Business

1

E-Commerceis the buying and selling of goods or merchandise over the internet.Payments are made by using credit cards. The use of online shoppingis advantageous since it allows consumers to compare differentproducts with the use of search engines. The online shopping isconvenient as the products are delivered on time. The table belowshows the growth in E-Commerce sales since 2010 [ CITATION Ste00 l 1033 ]

Year

E-Commerce Sales in Billions

2010

27.2

2011

30.2

2012

33

2013

37.1

Thereare various types of E-Commerce -to-Consumer (B2C),-to- (B2B), Consumer-to- (C2B) andConsumer-to-Consumer (C2C). The to Consumer (B2C) modelinvolves businesses selling their products to consumers via theinternet. The consumers are considered to be the end users of theproducts being sold by the companies or businesses. B2C model is alsoreferred to as internet retailing. Examples of products that areinvolved in the B2C model include electronic shopping, interactivegames, and computers.

Themain transactions involved in B2C model includes the customerplacing an order through a shopping cart the customers’ creditcard is charged the order is completed an e-mail is sent to thecustomer acknowledging the order the order is sent to the warehouse,and the businesses’ shipping carrier picks up the product fordelivery to the client.

Examplesof B2C model

Amazon

Amazonis an online retailer with core operations in both North America andinternationally. Its main websites are amazon.comand amazon.caunder the online retailing segment. Amazon also provides Web Servicesaside from manufacturing and selling the Kindle e-reader, fulfillmentservices, miscellaneous marketing and promotional agreements andco-branded credit cards.

Thecompany’s mission is to become the most customer-centric companyunder four customer sets which includes consumers, sellers,enterprises and content creators while generating revenues throughmarketing and promotional services, online advertising and co-brandedcredit card agreements. Amazon is considered to be the champion inthe paradigm shift due to the popularity of the internet.

Apple

AppleInc. is a multinational corporation located in California, UnitedStates. The organization was founded in 1976. Apple Inc. is a publiccompany. Apple was instituted by Steve Jobs, Steve Wozniak, andRonald Wayne. Appleis widely known to design and produce consumer electronics, personalcomputers, and their associated software. Also, the company developshardware components such as the Mac computers. Apple Inc.manufactures three main products namely IPod, iPhone, and Mac. Appleprovides an online platform for its customers to buy its products.

Evolutionand Future of E-Commerce

Sincethe evolution of the internet, businesses and practitioners have beenkeen in developing online transactions. The evolution of e-commercewas facilitated by factors such as the need to remain competitive,technological factors and environmental factors. The evolution ofe-commerce was heavily determined by the size of the potential markettargeted by the businesses and the number of internet users. Theevolution of e-commerce to a great extent can be attributed to theopportunities emerging from the advancements in technology.

Upto date, the internet remains an emerging environment. The size ofthe market a business intends to reach out determines the developmentof e-commerce. A business targeting a wide market may benefit fromthe use of the online platform in reaching out to its customers.

Theevolution of e-commerce was also determined by the availability ofinformation and telecommunication infrastructures. The evolution andpenetration of broadband technology influenced the development ofe-commerce. The availability of well-developed communication andinfrastructure facilitated the interconnection between customers andbusinesses. The broadband technology also enabled the businesses todevelop personalized and customized websites that would incorporatevarious business elements that would appeal to customers. Thewebsites would also provide consumers with the business products,their characteristics, and the corresponding prices.

Theneed for marketing or business strategy also facilitated theevolution of e-commerce. E-commerce enhances customer relationshipmarketing. Customerrelationship marketing would be the most efficient method ofunderstanding the customers’ preferences. Customer RelationshipMarketing is a form of marketing in which the company focuses onclient satisfaction. The marketing efforts are directed at ensuringstrong customer relationship and loyalty. Additionally, the marketingefforts aim at creating a brand value of the company products.

Mostbusinesses employed the use of online marketing to promote customerrelationship marketing. This is in contrast to the traditional aimsof marketing which aimed at maximizing the number of units sold. Forcustomer relationship marketing to be successful, a company mustdevelop appropriate marketing strategies and activities. Customerrelationship marketing can be used to acquire and retain new businesscustomers while fulfilling the corporate governance role [CITATION Rog08 l 1033 ].The marketing and business strategies are associated with businesses’value propositions.

