10 MANAGEMENT THINKERS
C. K. Prahalad
Born: 1941, in Coimbatore, Tamil Nadu, India
Profile: Krishnarao Prahalad is a management consultant, author, and the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of Michigan Ross School of Business.
Contribution: C.K Prahalad co-author of “Competing for the future breakdown strategies for seizing control of your industry and creating the markets of tomorrow.”
Achievement: He is one of the recipients of Pravasi Bharatiya Sammaan awards in 2009 and was conferred the Padma Bhushan the same year.
Bill Gates
Born: October 28, 1955.
Profile: He is an American business magnate, philanthropist, author, and chairman of Microsoft, the software company he founded with Paul Allen. He is ranked consistently one of the world's wealthiest people and the wealthiest overall as of 2009. During his career at Microsoft, Gates held the positions of CEO and chief software architect, and remains the largest individual shareholder with more than 8 percent of the common stock.
Writing: The Road Ahead,
Awards and honors: Time magazine named Gates one of the 100 people who most influenced the 20th century, as well as one of the 100 most influential people of 2004, 2005, and 2006 In 2006, he was voted eighth in the list of "Heroes of our time".Gates has received honorary doctorates from Nyenrode Business Universiteit, Breukelen, The Netherlands, in 2000; the Royal Institute of Technology, Stockholm, Sweden, in 2002; Waseda University, Tokyo, Japan, in 2005; Tsinghua University, Beijing, China, in April 2007;Harvard University in June 2007; the Karolinska Institutet, Stockholm, in January 2008, and Cambridge University in June 2009.
Philip Kotler
Born: 27 May 1931 in Chicago
Profile: Philip Kotler is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University.
Contribution: Kotler has consulted many major U.S. and foreign companies, including IBM, Michelin, Bank of America, Merck, General Electric, Honeywell, and Motorola—in the areas of marketing strategy, planning and organization, and international marketing. He presents seminars in major international cities around the world on the latest marketing developments to companies and other organizations.
Achievement: Philip Kotler was selected in 2001 as the 4 major management guru by the Financial Times (behind Jack Welch, Bill Gates, and Peter Drucker,) and has been hailed by the Management Centre Europe as "the world's foremost expert on the strategic practice of marketing." In 2008, the Wall Street Journal listed him as the 6th most influential person on business thinking.
Dr. Gary P. Hamel
Born: Woodside, California
Profile: Hamel is an American management expert. He is a founder of Strategos, an international management consulting firm based in Chicago.
Contribution: Gary Hamel is the originator (with C. K. Prahalad) of the concept of core competencies. He is also the director of the Woodside Institute, a nonprofit research foundation based in Woodside, California.He is a visiting Professor of Strategic Management at London Business School. He was formerly a Visiting Professor of International Business at the University of Michigan (PhD 1990) and at Harvard Business School.
Awards and honors: Leading the Revolution, in which he had written a very positive profile of Enron.
Michael Porter
Born: In 1947
Profile: Michael Eugene Porter is a University Professor at Harvard Business School, with academic interests in management and economics
Contribution: Michael Porter is the founder of a nonprofit organization called the Initiative for a Competitive Inner City and one of the founders of The Monitor Group. His main academic objectives focus on how a firm or a region can build a competitive advantage and develop competitive strategy. One of his most significant contributions is the five forces.Porter's strategic system consists primarily of:
• Porter's Five Forces Analysis
• strategic groups (also called strategic sets)
• the value chain
• the generic strategies of cost leadership, product differentiation, and focus
• the market positioning strategies of variety based, needs based, and access based market positions
• global strategy
• Porter's clusters of competence for regional economic development
• Diamond model
Awards and honors: Michael E. Porter and Mark R. Kramer's latest article and winner of the 2006 McKinsey Award for the Best Harvard Business Review Article.
Peter Michael Senge
Born: 1947
Profile: He is an American scientist and director of the Center for Organizational Learning at the MIT Sloan School of Management. He is known as author of the book The Fifth Discipline: The art and practice of the learning organization from 1990 (new edition of 2007). He is a senior lecturer at the System Dynamics Group at MIT Sloan School of Management, and co-faculty at the New England Complex Systems Institute.
Contribution: An engineer by training, Peter was a protegé of John H. Hopkins and has followed closely the works of Michael Peters and Robert Fritz and based his books on pioneering works with the five disciplines in Ford, Chrysler, Shell, AT&T, Hannover Insurance, Harley-Davidson since the 70s and 80s through today.
Awards and honors: The Fifth Discipline is one of his most popular books with over one million copies sold. Peter Senge and the Learning Organization at the Infed Website
Alvin Toffler
Born: October 3, 1928
Profile: He is an American writer and futurist, known for his works discussing the digital revolution, communications revolution, corporate revolution and technological singularity. A former associate editor of Fortune magazine, his early work focused on technology and its impact (through effects like information overload). Then he moved to examining the reaction of and changes in society. His later focus has been on the increasing power of 21st century military hardware, weapons and technology proliferation, and capitalism
Contribution: In his book The Third Wave Toffler describes three types of societies, based on the concept of 'waves' - each wave pushes the older societies and cultures aside.
Awards and honors: He has been described in the Financial Times as the "world's most famous futurologist".
Richard Branson
Born: 18 July 1950
Profile: He is an English industrialist, best known for his Virgin brand of over 360 companies. Branson's first successful business venture was at age 16, when he published a magazine called Student.
Awards and honors: He was knighted in 1999 for his "services to entrepreneurship".[44][45] In 2000, Branson received the Tony Jannus Award for his accomplishments in commercial air transportation.
Ram Charan
Born: In 1939 in Uttar Pradesh, India
Profile: He is a business consultant, speaker, and writer.
Contribution: Charan has consulted for many well-known companies such as GE, KLM, and Bank of America. He is the author of various popular books on business, including Leadership in the Era of Economic Uncertainty: The New Rules for Getting the Right Things Done in Difficult Times, Boards That Deliver, What The CEO Wants You To Know, Boards At Work, Every Business Is A Growth Business (with Noel Tichy), Profitable Growth Is Everyone's Business, Confronting Reality,Know How and Execution (with Larry Bossidy and Charles Burck), which was a best-seller.
Awards and honors: Charan was elected a Fellow of the National Academy of Human Resources in 2000 and named a Distinguished Fellow in 2005. He is also a director of Austin Industries.
Paul Michael Romer
Born: 1955
Profile: He is an economist and Senior Fellow at Stanford University's Center for International Development and the Stanford Institute for Economic Policy Research. He is considered an expert on economic growth.
Contribution: Paul Romer's most important work is in the field of economic growth. Economists studied long-run growth extensively during the 1950s and 1960s. The work of Robert Solow, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. Romer's work in the 1980s and 1990s amounted to constructing mathematical representations of economies in which technological change is the result of the intentional actions of people, such as research and development.
Awards and honors: Romer was named one of America's 25 most influential people by Time Magazine in 1997[1], and in 2000 started the online educational company Aplia. He has been awarded the Horst Claus Recktenwald Prize in Economics in Nuremberg, Germany. Romer is the son of former Colorado Governor Roy Romer.
Peter Drucker
Profile: He (November 19, 1909–November 11, 2005) was a writer, management consultant, and self-described “social ecologist.” His books and scholarly and popular articles explored how humans are organized across the business, government and the nonprofit sectors of society.
Contribution: His writings have predicted many of the major developments of the late twentieth century, including privatization and decentralization; the rise of Japan to economic world power; the decisive importance of marketing; and the emergence of the information society with its necessity of lifelong learning. In 1959, Drucker coined the term “knowledge worker" and later in his life considered knowledge work productivity to be the next frontier of management.
Awards and honors: Drucker was awarded the Presidential Medal of Freedom by U.S. President George W. Bush on July 9, 2002[1]. He also received honors from the governments of Japan and Austria. He was the Honorary Chairman of the Peter F. Drucker Foundation for Nonprofit Management, now the Leader to Leader Institute, from 1990 through 2002. In 1969 he was awarded New York University’s highest honor, the NYU Presidential Citation.
James G. March
Born: 1928 in Cleveland, Ohio
Profile: He is Professor Emeritus at Stanford University, best known for his research on organizations and organizational decision making.
Contribution: The scope of his academic work is broad, but focused on understanding how decisions happen in individuals, groups, organizations, companies and society. He explores factors that influences decision making, such as risk orientation, leadership and the ambiguity of the present and the past; politics and vested interests by stakeholders; the challenges of giving and receiving advice; the challenges of organizational and individual learning and the challenges of balancing exploration and exploitation in organizations.
Awards and honors: He has received numerous teaching awards. He interacts and communicates in many different forms as books, articles, interactive seminars, films and poetry.
Vijay Govindarajan
Probile: Vijay Govindarajan, known as VG, is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business and founding director of Tuck's Center for Global Leadership. He is also the faculty co-director for Global Leadership 2020, Tuck's executive education program that focuses on global management and is taught on three continents.
Contribution: Govindarajan currently writes a column for FastCompany.com. His articles have also appeared in journals such as Harvard Business Review, strategy+business, California Management Review, MIT Sloan Management Review, Accounting, Organizations and Society, Decision Sciences, and Journal of Business Strategy. One of his papers, co-authored with Professor Anil K. Gupta, was recognized as one of the ten most-often cited articles in the entire 40-year history of Academy of Management Journal. Govindarajan has published six books, including The Quest for Global Dominance (co-authored with Anil K. Gupta,Jossey-Bass, 2001). He is a popular keynote speaker and has been featured at such conferences as the Business Week CEO Forum and The Economist Conference.
