture and tradition and it gets backups for existing main research staff from the head office. As the e-commerce model is incomplete in the company, it studies its features and improves it with approaches appropriate. All its doing aims at its survival.

5.3The e-commerce countermeasurestrategies to take

As the analysis of the SWOT and its confrontation show, it is necessary to make out some basic strategies to improve the management of the process of Yuanquan Co Ltd’s problems by making use of its strengths and the favorable external environment.

It is realistic to combine all the strategies with different emphases into one e-commerce system. The main emphasis in the e-commerce strategy is the sales management and customers communication.

The e-commerce strategy for sales management: CRM focuses more on the sales management, especially the management of contacts while ERP focuses only on the result of sales, such as the sales plans and sales volume. In the sales management, EPR is weaker, offering only the comparison of previous sales data and the information of the market. CRM covers more aspects such as the analysis of the market, sales plans making and evaluation, and the analysis of the making of marketing strategies. This strategy is a major aim of the e-commerce model as the sales are crucial to the development of the company. It is obvious that the production of the products is almost the same, as the new innovative products can easily be imitated, so the emphasis is on the sales and reaching for the customers is essential for its expansion in the market. With regard to its importance, this strategy can be weighed 30% in the whole e-commerce model.

The e-commerce strategy for customers: Firstly, its present e-commerce information system EPR and CRM both should reinforce their respective database of group customers and update the information. In the CRM system, the detailed information is included and recorded, while in the EPR system gets the detailed information from CRM and analyses their needs every month, detects any change in the order scale and the tendency of the order. And EPR just provides the simple dealing with the customer’s complaints while CRM offers the systematic and complete information of customers, with its emphasis on the concern for the customers and their loyalty.

This strategy is the base for the setup of the e-commerce model in the Yuanquan Ltd, the first step for the production and sales. This strategy accounts for the 20% of its model, as it is the fundamental basis of the whole system.

Secondly, it needs a new and more dynamic database of the individual customers, cooperate with the third party online sellers as Taobao .com and Alibaba.com, and update and detect the change of customer’s needs for both EPR and CRM system respectively. The internet provides a huge market and access to a large number of customers at low cost. It is urgent to expand Yuanquan Co Ltd’s online sales scale to finance the investment in the technology improvement and production to expand the production ability and scale.#p#分页标题#e#

The e-commerce strategy for production process management: CRM aims at the sales, the marketing, customers’ management and support. It needs to be united with the EPR system and provide cooperation with the production and logistics without any delay. EPR is needed to take up the management of the parts related with the functions of CRM, and in turn CRM should correspond with the production, production design, the management of orders and logistics control to achieve its function to the largest extent. The unification of the CRM and EPR systems can show its best in the process management ideas, and time and opportunity management. This strategy is certainly an indispensible part in the e-commerce model, which contributes to the innovation in the new products. Although the innovation is a long and costly process, it is also the most potential and powerful driving force for its long term development, therefore it accounts for 10% for the e-commerce model.

The strategy for information exchange is the bridge for the above strategies as it gets involved in all the use of the e-commerce strategy. Without the effective information exchange strategy, the other strategies end up in nothing or remain paralyzed. It accounts for 30% in the e-commerce model.

Yuanquan Company’s goal is to build an e-commerce website to increase business profitability, enhance market reaction to provide customers with personalized service, enhance the competitiveness of enterprises, which requires the management of enterprises, business flow process, marketing, and security management through reform or reorganization.

Its target is to make a powerful, technologically centered business platform, customer-oriented service e-commerce model, in which the model is based on the information exchange system, and the sound and flexible customer management platform. Its target market is the small to medium sized companies and also individual customers.

As the trend of e-commerce is to center around the market, therefore, the e-commerce model of Yuanquan Co Ltd aims at the setup of the market centered decision making system, emphasizing on the prompt responses to the customers needs, and the management of the customer information, as well as the unification of different information systems. The center of the e-commerce is the management of the customer management and the unification of the information systems.

