E-Business Management

Name: Sejun Lee

Executive Summary

Automated robots have been highly developed in the last 30 years. The Internet provides a

wide range of benefits to users. Now these two innovative technologies have been combined

through Wi-Fi networking. Advanced robots can work in an intelligent and accessible manner

to obtain a wide range of information from the Internet. These robots also can work in service

areas such as exhibition halls and restaurants. In addition, they can teach babies and children.

This assumes that robots will improve productivity, add to convenience, and reduce a lot of

human work within 15 years. For example, in the last 30 years, analysis has shown that the

labour market share (total labour salary/total productive income) has decreased. On the other

hand, some experts have pointed out that productivity has not improved because the GDP of

countries that use automated robots has not increased.

The e-business market has grown dramatically with an increasing number of Internet users.

The Internet has significantly affected benefits and threats in the e-market. Glam Media, for

example, is one of the biggest e-business companies in the world. Such companies need to

analyse the e-market and their customers. Glam Media faces buy side, sell side, and

competitive threats. The risk assessments for these threats are drawn from the Porter five

forces model:

1) Buy side threats

Threat of supplier (customer) is high risk

2) Threat of intermediaries is low-risk sell side threats

Threat of customer is high risk

Threat of intermediaries is medium risk

3) Competitive threats

Threat of new entrance is medium risk

Threat of new digital products and services is medium risk

The threat of a new business model is high risk. One main suggestion is that Glam Media

should have a positive relationship with buy- and sell-side customers. In addition, it should

follow new trends and update its information.

Amazon‘s Mechanical Turk (MTurk) is one of the many online services that use human

intelligent tasks (HIT) and the long tail (LT) effect in Web 2.0. In the financial industry, retail

and investment banks such as HSBC and Barclays, along with other advanced countries‘

banks and financial institutions use this method to improve their quality of service and loyalty

from customers. However, there are barriers to using these techniques in the financial

industry. First, the public is not knowledgeable enough about finance. Second, it can lead to

the creation of rumours that would negatively affect customer loyalty and a bank‘s reputation.

Finally, banks need a significant infrastructure for crowdsourcing and require a maintenance

fee, as it will be costly.

Contents

Introduction ............................................................................................................................- 1 -

How Internet technologies and robots will displace jobs ......................................................- 2 -

Analysis of Glam Media business organization.....................................................................- 6 -

Buy-side threats ................................................................................................................. - 7 -

Sell-side threats ................................................................................................................. - 9 -

Competitive threats ......................................................................................................... - 10 -

How crowdsourcing can be used in the financial industry ................................................. - 13 -

References ........................................................................................................................... - 17 -

- 1 -

Introduction

Automated robots have been highly developed in the last 30 years. Many robots assist human

work in manufacturing factories. In addition, the Internet also has influenced our lives over

the last 30 years. The Internet does not have arms and legs, but robots will be the arms and

legs for the Internet. These innovative robots will have a large impact on the business sector

within 15 years. There are many different opinions in regards to the effects of robots.

Glam Media was founded in 2004 through adding together a variety of blogs and websites. A

lot of manufacturing businesses also want to enter the e-market. It is believed that it is easy to

make an e-business in the e-market. Therefore, Glam Media needs to analyse this situation by

using the ―Competitive Threats Acting on the e-Business‖ framework by Chaffey for

overcoming and working against threats.

Crowdsourcing is defined as a model used to solve a problem by outsourcing through

distribution to a group of personnel. Crowdsourcing is a significantly useful method for

solving difficult and specific problems. Therefore, the financial industry has adopted this

method to develop financial products and services for customers. However, there are a few

barriers to using crowdsourcing.

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How Internet technologies and robots will displace jobs

Some believe robots will provide significant convenience and safety to people. In addition, an

increase in gradation/development of technology is essential to business industries,

organisations, and employees. This is because technology can effectively reduce costs and

improve total quality; for example, people who work can get repetitive strain injuries. Robots

can perform jobs such as delivering food trays and looking after hospital corridors. However,

others claim that high-technology products will negatively affect people‘s lives. The rapid

advancement in expertise would pose a serious threat to a lot of jobs that are ordinarily

performed by people. It is quite difficult for robots to work alongside or with people. This

means that robots will surely have a wide influence and pose disadvantages for employment.

