- Discuss the key components of human resource management. Pick at least four concepts from chapter nine and describe how these concepts interrelate to individual performance on a team.
- Review table 9.2 and select one of the dimensions listed, note why it was chosen and how you relate to this behavior. If you have a personal experience, please share.
- How do leaders select the best talent? What are some tools they can use to select the best-talent?
© 2019 Straipsnio autoriai. Leidėjas VGTU leidykla „Technika“. Šis straipsnis yra atvirosios prieigos straipsnis, turintis Kūrybinių bendrijų (Creative Commons) licenciją (https://creativecommons.org/licenses/by/4.0/), kuri leidžia neribotą straipsnio ar jo dalių panaudą su privaloma sąlyga nurodyti autorių ir pirminį šaltinį. INVESTIGATION OF DIGITAL RETAIL COMPANIES FINANCIAL PERFORMANCE USING MULTIPLE CRITERIA DECISION ANALYSIS Kotryna URBONAVIČIŪTĖ*, Nijolė MAKNICKIENĖ Vilnius Gediminas Technical University, Vilnius, Lithuania Received 02 March 2019; accepted 26 March 2019 Abstract. Digital retail (online retail or e-commerce) sector is continuously expanding its stake in the global economy each year. According to the statistics, online retail share of the total global retail sales takes approximately 11.9% in 2018 and is expected to reach 17.5% at the end of 2021. The same pattern of rapid growth was noticed more than 18 years ago when a burst of dot-com bubble crashed many of the internet-based online shopping companies. “Growth over profits” mental- ity and overestimated perception of the magnitude of online sales resulted in a superficial understanding of the business’ financial performance. Because of that, it is highly necessary to analyze and adequately evaluate the financial performance of digital retail companies. Thus, the purpose of this article is to investigate the top 4 digital retail companies’ financial performance by applying multiple criteria decision analysis (MCDA) TOPSIS and SAW methods to demonstrate that sales turnover is not the only and the prime measure to evaluate the successful company’s financial performance. Keywords: financial performance, digital retail, digital transformation, online retail, e-commerce, MCDA, TOPSIS meth- od, SAW method. Introduction Digitalization or digital transformation is a significant trend in nowadays business world. Digital transforma- tion and transition to digitalization are nearly in all the services of our globalized economy. One of the fields that are affected by digital transformation the most is the retail industry. E-commerce sales have been growing rapidly in the past couple of years. According to the statistics, digital retail sales increased from 1 336 billion USD in 2014 to 2 304 billion USD in 2017 (72% growth) and is expected to grow up to 4 878 billion USD by the end of 2021 (265% growth) (Statista, 2018a, 2018b). The growing share of this business sector and the po- tential future impact to the economics emphasises the need for proper investigation and evaluation of the finan- cial performance of this sector players. Sales turnover is a widely used financial indicator of the company’s per- formance and the magnitude of the business. However, this traditional performance determinant might not be the most adequate measurement to evaluate digital company’s success due to the vastly increasing digital transformation process and its impact to the business. Thus, identifying adequate success factors is a crucial matter to evaluate suc- cessful business performance. This scientific article aims to assess the top 4 digital re- tail companies financial performance using 2 of the multic- riteria decision analysis (MCDA) methods – TOPSIS and SAW – in order to demonstrate that sales turnover is not the only and the prime measure to evaluate the success- ful company’s financial performance and to determine which one is the most successful business. The research conducted in this scientific article is lim- ited to digital (or e-commerce) retail companies. E-com- merce company is defined as a company that does most of its business on the Internet. It excludes Internet service providers or other information technology companies. 1. Theoretical background 1.1. Digital transformation effect to the business Digital transformation (digitalization or digitization) is a trending process of integration of digital technologies into all areas of a business. This transformational process Economics and Management Ekonomika ir vadyba Mokslas – Lietuvos ateitis / Science – Future of Lithuania ISSN 2029-2341 / eISSN 2029-2252 2019 Volume 11, Article ID: mla.2019.9737, 1–9 https://doi.org/10.3846/mla.2019.9737 *Autorius susirašinėti. El. paštas
[email protected] https://doi.org/10.3846/mla.2019.9737 K. Urbonavičiūtė, N. Maknickienė. Investigation of digital retail companies financial performance using multiple criteria... 2 and its effect to business have been widely investigated by many authors in their scientific papers. Jürgen Meffert and Anand Swaminathan (2018) agreed that companies that adopt digital technologies in their business would retain their leadership and leverage their strengths. Companies that want to digitalize successfully can either improve their current business model and processes, add new streams of revenue to their business model, or replace their old business models with the new ones. However, since digital transformation is a complicated process, authors C. Matt, T. Hess and A. Benlian in their scientific article Digital Transformation Strategies (2015) argue that increasing digitalization of business processes makes it necessary to develop a better understanding of digital business trans- formation strategies. It is essential to set a clear approach and assign adequate responsibilities for implementation of such conversion change in the business. One of the core elements which helps the company to differentiate itself from the competitive environment and to create addition- al value, according to S. Mithas, A. Tafti and W. Mitchell (2013), is an investment into general information technolo- gies and IT outsourcing. Moreover, according to a survey which was conducted by MIT Sloan Management Review and Capgemini Consulting to investigate how businesses succeed or fail in using digital technology to improve busi- ness performance it was revealed that 78% of respondents admitted that achieving digital transformation will be- come critical to their organization within next two years. The results of the survey indicated that managers believe that digital technology will bring transformative change to business (Fitzgerald, Kruschwitz, Bonnet, & Welch, 2013). 