The Figure 5.3 The weight of different strategies for Yuanquan Company

E-commerce Strategy Weight

production process management 10%

decision making 10%

Customers 20%

sales management 30%

information exchange 30%

To sum up, the most worthwhile strategies for the time being are the sales management, and information exchange, accounting to 30% respectively of all the strategies. The following is the e-commerce strategy for the customers, accounting to 20% of the entire e-commerce strategy model. For the time being, it is costly to pay much attention to the technology promotion to accelerate products development, moreover, the new product development should follow the results from analysis of the customers, needs, therefore, the e-commerce system for Yuanquan Ltd is supposed to solve the problems of sales and service centering around customers. When the sales and market research are founded soundly, the company can rise to the new product development and related researches.#p#分页标题#e#

5.4 Summary

This chapter makes analysis of the basic condition of Yuanquan Company with the help of the SWOT and SWOT confrontation models. It is found out that the sales and information exchange system is the main field to be paid more attention in the new design of the new e-commerce system.

Chapter 6 The design

6.0Introduction

This chapter is the designs of the new e-commerce system, concentrating on the details through the use of Value Net analysis. According to the analysis of the SWOT factors in the company, this new design aims at the improvement of improvement of the sales and marketing study through cooperation and information exchange among different departments in the company, as it is needed by the company for the time being. The major problems are to set up the product preview, the e-pay system and databases for the customers. In this chapter the new improvement brought out by the new e-commerce system is to be talked, and described in detail.

6.1 The basic preconditions for the new e-commerce system

Before the chapter runs into the every stage in the value net, it is worthwhile to take some overall steps to prepare for the new e-commerce model based on the value-net model.

There are new things to be focused on necessary to the buiding of the new e-commerce system. It is the first step to set up the new management mode, which makes use of the office automation and reduces the circulation of letters and documents in order to improve the office work efficiency. The second step is to monitor the information system through the information technology advantage in order to endow the relevant staff with the adequate power, and regulate the information exchange and the management arena for each member of the enterprises as well as their personal business behaviors. The third basic step is to make and effect new regulations to overlook the flat management structure as every employee knows their own duty and power. The fourth step is to make use of the information technology to have a scientific management mode, to complete the work of the collection, the classify the information into different business stages, assorting, analysis, absorbing , innovations of the rules implied by the available information , communication, share and the distribution of the information in the departments in the company. By the sound and through process of the information, the e-commerce model is ready to provide the base for the decision making and improve the profits. In this process, the company can really achieve the scientific decision making to magnify the advantages of the e-commerce system.

6.2 Value Net analysis of the e-commerce model of Yuanquan Co Ltd

In the value Net analysis, there are two parts, one is the primary part and the other the supporting part, and the following chapter is to deal with the different stages of the model one by one and give out details of the establishment of the new e-commerce model as the e-commerce countermeasures to solve its present problem and improve its profits.#p#分页标题#e#

In the e-commerce system, the first is to set an e-commerce strategy for decision making level. CRM is more powerful than EPR in the making use of the data of stock of goods, the research of information and network cooperation and also in the support of the policies making process. CRM has an effective and comprehensive database and local network operational power, which helps the EPR in the intelligence and decision making process. The unification of CRM and EPR can accelerate and improve the dealing of larger quantity of information and also the speed and efficiency of information process. The decision making level relates with the direction the company will go, providing the background for the company’s development.

Besides the decision making level, with a smooth channel for information exchange, the unification of EPR and CRM can save the time and energy in the input of information and eliminate the possibility of repeated store of information. Based on the customer-oriented management mode, the enterprise is regarded as the combination of foreground and background, as the foreground is the platform where the customers communicate with the enterprise, while the background is the platform which supplies the foreground with effective support. In the e-commerce model, the foreground is CRM and the background is EPR. The unification of the two can break through the geographical and organizational borderlines among the enterprises on supplier chain and sales channels, to achieve the netting of the sales network and abolish the intermediary links, lower the sales costs, to and achieve an extension of ERP function.