Achievement: He was awarded the President's Gold Medal for his outstanding performance in obtaining the first rank.
Shiv Khera
Profile: He is an Indian motivational speaker, author of self-help books, business consultant, activist and politician.
Contribution: Khera has been delivering motivational lectures for more than ten years, primarily in India, US and Singapore. He has spoken in seminars, workshops and as keynote speaker in conferences. He has developed a three-day workshop called Blueprint for Success, which focuses on "the key areas of MAALTS (motivation, attitude, ambition, leadership, teamwork and self-esteem)". In addition, Khera also conducts in-house workshops on time and stress management, customer service, platform skills and improving sales.
Awards and honors: He has been recognized as a "Louis Marchesi Fellow" by the Round Table Foundation. Lions Club International gave him a "Lifetime Achievement Award" for the cause of 'Humanitarian Service to the Society'. He has also received the Rotary Club's "Centennial Vocational Award for Excellence."
Gita Piramal
Born: around 1954
Profile: He is a renowned media personality, freelance writer, business historian, managing editor of The Smart Manager magazine, Director of BP Ergo and former director of VIP Industries Limited.
Contribution: Gita worked as a Bombay correspondent for Financial Times from 1988 to 1992. Gita Piramal had worked as the Associate Dean for Indian School of Business's publishing arm She has also worked as Member LBS Regional Advisory Board. She has been working as managing editor of The Smart Manager, a management magazine, based at Mumbai, since 2002. She has written for many years on the corporate sector for leading Indian and international publications such as the Financial Times and the Economic Times and is a consulting editor of the World Executive’s Digest. She also has been involved in the making of television programmes on Indian business for the BBC and Plus Channel.
Awards and honors: Gita had received 'Business Today Award' for being one of India's 25 most powerful women in 2004. She also received the Scholar of the Year 2004 award from Ness Wadia College, Pune, India. Her two books have been adjudged as best management book by Delhi Management Association.
Monday, November 30, 2009
Canara bank
Canara bank
Mission:
To provide quality banking services with enhanced customer orientation, higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking.
Objective:
1. To promote and develop in India, sound and progressive banking principles, practices and convention and to contribute to the developments of creative banking.
2. To initiate advance planning for introduction of new systems or services in the banking.
3. To project a good public image of banking as a service industry and develop good public relations.
Strategies:
1. Customer comes first.
Banking has become the commodity business. By getting to know customers, commodity bankers hope to build long term relationships and attract new customers.
2. Broadening customer base.
They are trying to gain customer by adding new location.
3. Core banking.
Its helps the customer save time, reduce costs and improve operation.
Policies
1. Customer would be contacted ordinarily at the place of his choice and in the absence of any specified place at the place of his residence in the case of retail customers and in the place of business or residence as the case may be in the case of other customers.
2. Identity and authority to represent will be made known to the customer at the first instance.
3. Customers’ privacy would be respected.
4. The bank is committed to ensure that all written and verbal communication with its customers will be in simple business language and bank will adopt civil manners for interaction with customers.
5. Customer calling time will be between 0700 hrs and 1900 hrs, unless the special circumstances of the customer's business or occupation demands otherwise.
Rules and procedure:
1. Fair practices especially with regard to collection of dues and repossession of security
2. Fostering customer confidence and long-term relationship.
3. Do not follow any rules that are unduly coercive in collection of dues.
4. Bank's dues-collection policy is built on courtesy, fair treatment and persuasion.
Programme/project:
Canara Bank holds career guidance programme
Centre for entrepreneurship development for women of Canara Bank, Circle office, Hubli, conducted a career guidance programme for the final year students of SJMVS Arts and Commerce College for Women here recently. Bank's deputy general manager Jaiprakash inaugurated the programme. He said the bank motivates, trains and assists aspiring women entrepreneurs so that they become assets of the country.
Noting that the bank gives 1% and 0.50% concessions for women on education loan and for taking up entrepreneurship, he asked the students to derive maximum benefit of the facilities for a better future.
Canara Bank Relief and Welfare Society for Aged, Child welfare, Disability.
This organization has been working since 1961 in the above areas. It is recognized charitable organizations. It runs a 100-bed hospital, a foundling home for children (which is a licensed adoption centre for both in-country and inter-country adoptions); home for elders, a geriatric care centre, a Braille transcription centre and a counseling centre. It depends on financial assistance by individuals and institutions apart from the hospitals own generation of income.
Budget:
In the budget of Canara Bank they first lay down the fundamental targets necessary for continuous progress of the business. These target may be in rupee figures, market share, expansion and diversification etc.
Canara Bank (CNBK) reported a net profit of Rs7.2bn for Q4FY09 ahead of expectations. The robust performance was driven by better than expected NII and higher treasury income.
Mission:
To provide quality banking services with enhanced customer orientation, higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking.
Objective:
1. To promote and develop in India, sound and progressive banking principles, practices and convention and to contribute to the developments of creative banking.
2. To initiate advance planning for introduction of new systems or services in the banking.
3. To project a good public image of banking as a service industry and develop good public relations.
Strategies:
1. Customer comes first.
Banking has become the commodity business. By getting to know customers, commodity bankers hope to build long term relationships and attract new customers.
2. Broadening customer base.
They are trying to gain customer by adding new location.
3. Core banking.
Its helps the customer save time, reduce costs and improve operation.
Policies
1. Customer would be contacted ordinarily at the place of his choice and in the absence of any specified place at the place of his residence in the case of retail customers and in the place of business or residence as the case may be in the case of other customers.
2. Identity and authority to represent will be made known to the customer at the first instance.
3. Customers’ privacy would be respected.
4. The bank is committed to ensure that all written and verbal communication with its customers will be in simple business language and bank will adopt civil manners for interaction with customers.
5. Customer calling time will be between 0700 hrs and 1900 hrs, unless the special circumstances of the customer's business or occupation demands otherwise.
Rules and procedure:
1. Fair practices especially with regard to collection of dues and repossession of security
2. Fostering customer confidence and long-term relationship.
3. Do not follow any rules that are unduly coercive in collection of dues.
4. Bank's dues-collection policy is built on courtesy, fair treatment and persuasion.
Programme/project:
Canara Bank holds career guidance programme
Centre for entrepreneurship development for women of Canara Bank, Circle office, Hubli, conducted a career guidance programme for the final year students of SJMVS Arts and Commerce College for Women here recently. Bank's deputy general manager Jaiprakash inaugurated the programme. He said the bank motivates, trains and assists aspiring women entrepreneurs so that they become assets of the country.
Noting that the bank gives 1% and 0.50% concessions for women on education loan and for taking up entrepreneurship, he asked the students to derive maximum benefit of the facilities for a better future.
Canara Bank Relief and Welfare Society for Aged, Child welfare, Disability.
This organization has been working since 1961 in the above areas. It is recognized charitable organizations. It runs a 100-bed hospital, a foundling home for children (which is a licensed adoption centre for both in-country and inter-country adoptions); home for elders, a geriatric care centre, a Braille transcription centre and a counseling centre. It depends on financial assistance by individuals and institutions apart from the hospitals own generation of income.
Budget:
In the budget of Canara Bank they first lay down the fundamental targets necessary for continuous progress of the business. These target may be in rupee figures, market share, expansion and diversification etc.
Canara Bank (CNBK) reported a net profit of Rs7.2bn for Q4FY09 ahead of expectations. The robust performance was driven by better than expected NII and higher treasury income.
Renesis Likert:
Renesis Likert:
Dr Renesis Likert has studied human behavior within many organizations. After extensive research, Dr. Rensis Likert concluded that there are four systems of management. According to Likert, the efficiency of an organization or its departments is influenced by their system of management. Likert categorized his four management systems as follows;
Exploitive authoritative system (1)
In this type of management system the job of employees/subordinates is to abide by the decisions made by managers and those with a higher status than them in the organisation. The subordinates do not participate in the decision making. The organisation is concerned simply about completing the work. The organisation will use fear and threats to make sure employees complete the work set. There is no teamwork involved.
Benevolent authoritative system (2)
Just as in an exploitive authoritative system, decisions are made by those at the top of the organisation and management. However employees are motivated through rewards (for their contribution) rather than fear and threats. Information may flow from subordinates to managers but it is restricted to “what management want to hear”.
Consultative system (3)
In this type of management system, subordinates are motivated by rewards and a degree of involvement in the decision making process. Management will constructively use their subordinates ideas and opinions. However involvement is incomplete and major decisions are still made by senior management. There is a greater flow of information (than in a benevolent authoritative system) from subordinates to management. Although the information from subordinate to manager is incomplete and euphemistic.
Participative (group) system (4)
Management have complete confidence in their subordinates/employees. There is lots of communication and subordinates are fully involved in the decision making process. Subordinates comfortably express opinions and there is lots of teamwork. Teams are linked together by people, who are members of more than one team. Likert calls people in more than one group “linking pins”. Employees throughout the organisation feel responsible for achieving the organisation’s objectives. This responsibility is motivational especially as subordinates are offered economic rewards for achieving organisational goals which they have participated in setting.
Likerts Ideal System
Likert believes that if an organisation is to achieve optimum effectiveness then the “ideal” system to adopt is Participative (system 4).
Dr Renesis Likert has studied human behavior within many organizations. After extensive research, Dr. Rensis Likert concluded that there are four systems of management. According to Likert, the efficiency of an organization or its departments is influenced by their system of management. Likert categorized his four management systems as follows;
Exploitive authoritative system (1)
In this type of management system the job of employees/subordinates is to abide by the decisions made by managers and those with a higher status than them in the organisation. The subordinates do not participate in the decision making. The organisation is concerned simply about completing the work. The organisation will use fear and threats to make sure employees complete the work set. There is no teamwork involved.
