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Incentives and Barriers to E-commerce

Free essay example:

Ricki Lambert

E-Commerce

Assignment 2

Introduction

In this assignment I shall be outlining the incentives and barriers for all parties concerned in the usage of e-commerce and listing any moral, ethical or legal issues of using it to trade for goods and services. Further more; I shall be report writing using detailed examples to show that e-commerce is the future for trade and organisations.

Task 1

Why should we use e-commerce in today’s society? This question is easy to answer.  E-commerce is one of the easiest and economical ways of getting a business going as quickly as possible. Nevertheless, business owners - be it small or large - should carefully consider the ramifications of basing their business model either partially or wholly on an e-commerce system.

Negatives to E-Commerce

As a trader there are many things that need to be considered for the users experience to be, not only smooth and error free, but also as safe as possible as well. It is these two points that impact on the trader as they have to do the following things;

  • Fixed costs – Hosting fees, domain name
  • Database licence fees
  • Maintenance costs (this price range could vary considerably dependant on the skill of the business owner who is actually paying for the site on the first place)
  • Patches and software updates
  • Network scans to ensure privacy
  • Increase rankings in search engines to raise your site (S.E.O)
  • Money spent on marketing the site
  • From the time visitors enter the site, read the sales letter and proceed to the order page, the priority is to keep them excited about the products so that they will buy from you and not the competitor. For this, we would need to continually update the website with discounts, free gifts, offers, send brochures, etc to make them come back for further business.

All of the above are time consuming tasks and are going to cost the business. Is it really worth undertaking all of these processes if the revenue to be made is minimal? These are all questions that need to be considered.

As far as the consumer is concerned we have a completely different type of situation. The consumer is to be possibly sat at their home and can only get a small picture of the item they want to buy, also, if it is clothing that they are to buy then the size of the item may not be exactly to their liking. This has a very big impact as the user will not wish to spend money on a product that they are unsure off.  Below is a list of some of the most problematic areas for consumers;

  • Security issues may put people off
  • Trading over the internet means that that user cannot see the object in front of them, only a picture
  • Buying over the internet from foreign countries means that tax will need to be paid for. Sometimes this isn’t included in the cost
  • Postage costs can vary greatly and sometimes deliveries are not always efficient.

Positives to e-commerce

There are many incentives for both business and user of e-commerce. The businesses incentives shall be listed below;

  • The trading hours are never limited apart from when essential maintenance needs to be done, for example, the website will be “open” all hours and will be accessibly even when shops aren’t, another example of this is holidays, such as Christmas and bank holidays, and such shops don’t tend to be open on these days.
  • If the shop is in a remote village, or, even not part of a chain we can maximise the potential audience by putting it on the internet. By doing this the maximum chance for revenue maximization is increased greatly.
  • By setting up a forum on the webpage we can see what the users think of our products when they have purchased them. This will then help us to specifically identify problems and issues where we may not in a shop.
  • Items to be sold can be details far greater than what they are in shops, it allows the seller to rate, and write about the product.
  • By selling on the internet the trader drops costs of shop assistants and so fourth, this helps maximize their profits.
  • On the website the user can also change prices and so on without having to worry about the ramifications, the problem with doing this in catalogues is that the catalogue would have to be reprinted and then redistributed.
  • We can also use the website as a marketing tool which can in turn attract customers in to the normal retail stores.

Above we can see that there are many benefits to the trader, and that there are probable many more that we cannot see as outsiders. Ultimately as a business it is important that we forecast specifically as to how the sales figures are going and then compare to see whether the extra cost is ultimately going to maximize revenue. If not, then there is a very important decision to be made.

Below is a list of the benefits to the consumer;

  • Users can access the site at any time of the day or of the year, and this means that there is no restriction on times you can buy.
  • If the facility has been setup then the user can read comments from previous buyers and see whether the product, and the company is worth buying from
  • Products can be viewed from any workstation in the world, meaning you don’t have a limit to where you can look through the store

As we can see, there are many positives and negatives to the consumer and trader. However, we must weigh up the situation on an individual basis all of the time. As we know, one system will not be suitable for another and thus we need differing marketing and selling ploys for differing products. On the other side, for the consumer, we ultimately have a system in place that makes our lives far more efficient meaning we can spend more time focusing on other day to day tasks. And isn’t that what ultimately technology is supposed to do? Make our lives easier.