Figure 6.1 The process of EC in Yuanquan Company

This figure is the sum up of the e-commerce system of the company, from the decision making level to the operation level, and from the customer’s information management to the production process. In the following, the analysis tries to combine the value-net model with the planned e-commerce system. Starting from the Marketing and Sales analysis as the information source for the e-commerce system, this part aims at picture the application of e-commerce in different stages for the company.

To sum up, the present e-commerce system needs to be improved with a better defined picture with all the clearly defined factors in the value net as the information channels, smooth and ever updating channels. In the following design, the new element in every part will be mention at the end of each sector.

6.2.1Marketing and Sales

As the marketing and sales are the central topics in the e-commerce system as they provide the necessary information for the decision making, management and operation level. The e-commerce sales and market part involves the management of the customers, for this company, the customers are the small to medium sized companies and individual buyers. As to the small and medium sized companies, Yuanquan Company I is to give all-round services. As to the regular group buyers, the company is to collect the related information and set up a membership mode for them. Through this mode, it is possible to make decisions on the new product promotion, the discount, the after sales service and technological support for the group buyers. Meanwhile, the group buyer can enjoy an allotted e-commerce service channel, to attract more group buyers. As to the individual buyer, the company aims at the provision of fast and convenient online sales service to facilitate their purchase.#p#分页标题#e#

To sum up the sales stage should include the following 4 parts at least.Member Registration: Customer can add their information, keep track of their contact, address, real name, etc. Product View: The buyer can see not only the products, but also with sales rankings, recommended products, to make a preferential purchase; Product Search: According to the product name and category of fuzzy queries to facilitate the members to find interested products;

Order Management: Member can manage their own order information, they can delete orders; the company can check the status of the order in the delivery, customers have access to website and they can browse the exhibited products, make inquiries, about the models, while the company needs to make a focus on some excellent products and their recommendation and introduction of products because the e-commerce market competition is severe. The company will also introduce some special products to customers, after the query to the applicable products, customers show their purchase intention, and place orders through the e-commerce system, and former old customers can go directly to the order page to operate, while the new users can register to enter orders, and with the system’s help, the system will return to order receipt. The view of the products is easy and quick, and reduces the middle links of shopping, the users only need to log in or to register, then they can visit the company's products. The enterprise portal also provides users with some of the high-quality product recommendations and the focus of special products, makes referrals, and provides a convenient station search tools, to find the most appropriate products.

Depend on the different status of customers; the e-commerce e-payment process will enter different stages. E-payment is usually paid by bank card or online banking methods. After e-commerce purchases, buyers, including individual and corporate customers, so they are planned into the payment processes.

Figure 6.3 The pay process of ordinary customers

Credit card company

Clearing System

Customers apply for an electronic payment or bank card business, as the company's shipments are received after the notification. The commodities require to use electronic cash, electronic checks, bank cards and other forms of electronic means to make payments. After the customer’s pay, and the company's Bank and credit card companies through the certification bodies, clearing system.

The basic elements such as the product introduction, the contact information and the account number of the company have been put on the website, but the updating of the product information as well the cooperation with the banks are actually is poor in quality. So in the new e-commerce system, not only the latest product information is listed on the net, but also the purchase package for the individual customers are set up, firstly, to make their visit in the website easier and, secondly, through the recording of the customers’ information the data related to their log-on are meaningful and valuable to research the customers loyalty. The new and smooth e-payment system is the new part in for the individual customers as they were less in number before; they were not taken notice of. And also the e-payment for the foreign trade shows the possibility of foreign orders, which is new to the company that focused on the domestic group customers.#p#分页标题#e#

6.2.2Inbound Logistics

New points in the procurement are listed as the follows.The procurement of the raw material must base on the processed information by the e-commerce model. The procurement must be confirmed by the management personnel and set in the regulated and modified procurement procedures. The online procurement in supplier’s website must be modified according to the change in the raw materials, with a sound understanding of the changes in the market to achieve the most reasonable stock and flow into the production stage.