Benevolent authoritative system (2)
Just as in an exploitive authoritative system, decisions are made by those at the top of the organisation and management. However employees are motivated through rewards (for their contribution) rather than fear and threats. Information may flow from subordinates to managers but it is restricted to “what management want to hear”.
Consultative system (3)
In this type of management system, subordinates are motivated by rewards and a degree of involvement in the decision making process. Management will constructively use their subordinates ideas and opinions. However involvement is incomplete and major decisions are still made by senior management. There is a greater flow of information (than in a benevolent authoritative system) from subordinates to management. Although the information from subordinate to manager is incomplete and euphemistic.
Participative (group) system (4)
Management have complete confidence in their subordinates/employees. There is lots of communication and subordinates are fully involved in the decision making process. Subordinates comfortably express opinions and there is lots of teamwork. Teams are linked together by people, who are members of more than one team. Likert calls people in more than one group “linking pins”. Employees throughout the organisation feel responsible for achieving the organisation’s objectives. This responsibility is motivational especially as subordinates are offered economic rewards for achieving organisational goals which they have participated in setting.
Likerts Ideal System
Likert believes that if an organisation is to achieve optimum effectiveness then the “ideal” system to adopt is Participative (system 4).
Types of Departmentation
Types of Departmentation
(a) Functions, e.g., sales, production, personnel, planning, transport, etc.
(b) Products, e.g., air-conditioners, accounting machines, electronic calculators, etc.
(c) Territory, region, or geographical area, e.g., Northern Railway, Western Railway, N.E. Railway, etc.
(d) Customer, e.g., wholesaler, retailer, government.
(e) Process.
(f) Appropriate combination of any of these types.
Function wise Departmentation
Under each of these five managers, there will be subordinate managers and under them, the subordinate staff.
The advantages of this type of structure are as follows:
(i) It is a logical reflection of functions.
(ii) It follows the principle of specialisation.
(iii) Maintains power and prestige of major functions.
(iv) Inter-departmental co-ordination is facilitated.
(v) The structure is simple, logical and easy to understand.
(vi) Provides a good means of control at the top.
There are also some disadvantages:
(i) Responsibility for profits tends to be at the top.
(ii) There may be chances of heavy centralisation in decision-making.
(iii) Where geographical centralisation is desirable or required, this form becomes unsuitable.
(iv) This is not very suitable where product lines have to be emphasized.
(v) There is a lower potential for manager development.
Product wise Departmentation
The advantages of this type of structure are:
(i) Places greater effort on individual product line.
(ii) Better customer service arising from greater product knowledge.
(iii) Simplifies departmentation of profitability of each product line. Responsibility for profits is at the Division level.
(iv) Improves co-ordination of functional activities.
(v) New department may be added without difficulty. Permits growth and diversity of products and services.
(vi) Detailed information on markets for specific products will be generated.
(vii) Extremely suitable where product lines are complex or vary greatly.
(viii) Furnishes measurable training ground for Managers.
Some of the disadvantages inherent in such departmentation are:
(i) A customer has to deal with different salesmen or managers for different products of the same company.
(ii) Extra costs of maintaining separate sales force for each product.
(iii) Duplication of costs on travel, etc.
(iv) Tends to make maintenance of economical central services difficult.
(v) Results in increased problems of the top management control.
Territorial or Geographical Departmentation
The advantages of such departmentation are:
(i) Regional expertise is generated and managers can tackle customers or competition better. Places responsibility at lower levels.
(ii) Proximity will reduce costs of operation and administration.
(iii) Places emphasis on local markets and problems. Local conditions might warrant different types of selling. This is possible only in territorial departmentation.
(iv) Improves co-ordination at the regional level.
(v) Better face-to-face communication with local interests in mind.
(vi) Better manager development.
Some disadvantages are listed as follows:
(i) Involves higher costs of co-ordination and control from headquarters.
(ii) Results in more managerial levels which increases overhead costs.
(iii) Unsuitable for departments like Finance, where no gains are possible by specialisation on local factors.
(iv) Increases problems of the top management control.
Departmentation by Customers
Some advantages of this type of structure are:
(i) Greater specialized customer service.
(ii) Where marketing channels are considerably different for various types of customers, this type of structure is very useful.
Some disadvantages of this type are:
(i) May not be enough work for certain types of customers. Hence, under employment of facilities and manpower specialized in terms of customer groups.
(ii) Problems of co-ordination might pose difficulties.
(iii) Unequal development of customer groups.
(a) Functions, e.g., sales, production, personnel, planning, transport, etc.
(b) Products, e.g., air-conditioners, accounting machines, electronic calculators, etc.
(c) Territory, region, or geographical area, e.g., Northern Railway, Western Railway, N.E. Railway, etc.
(d) Customer, e.g., wholesaler, retailer, government.
(e) Process.
(f) Appropriate combination of any of these types.
Function wise Departmentation
Under each of these five managers, there will be subordinate managers and under them, the subordinate staff.
The advantages of this type of structure are as follows:
(i) It is a logical reflection of functions.
(ii) It follows the principle of specialisation.
(iii) Maintains power and prestige of major functions.
(iv) Inter-departmental co-ordination is facilitated.
(v) The structure is simple, logical and easy to understand.
(vi) Provides a good means of control at the top.
There are also some disadvantages:
(i) Responsibility for profits tends to be at the top.
(ii) There may be chances of heavy centralisation in decision-making.
(iii) Where geographical centralisation is desirable or required, this form becomes unsuitable.
(iv) This is not very suitable where product lines have to be emphasized.
(v) There is a lower potential for manager development.
Product wise Departmentation
The advantages of this type of structure are:
(i) Places greater effort on individual product line.
(ii) Better customer service arising from greater product knowledge.
(iii) Simplifies departmentation of profitability of each product line. Responsibility for profits is at the Division level.
(iv) Improves co-ordination of functional activities.
(v) New department may be added without difficulty. Permits growth and diversity of products and services.
(vi) Detailed information on markets for specific products will be generated.
(vii) Extremely suitable where product lines are complex or vary greatly.
(viii) Furnishes measurable training ground for Managers.
Some of the disadvantages inherent in such departmentation are:
(i) A customer has to deal with different salesmen or managers for different products of the same company.
(ii) Extra costs of maintaining separate sales force for each product.
(iii) Duplication of costs on travel, etc.
(iv) Tends to make maintenance of economical central services difficult.
(v) Results in increased problems of the top management control.
Territorial or Geographical Departmentation
The advantages of such departmentation are:
(i) Regional expertise is generated and managers can tackle customers or competition better. Places responsibility at lower levels.
(ii) Proximity will reduce costs of operation and administration.
(iii) Places emphasis on local markets and problems. Local conditions might warrant different types of selling. This is possible only in territorial departmentation.
(iv) Improves co-ordination at the regional level.
(v) Better face-to-face communication with local interests in mind.
(vi) Better manager development.
Some disadvantages are listed as follows:
(i) Involves higher costs of co-ordination and control from headquarters.
(ii) Results in more managerial levels which increases overhead costs.
(iii) Unsuitable for departments like Finance, where no gains are possible by specialisation on local factors.
(iv) Increases problems of the top management control.
Departmentation by Customers
Some advantages of this type of structure are:
(i) Greater specialized customer service.
(ii) Where marketing channels are considerably different for various types of customers, this type of structure is very useful.
Some disadvantages of this type are:
(i) May not be enough work for certain types of customers. Hence, under employment of facilities and manpower specialized in terms of customer groups.
(ii) Problems of co-ordination might pose difficulties.
(iii) Unequal development of customer groups.
Management by objectives
Management by objectives
Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
Features and Advantages
Unique features and advantage of the MBO process
The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals.
Some of the important features and advantages of MBO are:
1. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
2. Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
3. Clarity of goals – With MBO, came the concept of SMART goals[2] i.e. goals that are:
1. Specific
2. Measurable
3. Achievable
4. Relevant, and
5. Time bound.
The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees.
The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback.
In some sectors (Healthcare, Finance etc.) many add ER to make SMARTER, The ER can have many meanings including
Domains and levels
Objectives can be set in all domains of activities (production, services, sales, R&D, human resources, finance, information systems etc.).
Some objectives are collective, for a whole department or the whole company, others can be individualized.
Practice
Objectives need quantifying and monitoring. Reliable management information systems are needed to establish relevant objectives and monitor their "reach ratio" in an objective way. Pay incentives (bonuses) are often linked to results in reaching the objectives
Limitations
There are several limitations to the assumptive base underlying the impact of managing by objectives, including:
1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity.
3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees should be, not at what they should do.
4. It did not address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. The model didn’t adequately cope with the obstacles of:
* Defects in resources, planning and methodology,
* The increasing burden of managing the information organization challenge,
* The impact of a rapidly changing environment, which could alter the landscape enough to make yesterday’s goals and action plans irrelevant to the present.
When this approach is not properly set, agreed and managed by organizations, in self-centered thinking employees, it may trigger an unethical behavior of distorting the system of results and financial figures to falsely achieve targets that were set in a short-term, narrow, bottom-line fashion.
The use of MBO needs to be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the 'empowerment' fad, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed, based upon a more strategic picture being available to employees. Engagement of employees in the objective setting process is seen as a strategic advantage by many
A saying around MBO and CSF's -- "What gets measured gets done" is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.
