Transcript Benefits of WDP using technology in business

Benefits of WDP
using technology in
business
E-commerce
Websites
Websites
What can WDP use the Web for:
1. Marketing all their products – creating
awareness of their services.
2. Advertising their services
3. Emailing - communicating with its
customers.
E-commerce
What is e-commerce?
E-commerce means to sell products or services
over the internet.
What can WDP use e-commerce for:
1. Customers can order WDP products online
and pay for then using their credit or debit
card. Once paid for WDP will forward them
their design package e.g. web page, e-mail
facilities etc.
Benefits of WDP using ecommerce
Advantages:
1. WDP can sell products anywhere in the
world, thus increasing their market share.
2. WDP can reduce costs as the cost of
downloading information on their
services is paid for by the internet user
not WDP.
3. There is no need for WDP to hire a large
sales team as most of the sales take
place over the net.
Exam Question
What are the advantages to WDP of
communicating electronically via the
website, email and e-commerce? 6 marks
Sources of finance that
WDP can use to help
achieve their objectives
Objectives:
•
Market all products on line.
•
Increase the use of e-commerce
•
Survive within a competitive market
Why does WDP need to raise
finance?
In order to raise finance to achieve their
objectives for 2009 WDP will need to raise
finance. This can come from both internal
and external sources.
 Internal sources = re-invested profits,
share capital.
 Short-term external sources = overdraft
and loans.
What is an overdraft?
An overdraft is when a business draws more
money from its bank account than it currently
has in its account.
Advantages of use:
1. WDP can borrow money when needed.
2. Interest is only paid when the money is taken
out.
Disadvantages:
1. Banks can insist that I can be repaid
immediately.
What are loans?
A loan is a sum of money borrowed from a bank.
The loan has to be re-paid in fixed monthly
instalments.
Disadvantages of use:
1. Interest is payable on the loan.
2. Banks may require WDP to provide security or
collateral against the loan. Which means the
bank will sell some of WDPs assets if it fails to
make the payments.
3. Can be affected by a raise interest rates.
How could a change in
interest rates affect WDPs
loan or overdraft repayments?
What are interest rates?
Is the percentage that is charged for borrowing.
High interest rates: Will mean that the charge for
borrowing money will be high. WDP will have to
pay a lot of interest on top of its borrowing.
Low interest rates: Will mean that the charge for
borrowing will be low. WDP will have to pay
back less interest on their borrowing.
Illustration of interest rates
If WDP borrowed £8000 from the bank in the
form of a short-term loan, in order
increase the use of e-commerce, with an
interest rate of 5%.
1.
2.
How much would WDP need to pay back
to the bank in total?
If interest rates increased to 9%. How
much in total would they need to
payback to the bank.
Exam question
WDP are considering approaching the bank for
a bank loan as additional finance to help them
achieve their objectives.
Discuss the advantages and disadvantages of this
decision. 6 marks.
2. Outline the affects on WDP if interest rates
increase during the year they have taken out
the bank loan. 4 marks
1.