6.2.3Operations

After the company issued the order will be through e-commerce systems into the enterprise system, particularly the production process. In order to provide products timely and accurately to the customers, it is necessary to require about customer information, order details and other information in the e-commerce system, and ready for an internal smooth and accurate delivery. In this operation, the various information systems need to be cooperated and united for the information sharing and production coordination. The production process needs to be studied alone to find more innovative and saving procedures to cut down the waste and find most appropriate ways to produce the products. The information in the production was collected by the produce manages, and the requirement of the new system is that the information should be kept and uploaded every week, in order to help the procurement as well as the sales.

6.2.4 Outbound Logistics.

The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. Although there was an e-payment system already in the website, but the transaction is actually blocked as the security as well as the conditions with other banks is not guaranteed for their cost. It is now possible and necessary to give the customers the e-commerce pay through the e-commerce e-payment process. E-payment is usually paid by bank card or online banking methods. The buyers of regular customers and group customers are also inconsistent with the payment process.

The customers apply for an electronic payment or bank card business. After receiving the company's shipments, they are required to use electronic cash, electronic checks, bank cards and other forms of electronic money to make payments. The company will check with the credit card company, through the certification bodies and through clearing system the funds clear the final operator.

For the group customers, they have to pay in a relatively complex process, particularly in international trade operations, such as in international electronic trade , they use of the letter of credit payment . The company can submit to the advising bank, and through the advising bank to pay the issuing Bank. In receipt of the goods , the customers will send a receipt notification to the other party and to report receiving information, such as the case of goods not in conformity with the relevant provisions of the original contract.#p#分页标题#e#

6.2.5 Procurement.

This information of the procurement and even the historic data of the raw materials of different period need to be collected to grasp the future tendency of the raw materials.

6.2.6 Technology Development

This technology development is not about the product development, but the improvement of the information exchange system related to the customer and sales information.

For most traditional CRM and EPR systems, they themselves can have open platform, and they themselves have had an open platform. The interface can be flexible, configurable through the implementation and adoptable to meet the specific needs of each enterprise deployment and testing. The interface standards such as Turbo CRM since its publication, it has been tested and used in several clients and continues to expand its open interface platform, together with industry vendors to promote the continuous development of enterprise information construction. Yuanquan company has already has this type of Turbo CRM, what they need to do is to expand the interface the company development asks for.

Taking into account the system's scalability and openness, a middleware company will implement an integrated approach to meet the public demand for the different brands of systems within the Division of the e-commerce require the future expansion of enterprise systems, and a basis for expansion, different modes of systems to facilitate information and communication and exchange.

The application middleware in establishing an integrated approach, the company needs to consider what information technology is used to achieve. So it is necessary to update the expansion of the e-commerce system to meet the further needs, based on the profound understanding of the sales and market researches. One of the principles according to e-commerce response is to improve the advanced operability, therefore, Yuanquan company chooses the Web service architecture, the J2EE platform, and the use of JMS for asynchronous communication, which can enable the company to easily increase or decrease the size of the future system, and in quite a long period of time to maintain the advanced performance of its Asynchronous technology.

To sum up, the interfaces and middleware are needed to guarantee the smooth information exchange. And a new and powerful anti- virus system should be an emergency to set up a e-commerce system.

6.2.7 Human Resource Management

Just as the technology development focuses on the improvement of information interfaces, the e-commerce integration with the human resource management pays more attention to the personnel requirement of the control of the information exchange and the set up of the various databases.

The training of different personnel is to be different in arrangement. The new technicians need training of this new system, so the company can invite the programs designers to help the trainer for three months. To cut off the unnecessary employees involved present in the repeated work in the information collection, to make the size of personnel to be reasonable to the size of the company.#p#分页标题#e#

Administrator is mainly to manage the e-commerce site for access as well as the information processing of customers and products. He or she is also responsible for the orders, user information, website maintenance and management, etc. Besides the administrator ratification procedure, the strict network management of the personnel is needed as to run the personnel selection mechanism to employ the personnel of strong sense of responsibility and principle, and market. And in the last, implement responsibility system to require officers strictly to comply with the network security system, any breach of the responsibility will be firmly cracked down and even sued in the court.