Arguments Against
MBO has its detractors, notably among them W. Edwards Deming, who argue that a lack of understanding of systems commonly results in the misapplication of objectives.
One trap is not differentiating between common and special cause. Deming had a simple demonstration to illustrate Common Cause Variation. He would suspend a funnel over a table and cover the table with a paper, marking the point on the paper above which the funnel was suspended. He would then repeatedly drop a marble into the funnel, which would roll and eventually come to rest some distance from the point under the funnel, and each time he would mark the resting point. Eventually, it could be seen that the resting points were distributed around the point under the funnel and a circle could be drawn representing a boundary where predictably all marbles would come to rest. This distribution is attributable to common cause. A manager could set an objective, saying that marbles should be as close to the point under the funnel as possible, and easily express this objective using the SMART(ER) criteria. With an understanding of common cause, it is possible to calculate the probability of a marble meeting the objective, but the objective itself does not change the quality inherent to the system. Unfortunately, it is human nature to assume that there is something better about random events that meet arbitrary objectives, and assign their superiority to a non-existent special cause. For example, the manager might say that the person who dropped the marble that met the objective was more diligent than the person whose drop did not; it is likely that the two are indistinguishable and no such special cause exists.
This does not mean that there is no way to meet objectives. Deming concluded his demonstration by lowering the funnel over a fresh sheet of paper and dropping another series of marbles through it. This is a systemic change that results in a change in the system's quality, the reduction of the boundary radius. This change could potentially meet the objective set by the manager, but is also the basis of a second trap; a single SMART(ER) objective is not necessarily the best criteria for judging the fitness of potential solutions. There are numerous cases of employees meeting their managers' objectives by contravening policy, regulations, ethical considerations and laws. Point 7 of Deming's 14 Points encourages managers to abandon objectives in favour of leadership because he felt that a leader with an understanding of systems was more likely to guide workers to an appropriate solution than the incentive of an objective.
Deming also stressed the point that a leader must have an understanding of systems because there is a third trap, incorrectly assuming that improving a component of the system always improves the whole system. A business system is usually made up of interdependent components. A simple example of this is a hypothetical factory that makes products from raw materials, with its two components being a stocking facility for raw materials and an assembly facility for making products from raw materials. The manager of this factory has noted that production is 100 units a day on average, but the stock room holds enough raw materials to make 150 units a day. Seeing this as wasteful, the manager sets the objective that stock must be reduced. The problem is that the 150 units of raw materials may coincide with an upper control limit of production. If the assembly facility produces its average of 100 units a day with a assembly process that varies from 50 to 150 units a day, the assumed beneficial reduction of raw materials will also cause a detrimental reduction of productivity, as the factory will no longer have the raw materials on hand to make up for the days when the system fails to produce. A leader with an understanding of systems could observe the interdependence and make adjustments to the assembly process that would allow the reduction of stock. A manager using only objectives would likely blame the assembly team of slipping when in fact they had made no change at all. Deming points out that Drucker also warned managers that a systemic view was required and felt that Drucker's warning went largely unheeded by the practitioners of MBO.
A more fundamental and authoritative critique comes from Walter A. Shewhart / W. Edwards Deming, the fathers of Modern Quality Management, for whom MBO is the opposite of their founding Philosophy of Statistical Proce
rds Deming, the fathers of Modern Quality Management, for whom MBO is the opposite of their founding Philosophy of Statistical Process Control
Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
Features and Advantages
Unique features and advantage of the MBO process
The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals.
Some of the important features and advantages of MBO are:
1. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
2. Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
3. Clarity of goals – With MBO, came the concept of SMART goals[2] i.e. goals that are:
1. Specific
2. Measurable
3. Achievable
4. Relevant, and
5. Time bound.
The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees.
The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback.
In some sectors (Healthcare, Finance etc.) many add ER to make SMARTER, The ER can have many meanings including
Domains and levels
Objectives can be set in all domains of activities (production, services, sales, R&D, human resources, finance, information systems etc.).
Some objectives are collective, for a whole department or the whole company, others can be individualized.
Practice
Objectives need quantifying and monitoring. Reliable management information systems are needed to establish relevant objectives and monitor their "reach ratio" in an objective way. Pay incentives (bonuses) are often linked to results in reaching the objectives
Limitations
There are several limitations to the assumptive base underlying the impact of managing by objectives, including:
1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity.
3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees should be, not at what they should do.
4. It did not address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. The model didn’t adequately cope with the obstacles of:
* Defects in resources, planning and methodology,
* The increasing burden of managing the information organization challenge,
* The impact of a rapidly changing environment, which could alter the landscape enough to make yesterday’s goals and action plans irrelevant to the present.
When this approach is not properly set, agreed and managed by organizations, in self-centered thinking employees, it may trigger an unethical behavior of distorting the system of results and financial figures to falsely achieve targets that were set in a short-term, narrow, bottom-line fashion.
The use of MBO needs to be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the 'empowerment' fad, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed, based upon a more strategic picture being available to employees. Engagement of employees in the objective setting process is seen as a strategic advantage by many
A saying around MBO and CSF's -- "What gets measured gets done" is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.
Arguments Against
MBO has its detractors, notably among them W. Edwards Deming, who argue that a lack of understanding of systems commonly results in the misapplication of objectives.
One trap is not differentiating between common and special cause. Deming had a simple demonstration to illustrate Common Cause Variation. He would suspend a funnel over a table and cover the table with a paper, marking the point on the paper above which the funnel was suspended. He would then repeatedly drop a marble into the funnel, which would roll and eventually come to rest some distance from the point under the funnel, and each time he would mark the resting point. Eventually, it could be seen that the resting points were distributed around the point under the funnel and a circle could be drawn representing a boundary where predictably all marbles would come to rest. This distribution is attributable to common cause. A manager could set an objective, saying that marbles should be as close to the point under the funnel as possible, and easily express this objective using the SMART(ER) criteria. With an understanding of common cause, it is possible to calculate the probability of a marble meeting the objective, but the objective itself does not change the quality inherent to the system. Unfortunately, it is human nature to assume that there is something better about random events that meet arbitrary objectives, and assign their superiority to a non-existent special cause. For example, the manager might say that the person who dropped the marble that met the objective was more diligent than the person whose drop did not; it is likely that the two are indistinguishable and no such special cause exists.
This does not mean that there is no way to meet objectives. Deming concluded his demonstration by lowering the funnel over a fresh sheet of paper and dropping another series of marbles through it. This is a systemic change that results in a change in the system's quality, the reduction of the boundary radius. This change could potentially meet the objective set by the manager, but is also the basis of a second trap; a single SMART(ER) objective is not necessarily the best criteria for judging the fitness of potential solutions. There are numerous cases of employees meeting their managers' objectives by contravening policy, regulations, ethical considerations and laws. Point 7 of Deming's 14 Points encourages managers to abandon objectives in favour of leadership because he felt that a leader with an understanding of systems was more likely to guide workers to an appropriate solution than the incentive of an objective.
Deming also stressed the point that a leader must have an understanding of systems because there is a third trap, incorrectly assuming that improving a component of the system always improves the whole system. A business system is usually made up of interdependent components. A simple example of this is a hypothetical factory that makes products from raw materials, with its two components being a stocking facility for raw materials and an assembly facility for making products from raw materials. The manager of this factory has noted that production is 100 units a day on average, but the stock room holds enough raw materials to make 150 units a day. Seeing this as wasteful, the manager sets the objective that stock must be reduced. The problem is that the 150 units of raw materials may coincide with an upper control limit of production. If the assembly facility produces its average of 100 units a day with a assembly process that varies from 50 to 150 units a day, the assumed beneficial reduction of raw materials will also cause a detrimental reduction of productivity, as the factory will no longer have the raw materials on hand to make up for the days when the system fails to produce. A leader with an understanding of systems could observe the interdependence and make adjustments to the assembly process that would allow the reduction of stock. A manager using only objectives would likely blame the assembly team of slipping when in fact they had made no change at all. Deming points out that Drucker also warned managers that a systemic view was required and felt that Drucker's warning went largely unheeded by the practitioners of MBO.
A more fundamental and authoritative critique comes from Walter A. Shewhart / W. Edwards Deming, the fathers of Modern Quality Management, for whom MBO is the opposite of their founding Philosophy of Statistical Proce
rds Deming, the fathers of Modern Quality Management, for whom MBO is the opposite of their founding Philosophy of Statistical Process Control
Electronic commerce
Electronic commerce
Electronic commerce, commonly known as (electronic marketing) e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.
A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.
Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.
History
Early development
The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK.
Online shopping, an important component of electronic commerce, was invented by Michael Aldrich in the UK in 1979. The world's first recorded B2B was Thomson Holidays in 1981 [1] The first recorded B2C was Gateshead SIS/Tesco in 1984 .The world's first recorded online shopper was Mrs Jane Snowball of Gateshead, England During the 1980s, online shopping was also used extensively in the UK by auto manufacturers such as Ford, Peugeot-Talbot, General Motors and Nissan.All these organizations and others used the Aldrich systems. The systems used the switched public telephone network in dial-up and leased line modes. There was no broadband capability.
From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.
An early example of many-to-many electronic commerce in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. An early online information marketplace, including online consulting, was the American Information Exchange, another pre Internet online system introduced in 1991.
In 1990 Tim Berners-Lee invented the World Wide Web and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet was strictly prohibited until 1991 . Although the Internet became popular worldwide around 1994 when the first internet online shopping started, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.
Timeline:
1979: Online shopping was invented in the UK by Michael Aldrich.
1982: Minitel was introduced nationwide in France by France Telecom and used for online ordering.