Task 2

When using e-commerce, and in fact anything else in the world we must bear in mind the ethical issues as well as the moral and legal implications imposed upon it. A comprehensive list of these issues shall be presented below.

Firstly it is important to understand the key concept of ethics;

“It is the principles of right and wrong used by individuals. Value judgements about what behaviour is good or bad”

Ultimately when new consider the ethical issues of the e-commerce world we have three main factors to consider, and these are very important points. Privacy and identity in reference to the human subject involved in the transaction and transaction non refutability. Further to these three important points we have a fourth, another key consideration. In this case it is hacking, trespassing to computer networks, mailboxes and websites.

The security issue is a real problem as the store must be open to anyone, the owner cannot ban or bar a single person else they would get in to trouble possibly for discrimination.


There are many ethical implications for businesses to run into that would normally be addressed when doing business face to face, for example selling tobacco and alcohol to an under age minor over the internet, this is impossible to regulate easily and affectively as it would be if the person walked into a store, not only is this unethical but it is also highly illegal and should never be done.

Another case of this was a case when a community pharmacy decided to start up an E-Commerce site, of course here there was plenty of Morel and Ethical decisions to be made here, as Pharmaceuticals are different from other items of commerce, particularly in that they should only be used as and when they were required.

Obviously there any a list of items that have Morel & Ethical decisions to be made about them being sold online such as Weight Loss Pills, which could be bought by a already underweight anorexic girl on eBay, Viagra, which could be flown in from America and taken by someone with a high risk of heart attacks and suffers from one. You could say that cases like these the person shouldn't be so stupid, but then again isn't it unethical and immoral to sell these items on the bases that you know that could happen?

As far as security us concerned we have many issues that need to be considered, the most important being the transaction of money over the internet. To do this the SSL has been introduced. SSL stands for the secure socket layer and provides a safe method for transaction over the internet. This is a key ethical point as it is someone’s human rights to be able to make transactions securely. Stemming from this we have to consider the ethical issues of data storage. When the user has provided the company with their details the firm are obliged to deal with it in a certain manor. This is all covered by the data protection act.

Task 3

It is evident that for a business to function correctly it has to aim for its maximum target audience. In order to do this in today’s society it must branch off from the “traditional” high street shop window and look more globally. To do this the business must use the internet. This form of business is called e-commerce (electronic trading). We have definitely moved in to the 21st century and maximising and utilising the technology that is in the present must definitely be considered a must by all businesses. But, what are they, why should we use the technology? I shall now be providing detailed examples of show that e-commerce is the future for businesses.

The fact that the internet has endless possibilities and very few limitations is a real bonus to the future of e-commerce. Considering this the first example I shall be using will be the detail presented to the user. This one fact alone is sure to drive the internet trade to a new level. What’s worse than walking in to a store, asking for some details or advise and being told something completely wrong? With the internet we can list the most detailed product information; inclusive of delivery dates, amount in stock, stores with that particular item in stock and then the price plans, payment methods and so on.

By relying on this information we allow the user to choose what they want to no. This not only prevents the hassle of being misled, but also makes the transfer or goods and cash far more efficient.  Another example of this being a particularly useful method is when we consider the stressful times of holidays, such as Christmas. At this time of the year this e-commerce system will likely par dividends for the shops.

My next reason to support the fact that e-commerce is the future for trade and organisations are the maximising of appearance on the website search engines. This is called search engine optimisation. When we walk down the high street it is not possible for us to remember or locate all stores that sell the product we are looking for, ultimately however, if the website is setup correctly we can tailor it to suit individuals search criteria in the search engines. How many people therefore use the search engines initially when searching for a product? The answer to this is unthinkable. Almost everyone will use the search engine as a first point of call and this will benefit the companies as they can attract there custom almost immediately. Doing this on the high street in not only expensive, but almost impossible.