Figure 6.4 Process of administrator

To print and notify all the daily work requirement is a way to pool support for the employees, therefore, the company should ratify new regulation systems, together with the training of the staff.

6.2.8Firm Infrastructure

The firm infrastructure is about the establishment of the e-commerce system’s operation system, by making a backup of software and hardwares. What are needed to add to present system is listed:

1) Purchase hardware firewall; set up multi-layered firewall systems; set up in the firewall between the internal and external networks to achieve isolation and access control; to install network management software to maintain and support the network equipment and hardware.

2) Carry out the control over the administrator, the user authentication and their access to different fields, including the information resources, read, write, implement, etc.

3) Enforce network transmission encryption for critical business and financial data

4) Regularly back up business and financial data through the main use of disk mirroring technology and other database technology.

5) Ratify different information with different confidential levels to guarantee the security of different information.

6) Set up the regulations to keep the security and performance dairy to monitor the work of the e-commerce system.

6.2.9Service

The after-sales service needs to be on the e-commerce system as well. It is necessary to record the after sales service condition onto the system, which is often neglected by the company before. And also, in order to finish this information collection, it is necessary to have their own service team and particularly the group for the group customers. And for the individual customers, it is necessary to require the employed technical teams to report their work through the e-commerce system.

It is of important to provide high quality service after sales for it means the further purchase of the customers. And the problems of the products can be significant to the new product innovation.

The following are some of the details to be notify in the e-commerce system.

Through the integration of different information systems, use CRM to advance the customer management. In CRM, the customer service and the supports can implement through the use of call centers and customer management, including: customer care, dispute resolution, order tracking, field service, problems and solutions database, maintenance and scheduling, service agreements and contracts, service request management and son on. The call center is the platform to connect the company, the customers and suppliers. Its main responsibility includes the dealing with the internal and external calls, the internet contacts, the running of the call center, the soft calls, the transfer of calls, the analysis of the calls record, and analysis of management etc. #p#分页标题#e#

Second, it is necessary to set up an emergency customer’s service team to deal with emergency situations as it is inevitable unexpected problems arise in the company.

The following are some measures to improve the service for the company through the e-commerce systemThrough the depiction of the 9 parts in the value net, it is now possible to integrate them into a whole e-commerce system in the company as the figure 6.5 shows:

Figure 6.5 The integration of EC in A

6.3 The cost of the e-commerce system

First of all, Yuanquan Company is a manufacturer and its implementation of the e-commerce system aims at B2C e-commerce’s profitability, and therefore, the profit and cost should be paid attention to in the process of establishing the system.

B2C can lose money because nothing less than the following two aspects: First, trading volume is too small to form a scale; second the subjective reasons of the company and external imperfections of traditional business services, which lead to the increase of the management cost. The loss of profit problem boils down to the problem of cost.

B2C is essentially suitable for the retailing industry, which means relatively low profit. To control the cost in B2C, it is necessary to cut down the cost of HR, ad, inventory and logistics. In the HR control, it is proper to hire the employees to provide services rather than management staff; the ad cost should be less than 20% of the whole cost. The inventory should be of suitable size to reduce the fiscal difficulty.

The second condition to achieve profit is to provide fast and effective service. To do this, it is required the products are clearly classified and stored, and the pay system is defined and easily carried out. To do this, it is also necessary to have a sound back end service, such as the logistics and delivery.

6.4 Summary

In chapter 6, the dissertation shows the integration of e-commerce with Yuanquan Company and the cost of the implementation of the system. From the change of management thoughts and the improvement of the infrastructure to the clarification of the sales and pay systems, the company can display its high efficiency and excellence through the establishment of the new e-commerce system. The parts of the value net are studied and advices are given out.

Chapter 7 Advice on the Implementation

7.0 Introduction

The designed e-commerce system is supposed to improve the performance of the company, and in this chapter, the gaps between the designed system and the present e-commerce condition are to be talked, the nest is the advice on the plan and the last part is about the suggestion on the implementation of the system.