1987: Swreg begins to provide software and shareware authors means to sell their products online through an electronic Merchant account.
1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.
1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martin's Press. ISBN 0312063598.
1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also become commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL encryption that made transactions secure.
1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launches to sell decorative items for the home online.
2000: The dot-com bust.
2002: eBay acquires PayPal for $1.5 billion [6]. Niche retail companies CSN Stores and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
2003: Amazon.com posts first yearly profit.
2007: Business.com acquired by R.H. Donnelley for $345 million
2008: US eCommerce and Online Retail sales projected to reach $204 billion, an increase of 17 percent over 2007
Business applications:
Some common applications related to electronic commerce are the following:
Email
Enterprise content management
Instant messaging
Newsgroups
Online shopping and order tracking
Online banking
Online office suites
Domestic and international payment systems
Shopping cart software
Teleconferencing
Electronic tickets
Government regulations
In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers’ personal information. As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.[11]
Forms:
Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce.
On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books or groceries, to expensive items like real estate. Another example would be online banking, i.e. online bill payments, buying stocks, transferring funds from one account to another, and initiating wire payment to another country. All of these activities can be done with a few strokes of the keyboard.
On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce today.
What is E-Commerce ?
What is E-Commerce', 'Electronic Commerce (EC) is the paperless exchange of business information using Electronic Data Interchange (EDI) and related technologies. If you are familiar with Electronic Mail (E-Mail), computer bulletin boards, facsimile machines (faxes), Electronic Funds Transfer (EFT) you can very well understand what is e-commerce. These are all forms of EC. All EC systems replace all or key parts of paper-based work flow with faster, cheaper, more efficient, and more reliable communications between machines. In today's Defense Department procurement arena, however the most important EC technology to know about is Electronic Data Interchange, or EDI.
An introduction into e-commerce
E-commerce advantages and disadvantages
E-commerce provides many new ways for businesses and consumers to communicate and conduct business. There are a number of advantages and disadvantages of conducting business in this manner.
E-commerce advantages
Some advantages that can be achieved from e-commerce include:
• Being able to conduct business 24 x 7 x 365 . E-commerce systems can operate all day every day. Your physical storefront does not need to be open in order for customers and suppliers to be doing business with you electronically.
• Access the global marketplace . The Internet spans the world, and it is possible to do business with any business or person who is connected to the Internet. Simple local businesses such as specialist record stores are able to market and sell their offerings internationally using e-commerce. This global opportunity is assisted by the fact that, unlike traditional communications methods, users are not charged according to the distance over which they are communicating.
• Speed. Electronic communications allow messages to traverse the world almost instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that communications delay is not a part of the Internet / e-commerce world.
• Marketspace. The market in which web-based businesses operate is the global market. It may not be evident to them, but many businesses are already facing international competition from web-enabled businesses.
• Opportunity to reduce costs. The Internet makes it very easy to 'shop around' for products and services that may be cheaper or more effective than we might otherwise settle for. It is sometimes possible to, through some online research, identify original manufacturers for some goods - thereby bypassing wholesalers and achieving a cheaper price.
• Computer platform-independent . 'Many, if not most, computers have the ability to communicate via the Internet independent of operating systems and hardware. Customers are not limited by existing hardware systems' (Gascoyne & Ozcubukcu, 1997:87).
• Efficient applications development environment - 'In many respects, applications can be more efficiently developed and distributed because the can be built without regard to the customer's or the business partner's technology platform. Application updates do not have to be manually installed on computers. Rather, Internet-related technologies provide this capability inherently through automatic deployment of software updates' (Gascoyne & Ozcubukcu, 1997:87).
• Allowing customer self service and 'customer outsourcing'. People can interact with businesses at any hour of the day that it is convenient to them, and because these interactions are initiated by customers, the customers also provide a lot of the data for the transaction that may otherwise need to be entered by business staff. This means that some of the work and costs are effectively shifted to customers; this is referred to as 'customer outsourcing'.
• Stepping beyond borders to a global view. Using aspects of e-commerce technology can mean your business can source and use products and services provided by other businesses in other countries. This seems obvious enough to say, but people do not always consider the implications of e-commerce. For example, in many ways it can be easier and cheaper to host and operate some e-commerce activities outside Australia. Further, because many e-commerce transactions involve credit cards, many businesses in Australia need to make arrangements for accepting online payments. However a number of major Australian banks have tended to be unhelpful laggards on this front, charging a lot of money and making it difficult to establish these arrangements - particularly for smaller businesses and/or businesses that don't fit into a traditional-economy understanding of business. In some cases, therefore, it can be easier and cheaper to set up arrangements which bypass this aspect of the Australian banking system. Admittedly, this can create some grey areas for legal and taxation purposes, but these can be dealt with. And yes these circumstances do have implications for Australia's national competitiveness and the competitiveness of our industries and businesses.
As a further thought, many businesses find it easier to buy and sell in U.S. dollars: it is effectively the major currency of the Internet. In this context, global online customers can find the concept of peculiar and unfamiliar currencies disconcerting. Some businesses find they can achieve higher prices online and in US dollars than they would achieve selling locally or nationally. Given that banks often charge fees for converting currencies, this is another reason to investigate all of your (national and international) options for accepting and making online payments.
In brief, it is useful to take a global view with regard the potential and organisation of your e-commerce activities, especially if you are targeting global customers.
• A new marketing channel. The Internet provides an important new channel to sell to consumers. Peterson et al. (1999) suggest that, as a marketing channel, the Internet has the following characteristics:
• the ability to inexpensively store vast amounts of information at different virtual locations
• the availability of powerful and inexpensive means of searching, organising, and disseminating such information
• interactivity and the ability to provide information on demand
• the ability to provide perceptual experiences that are far superior to a printed catalogue, although not as rich as personal inspection
• the capability to serve as a transaction medium
• the ability to serve as a physical distribution medium for certain goods (e.g., software)
• relatively low entry and establishment costs for sellers
• no other existing marketing channel possesses all of these characteristics.
Some of these advantages and their surrounding issues are discussed below in further detail.
E-commerce disadvantages and constraints
Some disadvantages and constraints of e-commerce include the following.
• Time for delivery of physical products . It is possible to visit a local music store and walk out with a compact disc, or a bookstore and leave with a book. E-commerce is often used to buy goods that are not available locally from businesses all over the world, meaning that physical goods need to be delivered, which takes time and costs money. In some cases there are ways around this, for example, with electronic files of the music or books being accessed across the Internet, but then these are not physical goods.
• Physical product, supplier & delivery uncertainty . When you walk out of a shop with an item, it's yours. You have it; you know what it is, where it is and how it looks. In some respects e-commerce purchases are made on trust. This is because, firstly, not having had physical access to the product, a purchase is made on an expectation of what that product is and its condition. Secondly, because supplying businesses can be conducted across the world, it can be uncertain whether or not they are legitimate businesses and are not just going to take your money. It's pretty hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever arrive.
• Perishable goods . Forget about ordering a single gelato ice cream from a shop in Rome! Though specialised or refrigerated transport can be used, goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods back towards traditional supply chain arrangements, or towards relatively more local e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from almost anyone to almost anyone else, sparking competition for lower prices. In some cases this leads to disintermediation in which intermediary people and businesses are bypassed by consumers and by other businesses that are seeking to purchase more directly from manufacturers.
• Limited and selected sensory information. The Internet is an effective conduit for visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up and inspect something, we choose what we look at and how we look at it. This is not the case on the Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen for us to see but not the things we might look for if we were able to see it in person. And, taking into account our other senses, we can't test the car to hear the sound of the engine as it changes gears or sense the smell and feel of the leather seats. There are many ways in which the Internet does not convey the richness of experiences of the world. This lack of sensory information means that people are often much more comfortable buying via the Internet generic goods - things that they have seen or experienced before and about which there is little ambiguity, rather than unique or complex things.
• Returning goods. Returning goods online can be an area of difficulty. The uncertainties surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.
• Privacy, security, payment, identity, contract. Many issues arise - privacy of information, security of that information and payment details, whether or not payment details (eg credit card details) will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction apply.
• Defined services & the unexpected . E-commerce is an effective means for managing the transaction of known and established services, that is, things that are everyday. It is not suitable for dealing with the new or unexpected. For example, a transport company used to dealing with simple packages being asked if it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such requests need human intervention to investigate and resolve.
• Personal service . Although some human interaction can be facilitated via the web, e-commerce can not provide the richness of interaction provided by personal service. For most businesses, e-commerce methods provide the equivalent of an information-rich counter attendant rather than a salesperson. This also means that feedback about how people react to product and service offerings also tends to be more granular or perhaps lost using e-commerce approaches. If your only feedback is that people are (or are not) buying your products or services online, this is inadequate for evaluating how to change or improve your e-commerce strategies and/or product and service offerings. Successful business use of e-commerce typically involves strategies for gaining and applying customer feedback. This helps businesses to understand, anticipate and meet changing online customer needs and preferences, which is critical because of the comparatively rapid rate of ongoing Internet-based change.
• Size and number of transactions. E-commerce is most often conducted using credit card facilities for payments, and as a result very small and very large transactions tend not to be conducted online. The size of transactions is also impacted by the economics of transporting physical goods. For example, any benefits or conveniences of buying a box of pens online from a US-based business tend to be eclipsed by the cost of having to pay for them to be delivered to you in Australia. The delivery costs also mean that buying individual items from a range of different overseas businesses is significantly more expensive than buying all of the goods from one overseas business because the goods can be packaged and shipped together.
Electronic commerce, commonly known as (electronic marketing) e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.