Another very important point is to consider the portability of e-commerce. With the new advances in the mobile phone, and sms messaging systems we have the generation of custom to reach whilst on the move, this may be more structures as advertising as purchasing this way may become a little awkward due to safety reasons, however its still another way to attract custom in to the shop.

The most likely business type to benefit from the e-commerce trade however is the smaller, town businesses that you tend not to find on every high street in the country. In relation to these businesses in America we can see that a small company that includes the Internet in its business model can achieve greater market share and visibility and can reach new markets more effectively. In a study, small businesses with annual revenues of less than $10 million saw average improvements of 40 percent to 50 percent in financial performance. This is staggering, and only due to the fact that the e-commerce has spread the target audience to a whopping new horizon.

Another very important thing to consider is that with a new generation of internet users (specifically the more older of today’s society) starting to take up the benefits and reap the rewards of online trading that more and more will go to the high street shops, opposed to the dedicated online stores like Amazon and Play. This is mainly due to security and the like, but never the less people feel safer if they have the option of buying online and still being able to walk in to a dedicated shop also.  On top of this more shoppers are also expected to buy clothes and shoes online this year, in addition to safer online purchases such as books, CDs and computer gear. This shows that consumers are becoming increasingly comfortable buying online.

In concluding it is important to remember that the technology we use is there to be an aid to everyone, after all isn’t that what technology is for? Technology is meant to make our day to day lives far easier to carry out tasks and ensure efficiency. Overall, the usage of e-commerce will help this, not only for the organizations to maximize profits, but for the home user to, to ensure greater time to do other tasks. As long as this mutual need is maintained then there will always be a future for e-commerce, but don’t expect it to take over and replace, as its purpose was never intended to do so.

Task 4 – D1

E-Commerce

Ricki Lambert

A while back their only used to be two ways of buying a book, you could phone up and order it over the phone and wait for the delivery to be done, or, you could walk in to a book shop and pay for it in cash. However, with our new, more technological lives we needed a more efficient way of carrying out these day to day transactions. But how, and what could we do? Well the answer to this is e-commerce. But, e-commerce is still relatively un trusted by the general public and there needs to be a way of incorporating it in to our daily lives, this assignment looks at the incentives and initiatives to overcome the barriers imposed on trading.

Electronic commerce – the production, advertising, sale and distribution of products via telecommunications networks – is both dependent upon trade and transforming the way in which trade is conducted. Trade lies at the heart of these transformations, both of goods (e.g., computers) and services (e.g., telecommunications services), with liberalisation playing its part by making technology cheaper and more widely accessible.

Incentives

I shall now continue to list and describe the incentives as a general term, the initiatives that apply to the smallest and biggest of firms within their countries and continents.

  1. Product promotion and customization through the direct connection to consumers

I have already touched upon this point through the course of this document, but it’s important to stress that the future of e-commerce relates solely on the connection to an individual in order to sell the product. For this to be achieved there are many things that need to be done, for example tailored websites per country, specific products and labels, branding and marketing, price changes and so on. By doing this the businesses incentive produces them money and any businesses aim is to make a profit. The advantages of this can be seen I my following example, imagine an engine manufacturer in Europe, they could engineer a small part advertise it on the internet, and then distribute it world wide, this could be to Asia, America, who knows, what we do know is that products will now reach certain places where only previously local dealers could. This doesn’t just help the major businesses though we also open up the market for small local farmers and businesses and handicrafts businesses to, by adopting e-commerce they can maximize their turnover. An example of this is Software Engineering in places like India. However, by choosing this option are businesses saving money on everything? The answer to this is no, and this brings me directly on to my next point.

  1. Developing and exploiting new sales channels

This incentive is connected to marketing; E-Commerce opens many new doors for the companies to market through. It’s this incentive that will drive them to take the choice of adopting e-commerce, without doing so they don’t meet their maximum target audience and again they may suffer loss of sales. The reason I say this is because of my previous point, businesses may move to India to conduct software engineering, pay less wages, connect them to the internet and sell over that, but, business costs are still high, they all need computers, they all need training and if all this is being paid for and not much advertising is being done then the businesses will start loosing money, so advertising and exploiting new sales channels will ultimately help solve this problem.