7.1 Gaps

The present e-commerce of Yuanquan Company lags behind the designed e-commerce system, and gaps exist mainly in the database buildup, the technological infrastructure and the e-payment system.

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7.1.1The gap of the database up-dating

As to the database buildup, the present e-commerce system has the coarse frame of the database as it originally decided to set up it, all the data are out of date, and the database cannot reflect the actual change of the customers’ information, the inventory data. The database is the important source of the information for the e-commerce system, and the data involved are crucial to the decision making and the evaluation of the company’s performance. To make up the gap, it is important to record and update the data according to the facts. Besides the data of the customer and inventory, even the products introduction is far from the explicit level and needs up-dating to. The information can be better accepted if it is explained by the videos and instruction of the use, as well as the detailed evaluation of the other products from other competitors to illustrate the strong point sand high return ration of the products.

7.1.2 The gap of the technological infrastructure

At present Yuanquan company has already has this type of Turbo CRM, what they need to do is to expand the interface the company development asks for. The application middleware in establishing an integrated approach, the company needs to consider what information technology is used to achieve. So it is necessary to update the expansion of the e-commerce system to meet the further needs, based on the profound understanding of the sales and market researches. One of the principles according to e-commerce response is to improve the advanced operability, therefore, Yuanquan company chooses the Web service architecture, the J2EE platform, and the use of JMS for asynchronous communication, which can enable the company to easily increase or decrease the size of the future system, and in quite a long period of time to maintain the advanced performance of its Asynchronous technology.

7.1.3 Gap in the e-pay system

The present pay system of Yuanquan Company is mainly through the main Chinese national banks. But as the increase use of credit card by the individual customers, or even installment pay, the updating of e-pay system should be put on agenda. And the international trade is still just a plan for the company, but it is a long range envision for the e-pay system structure. The establishment of the credit card e-pay needs the audit of the related companies and work mechanics ratified by the companies in cooperation.

7.2 Advice on the plan

It is a complicated and costly plan to set up a relatively advanced e-commerce system on the present condition. Firstly, it is advisable to carry out a detailed analysis on the present condition, more detailed than the dissertation has mentioned. Secondly, it is also necessary to work out a schedule of the stages of the plan. And the plan should be notified by all the departments involved. Accordingly, the advice from different department should be collected and incorporate into the plan.

7.3 The advice on the implementation#p#分页标题#e#

The cost and the law requirement should be noticed in the implementation of the planned e-commerce system. The cost has been talked in Chapter 6, and it should be stressed that the cost might be paid off in a relatively long run as the present B2C users in China are about 2.53 billion. But it is worthy as the increase of the number is encouraging.

The collection of the customer’s information needs to observe the privacy protection laws. And to keep the value of business information, the company needs also be aware of the company competition laws and other law related to the information security problems.

It is possible, in the planning and implementation periods, unexpected problems arise, but the company should keep in mind that the e-commerce system is a valuable and must for its own development.

To sum up, the practical advice is given to realize the design the new e-commerce system in this chapter.

Chapter 8 Conclusion

8.0 Introduction

In this chapter, the reflection on the used methodology and on the author’s personal learning is to be mentioned.

8.1 Discuss the set-up of the research.

I am not so satisfied with the set up of the dissertation as there is a little distance between the literature review part with the necessary theories related to the e-commerce establishment in the company. But as the e-commerce system covers a series measures to take, it is difficult to find and state out all the related theories. I will choose the most relevant theories and fields to write about if I have more time for this dissertation.

There are some limitations in the used methods. The dissertation aims at finding out a solution for the Yuanquan Company to improve its competition with other companies in the same industry, which should be an all-round e-commerce design, including the sales, marketing, and product development. But it is a pity that the company is still at distance from the technology for product development and innovation. The present e-commerce design covers mainly on the sales, market, and service centered on the customers. This is the first major limitation of the e-commerce design, and also the limitation on the methodology. This may cause the mismatch between the analysis of the present problems of the company and the design of the new e-commerce system, which just solve the problem of the sales and market.

