This project will contribute to the following learning outcomes of this theme:
• Identify the different functions in traditional and new economy businesses.
• Explain how the functions relate to each other in traditional versus new economy businesses.
• Infer some differences in operational skills that workers in new economy businesses must have if they, and the business in general, is to be successful.
Financial Aspects of E-Commerce
• Explore the sources of finance available to a business.
• Analyse the implications of finance as a resource within a business.
• Analyse and evaluate the financial performance of a business.
• Perform basic research well through traditional and non-tradition information sources to solve a problem or construct something.
• Demonstrate an increasingly independent continuous learning way of working.
You receive an e-mail from a friend who is studying in the United States. She has found a really good on-line business that she thought might be good to have in the UAE.
The idea is a photo shop on the Internet. Customers upload their scanned photos or their digital camera shots via the Internet to your print shop. Over the Internet, your print shop then suggests to customers adjustments to the photos such as brightening or darkening them, and let’s them choose how many prints they want to order and of what sizes. Finally, the customers enter their addresses where they want the photos mailed to and you mail them once their credit card payment has been put through.
There are three companies in the United States that are in the lead for this new market. They are Ofoto, Shutterfly, and Snapfish.
You like your friend’s idea: Why not open up your own, similar business, here? Investigate this cool opportunity and make some decisions – Is this type of business feasible in the UAE? How would the business be organised? How would it make money? What financial structure will you use for your business, and how are you going to finance it? How will you measure the performance of your business?
In order to achieve your goal you must submit a Management Report which documents background research and details your final decisions.
The Management Report includes information from the following areas of research:
1. Background information
Check out Ofoto, Shutterfly, and Snapfish on the Web and other, similar companies. Learn what they do and how they do it by surfing their site. Try signing up and seeing how their service works. Don’t really order prints unless you actually want to for your own personal use and have a credit card to pay for it.
2. Feasibility of a photo shop business in the UAE
• How do traditional print shops work? How does this business work? Logistics?
• How would you let people know about it here?
• Who would be threatened by this business?
• Are there any ‘channel conflicts’ for your suppliers if you start this business?
• How big would the business be (numbers of employees?)
• How many departments would it have?
• If there is more than one, what would the departments be called?
• Who would you think the customers would be?
• Where do you think the customers are?
• How would they use the service here?
• What kind of markets could you serve?
• Would you need to make the site in another language?
• Where should you put your business? (Where should you run it from?) Why?
3. Business Type
What financial structure do you want for your business? Background research for this decision will be provided by answering the following questions:
• What are the three main types of business organisation?
• How are they different from each other?
• What are the advantages and disadvantages of each type?
• Which business type will help you most if your idea doesn’t work and your company goes bankrupt?
• Which business type will best help you develop great ideas for your business?
• Which business type would be best when trying to finance the business?
4. Sources of Finance
How are you going to finance this business? Answering the following questions will help you make your decision.
• What kind of finance do you need? Investigate long-term, short-term, leasing, help with paying suppliers and more.
• Where will the finance come from?
• Are there any other sources of finance available from the operation of your business?
• Does the kind of business structure you chose in 3. above limit the kind of finance you can have?
• What are the costs and benefits of each kind of finance source?
• What documents will you need in order to obtain finance from outside sources?
• What documents will you receive when you obtain finance from an outside source?
5. Financial Performance
How will you measure the financial performance of your company? Research the following:
• What are the main financial statements?
• What is the purpose of each of these financial statements?
• Does each type of business have a different type of format for financial statements?
• What will be the format for the type of business you have chosen?
• What will be your main costs in starting this business, and which financial statement will they appear in?
• Where will your sources of finance appear in the financial statements?
• Where will the costs of finance appear in the financial statements?
• How do you make a profit with this type of business and which financial statement does it appear in?
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