  1. Reduces cost of business Transactions through a public shared infrastructure

Although the world of e-commerce opens up many doors for trading what would the point be if the sector had been locked down by poor infrastructure? By having good links we can reduce the costs for all parties involved, that goes for the biggest to the smallest of firms in the most remote of places. And by doing so we open up competition, and competition is healthy as it incurs price dropping and matching therefore we make the market fairer.

  1. Using the net to conduct research and development and product development

The internet doesn’t just have to be a Market place for trading, but can be utilized to help in other areas. For example, we can gather information on previous customers, granted their approval and we can then proceed to ask them questions, researching for future developments, further, using their website they can post and conduct online research allowing them to build a rapport on what the customers want and need.

Initiatives to Overcome the Barriers

I shall now continue to list and describe the initiatives as a general term, the initiatives that apply to the smallest and biggest of firms within their countries and continents. Many of the issues related to consumers are to do with trust, and the next few statements involve this, for country specific initiatives pelase read the rest of the document, these can be found towards the end.

While e-commerce can help developing countries participate more in world trade, it poses some difficulties for trade policy. E-commerce has already had a major impact on international business practices, changing how transactions are initiated and managed and how relations unfold between buyers and sellers. It has blurred the differences between time zones; with the Internet, production and trade can be conducted around the clock and across the continents. It has blurred the boundaries between the old and new economies – car manufacturers use e-commerce – between tradable and non-tradable products, and between goods and services.

  1. Predictable legal framework and digital Signatures

Having no legal framework for the trading of e-commerce seriously impacts the relation between customer and trust.  Yet both businesses and consumers are discouraged from engaging in transactions over the Internet by the many legal questions which still remain unanswered. What is the legal status of an electronically exchanged offer or acceptance of an offer in the absence of a written document? How will I prove the existence of my contract or its contents in courts in case of dispute? Will the law recognize the electronic authentification technique used such as a digital signature? The Internet revolution and the move from closed networks (business to business) to open networks (business to public) has provided global trading opportunities among an increasing number of participants whether known or unknown, highlighting the need for an appropriate legal framework. Attention must also be paid to the fact that with rapid technological changes, any technology-based legislation would be very quickly outdated.

A digital signature is an electronic signature that can be used to authenticate the identity of the sender of a message or the signer of a document, and possibly to ensure that the original content of the message or document that has been sent is unchanged. Digital signatures are easily transportable, cannot be imitated by someone else, and can be automatically time-stamped. The ability to ensure that the original signed message arrived means that the sender cannot easily repudiate it later. A digital signature can be used with any kind of message, whether it is encrypted or not, simply so that the receiver can be sure of the sender's identity and that the message arrived intact.

  1. Access to the Internet and Training

Is there any point of having the ideas of using e-commerce without there being sufficient access for the public to get on to the internet and buy. Without this e-commerce would be renders useless, for this reasons it would make sense for businesses to run schemes allowing internet access, or investing in internet cafés and so on. And it’s also important for Universities and colleges to run e-commerce, website development courses this would then help the future development, training people in to professionals to run and maintain these forms of websites.

Another really important thing for international traders to consider when developing their sites is the following;

  • Language
  • Measurement
  • Time and date
  • Phone prefixes

We can see that the above bullet points are important considerations for businesses when trading globally, firstly, different time zones impact on the delivery dates and other related time concerns. In avoiding this there needs to be a system set up that allows the user to select their time zone and everything changes on the site accordingly.

Measurement issues are very important when buying TVs or stands and the like. This I because differing countries and continents implement metric and non metric measuring systems, ultimately this makes it hard for the consumer as the delivered item may not be to their desire.

Language concerns should also be considered else the target audience is going to be minimized, not everyone can read English, but, as it’s the most common language it should be displayed on the website. There should be an option to change the websites language so that the consumers in different countries can use it.