Thegrowing adoption of e-commerce by businesses and continuoustechnological evolution could change the current situation ofe-commerce. The increased use of internet usage and penetrationcould enhance further growth in e-commerce. Also, the significantincrease in income levels above the population average and access tocomputer equipment at home could change the current situation ofe-commerce.

Existingand continuing threats to the security of E-Commerce

Thethreats to the security of E-Commerce can be broadly categorized intotwo deliberate acts and human error. The deliberate acts includefraud, security and viruses. On the other hand, human error actsinclude poor management and untrained employees.

Theusers of e-commerce websites are prone to fraud from both internaland external sources. For example, a customers’ credit card maybehacked by rogue employees. Malicious software’ and computer virusescan lead to corruption of files stored on the website. The customerswill not be able to access the correct information. Malicioussoftware’ such as “Trojan Horse” can capture the customers’information and use it to impersonate the customer in othertransactions.

Poormanagement poses a security threat to the success of e-commerce. Forexample, failure to install anti-virus programs can expose thecompany website to viruses and other malicious software. Themanagement should enforce regular IT security audits to ensure thatthe security is optimized. The use of untrained employees can exposethe company to security threats. For example, the untrained employeecan erroneously misuse customers’ information.

Themanagement should hire qualified employees to minimize securityissues associated with e-commerce. The dynamic nature of technologyrequires the company management to ensure that all the staffs areequipped with the appropriate skills to detect e-commerce relatedrisks.

AssignmentTwo

Bothannuities and perpetuities are examples of payment schedules.Annuities cash flows are the cash flows that are the same for theentire period for a given project. Unlike perpetuity, annuities havea predetermined lifespan. The periodic payments of perpetuity have afixed start date. The payments continue indefinitely. Thepresent value of perpetuity is determined using the formula below

Where

PVis the value at time o

Ais the perpetuity/annuity

Iis the discounting rate, also referred to as the interest rate

nis the duration of the cash flows

PartA

Year

Cash flows

PVIFn,6%

PVs

1

15,000

1.4185

21,278

2

20,000

1.3382

26,764

3

30,000

1.2625

37,875

4

5

6

7

150,000

1.0000

150,000

Future value

235,917

Year

Cash flows

PVIFn,9%

PVs

1

15,000

1.6771

25,157

2

20,000

1.5386

30,772

3

30,000

1.4116

42,348

4

5

6

7

150,000

1.0000

150,000

Future value

248,277

Year

Cash flows

PVIFn,15%

PVs

1

15,000

2.3131

34,697

2

20,000

2.0014

40,028

3

30,000

1.7490

52,470

4

5

6

7

150,000

1.0000

150,000

Future value

277,195

PartB

Theproposed investment has a useful life of 25 years. As shown in thetable below, the annual cash flows for the project before tax is$5000 for the next 25 years. The cash flows are the same for theentire period. This is referred to as annuity cash flows. The totalinitial cost is the sum of the purchase cost and the installationcost.

County Ranch Insurance

Year

Cash flow

PVIF6%,25

PVs

1 – 25

500.00

12.78354

6,391.77

Price

6,391.77

Annualpayments = $30,000/ PVIAF10, 6% = $30,000 / 6.5613 = $4,572.23

PartC

Theinvestment rate at which the annuity cash flows of $150,000 for thenext 25 years be the equal to the lump sum payment of $2,000,000

.At 5.56%, an investor would be indifferent as to whether to take theannual payments of $150,000 or a lump-sum amount of $2,000,000today.

PartD

Ifthe investment rate over the next 20 years is 8% the present valueof the cash flows at 8% discount rate will be $2,454,500. The presentvalue is less than $2,867,480. Hence, it would be more profitable toaccept $2,867,480todaythan receiving annual $250,000 for the next 20 years discounted at8%.

State of Tranquility’s Lottery

Year

Cash flow

PVIF8%,20

PVs

1 – 20

250,000.00

9.818

2,454,500.00

Present value

2,454,500.00

Ifthe investment rate over the next 20 years is 5%, the present valueof the annual cash flows discounted at 5% is $3,115,500. The amountis higher than $2,867,480.Hence, it would be profitable to receive annually $250,000 for thenext 20 years discounted at 5%.

State of Tranquility’s Lottery

Year

Cash flow

PVIF5%,20

PVs

1 – 20

250,000.00

12.462

3,115,500.00

Price

3,115,500.00

Theinvestment rate at which the annuity stream of $250,000 will equalthe lump sum payment of $2,867,480

.At 6%, an investor would be indifferent as to whether to take theannual payments of $250,000 or a lump-sum amount of $2,454,500today.