A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.
Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.
History
Early development
The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK.
Online shopping, an important component of electronic commerce, was invented by Michael Aldrich in the UK in 1979. The world's first recorded B2B was Thomson Holidays in 1981 [1] The first recorded B2C was Gateshead SIS/Tesco in 1984 .The world's first recorded online shopper was Mrs Jane Snowball of Gateshead, England During the 1980s, online shopping was also used extensively in the UK by auto manufacturers such as Ford, Peugeot-Talbot, General Motors and Nissan.All these organizations and others used the Aldrich systems. The systems used the switched public telephone network in dial-up and leased line modes. There was no broadband capability.
From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.
An early example of many-to-many electronic commerce in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. An early online information marketplace, including online consulting, was the American Information Exchange, another pre Internet online system introduced in 1991.
In 1990 Tim Berners-Lee invented the World Wide Web and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet was strictly prohibited until 1991 . Although the Internet became popular worldwide around 1994 when the first internet online shopping started, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.
Timeline:
1979: Online shopping was invented in the UK by Michael Aldrich.
1982: Minitel was introduced nationwide in France by France Telecom and used for online ordering.
1987: Swreg begins to provide software and shareware authors means to sell their products online through an electronic Merchant account.
1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.
1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martin's Press. ISBN 0312063598.
1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also become commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL encryption that made transactions secure.
1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launches to sell decorative items for the home online.
2000: The dot-com bust.
2002: eBay acquires PayPal for $1.5 billion [6]. Niche retail companies CSN Stores and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
2003: Amazon.com posts first yearly profit.
2007: Business.com acquired by R.H. Donnelley for $345 million
2008: US eCommerce and Online Retail sales projected to reach $204 billion, an increase of 17 percent over 2007
Business applications:
Some common applications related to electronic commerce are the following:
Enterprise content management
Instant messaging
Newsgroups
Online shopping and order tracking
Online banking
Online office suites
Domestic and international payment systems
Shopping cart software
Teleconferencing
Electronic tickets
Government regulations
In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers’ personal information. As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.[11]
Forms:
Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce.
On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books or groceries, to expensive items like real estate. Another example would be online banking, i.e. online bill payments, buying stocks, transferring funds from one account to another, and initiating wire payment to another country. All of these activities can be done with a few strokes of the keyboard.
On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce today.
What is E-Commerce ?
What is E-Commerce', 'Electronic Commerce (EC) is the paperless exchange of business information using Electronic Data Interchange (EDI) and related technologies. If you are familiar with Electronic Mail (E-Mail), computer bulletin boards, facsimile machines (faxes), Electronic Funds Transfer (EFT) you can very well understand what is e-commerce. These are all forms of EC. All EC systems replace all or key parts of paper-based work flow with faster, cheaper, more efficient, and more reliable communications between machines. In today's Defense Department procurement arena, however the most important EC technology to know about is Electronic Data Interchange, or EDI.
An introduction into e-commerce
E-commerce advantages and disadvantages
E-commerce provides many new ways for businesses and consumers to communicate and conduct business. There are a number of advantages and disadvantages of conducting business in this manner.
E-commerce advantages
Some advantages that can be achieved from e-commerce include:
• Being able to conduct business 24 x 7 x 365 . E-commerce systems can operate all day every day. Your physical storefront does not need to be open in order for customers and suppliers to be doing business with you electronically.
• Access the global marketplace . The Internet spans the world, and it is possible to do business with any business or person who is connected to the Internet. Simple local businesses such as specialist record stores are able to market and sell their offerings internationally using e-commerce. This global opportunity is assisted by the fact that, unlike traditional communications methods, users are not charged according to the distance over which they are communicating.
• Speed. Electronic communications allow messages to traverse the world almost instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that communications delay is not a part of the Internet / e-commerce world.
• Marketspace. The market in which web-based businesses operate is the global market. It may not be evident to them, but many businesses are already facing international competition from web-enabled businesses.
• Opportunity to reduce costs. The Internet makes it very easy to 'shop around' for products and services that may be cheaper or more effective than we might otherwise settle for. It is sometimes possible to, through some online research, identify original manufacturers for some goods - thereby bypassing wholesalers and achieving a cheaper price.
• Computer platform-independent . 'Many, if not most, computers have the ability to communicate via the Internet independent of operating systems and hardware. Customers are not limited by existing hardware systems' (Gascoyne & Ozcubukcu, 1997:87).
• Efficient applications development environment - 'In many respects, applications can be more efficiently developed and distributed because the can be built without regard to the customer's or the business partner's technology platform. Application updates do not have to be manually installed on computers. Rather, Internet-related technologies provide this capability inherently through automatic deployment of software updates' (Gascoyne & Ozcubukcu, 1997:87).
• Allowing customer self service and 'customer outsourcing'. People can interact with businesses at any hour of the day that it is convenient to them, and because these interactions are initiated by customers, the customers also provide a lot of the data for the transaction that may otherwise need to be entered by business staff. This means that some of the work and costs are effectively shifted to customers; this is referred to as 'customer outsourcing'.
• Stepping beyond borders to a global view. Using aspects of e-commerce technology can mean your business can source and use products and services provided by other businesses in other countries. This seems obvious enough to say, but people do not always consider the implications of e-commerce. For example, in many ways it can be easier and cheaper to host and operate some e-commerce activities outside Australia. Further, because many e-commerce transactions involve credit cards, many businesses in Australia need to make arrangements for accepting online payments. However a number of major Australian banks have tended to be unhelpful laggards on this front, charging a lot of money and making it difficult to establish these arrangements - particularly for smaller businesses and/or businesses that don't fit into a traditional-economy understanding of business. In some cases, therefore, it can be easier and cheaper to set up arrangements which bypass this aspect of the Australian banking system. Admittedly, this can create some grey areas for legal and taxation purposes, but these can be dealt with. And yes these circumstances do have implications for Australia's national competitiveness and the competitiveness of our industries and businesses.
As a further thought, many businesses find it easier to buy and sell in U.S. dollars: it is effectively the major currency of the Internet. In this context, global online customers can find the concept of peculiar and unfamiliar currencies disconcerting. Some businesses find they can achieve higher prices online and in US dollars than they would achieve selling locally or nationally. Given that banks often charge fees for converting currencies, this is another reason to investigate all of your (national and international) options for accepting and making online payments.
In brief, it is useful to take a global view with regard the potential and organisation of your e-commerce activities, especially if you are targeting global customers.
• A new marketing channel. The Internet provides an important new channel to sell to consumers. Peterson et al. (1999) suggest that, as a marketing channel, the Internet has the following characteristics:
• the ability to inexpensively store vast amounts of information at different virtual locations
• the availability of powerful and inexpensive means of searching, organising, and disseminating such information
• interactivity and the ability to provide information on demand
• the ability to provide perceptual experiences that are far superior to a printed catalogue, although not as rich as personal inspection
• the capability to serve as a transaction medium
• the ability to serve as a physical distribution medium for certain goods (e.g., software)
• relatively low entry and establishment costs for sellers
• no other existing marketing channel possesses all of these characteristics.
Some of these advantages and their surrounding issues are discussed below in further detail.
E-commerce disadvantages and constraints
Some disadvantages and constraints of e-commerce include the following.
• Time for delivery of physical products . It is possible to visit a local music store and walk out with a compact disc, or a bookstore and leave with a book. E-commerce is often used to buy goods that are not available locally from businesses all over the world, meaning that physical goods need to be delivered, which takes time and costs money. In some cases there are ways around this, for example, with electronic files of the music or books being accessed across the Internet, but then these are not physical goods.
• Physical product, supplier & delivery uncertainty . When you walk out of a shop with an item, it's yours. You have it; you know what it is, where it is and how it looks. In some respects e-commerce purchases are made on trust. This is because, firstly, not having had physical access to the product, a purchase is made on an expectation of what that product is and its condition. Secondly, because supplying businesses can be conducted across the world, it can be uncertain whether or not they are legitimate businesses and are not just going to take your money. It's pretty hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever arrive.
• Perishable goods . Forget about ordering a single gelato ice cream from a shop in Rome! Though specialised or refrigerated transport can be used, goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods back towards traditional supply chain arrangements, or towards relatively more local e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from almost anyone to almost anyone else, sparking competition for lower prices. In some cases this leads to disintermediation in which intermediary people and businesses are bypassed by consumers and by other businesses that are seeking to purchase more directly from manufacturers.
• Limited and selected sensory information. The Internet is an effective conduit for visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up and inspect something, we choose what we look at and how we look at it. This is not the case on the Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen for us to see but not the things we might look for if we were able to see it in person. And, taking into account our other senses, we can't test the car to hear the sound of the engine as it changes gears or sense the smell and feel of the leather seats. There are many ways in which the Internet does not convey the richness of experiences of the world. This lack of sensory information means that people are often much more comfortable buying via the Internet generic goods - things that they have seen or experienced before and about which there is little ambiguity, rather than unique or complex things.
• Returning goods. Returning goods online can be an area of difficulty. The uncertainties surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.
• Privacy, security, payment, identity, contract. Many issues arise - privacy of information, security of that information and payment details, whether or not payment details (eg credit card details) will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction apply.
• Defined services & the unexpected . E-commerce is an effective means for managing the transaction of known and established services, that is, things that are everyday. It is not suitable for dealing with the new or unexpected. For example, a transport company used to dealing with simple packages being asked if it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such requests need human intervention to investigate and resolve.