Now we have considered the more specific business initiatives and incentives we can focus on the more general, looking and the positives and negatives firstly. From here we will look at the world wide incentives to businesses.

Negatives

  • Fixed costs – Hosting fees, domain name - Generally these fees may not be too bad, however we need to take in to account that the smaller firms may not be able to afford these sorts of fees. Consider the following; if I Ricki Lambert wishes to make a website about myself I would really want the websites name to be www.RickiLambert.com. Firstly I would need to pay for this, and the costs are differing dependant on what firm you go with, if you pay less and have a less relevant name then the chances of maximising business is very small.
  • Database licence fees – If selling many items then we need to store all the information on to a database. This is ok, but the software costs are dependant on what firm you choose to use. There are two main competitors in the database market for large scale databases, Oracle and Mysql. One ranges at around £400 per licence, the other free.  
  • Maintenance costs (this price range could vary considerably dependant on the skill of the business owner who is actually paying for the site on the first place) – If the database is to be large then the company is going to have to pay a database developer to set it up, if its very big then there will need to be more than one developer, on top of this the database needs to be maintained and updated, over a long period of time this can be a very expensive process and needs to be a continued feature else the website will become outdated and the users will not be able to purchase up to date information.
  • Patches and software updates – Similar to the above, however the websites software and security patches need to be updated in the same manor as the websites material did. This is another cost that needs to be considered.
  • Network scans to ensure privacy – One of the most important features to consider when choosing e-commerce is the users’ security when giving payment details over the internet. The network therefore may become a target to fraudsters and criminals trying to steal money. In this case we need to have a secure network with firewalls and anti virus protection, for a large firm this needs to be a good version and will therefore incur an extra cost.
  • Increase rankings in search engines to raise your site (S.E.O) – This is very important to consider. When we walk down the high street it is not possible for us to remember or locate all stores that sell the product we are looking for, ultimately however, if the website is set-up correctly we can tailor it to suit individuals search criteria in the search engines. How many people therefore use the search engines initially when searching for a product? The answer to this is unthinkable. Almost everyone will use the search engine as a first point of call and this will benefit the companies as they can attract there custom almost immediately.
  • Money spent on marketing the site
  • From the time visitors enter the site, read the sales letter and proceed to the order page, the priority is to keep them excited about the products so that they will buy from you and not the competitor. For this, we would need to continually update the website with discounts, free gifts, offers, send brochures, etc to make them come back for further business.

Positives to E-Commerce

  • The trading hours are never limited apart from when essential maintenance needs to be done, for example, the website will be “open” all hours and will be accessibly even when shops aren’t, another example of this is holidays, such as Christmas and bank holidays, and such shops don’t tend to be open on these days.
  • If the shop is in a remote village, or, even not part of a chain we can maximise the potential audience by putting it on the internet. By doing this the maximum chance for revenue maximization is increased greatly.
  • By setting up a forum on the webpage we can see what the users think of our products when they have purchased them. This will then help us to specifically identify problems and issues where we may not in a shop.
  • Items to be sold can be details far greater than what they are in shops, it allows the seller to rate, and write about the product.
  • By selling on the internet the trader drops costs of shop assistants and so fourth, this helps maximize their profits.
  • On the website the user can also change prices and so on without having to worry about the ramifications, the problem with doing this in catalogues is that the catalogue would have to be reprinted and then redistributed.
  • We can also use the website as a marketing tool which can in turn attract customers in to the normal retail stores. This actually helps the website in developing the word of mouth spread and in fact can help repeat business. This is why layout and planning/design are so important.
  • Users can access the site at any time of the day or of the year, and this means that there is no restriction on times you can buy. Whether it be Christmas or bank holidays, or even at 3, 4, 5am in the morning, the website will still be open. Shops are starting to fight back, like Tescos and Asda with 24 hour shopping, but still it doesn’t compete with browsing from the comfort of your own home
  • If the facility has been set-up then the user can read comments from previous buyers and see whether the product, and the company is worth buying from
  • Products can be viewed from any workstation in the world, meaning you don’t have a limit to where you can look through the store

We can see that the positives far outweigh the negatives where the negatives mainly consist of software issues and employees that are needed for the system to function correctly. Cost therefore must be taken In to account per business meaning that the total income made per business needs to be forecast for the future to see whether they will cover all these outgoings. However, on the other side of the spectrum we have the fact that globalisation of target audience can be achieved meaning we maximise the chances of turnover. This is the main aim of any business and this would be one of the main things to consider when deciding whether to take on e-commerce or not.