The Centre for the Future of Museums (2013) pointed out that robots can process faster and

safer than humans can. The following tables show various kinds of jobs or work in the

manufacturing and service industries that will be negatively affected:

Robotic technologies such as simple robots and manufacturing robots have already been used

in car manufacturing to process complicated parts. According to The Economist (2013),

Foxccon will buy and assemble around one million robots to replace employees within three

years.

- 3 -

In terms of science, Duong, Hoang and Van (2012) pointed out that it is important to ensure

there is a combination of robotic and Internet technologies. People could use wireless

communication based on an interface module such as WMAN (wireless metropolitan area

network), WLAN (wireless local area network), and WPAN (wireless personal area network).

Robots are already used near families in houses and offices. For example, housekeepers use

vacuum robots that automatically keep moving to find dust and small rubbish pieces. If there

is Wi-Fi in the house, people can operate this robot anywhere and at any time. Although it is

difficult to make and develop intelligent robots, they are already being substituted for humans.

According to Bersier (2013), “The Internet is continuously being supplied with eyes and ears,

but it misses arms and legs to take action. Robots seem the logical candidates that take on the

role of gateways of information flows.”

There are some examples of automation robots that are linked to the Internet. In particular,

specialised robots will have a considerable influence on businesses and jobs within 15 years

because companies want to reduce costs and improve efficiency for their net income (Bersier

2013). First, high technology that utilizes Internet-linked robots will change the services field.

In South Korea, a futuristic guide robot called FURO-K has been developed to guide

spectators and buyers to exhibition areas. This robot can move freely in any direction, and it

uses several expressions. It also has a multi-language system for helping people in many

different countries. The robot can explain specific points that humans cannot remember

exactly. This means that the robots are more professional than human guides.

In addition, robots can create content, edit, and advertise order and pay through the Internet.

They also can serve as waiters in a restaurant. Robots can do such things as take payments,

clean, and babysit. Customers can see pictures of food on a robot‘s screen. Robots also can

offer explanations of food that people select in their original language. Since 2012, a few

FURO-K robots have been exported to Japan, France, Russia, China, Brazil, Mexico, and

Singapore. These countries will probably see a steady increase in the number of robots. This

means that robots will significantly influence their service labour market (Borenstein &

Miller, 2013). On the negative side, a lot of guiders, translators, and waiters will lose their

jobs and will find it difficult to obtain steady jobs within 10 years. This guide robot will be

controlled by Wi-Fi at a centre. This means that the information technology department will

control service robots for updating their content and survey data. Rotman (2013) pointed out

that automated robots and software can replace humans who work in car manufacturing or

travel agencies.

- 4 -

Robots that educate babies and children (ages 3 to 13) will be popular in the home. When a

child touches the robot, it will react to him or her. Parents can connect the robot to the

Internet through Wi-Fi and download over 10,000 types of content such as videos, books, and

applications. The child can view the content through a screen located on the head. There is

also a beam projector in the back of its head for watching content with the family. The robot

automatically bans spam applications. Parents can look after their children through a head

cam by mobile phone anywhere and anytime. Consequently, parents can work more

efficiently and reduce their extra spending on other products. In business, workers who are

also parents can concentrate on their own work, so companies can improve productivity and

effectiveness. However, teachers who teach young children will lose their jobs. This will

create a vicious circle in the business sector that will lower GDP.

This assumes that a lot of workers in business will lose their jobs and find it difficult to obtain

jobs. In the next 10 years, there will be a decline in manufacturing employment due to the

implementation of Internet technology robotics (Livshits & Zimmermann 2005; Nordhaus

2007). However, the productivity rate will be increased steadily through the use of robots, as

production costs will be reduced. If the robots increase business productivity, people also will

get these benefits. Consequently, people will spend these benefits in other sectors, so the

number of jobs will increase steadily. In the future, due to the use of Internet technology-

linked robots, there will be a greater demand for skilled workers or employees with higher

education and problem-solving skills (Burnstein 2011). Atkinson (2013) pointed out another

problem: although the robot has increased its ability to work in the business field in the last

decade, the gross domestic product (GDP) of many countries has not increased. According to

the Organization for Economic Co-operation and Development (OECD) (2011), the GDPs of

the United Kingdom, United States, and other developed countries that have used robots are

still not up over 3%. On the other hand, Karabarbounis and Neiman (2012) claimed that the

labour market share (including robots) has been reduced by 5% since the digital technology

revolution of the 1980s (Figure 1). This means that robots have increased productivity and

reduced labour market share (total labour salary/total productive income).

- 5 -

Figure 1. Declining labour share for the largest countries (Karabarbounis & Neiman 2012,

p. 36).