References

Roger Joseph Baran, R. J. (2008). Principles of Customer Relationship Management. South Melbourne: Cengage Learning.

Steffano Korper, J. E. (2000). The E-Commerce Book: Building the E-Empire. Burlington, MA: Morgan Kaufmann.

Business

BUSINESS 5

NameInstitutionTutor

Distinguishbetween the following relationships (a) agency (b) Employee (c)Independent contractor.

Anagency relationship is connoted by the fiduciary as well asconsensual relation that emanates from the exhibition of consentespecially from one party towards another in such a way that theother party or agent is authorized to carry out transactions andactivities on behalf of the first one and the entirety of theactivities involved are subject to the control of and authorizationof the first party (MacIntyre,2008),which is the principal. On the other hand, an employee relationshipinvolves one party (the employee) working for another party (theemployer) where the employee receives directions for work and iscontrolled by the employer and also receives payment from the same.According to MacIntyre(2008), theemployee relationship also means that the employer takes liabilityfor any acts and omissions by the employee.

Finally,an independent contractor relationship is defined by one working foras well as receiving payment from his or her employer (Marson,2013).Nevertheless, this kind of relationship differs from the employmentrelationship in that independent contractors do not have theirworking milieu or methods under the control of the employer and alsoin that the employer is not at all liable for the acts and omissionsof the independent contractor (MacIntyre,2008). It is also worth noting that the distinction between the employeeand independent contractor relationships is determined by thefollowing features as stated by Marson(2013).

  • The level of control that the employee can exercise concerning working milieu and details

  • The source of tools supply for pre-defined assignments

  • Duration and methods to be used in payment

  • Type of skills necessary for the required job

Dutiesowed by an agent to his/her principle

  1. The agent is expected to always carry out actions that are the principals’ superlative interests. This means that the agent is supposed to use the authority delegated by the principal to ensure that the interests of the principal are well represented in all transactions (Marson, 2013).

  2. The agent is to avoid other contracts that may lead to conflict of interest (MacIntyre, 2008). This responsibility entails the agent taking care not to sign any other agreement with a different principal that conflicts with the laid down interests of the first principal with whom an agreement is already signed (Marson, 2013).

  3. An agent is supposed to avoid making secret profits. This duty means that the agent cannot go ahead and take advantage of any form of benefits from the dealings delegated by the principal without the knowledge and consent of his/her principal (MacIntyre, 2008).

  4. The agent has also the duty of confidentiality as regards his/her principal (MacIntyre, 2008). This means that the agent does not have the legal authority to share the principal’s information such as the principals name, telephone number, identity card number and address with a third party without consent (Marson, 2013).

Dutiesowed by a principle to his/her agent

  1. Compensation and indemnification

Theprincipal has the responsibility of ensuring that his/her agent isduly compensated according to the signed contract and must as wellmake sure that the payment is reasonable. On the other hand,according to MacIntyre(2008),the principle of indemnification means that the principal must refundhis/her agent for any claims, liabilities, and expenses incurred inthe course of the assigned duty (Marson,2013).

  1. The principal has as well the responsibility of dealing fairly towards his/her agent.

Thismeans that the principal must ensure honesty and fairness in alldealings without engaging in activities that may cause his/her agencyto incur losses (Marson,2013).

  1. Reimbursement.

Thissimply means that the principal is obligated to refund any costsincurred by his or her agent in the course of the agent’sactivities that lie within the scope of fulfilling the laid downagreement (MacIntyre,2008).

  1. Co-operation.

Itis the duty of the principal to provide all the necessary assistanceto his/her agent in order for the agent to be able to carry outhis/her end of the agreement (MacIntyre,2008).

  1. Safe working conditions

Itis the responsibility of the principal to ensure that agents work insafe premises, use safe equipment, and that the general conditionswithin which the agents operate do not in any way subject them to anyform of harm (Marson,2013).In addition, the principal bears the responsibility of carrying outinspections on the conditions under which his/her agent works andwarn incase of any suspicious threats (MacIntyre,2008).

References

MacIntyre,E. (2008).&nbsplaw&nbsp(4thed.). Harlow, England: Pearson Longman.

Marson,J. (2013). Law.&nbspLawand Journal,&nbsp3(12),56-61.