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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 impor- tant 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 environ-
ment is usually referred to as
environmental scanning
. This often occurs as an ad hoc
Activity 4.1
Introduction to social, legal and ethical issues
List all the social, legal and ethical issues that the manager of a sell-side e-commerce web site needs to consider to avoid damaging relationships with users of his or her site
or which may leave the company facing prosecution. You can base your answer on issues which may concern you, your friends or your family when accessing a web site.
Answers to activities can be found at www.pearsoned.co.ukchaffey.
Part 1 Introduction
Figure 4.1
‘Waves of change’ – different timescales for change in the environment Infrastructure:
road, railways Government
Commerce Technology
Social Pop culture
The natural environment
Environmental scanning
The process of continuously monitoring
the environment and events and responding
accordingly.
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. En- vironmental 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 organiz- ation in the music sector has reviewed and exploited changes within the micro-environment.
195
Table 4.2
Legal issue Digital marketing activities affected
1. Data protection and privacy law Collection, storage, usage and deletion of personal information directly
through data capture on forms and indirectly through tracking behaviour through web analytics
E-mail marketing and SMS mobile marketing Use of viral marketing to encourage transmission of marketing messages
between consumers Use of cookies and other techniques for personalizing content and
tracking on-site Use of cookies for tracking between sites, for example for advertising
networks Use of digital assets installed on a user’s PC for marketing purposes,
e.g. toolbars or other downloadable utilities sometimes referred to as ‘malware’
2. Disability and discrimination law
Accessibility of content such as images for the visually impaired within different digital environments:
Web site E-mail marketing
Mobile marketing IPTV
Accessibility affecting other forms of disability including hearing difficulties and motor impairment
3. Brand and trademark protection
Use of trademarks and brand names within: Domain names
Content on site for search engine optimization Paid search advertising campaigns e.g. Google AdWords
Representation of a brand on third-party sites including partners, publishers and social networks
Defamation of employees
4. Intellectual property rights Protection of digital assets such as text content, images, audio and
sounds through digital rights management DRM
5. Contract law Validity of electronic contracts relevant to:
Cancellations Returns
Errors in pricing Distance-selling law
International taxation issues where the e-commerce service provider is under a different tax regime from the purchaser
6. Online advertising law
Similar issues to traditional media Representation of offer
Causing offence e.g. viral marketing Significant laws which control digital marketing
Chapter 4 E-environment
196
Real-world E-Business experiences
The Econsultancy interview Interview with Mike Clark of GD Worldwide, supplier to the social net-
work bands
Overview and main concepts covered
GD Worldwide is an online resource for independent bands originating in Australia. It is intended to help establish an Internet presence and manage the distribution of their
material. It also allows bands to create a ‘backstage area’ via its Usync tool. It high- lights the innovation made possible by digital technology and how one web start-up
business has taken advantage of them. We caught up with UK MD Mark Clark to discuss plans and progress to date...
Q. When, how and why was the company formed? Mike Clark, GD Worldwide:
The company is called GD Worldwide, and was formed in 2001 by the Australian band Gabriel’s Day – a touring, working band. They’re relatively
small in the global scale of artists, but in Australia have got a core following and a sustainable fan base.
The music business in Australia has, to an extent, been overlooked by the big record labels, at least relative to other markets, so it has spawned more of an independent, self-
managed environment. The artists have much more of a sense of community about them. So the idea behind GD Worldwide was to take the experiences of Gabriel’s Day and
give other artists the tools they need to create self-sustaining careers outside of the traditional, major label system. It gives them an alternative route to market – they don’t
have to go through the existing model. In that model, the creative group behind a band have to go through a series of gate-
keepers in order to reach their audience – the distribution, the rights organizations, the retailers and so on.
There’s a whole load of people that get in between the artist and the audience and are taking meat off the table. Those people aren’t really adding a tremendous amount
of value – they are normally taking it away – so the artists find it difficult to reach their audience in a sustainable way.
The other side of it is that the gatekeeper model only represents what we estimate to be 3 of the total music marketplace. It’s the short tail and the market is set up to
create and feed that, rather like the Hollywood star model. There is the other 97 of the market – the long tail, and we are a company set up to operate there. We put the
artist at the centre of things and reorientate the resources around them.
The other thing is that it’s no secret that record sales are declining, and while the music is predicting that there is huge growth to be had in the future, nobody seems to
know how to get their hands on it.
Q. What do you offer over the likes of Bebo and Myspace? Mike Clark, GD Worldwide:
In Myspace, there are up to 3m artists but very few have worked out how to monetise their presence or commercialise the interest they
have created. We think of our Usync product as the next step on from Myspace, where an artist
can interact, manage and learn from their audiences, as well as commercialising them. Bands need a Myspace profile – it’s a great way to attract interest – but once you
have brought people into your space, how many of those are true fans? You want to take the 20 of those that are, and bring them into the backstage area we create for
you, where they get treated to exclusive content and so on.
Part 1 Introduction