- 6 -

Analysis of Glam Media business organization

Electronic business is implemented by organisations to reach their target market within the

shortest time possible with minimal-cost electronic payments, unlike in the past where

customers had to travel to shops to pay for their purchased items. NetObjects CEO Samir

Arora, a former Apple veteran, with a group of Silicon Valley veterans, established Glam

Media in 2003. This digital media business was based on blogs that contain advertising and

professional digital content. The business associated with 1,500 blogs, websites, and

magazines covering entertainment, fashion, quizzes, horoscopes, slide shows, beauty, and

well-being and health.

In 2004, Glam Media decided to secure a market niche as the first ones to market products

from other companies. It offers a place to advertise every brand, both high- and low-quality

items, to customers on the Internet. Although the name of the business is media, Glam does

not create news or advertisements. It gathers information and advertisements from associated

blogs and magazines and then shows them on its website. This is called ―one source multi-

use.‖ The main articles and information concern beauty treatment, style, makeup, and

celebrities. It is similar to an online magazine. Glam Media aggressively extended its e-

market share using the Ning social media platform. According to Comscore (2012), 80

million US citizens visited the site. This media site has ranked eighth following Yahoo,

Google, Microsoft, and Facebook. It also has ranked higher than Amazon, New York Times,

and eBay.

In 1980, Michael Porter identified five competitive forces involving the bargaining power of

buyers, suppliers, products, services, and barriers to entry and rivalry among existing

competitors. This model provides a structure for analysing threats arising in e-business.

Chaffey (2011) organised these threats into competitive threats, buy-side threats, and sell-side

threats. This model can be used by an e-business to analyse the variety of threat factors or

situations of the company in the industry (Troshani & Rao 2007). Moreover, the model is

most useful for business management because it also effectively evaluates the condition of

competitors. Therefore, firms operating in a similar industry can be identified in a more

comprehensive and effective manner (ABS 2005). This model is presented and interpreted in

Figures 2 and 3.

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Figures 2 and 3. Threats to E-Business (Chaffey 2011, p. 257).

Glam Media faces threats that are likely to influence its profitability significantly. It is

struggling to maintain availability, capacity to deliver, and improved performance and service

to satisfy constituents. The company should analyse the e-market accurately and adopt a new

strategy and business model against its competitors.

Buy-side threats

Power of suppliers

The Internet has reduced the power of suppliers. This lower threat from suppliers is an

important opportunity for Glam Media, but this point is not quite correct. There are a lot of

linked suppliers who have blogs and websites on the Internet. This means that Glam Media

Buy-side Threats Power of suppliers (customers)

Power of intermediaries

Sell-side Threats

Customer power and knowledge (company

uses Internet and compares information)

Power of intermediaries (channel conflicts )

Competitive Threats

New digital products

New commerce entrants

New business model (Glam One)

- 8 -

can obtain as much information as the company wants. However, suppliers are also potential

customers who supply their blogs and websites to Glam Media. As Arrington (2007) pointed

out, “Glam is an advertising network and runs a very good SEO [search engine optimisation]

operation.” This means that Glam Media has driven its revenues by selling advertisements to

other clients for partner websites, not only with its own page views. In 2007, Glam Media

(2007) claimed it had 19 million website viewers, but these viewers represented only 3.4% of

the total without other supplier blogs and websites (Appendix 1). Figure 4 shows the huge

gap between total revenue and EBITDA (earnings before interest, taxes, depreciation, and

amortisation). This means that the gap in revenue is the suppliers‘ share. Therefore, in the

position of Glam Media, suppliers are also significantly important customers because the

company can earn money from their websites and blogs (Plunkett 2009). Therefore, the

supplier (customer) threat is a medium risk.

Figure 4. Is Glam a Sham? (http://techcrunch.com/2007/08/12/is-glam-a-sham/)

Power of intermediaries

Websites that have their own blogs will be intermediaries. This means that Glam should

connect blogs via its websites. Therefore, a specific website can be an intermediary. However,

those websites cannot be a threat to Glam‘s own business.

- 9 -

Sell-side threats

The power of the Internet buyer has increased dramatically in the last 10 years. This

phenomenon has affected customers and created new customer behaviours and power.

According to Namchul (2001, p. 165), “The Internet changes the basis of competition by

radically altering product/service offerings and the cost structure of firms.” This is one of the

biggest threats to Glam Media‘s business posed by electronic trading.

