E-Commerce, Efficiency Research Paper

Pages: 10 (3311 words)  ·  Bibliography Sources: 10  ·  File: .docx  ·  Level: Master's  ·  Topic: Business

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For the purpose of marketing the segment starts from people of 15 years of age and above. Since these people belong to the income group that have a high purchasing power, a large number of this people from this segment are smart phone users. iPhone and Android are especially gaining popularity among youngsters. This provides immense scope for Brokerage house to use a smart phone application as an integrated marketing tool. It will be easy for the administrators and corporate clients to identify what kind of information a customer would be looking for. This can be done byassessing the kind of interests the users indicate on their profiles. The new strategy used by these apps is focused on the integrated marketing strategy. User accounts for both individual and corporate clients would be available for free. Corporate clients will have to pay a nominal commission fee in order to user promotional services provided by the company, which will offer access to a large market along with an opportunity to identify and understand individual clients and consumer markets. Individual users will have to pay for using certain services such as online Trading and auctions.Download full Download Microsoft Word File
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TOPIC: Research Paper on E-Commerce, Efficiency in Terms of Assignment

Likewise, the corporate clients will be able to have their personalized pages with the name of their businesses. They will be able to track their customers by the interest the customers show towards their 'pages'. This will provide as an effective marketing and customer tracking facility for the corporate clients. While user accounts for individual and businesses would be free, corporate clients would be charged a nominal fee if they would like to use the advertisement invitations to the general users. This will attract and will be beneficial in a lot of ways. For example if an investor is in Florida and indicates 'Microsoft' as an interest, s/he would be automatically connected to the respective company's trading database. S/he would then be able to receive all news feeds about the latest offer and promotional activities. Corporate clients will also be offered 'brand partnerships'. These partnerships will aim to provide customers who show interest in participating firms with special discounts and other incentives. This will not only attract more customers for a brokerage house itself, but will also act as a promotional activity for our corporate clients.Using the smart phone applications, customers will not only be able to get required information, but will also be able to enjoy facilities such as participating in online auctions and IPOs from any location.

Financial and Quantitative Analysis of Internet Use and Stock Market Participation

While there has been very little work done in the past in order to do a litmus test in terms of quantification of the implications of internet on stock market participation, however a few researchers have researched the matter in limited capacity.

Yang (2006) claims researching the coorelation between stock market participation and online trading using a sample population of six major brokerage houses from NASDAQ. The results of his Quantitative Analysis showed very high co-relation rates.

Case Study: Online IPO Auctions vs. Commercial Banks

Twitter is an online social networking website that allows users to post updates or 'tweets' and communicate with others using about 140 characters. Lately, Twitter has gained immense popularity and the company is ranked as the third most popular social networking website after Facebook and Myspace. The company, despite of generating huge revenues is still a privately owned company. The company is now assessing Twitter's use to the corporate sector for advertisement purposes. If this becomes successful Twitter is expected to go much larger in terms of scale of business activity. The company therefore is expected to go public any time soon. Being a social networking website Twitter is considering issuing Initial public Offering using an online auction rather than the traditional offering methods.

Traditional vs. Online Auctions

When Initial Public Offerings are issued using traditional auctioning methods, the company has to outsource services of banks and underwriters each of which keeps their commissions that increase the costs for the company (Lowes, 1997). Moreover, the fact that the advertisements are published in the nationwide newspapers results in a further rise as these advertisements can be very expensive. Moreover, the company has to be completely dependent on the commercial banks while the IPOs are issued and investors are issued the shares. The same goes if Initial Public Offerings are auctioned through stock exchanges. Only those investors will get the news of the offerings being made who keep close tabs with the stock market. What makes traditional auctions of Initial Public Offerings more appealing to many companies is the fact that investment banks and commercial banks that are hired by the company helps in determining a realistic value at which the shares would be issued to the general public. The bank in turn charges a commission out of the sales of the Initial Public Offering from the company (Schuck, 1991). Considering the fact that the company issues the shares in order to generate finance for the company operations, these commission banks to the banks and underwriters can be a drawback for the company making the Initial Public Offerings. An added advantage of taking assistance from the investment banks is that they can directly distribute the Initial Public Offerings to the preferential investors (Young, 1990).

Making an online auction for the Initial Public offering will not only become more cost efficient as the company can auction using its own website but can also market the offering to a greater pool of potential investors. Moreover, an online auction would go with the nature of the company itself. The purchase of Initial Public Offering is made online and any potential investor is allowed to bid for the offerings. Although the investment banks are involved in online auction-based IPOs as well, online auctions are still much more cost efficient as the investment bank only takes in the payments as the process of shares allocation and price determination does not exist. In an online auction-based IPO offering, the share allocation process does not exist as the investors are required to bid a price for the number of shares they wish to purchase. The final allocation of shares and determination of price is therefore done by the company itself according to the bids made by the potential investors. Moreover Initial Public Offerings through online auction-based systems are more users friendly and enables to attract a much larger pool of investors.

Lessons Learnt from Google and Morningstar

Google made its initial public offering through a major investment and mutual funds giant, Morgan Stanley. The company charged Google with billions of underwriting fee and commissions in the sales of Initial Public Offering to some major preferential strong investors. This not only eliminated a large number of smaller investors from the pool of potential investors, but also placed the company in a huge risk of losing control. This was because since the shares were not held by a diverse group of people and were accumulated in the hands of some large investors, as a result there remained a huge chance that if the big investors bought shares to a considerable proportion, than the company could lose out the control and could be taken over. Moreover despite the fact that the company charges huge sums of mone in order to underwrite the Initial public Offering, due to the fact that offerings are made only to a limited number of large investors, great risks of scams and fraudulent exists for the company issuing IPOs (Oliver, 2004).

Twitter should therefore learn from the research published by Morningstar and avoid hiring the services of an invest institution. Given the popularity and growth prospects of the company, Twitter has the tendency to attract a lot of large and small investors. Issuing shares to a diverse group of investors will be beneficial for the company as there would be less risks of scams and frauds and a much less risk of losing out the control of company to the shareholders. The active forces of demand and supply will also keep the share prices stable as few large investors would not be able to influence the prices (Low, 2009). Moreover, the online auction-based systems are much more cost effective as the company can save on the huge sums that are paid out as commissions.

References

Low, C.K. (2009). Cornerstone Investors and Initial Public Offerings on the Stock Exchange of Hong Kong. Fordham Journal of Corporate & Financial Law, 14(3), 639+. Retrieved July 14, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=5035974604

Lowes, R.L. (1997, April 14). Try a Do-it-yourself Public Offering. Medical Economics, 74, 50+. Retrieved July 14, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=5035387523

Oliver, S.M. (Ed.). (2004). Handbook of Corporate Communication and Public Relations: Pure and Applied. London: Routledge. Retrieved July 14, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=107988972

Schuck, P.H. (Ed.). (1991). Tort Law and the Public Interest: Competition, Innovation, and Consumer Welfare (1st ed.). New York: W.W. Norton. Retrieved July 14, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=26070786

Young, K.M. (Ed.). (1990). The Expanding… [END OF PREVIEW] . . . READ MORE

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