Introduction to E-environment

In Chapter 2 we introduced the importance of monitoring changes in the environment and how they impact on an organization. Table 4.1 presents the main marketplace or macro­environmental factors and the micro-environmental factors that directly affect an organization.

In this chapter we concentrate on the role of the macro-environmental forces. Aspects of the micro-environment or e-marketplace such as competitors, suppliers and intermediaries are the focus of Chapters 2 and 4 and Part 2 of this book. We will review the macro-environmental factor using the widely used SLEPT framework. SLEPT stands for Social, Legal, Economic, Polit­ical and Technological factors. Often, these factors are known as the PEST factors, but we use SLEPT since it is useful to stress the importance of the law in influencing Internet marketing practices. The SLEPT factors are:

• Social factors – these include the influence of consumer perceptions in determining usage of the Internet for different activities.
• Legal and ethical factors – determine the method by which products can be promoted and sold online. Governments, on behalf of society, seek to safeguard individuals’ rights to privacy.
• Economic factors – variations in the economic performance in different countries and regions affect spending patterns and international trade.
• Political – national governments and transnational organizations have an important role in determining the future adoption and control of the Internet and the rules by which it is governed.
• Technological factors – changes in technology offer new opportunities to the way products can be marketed.

For each factor we look at new issues raised for managers responsible for e-commerce trad­ing. For those actively involved in the implementation of e-business, and in particular sell-side e-commerce, factors associated with buyer behaviour are also important when implementing e-commerce. These are covered separately in the section The online buying process (Chapter 9, p. 492).

Now complete Activity 4.1 to reflect on some of the macro-environmental factors that have to be considered by the e-business manager.

The issues identified in Activity 4.1 and others such as economic and competitive pressures tend to change rapidly, particularly dynamic factors associated with advances in technology.

An indication of the challenge of assessing the macro-environment factors is presented in Figure 4.1. This figure of the ‘waves of change’ shows how fluctuations in the characteristics of different aspects of the environment vary at different rates through time. The manager has to constantly scan the environment and assess which changes are relevant to their sphere of influence. Changes in social culture and particularly pop culture (what’s hot and what’s not) tend to be very rapid. Introduction of new technologies and changes in their popularity tend to be frequent too and need to be assessed. Governmental and legal changes tend to happen over longer timescales although, since this is only a generalization, new laws can be introduced relatively fast. The trick for managers is to identify those factors which are important in the context of e-commerce which are critical to competitiveness and service delivery and monitor these. It is the technological and legal factors which are most impor­tant to managing e-commerce, so we focus on these.

Since the law is one of the most important issues for the e-commerce manager to address the six most important legal issues for managers to assess are introduced in Table 4.2. Each of these is covered in more detail later in the chapter.

Organizations that either do not monitor these environmental factors, or those that do not respond to them adequately will not remain competitive and may fail, as discussed at the start of Chapter 2 in the section on strategic agility. The process of monitoring the environ­ment is usually referred to as environmental scanning. This often occurs as an ad hoc process in which many employees and managers will monitor the environment and will, perhaps, respond appropriately. The problem with the ad hoc approach is that if there is not a reporting mechanism then some major changes may not be apparent to managers. En­vironmental analysis is required to evaluate different information and respond accordingly.

The real-world e-business experiences case at the start of this chapter shows how an organiz­ation in the music sector has reviewed and exploited changes within the micro-environment.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).