Customer threats

The power of customers has risen significantly due to the Internet‘s rapid growth. The

Internet offers a wide range of products and information. Therefore, the customer can easily

and conveniently acquire products and information. This means that the accessibility of the

provider has increased dramatically by using the Internet.

In addition, buyers‘ knowledge has improved, so they can obtain a significant variety of

information such as price, performance, service, quality, shipping fee, and customer reviews.

The Internet enables easy price comparison of products and service for users (Bakos 1998;

Basu, Hartono, Lederer & Sethi 2002). This situation offers power to current and prospective

customers. In particular, new forms of social media, such as Facebook and Twitter, influence

thousands of individual consumers who discuss a brand on social network sites (Matlay 2004;

Bocij & Chaffey 2007). In this media industry, clients can switch easily, and customers will

not be excluded from access to world media. Therefore, the current Internet users who use

social media pose a high potential customer threat to Glam Media.

Customer reactions in the market sometimes can be predictable and, at other times, quite

unpredictable. Businesses need to form close relationships with customers with up-to-date,

quick, and interesting information. To do this, Glam Media should implement different

effective strategies and methods to respond and retain the consideration and motivation of

loyal customers. This means it needs to provide and consider feedback from customers and

then should immediately accept clients‘ opinions. Additionally, the buying patterns of

customers often change with seasons and times. Thus, the company must maintain constant

vigilance in the market to ensure that it fully understands customer demands and tastes at any

particular time.

- 10 -

Power of intermediaries

The downstream channel threat is a counterparty risk that loses distributors and partners.

Another threat is the dramatic effect that a few mega-intermediaries have had using websites

such as Google, Bing, Moneysupermarket, and Bizrate. This means that customers use them

and empower a few big intermediaries because they have the benefit of variety and high-

quality service. As a result, this situation will pose a threat to Glam Media.

Therefore, Glam Media should implement and apply new and innovative strategies to avoid

friction. For example, it could use a stable dealership as part of an e-commerce solution to

sell and connect to customers at any time. This strategy would be more valuable and effective

to maintain or increase its total revenue and sales in the Internet service market. Glam Media

also should take steps to reduce the amount of time taken in searching for websites. Gage

(2013) pointed out this could be reduced by 10% using a Google search.

Competitive threats

New entrants to the market are a threat since a company may learn of Glam Media‘s

weaknesses and then use this information against it. Entry of new companies into the market

also may lead to the emergence of new and more superior products that will outperform theirs.

New digital products/services

The threat can appear from an existing or a new company. It is believed that lower cost

engenders strong competitiveness, and the Internet thereby adds significant competitiveness

to e-business companies. Chaffey (2009, p. 278) pointed out that, “The greatest threats are

likely to occur where digital product fulfilment can occur over the Internet.” On the Internet,

there are few e-companies that act as competitors to Glam Media. Those companies—

including DailyCandy Inc., iVillage Inc., Hearst Interactive Media, and Condé Nast Digital

and Meredith Corporation—have been a steady threat. These companies are based on the

Internet and offer digital media content, advertisements, food information, and interesting

articles to Internet users. These are almost the same offerings as from Glam Media.

- 11 -

In France when Glam Media opened, the company faced a strong, similar named competitor

offering similar services called Glam One—a ―vertically integrated social media platform.‖

The media market has 400 domains other than Glam Media. In addition, Glam One has five

vertical content networks that are different than Glam Media‘s vertical content network. This

means that this service has a wider selection than Glam Media.

New commerce entrants

Since e-business is currently attractive for new entrants, entrepreneurs perceive the industry

to be more profitable, which brings about freedom of entry and exit. Glam Media has

captured a large market and is currently among the leading companies in terms of women‘s

products and styles. However, it is threatened by the entry of completely new start-up

competitors.

In the current climate, there are various traditional organisations operating in different

markets. These types of business firms mainly use the Internet to facilitate their entry into a

new e-market. This means that a lot of new e-business entrants negatively affect the

profitability, productivity, sales, market share, and revenue levels of Glam Media. The new

entrants are able to succeed in a short time, even if they do not have enough money to cover

the costs of maintaining and developing a distribution linkage to sell their particular products

and services. When traditional business companies enter the e-market, they do not need a

manufacturing base such as a supplier or intermediary. Traditional business and new start-up

companies can achieve access to new customers quickly by using the Internet. Since the

entrance barrier is low, new entrant companies pose a high threat to Glam Media.

