DISTINCTION BETWEEN TRADITIONAL / e-BUSINESS

Basis of distinction	Traditional business	e-business
Ease of formation	Difficult	Simple
Physical presence	Required	Not required
Locational requirements	Proximity to the source of raw materials or the market for the products	None
Cost of setting up	High	Low as no requirement of physical facilities
Operating cost	High due to fixed charges associated with investment in procurement and storage, production, marketing and distribution facilities	Low as a result of reliance on network   of relationships rather than ownership of resources
Nature of contact with the suppliers and the customers	Indirect through intermediaries	Direct
Nature of internal communication	Hierarchical - from top level management to middle level management to lower level management to operatives	Non-hierarchical, allowing direct vertical,  horizontal and diagonal communication
Response time for meeting customers’/internal requirements	Long	Instantaneous
Shape of the organisational structure	Vertical/tall, due to hierarchy or chain of command	Horizontal/flat due to  directness of command.      and communication.
Business processes and length of the cycle	Sequential precedencesuccession relationship, i.e., purchase - production/ operation - marketing - sales. The, business process cycle is, therefore, longer	Simultaneous (concurrence) different processes.  Business process cycle is, therefore, shorter
Opportunity for physical pre-sampling of the products	Much more	Less. However, for digitable products such an opportunity is tremendous.  You can pre-sample music, books, journals, software, videos, etc.
Opportunity for interpersonal touch	Much more	Less
Transaction risk	Low due to arm’s length transactions and face-to-face contact	High due to the distance  and anonymity of the parties
Nature of human capital	Semi-skilled and even unskilled manpower needed.	Technically and professionally qualified personnel needed
Ease of going global	Less	Much, as cyber space is truly without boundaries.