1.2. Online retail or “e-tail” concept One of the fields that are affected by digital transforma- tion the most is the retail industry. A term online retail or “e-tail” actually covers retailing using a variety of dif- ferent technologies or media (Chen & Leteney, 2000). Ac- cording to the World Trade Organization (World Trade Organization, 2018), e-commerce concept is described as “commercial transactions that are digitally-ordered and either digitally or physically delivered.” Many retail firms that have traditionally operated solely in the store channel (or offline) have been transforming their business process- es to engage with customers in the online channel. This strategic realignment is triggered by the rapid increase in online retail sales that has grown at a faster rate than in- store sales (Ishfaq, Defee, Gibson, & Raja, 2016). The online channel is an information-wealthy and cost-effective channel for product placement. It provides consumers with detailed product information worldwide (Rapp, Baker, Bachrach, Ogilvie, & Beitelspacher, 2015). Consumers are provided by the availability to reach the online site and search for product information anywhere without being bordered by time and place. The most sig- nificant advantage against offline channels is that consum- ers can more easily compare information between various products on the Internet (Zhu, Goraya, & Cai, 2018). Due to its many distinctive advantages, online retail continues to grow. Darrell Rigby (2011) also agrees that digital retail- ing will continue to grow fast because of the vast selection of goods, the reasonable prices, the convenience of shop- ping from home, and the access to product reviews and recommendations. Comfortable shopping, 24/7 conveni- ence, reducing dependence to visit physical stores, travel costs savings, reasonably quick delivery, secure payment, a wide range of products and personalization services, are only a few of many reasons why consumers choose to shop online over traditional retail options. 1.3. Online retail market overview The online retail market overview is restricted to digital (or e-commerce) retail companies only. E-commerce com- pany is defined as a company that does most of its busi- ness on the Internet. It excludes Internet service providers or other information technology companies. According to revenue (total sales turnover), the top 4 online retail companies are Amazon, Inc, JD.com, Inc, Alibaba Group Holding Ltd and eBay, Inc (Table 1). Table 1. Top 8 digital retail companies1 in the world according to turnover (in millions US$)2 Company Country 2017 2016 2015 2014 Amazon, Inc USA $177 866 $135 987 $107 006 $88 988 JD.com, Inc China $55 641 $37 167 $27 880 $18 537 Alibaba Group Holding Ltd.3 China $22 965 $15 686 $12 293 $8 463 eBay, Inc USA $9 567 $8 979 $8 592 $8 790 Rakuten, Inc Japan $8 407 $7 123 $5 896 $5 690 Zalando SE Germany $5 377 $3 834 $3 232 $2 691 ASOS plc UK $2 595 $1 777 $1 706 $1 515 B2W Companhia Digital Brazil $2 148 $2 641 $2 308 $ 2 964 1 Compiled by the author according to financial data from the official firms’ annual reports. 2 In cases were financial information was stated in other currency than US Dollars (USD), the figures were converted using the year- end-date FX exchange rate stated in https://www.oanda.com/currency/converter/ 3 Financial year of Alibaba Group Holding Ltd. ends as of 31st March. https://www.oanda.com/currency/converter/ Mokslas – Lietuvos ateitis / Science – Future of Lithuania, 2019, 11, Article ID: mla.2019.9737 3 The top 1 place is firmly occupied by e-commerce company Amazon also known as Amazon.com. Founded in 1994 in Seattle by Jeff Bezos, Amazon has become a household name when it comes to online shopping. This internet company today has the most substantial revenue and is considered as the biggest employer of all the internet companies with a workforce of more than 566 thousand employees. Jingdong or JD.com is an e-commerce company operating in Beijing. Jingdong has well over a quarter of a billion registered users as of 2018. It was founded in 1998 and started trading online six years later. Alibaba is the biggest e-commerce company in Asia with headquarters in Hangzhou; China has more than a billion users worldwide. Jack Ma, the founder of Alibaba, was rejected from more than 30 job posts in the early 1990s when he started mak- ing websites for companies with his wife and a friend. The business grew exponentially, and in the year 1999, Alibaba Group was founded. Alibaba has two major portals that run under it, Alibaba and AliExpress. eBay is an e-commerce company which was founded in 1995 by a computer pro- grammer named Pierre Omidyar. It was one of the first suc- cessful dot-com bubble companies that epitomized online shopping. Its most distinctive feature is the online auction feature, alongside a conventional buy-it-now shopping op- tion. These top 4 digital retail companies will be further assessed in this scientific