What is clear from this assignment is that for the majority of users adopting e-commerce it is going to be a slow and steady process that is going to need dedication and commitment in order it to succeed, there are many stories of over night success but these are the internet fables intended to give everyone the impression that e-commerce is for them. Ultimately we need to consider what we have now, what we want from the future and how we are going to get it. When this has been done we are ready to consider e-commerce.

When considering the maximum selling time for the business then shop based tends to be on a 9-5 basis, opening this up to the 24 hour scale means massive impacts for the shops and businesses, there isn’t anything that can top this fact, not only could we sell our products globally, but we can do it every day of the year, this is impressive and something we cannot miss out on. E-commerce has grown significantly during the past 5 years.  E-commerce has not only changed the way consumers view their purchasing power but also help increase the economy massively.  More and more businesses are conducting their own business over the web with Business to business transactions at their peak, and it is predicted it will grow even more.

World Wide E-Commerce Initiatives

World governments are now trying to develop incentives and initiatives that will rework the current world trading systems. At present there are three or four major forces in world trade and through the development of the internet have tried to revolutionize the way in which physical products are sold across the world. Let’s have a look at a few of them now.

The U.K: As one of the largest traders in the whole world, the UK has become a very important part of the e-commerce system. But for this to be achieved the previous system had to be radically overhauled.

“Mr Mandelson said there would be an extra £20m funding for the Information Society Initiative, to help more small businesses take advantage of new technologies”

By taking advantages of this new system the UK can prosper in to a developed trader, maximizing its full potential by using the technologies and government support that’s being offered. The UK was promised by the then Prime Minister, Tony Blair, that by 2002 the UK would be the best place for e-commerce in the world. These were bold statements to be making however he wasn’t far off, with the UK being placed in second place.  The government has now promised to inject a further £6 billion in to setting up and maintaining an e-commerce infrastructure that is second to none.

The report says: "In the rush to migrate services online, not enough consideration has been given to redesigning genuinely innovative services around the user. The resulting issue is that for those services which are already online, use remains disappointingly low.” Fifty-four percent of such services are now available online, but only one in 10 citizens have actually accessed them.

As we can see from the following quotes, the initiatives are working but aren’t focusing enough on the user, this means that the government’s initiatives are working but need a little more attention.

Australia: Another developing country in terms of e-commerce is Australia, who has a massive population. The effects of getting everyone from this country to take on the benefits of e-commerce will be enormous with huge impact on the smaller businesses and traders. By region we can see that the majority of business in Australia isn’t conducted online. It is for this reason that the Australian governments are introducing the following initiatives;image00.png

  • The Government Online Strategy to provide all appropriate government services on line by 2001
  • Networking the Nation
  • Information Technology On Line Program, which provides funding for industry sectors to adopt e-business commerce solutions
  • The E-commerce and Telecommunications Advisory Group

As well as the initiatives described by the governments of certain countries and cotenants we have the initiatives imposed by the major players in the industries. An example of this is Microsoft.  The major players are of course, only interested in helping themselves, but, by helping others they not only market their brand but enable more people to buy from them, for these firms there is only a win situation.

Conclusion

As a technology E-commerce is a helpful tool that gives users the viewing power and access to information and products. Not only does this mean that we can all focus on other, more important tasks than shopping but we can enjoy it with more ease with the stress and frenetic high street tempo lost in a world of arm chair shopping.

This student written piece of work is one of many that can be found in our AS and A Level Computer Science section.

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