• Personal service . Although some human interaction can be facilitated via the web, e-commerce can not provide the richness of interaction provided by personal service. For most businesses, e-commerce methods provide the equivalent of an information-rich counter attendant rather than a salesperson. This also means that feedback about how people react to product and service offerings also tends to be more granular or perhaps lost using e-commerce approaches. If your only feedback is that people are (or are not) buying your products or services online, this is inadequate for evaluating how to change or improve your e-commerce strategies and/or product and service offerings. Successful business use of e-commerce typically involves strategies for gaining and applying customer feedback. This helps businesses to understand, anticipate and meet changing online customer needs and preferences, which is critical because of the comparatively rapid rate of ongoing Internet-based change.
• Size and number of transactions. E-commerce is most often conducted using credit card facilities for payments, and as a result very small and very large transactions tend not to be conducted online. The size of transactions is also impacted by the economics of transporting physical goods. For example, any benefits or conveniences of buying a box of pens online from a US-based business tend to be eclipsed by the cost of having to pay for them to be delivered to you in Australia. The delivery costs also mean that buying individual items from a range of different overseas businesses is significantly more expensive than buying all of the goods from one overseas business because the goods can be packaged and shipped together.
WiMax
WiMax (Worldwide Interoperability for Microwave Access) is a wireless broadband technology, which supports point to multi-point (PMP) broadband wireless access. The name "WiMAX" was created by the Wimax forum, which was formed in June 2001 to promote conformity and interoperability of the standard. The forum describes WiMAX as "a standards-based technology enabling the delivery of last mile wireless broadband access as an alternative to cable and DSL.
WiMax is basically a new shorthand term for IEEE Standard 802.16, which was designed to support the European standards. IEEE defines the technical features of the communications protocol. The IEEE wireless standard has a range of up to 30 miles, and can deliver broadband at around 75 megabits per second. This is theoretically, 20 times faster than a commercially available wireless broadband.
The 802.16, WiMax standard was published in March 2002 and provided updated information on the Metropolitan Area Network (MAN) technology. The extension given in the March publication, extended the line-of-sight fixed wireless MAN standard, focused solely on a spectrum from 10 GHz to 60+ GHz.
This extension provides for non-line of sight access in low frequency bands like 2 - 11 GHz. These bands are sometimes unlicensed. This also boosts the maximum distance from 31 to 50 miles and supports PMP (point to multipoint) and mesh technologies.
The IEEE approved the 802.16 standards in June 2004, and three working groups were formed to evaluate and rate the standards.
WiMax can be used for wireless networking like the popular WiFi. WiMax, a second-generation protocol, allows higher data rates over longer distances, efficient use of bandwidth, and avoids interference almost to a minimum. WiMax can be termed partially a successor to the Wi-Fi protocol, which is measured in feet, and works, over shorter distances.
CONCEPT
Wimax is of two types. Fixed wimax and mobile wimax. Fixed WiMAX is similar in some respects to WLAN with an OFDM-based physical layer. Mobile WiMAX is based on an OFDMA physical layer. It uses both frequency division multiplex and time division multiplex.
Fixed wireless is the base concept for the metropolitan area networking (MAN), given in the 802.16 standard. In fixed wireless, a backbone of base stations is connected to a public network.
Each of these base stations supports many fixed subscriber stations, either public WiFi hot spots or fire walled enterprise networks. These base stations use the media access control (MAC) layer, and allocate uplink and downlink bandwidth to subscribers as per their individual needs. This is basically on a real-time need basis.
The subscriber stations might also be mounted on rooftops of the users. The MAC layer is a common interface that makes the networks interoperable. In the future, one can look forward to 802.11 hotspots, hosted by 802.16 MANs. These would serve as wireless local area networks (LANs) and would serve the end users directly too.
WiMax supporters are focusing on the broadband ~Slast mile~T in unwired areas, and on back-haul for WiFi hotspots. WiMax is expected to support mobile wireless technology too, wireless transmissions directly to mobile end users.
WiMax changes the last mile problem for broadband in the same way as WiFi has changed the last one hundred feet of networking.
WiMAX has a range of up to 31 miles, which can be used to provide both campus-level network connectivity and a wireless last-mile approach that can bring high-speed networking and Internet service directly to customers. This is especially useful in those areas that were not served by cable or DSL or in areas where the local telephone company may need a long time to deploy broadband service.
FORUM
WiMax Forum was formed in April 2001, to promote conformance and interoperability of the standard IEEE 802.16. The Forum's founding members were ~V Ensemble, CrossSpan, Harris and Nokia.
In April 2002, the forum grew to accommodate another member ~V OFDM, and in November, added Fujitsu as its sixth member. In March 2003, after intensive lobbying for the just cause of promoting the standard by Fujitsu and Wi-LAN, many new members joined the WiMax forum.
The forum was formed solely for promotion of devices supported by the 802.16 standard. The forum takes responsibility also to develop devices confirming to the standard and releasing it in the market. Some prominent members of the WiMax Forum are Airspan, Alvarion, Analog Devices, Aperto Networks, Ensemble Communications, Fujitsu, Intel, Nokia, OFDM Forum, Proxim and Wi-LAN.
The new members were ~V Aperto, Alvarion, Airspan, Intel, Proxim and others. The current forum has strong presence from service providers, system manufacturers, chip vendors and eco-system vendors.
Currently the WiMax forum has 110 members, and there are no WiMax-certified products available in the market. In September 2004, Intel introduced initial samples of a WiMax chipset, named Rosedale . Intel announced plans of offering transmitters by 2005, and has plans to ship WiMax devices for use in the office and home by 2006.
PROTOCOL
WiMax has two main topologies namely Point to Point for backhaul and Point to Multi Point Base station for Subscriber station. In each of these situations, multiple input multiple output antennas are used.
WiMax provides many user applications and interfaces like Ethernet, TDM, ATM, IP, and VLAN.
The IEEE 802.16 standard is versatile enough to accommodate time division multiplexing (TDM) or frequency division duplexing (FDD) deployments and also allows for both full an d half-duplex terminals.
802.16 supports three physical layers. The mandatory physical mode is 256-point FFT OFDM (Orthogonal Frequency Division Multiplexing). The other modes are Single carrier (SC) and 2048 OFDMA (Orthogonal Frequency Division Multiplexing Access) modes.
The MAC was developed for a point-to-multipoint wireless access environment and can accommodate protocols like ATM, Ethernet and IP (Internet Protocol). The MAC frame structure dynamic uplink and downlink profiles of terminals as per the link conditions. This is to ensure a trade-off of capacity and real-time robustness.
The MAC uses a protocol data unit of variable length, which increases the standards efficiency. Multiple MAC protocol data unit can be sent as a single physical stream to save overload. Also, multiple Service data units (SDU) can be sent together to save on MAC header overhead. By fragmenting, you can send large volumes of data (SDUs) across frame boundaries and can guarantee a QoS (Quality of Service) of competing services. The MAC uses a self-correcting bandwidth request scheme to avoid overhead and acknowledgement delays.
This also allows better QoS handling than the traditional acknowledged schemes. The terminals have a variety of options to request for bandwidth depending on the QoS and other parameters. The signal requirement can be polled or a request can be piggybacked.
The 802.16 MAC protocol performs mainly two tasks Periodic and Aperiodic activities. Fast activities (periodic) like scheduling, packing, fragmentation and ARQ are hard-pr essed for time and have hard tight deadlines. They must be performed within a single frame.
The slow activities, on the other hand, typically execute as per pre-fixed timers, but are not associated with any timers. They also do not have specific time frame or deadline.
Uses
The bandwidth and range of WiMAX make it suitable for the following potential applications:
• Connecting Wi-Fi hotspots to the Internet.
• Providing a wireless alternative to cable and DSL for 'last mile' broadband access.
• Providing data and telecommunications services.
• Providing a source of Internet connectivity as part of a business continuity plan. That is, if a business has both a fixed and a wireless Internet connection, especially from unrelated providers, they are unlikely to be affected by the same service outage.
• Providing portable connectivity.
Comparison with Wi-Fi
Comparisons and confusion between WiMAX and Wi-Fi are frequent because both are related to wireless connectivity and Internet access.
• WiMAX uses is a long range system, covering many kilometers, that uses licensed or unlicensed spectrum to deliver a point-to-point connection to the Internet.
• Different 802.16 standards provide different types of access, from portable (similar to a cordless phone) to fixed (an alternative to wired access, where the end user's wireless termination point is fixed in location.)
• Wi-Fi uses unlicensed spectrum to provide access to a network.
• Wi-Fi is more popular in end user devices.
• WiMAX and Wi-Fi have quite different quality of service (QoS) mechanisms.
• WiMAX uses a mechanism based on connections between the base station and the user device. Each connection is based on specific scheduling algorithms.
• Wi-Fi has a QoS mechanism similar to fixed Ethernet, where packets can receive different priorities based on their tags. For example VoIP traffic may be given priority over web browsing.
• Wi-Fi runs on the Media Access Control's CSMA/CA protocol, which is connectionless and contention based, whereas WiMAX runs a connection-oriented MAC.
• Both 802.11 and 802.16 define Peer-to-Peer (P2P) and ad hoc networks, where an end user communicates to users or servers on another Local Area Network (LAN) using its access point or base station.