The second limitation of the methodology is the use of the models, such as E-PEST, Porter’s 5 Forces, SWOT and SWOT confrontation, as well as the value net analyses. As the telecom equipment industry is still comparatively new in China and the monopoly of 5 telecom service operator influence Chinese market, Yuanquan Company still focuses on its corporate customers, and the market of the individual customers is still in growth, therefore, it is far from perfect to measure the factors in the above models.

Despite the limitations, the dissertation clarifies the e-commerce system especially in the fields aiming at improving of the market share and customer’s awareness of the brand. In the long run, the focus on the sales will lead to the attention to the customer’s needs and new product innovation.

8.2 Reflection on Personal learning

I have learned more about the research methods and a scientific attitude toward the information collection, analysis and construction of the set-up in the dissertation writing.

It is difficult for me to collect the first hand information on the Chinese statistics on the recent development of china’s telecommunication industry. And what’s more, I regard the analysis of the data is not available for me easily, as I am weak in making comparison and making conclusion by sorting out the effective information but get lost in the mess of the data.

I believe that the writing of the dissertation is a long and painful process, in the hope that the research can shed light on the urgency for Chinese enterprises in the design of the e-commerce, which helps to improve their awareness of the importance of individual customers in the telecom equipment industry. On the other hand, the limitation of the present e-commerce system on the product development shows the necessity of innovation for Chinese enterprises.

For the writer, this writing shows the room for the personal improvement in the information searching and analysis, which may cause the difficulty for the understanding of the dissertation.

Biography and References

Chinese books, newspapers, and other resources

China Statistical Yearbook (2003)

Chinese citizens who use the internet service at least one hour a week on average. (CNNIC, 200

Chongqing Yuanquan Tongxun Co.ltd : http://www.cqyqtx.com/plus/list.php?tid=9

Fang Meiqi The Development of E-commerce Qinghua University, 2002.

Fong Tsai-Shin. The Impact of Web site Design on Consumer Lolalty Business-to-Consumer(B2C)Internet Commerce:A Rhetorical Approach.ProQu Information and Learning Company,2004:120-130.

Lu Fengxing To Cultivate Loyal Customers E-commerce,2004, 1:36-39.

Wang You，Wang Yunfeng，The E-commerce influence on the modern business,The Journal of Hebei University，2007，32（01）：129～134．

The E-commerce in China, E-commerce [J]. Nov. 2006.

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Hill, T. & R. Westbrook (1997). "SWOT Analysis: It’s Time for a Product Recall". Long Range Planning 30 (1): 46–52. doi:10.1016/S0024-6301(96)00095-7.Jan, Y. (2002) A three-step matrix method for strategic marketing management, Marketing Intelligence and Planning, Vol. 20 Issue 5, pp.269-272. #p#分页标题#e#

]Leslie Willcocks.The Ultimate Practical Guide to Effective E-business.Moving to e-Business.

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Customer Marketing Method[J].The Free Press.2000.

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Competitive Age. Edward Elgar Publishing Limited

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Systems Frontiers，1999，（1）：1，95～106．

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Economics(J).2006,101.

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The Yearbook of World Electronics Data, 2007.

Timmers P.Business Models for Electronic Markets.Journal on Electronic Markets[J].

1998,8(2).

Winn,W.,&Beck,K.The persuasive of design elements on an e-commerce web sThchnical Communication,2002,3:17-35.

