Skip to main content

Electronic Commerce and Trade Cycle

A trade cycle is the series of exchanges, between a customer and supplier that take place when a commercial exchange is executed. A general trade cycle consists of following stages:
  1. Pre-Sales: Finding a supplier and agreeing the terms.
  2. Execution: Having decided to do business the buyer requests or orders from the vendor that which is required and the vendor hands over or delivers the goods or service.
  3. Settlement: At an appropriate stage the vendor asks for payment, the invoice, and, hopefully, the buyer makes the appropriate payment.
  4. After Sales: Once the sale is completed that is not necessarily the end of the story; depending on the nature of the exchange there may be a requirement for after sales activities. This trade cycle is shown in figure 1.6.


The way the trade cycle operates can vary depending on the nature of the customer, vendor, goods being traded and the traditions of the market segment and/or culture in which the deal is being done.

E-commerce can be applied to all, or to different phases, of the trade cycle. The trade cycle varies depending on: 
  1. Nature of the organisations (or individuals) involved. 
  2. Frequency of trade between the partners to the exchange. 
  3. Nature of the goods or services being exchanged.
The trade cycle has to support: 
  1. Finding goods or services appropriate to the requirement and agreeing the terms of trade (referred to as search and negotiation).
  2. Placing the order, taking delivery and making payment (execution and settlement).
  3. After-sales activities such as warrantee, service, etc. 
There are numerous versions of the trade cycles depending on the factors and for many transactions, further complicated by the complexities of international trade. Three generic trade cycles can be identified:
  1. Repeat Trade Cycle: Regular, repeat transactions between commercial trading partners.
  2. Credit Transaction: Irregular transactions between commercial trading partners where execution and settlement are separated.  
  3. Cash Transaction: Irregular transactions in once-off trading relationships where execution and settlement are typically combined.
The trade cycles for these three categories are shown in figure 1.7:




Labels:

Comments

Post a Comment

Popular Post

Competitive Advantage - Sustainable Competitive Advantage

Sustainable competitive advantage may be realised by adoption of e-commerce strategies and business models. Rather than simply exchanging procurement transactions as with e-commerce practices, leading enterprises are executing e- commerce to share intellectual capital with their trading partners working as a value chain that provides a competitive advantage for the development and distribution of their products. The idea of giving the customer access to tracking information via the internet was a new one that had considerable appeal to the customer. For example , the use of new system also had considerable advantage to FedEx who no longer had to deal with a vast number of calls checking up on progress of consignment; because the customer could now access the system themselves. But e-commerce development and implementation could not be entirely private- customer had to become involved at some stage. The competitor was quick to catch on to the idea and UPS (United Parsal Services) was so...
Post a Comment
Read more

E-Commerce Implementation

The strategy diagram divides implementation into the technical and the business aspects and these are briefly considered below: Technical Implementation : The approach to technical implementation of an E-Commerce system depends on the business objectives, business requirements and technologies that have been selected. It is noted that many internet E-Commerce systems are cobbled(repaired) together rather than designed and that is often apparent. It is important that the design process considers: Is of use of system by intended end-users : Always an important factor in system design but crucial if the end user are to be members of the public with perhaps limited computer literacy and the option to switch to an alternative website if not satisfied. Functionality that users need : This has to be what the users want rather than what the organisation things they need. Uses of e-commerce are not a captive audience that can be interviewed and evaluated like the uses of a traditional IS develo...
Post a Comment
Read more

Electronic commerce introduction

Electronic Commerce ( e-commerce ) generally refers to all forms of transactions relating to commercial activities, involving both organizations and individuals that are based upon the processing and transmission of digitised data, including text, sound and visual images. E-Commerce has created a new environment in business transactions using internet. It deals with providing information to consumers regarding products of their interest. It provides a platform of advertisement of products, allows negotiations, order for raw materials, settlement of financial transactions etc. Electronic commerce is an integrations of communication services, data management and security mechanisms that allows organizations to exchange information about the sale of goods and services, where, Communication services supports the transfer of information from the buyer to the seller electronically. Data management is the exchange and storing of data in a uniform format to facilitate easy exchange of infor...
Post a Comment
Read more