Limitations
A commonly-held misconception is that WiMAX will deliver 70 Mbit/s over 50 kilometers (~31 miles). In reality, WiMAX can either operate at higher bitrates or over longer distances but not both: operating at the maximum range of 50 km increases bit error rate and thus results in a much lower bitrate. Conversely, reducing the range (to <1 km) allows a device to operate at higher bitrates. There are no known examples of WiMAX services being delivered at bit rates over around 40 Mbit/s.[citation needed]
Typically, fixed WiMAX networks have a higher-gain directional antenna installed near the client (customer) which results in greatly increased range and throughput. Mobile WiMAX networks are usually made of indoor "Customer-premises equipment" (CPE) such as desktop modems, laptops with integrated Mobile WiMAX or other Mobile WiMAX devices. Mobile WiMAX devices typically have omnidirectional antennae which are of lower-gain compared to directional antennas but are more portable.
Like most wireless systems, available bandwidth is shared between users in a given radio sector, so performance could deteriorate in the case of many active users in a single sector. In practice, most users will have a range of 2-3 Mbit/s services and additional radio cards will be added to the base station to increase the number of users that may be served as required.
WiMax is basically a new shorthand term for IEEE Standard 802.16, which was designed to support the European standards. IEEE defines the technical features of the communications protocol. The IEEE wireless standard has a range of up to 30 miles, and can deliver broadband at around 75 megabits per second. This is theoretically, 20 times faster than a commercially available wireless broadband.
The 802.16, WiMax standard was published in March 2002 and provided updated information on the Metropolitan Area Network (MAN) technology. The extension given in the March publication, extended the line-of-sight fixed wireless MAN standard, focused solely on a spectrum from 10 GHz to 60+ GHz.
This extension provides for non-line of sight access in low frequency bands like 2 - 11 GHz. These bands are sometimes unlicensed. This also boosts the maximum distance from 31 to 50 miles and supports PMP (point to multipoint) and mesh technologies.
The IEEE approved the 802.16 standards in June 2004, and three working groups were formed to evaluate and rate the standards.
WiMax can be used for wireless networking like the popular WiFi. WiMax, a second-generation protocol, allows higher data rates over longer distances, efficient use of bandwidth, and avoids interference almost to a minimum. WiMax can be termed partially a successor to the Wi-Fi protocol, which is measured in feet, and works, over shorter distances.
CONCEPT
Wimax is of two types. Fixed wimax and mobile wimax. Fixed WiMAX is similar in some respects to WLAN with an OFDM-based physical layer. Mobile WiMAX is based on an OFDMA physical layer. It uses both frequency division multiplex and time division multiplex.
Fixed wireless is the base concept for the metropolitan area networking (MAN), given in the 802.16 standard. In fixed wireless, a backbone of base stations is connected to a public network.
Each of these base stations supports many fixed subscriber stations, either public WiFi hot spots or fire walled enterprise networks. These base stations use the media access control (MAC) layer, and allocate uplink and downlink bandwidth to subscribers as per their individual needs. This is basically on a real-time need basis.
The subscriber stations might also be mounted on rooftops of the users. The MAC layer is a common interface that makes the networks interoperable. In the future, one can look forward to 802.11 hotspots, hosted by 802.16 MANs. These would serve as wireless local area networks (LANs) and would serve the end users directly too.
WiMax supporters are focusing on the broadband ~Slast mile~T in unwired areas, and on back-haul for WiFi hotspots. WiMax is expected to support mobile wireless technology too, wireless transmissions directly to mobile end users.
WiMax changes the last mile problem for broadband in the same way as WiFi has changed the last one hundred feet of networking.
WiMAX has a range of up to 31 miles, which can be used to provide both campus-level network connectivity and a wireless last-mile approach that can bring high-speed networking and Internet service directly to customers. This is especially useful in those areas that were not served by cable or DSL or in areas where the local telephone company may need a long time to deploy broadband service.
FORUM
WiMax Forum was formed in April 2001, to promote conformance and interoperability of the standard IEEE 802.16. The Forum's founding members were ~V Ensemble, CrossSpan, Harris and Nokia.
In April 2002, the forum grew to accommodate another member ~V OFDM, and in November, added Fujitsu as its sixth member. In March 2003, after intensive lobbying for the just cause of promoting the standard by Fujitsu and Wi-LAN, many new members joined the WiMax forum.
The forum was formed solely for promotion of devices supported by the 802.16 standard. The forum takes responsibility also to develop devices confirming to the standard and releasing it in the market. Some prominent members of the WiMax Forum are Airspan, Alvarion, Analog Devices, Aperto Networks, Ensemble Communications, Fujitsu, Intel, Nokia, OFDM Forum, Proxim and Wi-LAN.
The new members were ~V Aperto, Alvarion, Airspan, Intel, Proxim and others. The current forum has strong presence from service providers, system manufacturers, chip vendors and eco-system vendors.
Currently the WiMax forum has 110 members, and there are no WiMax-certified products available in the market. In September 2004, Intel introduced initial samples of a WiMax chipset, named Rosedale . Intel announced plans of offering transmitters by 2005, and has plans to ship WiMax devices for use in the office and home by 2006.
PROTOCOL
WiMax has two main topologies namely Point to Point for backhaul and Point to Multi Point Base station for Subscriber station. In each of these situations, multiple input multiple output antennas are used.
WiMax provides many user applications and interfaces like Ethernet, TDM, ATM, IP, and VLAN.
The IEEE 802.16 standard is versatile enough to accommodate time division multiplexing (TDM) or frequency division duplexing (FDD) deployments and also allows for both full an d half-duplex terminals.
802.16 supports three physical layers. The mandatory physical mode is 256-point FFT OFDM (Orthogonal Frequency Division Multiplexing). The other modes are Single carrier (SC) and 2048 OFDMA (Orthogonal Frequency Division Multiplexing Access) modes.
The MAC was developed for a point-to-multipoint wireless access environment and can accommodate protocols like ATM, Ethernet and IP (Internet Protocol). The MAC frame structure dynamic uplink and downlink profiles of terminals as per the link conditions. This is to ensure a trade-off of capacity and real-time robustness.
The MAC uses a protocol data unit of variable length, which increases the standards efficiency. Multiple MAC protocol data unit can be sent as a single physical stream to save overload. Also, multiple Service data units (SDU) can be sent together to save on MAC header overhead. By fragmenting, you can send large volumes of data (SDUs) across frame boundaries and can guarantee a QoS (Quality of Service) of competing services. The MAC uses a self-correcting bandwidth request scheme to avoid overhead and acknowledgement delays.
This also allows better QoS handling than the traditional acknowledged schemes. The terminals have a variety of options to request for bandwidth depending on the QoS and other parameters. The signal requirement can be polled or a request can be piggybacked.
The 802.16 MAC protocol performs mainly two tasks Periodic and Aperiodic activities. Fast activities (periodic) like scheduling, packing, fragmentation and ARQ are hard-pr essed for time and have hard tight deadlines. They must be performed within a single frame.
The slow activities, on the other hand, typically execute as per pre-fixed timers, but are not associated with any timers. They also do not have specific time frame or deadline.
Uses
The bandwidth and range of WiMAX make it suitable for the following potential applications:
• Connecting Wi-Fi hotspots to the Internet.
• Providing a wireless alternative to cable and DSL for 'last mile' broadband access.
• Providing data and telecommunications services.
• Providing a source of Internet connectivity as part of a business continuity plan. That is, if a business has both a fixed and a wireless Internet connection, especially from unrelated providers, they are unlikely to be affected by the same service outage.
• Providing portable connectivity.
Comparison with Wi-Fi
Comparisons and confusion between WiMAX and Wi-Fi are frequent because both are related to wireless connectivity and Internet access.
• WiMAX uses is a long range system, covering many kilometers, that uses licensed or unlicensed spectrum to deliver a point-to-point connection to the Internet.
• Different 802.16 standards provide different types of access, from portable (similar to a cordless phone) to fixed (an alternative to wired access, where the end user's wireless termination point is fixed in location.)
• Wi-Fi uses unlicensed spectrum to provide access to a network.
• Wi-Fi is more popular in end user devices.
• WiMAX and Wi-Fi have quite different quality of service (QoS) mechanisms.
• WiMAX uses a mechanism based on connections between the base station and the user device. Each connection is based on specific scheduling algorithms.
• Wi-Fi has a QoS mechanism similar to fixed Ethernet, where packets can receive different priorities based on their tags. For example VoIP traffic may be given priority over web browsing.
• Wi-Fi runs on the Media Access Control's CSMA/CA protocol, which is connectionless and contention based, whereas WiMAX runs a connection-oriented MAC.
• Both 802.11 and 802.16 define Peer-to-Peer (P2P) and ad hoc networks, where an end user communicates to users or servers on another Local Area Network (LAN) using its access point or base station.
Limitations
A commonly-held misconception is that WiMAX will deliver 70 Mbit/s over 50 kilometers (~31 miles). In reality, WiMAX can either operate at higher bitrates or over longer distances but not both: operating at the maximum range of 50 km increases bit error rate and thus results in a much lower bitrate. Conversely, reducing the range (to <1 km) allows a device to operate at higher bitrates. There are no known examples of WiMAX services being delivered at bit rates over around 40 Mbit/s.[citation needed]
Typically, fixed WiMAX networks have a higher-gain directional antenna installed near the client (customer) which results in greatly increased range and throughput. Mobile WiMAX networks are usually made of indoor "Customer-premises equipment" (CPE) such as desktop modems, laptops with integrated Mobile WiMAX or other Mobile WiMAX devices. Mobile WiMAX devices typically have omnidirectional antennae which are of lower-gain compared to directional antennas but are more portable.
Like most wireless systems, available bandwidth is shared between users in a given radio sector, so performance could deteriorate in the case of many active users in a single sector. In practice, most users will have a range of 2-3 Mbit/s services and additional radio cards will be added to the base station to increase the number of users that may be served as required.
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