However, new e-business companies still have costs, such as switching and sunk costs.

Additionally, those companies need to spend money to follow rapid changes in technology to

become successful by being the market leaders in customer service in competition with Glam

Media and other competitors. New entrant businesses also have capital requirements that are

significantly high, but customer loyalty is quite low. Therefore, in the media industry, the

new entrant threat is a medium risk to Glam Media.

- 12 -

New business model

There is a threat from the development of new business firms or existing companies that

change to a new model. It is directly or indirectly associated with the competitive threat that

is concerned with new methods of service delivery. For example, Glam One in the French

media is an example of such a threat posed by a competitor because the company has a new

business model based on the e-market (Smith 2009). Although Glam Media and Glam One

have similar company names, they have different business models and audiences that are

specific in terms of content. Glam Media‘s base is women and men, while Glam One

interacts with people who are divided between specific professions, such as directors, actors,

and freelancers.

All threats are significant and important factors to a company‘s survival in the e-market.

However, Glam Media analysis shows that key competitive factors include the customer on

the buying side, the customer on the sehjlling side, and the new entrance threat. As previously

mentioned, Glam Media can make a profit from selling advertisements of the buying-side

customers to the selling-side customers on the Internet. Therefore, Glam Media should have a

good relationship with both-side customers. New entrants will create a competitive model to

provide a service to customers. Some new entrants will even follow the Glam Media model.

Glam Media should introduce specific service protection rights such as copyrights and

patents, and it should consider developing good relations with their selected customers.

Finally, exit barriers also should be established to avoid demand and supply being affected.

- 13 -

How crowdsourcing can be used in the financial industry

Crowdsourcing is a compound term that can be defined as the way in which a business

organisation creates a method wherein public customers participate according to a business

product line and service in making better quality products and services; the company would

share its benefit with participating customers. Crowdsourcing can be distinguished from

outsourcing because ideas and problem-solving methods come from unidentified people. This

approach offers a lot of specific and innovative benefits in a comprehensive manner. For

instance, with the help of crowdsourcing, an individual or a company can collect specific and

important information and a high volume of solutions at a lower or inexpensive cost. It can

also generate the benefits of viral marketing. This method can be divided into different

categories such as crowdsource design, crowdfunding, microwork, and open innovation

(Petersen 2011).

In the financial industry, a test of crowdsourcing has been adopted so that financers can better

understand what their clients want and need. In addition, financial companies use techniques

of crowdsourcing to improve and analyse financial market aptitude. Moreover, financial

companies can subdivide work in a more effective manner. Finally, it gives balance to experts

and non-experts. This means it is feasible for an expert to generate, but a non-expert

layperson also can offer creative solutions (Aitamurto, Leipone & Tee 2011).

Microwork crowdsourcing refers to an online problem-solving form. Occasionally a

computer has difficulty in solving or processing a specific task. Therefore, it is outsourced to

a distributed assembly of people by dividing the specific difficulty into smaller sub-

difficulties. Multiple public people (referred to as ―workers,‖ to use Amazon‘s jargon) who

do not have exact skills or know-how can independently obtain sub-difficulties with

economic rewards to work on individually. Amazon‘s Mechanical Turk (MTurk) is one of the

online implementations that use human intelligent tasks (HIT) and the long tail (LT) effect in

Web 2.0. MTurk has 50,000 workers in over 190 different countries. The model offers a

virtual labour marketplace for microtasks, task design, work questions, published answers,

and rewards. For example, a computer cannot summarise 1,000 hours of lecture videos.

However, MTurk can separately allocate the lecture videos to 1,000 people who will each

receive one hour of lectures. This means the online market links requesters and people who

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solve requested work. In addition, MTurk assists with translating a large amount of text or

data in a short time; for example, people analyse satellite pictures to fathom the

disappearance of ships (Oomen & Arroyo 2011; Young 2013). When all is done, the workers

are rewarded with money tokens. However, it is difficult to manage the delivery of quality

and time management because there is no obligation in the organisation (Brussee, Rovers,

Vliet, Swart & Hekman 2013).

It is estimated that microwork crowdsourcing is just one state-of-the-art approach selected by

financial companies, so that they are able to make efficient and effective financial services

decisions by solving complicated problems. This means that complexities are divided into

sub complexities. For example, almost all financial companies such as retail banks,

investment banks, and other institutions are helped in analysing qualitative and quantitative

data by using crowdsourcing. Financial organisations can gather high-quality customer

insights to avoid organisational challenges or to discover new revenue opportunities or to

resolve service problems in the financial industry. The companies also can enhance their

client loyalty through frequent communication and collaboration (Grier 2013). Financial

service companies confirm decision-making, and then financiers prudently design a setup

program and management to verify effectively a variety of financial functions.

