Advantages and Disadvantages of Starting a Business online

Advantages and Disadvantages of Starting a Business Online

        Starting a business online can be an incredibly daunting undertaking.  In order to assess the business climate, and determine whether or not it makes sense to engage in electric commerce, businesses can use a SWOT analysis.  A SWOT analysis is a process used to evaluate the strengths, weaknesses, opportunities and threats associated with the action.  Most businesses use a SWOT analysis to make strategic decisions and evaluate the environment.  While a SWOT analysis can be very helpful, does not address all business factors.  Typically, the SWOT analysis is a tool used to evaluate the factors that may or may not influence a business’ ability to sell a new product or enter a new market.  “And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares” (Mind Tools, n.d.). A local clothing store on the Jersey Shore boardwalk may experience a few different strengths.   As it relates to the internal business environment, going electronic would provide more traffic to the clothing store.  In addition, the store could enhance the customer service relationship with customers that may not visit the local store as often as they wish.  Finally, our strong design team would have an opportunity to try out new designs and gather feedback from customers about ideas and innovations.  Probably weaknesses would include having to hire resources to manage and keep the website updated and having a team to process and fulfill orders.  Initially, the costs of putting together the website would also be a weakness.  This could have a negative impact on cash flow.  The external opportunities for the shop would include expanding the customer base to other areas within the US.  In addition, the potential for revenue generation will increase with a wider reaching clientele.  The threats associated with getting the clothing shop on the web may include an inability to compete with prices for similarly situated products.  Other clothing stores with greater resources may offer similar products for much lower prices.  Another primary threat would be the fluctuating economy and hesitation of the public to spend on unnecessary goods.  As the economy improves or worsens, the income and revenue will fluctuate making it harder to plan and forecast future sales.

Addressing Key Issues with International Commerce

        A business that enters into the world of electronic, international commerce immediately faces new business challenges.  These key issues include trust, culture, language, government and infrastructure.  It is imperative for businesses, whether brick and mortar or web-based to establish trust with customers and business partners.  One way to create trust is to establish a secure, online transaction system for customers.  This shows customers that you care about their privacy and the security of their information.  Another way to create trust to provide outstanding customer service and respond to customer questions and complaints in an efficient and responsible manner.  This is imperative in the online world.  Customers who do experience issues with products purchased online want to work with capable, experienced people to help them solve their problems. In order to overcome language issues, web-based organizations must provide local language services on their page so that customers can easily translate the information.  In order to overcome cultural issues, businesses must study the cultures and customs of customers in different areas to make sure they understand motivating factors for conducting business on the internet.  Evaluating social and cultural norms and circumstances for a variety of nations will serve an electronic business well.  In many countries, the government regulates the internet, and the business conducted within it, at very high levels.  Because many countries prevent free expression, it’s crucial to understand which countries are more regulatory in nature and then tailor content and expression within the site for those countries.  If the store is selling provocative garments or shirts with derogatory phrases, the entire site could be banned by the host government.  Infrastructure can also pose great challenges for online businesses.  Because many countries face high costs for telephone and internet access.  Thus, consumers in those areas are less likely to participate in online shopping.  Advertising to these areas is a huge challenge and successful businesses more often advertise in more traditional media outlets in order to drive web traffic to their sites.