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Anita Rosen (2000), The E-commerce Question and Answer Book (USA: American Management Association

Castelfranchi, C., and Tan, Y.H., The Role of Trust and Deception in Virtual Societies. International Journal of Electronic Commerce，2002(3):55-77

China Statistical Yearbook (2003)

Chinese citizens who use the internet service at least one hour a week on average. (CNNIC, 2007)

Chongqing Yuanquan Tongxun Co.ltd : http://www.cqyqtx.com/plus/list.php?tid=9

Dai，Q.，and Kauffman，R.J., Business Models for Internet一Based B to B Electronic Markets. International Journal of Electronic Commerce，2002(4):41-72

Duan Lisa，Guan Zhongliang. Optimal Tax Rates, Governmental Transfer Payment and Research on China's Electronic Commerce Security in the New Period. QUANTITATIVE AND TECHNICAL ECONOMICS，2002(1): 22-24

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Fong Tsai-Shin. The Impact of Web site Design on Consumer Lolalty Business-to-Consumer(B2C)Internet Commerce:A Rhetorical Approach.ProQu Information and Learning Company,2004:120-130.#p#分页标题#e#

Gary Hackbarth, William J. Kettinger: Building an E-Business Strategy. IS Management 17(3): 1-16 (2000).

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Lee，M.K.O., and Turban, E., A Trust Model for Consumer Internet Shopping. International Journal of Electronic Commerce，2001(1):75-91

Leslie Willcocks.The Ultimate Practical Guide to Effective E-business.Moving to e-Business.

Random House[J].2000.

Lu Fengxing To Cultivate Loyal Customers E-commerce,2004, 1:36-39.

Lu, D & Wong C.K. (2003). China’s Telecommunications Market: Entering a New

Competitive Age. Edward Elgar Publishing Limited

Michael J.Shaw，Electronic commerce:Review of critical research issues，Information

Systems Frontiers，1999，（1）：1，95～106．

Martinsons，M.G., Electronic Commerce in China: Emerging Success Stories. Information & Management，2002(7):571-579

Noguchi，T., Essence of the E-business Model and Its Asian Perspective. International Journal of Asian Management，2001(1):l-14

Porter, M.E. (1979) "How competitive forces shape strategy", Harvard business Review, March/April 1979.

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Ravi Kalakota &Andrew WhinstonElectronic Commerce: A Manager's Guide；1997.

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Economics(J).2006,101.

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Timmers P.Business Models for Electronic Markets.Journal on Electronic Markets[J].

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Appendix1.

Development of the Telecommunications Infrastructure from 1981 to 2000

_______________________________________________________________

1981-85 1986-90 1991-95 1996-2000

Local Switchboard Capacity Planned

2.70 6.35 18.00 150.00

(million lines) Achieved 3.37 8.26 54.60 179.00

Long-Distance Phone Lines Planned 28.01 109.62 350.00 2800.00

(thousand) Achieved 37.55 112.44 735.55 5635.50

Telephones per 100 Residents Planned N/A N/A Above 2.0 10.00

Achieved 0.60 1.11 4.66 20.10

Total TelePhone Planned N/A 9.50 23.90 123.00

(million) Achieved 6.30 12.70 57.60 171.50

Of which: mobile phones Planned N/A N/A N/A 18.00

(million) Achieved N/A 0.02 3.63 84.50

Post & Telecom Turnover Growth Planned 5.00 11.10 20.00 20.00

Rate

per annum (%) Achieved 9.80 22.50 35.10 38.00

____________________________________________________________________________

Source: Lu and Wong (2003)

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Appendix2

Local Switchboard Capacity and Fixed Line Subscriptions in China

___________________________________________________________________________

Year Local Switchboard

Capacity Growth Rate(%)

1980 4.56 2.141 3.74

1985 10.80 2.775 12.43

1990 19.05 5.680 20.60

1995 46.23 40.706 49.13

1996 28.98 54.947 34.99

1997 21.29 70.310 27.96

1998 22.67 87.421 24.34

1999 14.68 108.716 24.36

2000 16.16 144.829 33.22

2001 15.37 180.368 24.50

2002 37.86 214.222 18.88

Source: Lu and Wong (2003) and China Statistical Yearbook.

Appendix 3

Number of Registered Internet Subscribers in China (million)

_______________________________________________________________

1995 0.006

1996 0.080

1997 0.620

1998 2.100

1999 8.900

2000 15.350

2001 32.040

2002 46.700

_________________________________________________________________________

Source: Lu and Wong (2003).

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