There are a few large demonstrations of crowdsourcing in the banking industry. Danske Bank,

for example, has applied crowdsourcing in the form of an ―Idebank‖ application on Facebook,

which proves their position as a unique bank by engaging their Danish community clients in

their transformation program. This is a significant way to assist their present projects with

new and greater customer input and access to make them more accessible. The bank

emphasises that it is seeking to be better and more transparent, thereby increasing its fan base,

which has resulted in 185 comments, 263 ideas, and 3,019 votes.

Nykredit Bank is applying a crowdsourcing initiative called ―Sparetips‖ on Facebook and on

mobile phones. The bank gathered 400 tips and increased 100% of users within two months,

without any cost contest and technique. In the United Kingdom, Barclays Bank has created a

Barclaycard ring card. The cardholder can ballot on characteristics for the card (Miettinen

2012). In addition, the First Direct Bank has a project called ―First Direct Lab‖ in the

―Kurtosys Blog.‖

- 15 -

In the United States, HSBC USA is the first bank to adopt crowdsourcing for its customers by

establishing the ―First Direct Lab.‖ As a result, HSBC can directly gather a share of customer

feedback, thereby improving existing service and creating new products. The Commonwealth

Bank (2011) in Australia (CBA) pointed out that its IdeaBank is crowdsourcing that mails,

ballots, and talks to customers about ideas for new innovative services and products. There

also is comprehensive data that can be viewed on ZDNet and a short CBA video on YouTube

concerning IdeaBank.

In September 2011, Sberbank in Russia commenced ―Sberbank 21,‖ which asked clients to

provide their concepts, assess ideas of other participants, exchange attitudes, and provide

feedback through customers‘ ideas and suggestions (Petersen 2011).

Deutsche Bank uses crowdsourcing to innovate and improve the quality of its services and

communication with customers. This project is called ―Drive DB‖ and involves corporate

customers who view the German website or blogs such as ―Social Banking 2.0,‖ ―Finance

2.0,‖ ―Socialnetworkstrategien,‖ and ―Computer Weekly.‖

In Singapore, the DBS Bank uses the method of ―Your Bank - Your Design‖ on Facebook. It

assists in making a new bank branch‘s design. Clients can be found in the Brand Finance

ratings. There is updating to show the winning designs. Capitec Bank in South Africa also

adopted crowdsourcing tasks for publishing along with a web banner design at ―Gottaquirk.‖

The Swedish Avanza Bank has a project called ―Avanza Lab,‖ which proposes developing

new ideas, products, and services. It can be found at the Springwise and wowdwow websites.

Crowdsourcing improves transparency between clients and their banks. This means that

banks and customers should believe their partners in the move toward construction. It also

boosts collaboration and openness. However, the financial industry is still waiting for an

overall positive outcome with customers in terms of the usefulness of crowdsourcing (Grier

2013).

There is a wide range of barriers to be overcome in relation to cost and technical capability,

so that the automation scenario described can be effectively executed. The most fundamental

and specific barrier is simple knowledge (Barbham 2008, 2013; Oomen & Arroyo 2011;

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Camhi 2012). This means that for automation scenarios to operate efficiently, lay people

should develop specific knowledge of finance in a proper manner.

Another barrier is that crowdsourcing has the benefit of viral marketing. However, creating

scandals or spreading rumours constitutes the wrong form of marketing. For example, if there

is not enough compensation, some people will create incorrect rumours (Merrill, Latham,

Santalesa & Navetta 2011; Bays 2013). It is significantly important and sensitive that

financial companies give credit to their customers because of the money market. Otherwise, it

will have a negative influence on a financial company.

Another major challenge to crowdsourcing is the lack of sufficient money to initiate the

process. Prior to setting up a crowdsourcing community, one needs to develop a website, and,

in other cases, especially for a novice, participants must be rewarded so as to encourage their

interest (Brabham 2013). This means that crowdsourcing needs a reasonable infrastructure for

performance. This requires start-up funding, which many people or small financial companies

do not have. As a result, most crowdsourcing projects do not receive sufficient attention, and,

hence, poor solutions in terms of public opinion are the result.

- 17 -

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Appendix 1

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