Business Information Management PDF

Business Information Management Dr. Michael P. O’Brien Module: MI4007 Week 7 1 The Internet - Changing the Face of Business Successful companies use the Internet as a mechanism for transforming their companies and for...

Business Information Management Dr. Michael P. O’Brien Module: MI4007 Week 7 1 The Internet - Changing the Face of Business Successful companies use the Internet as a mechanism for transforming their companies and for changing everything about the way they do business Recent statistics show that 94% of the world’s online population visit online stores. Items purchased most often include computer hardware and software, tickets, books, music, movies, gift cards, toys, video games, etc., etc. E-commerce has launched a revolution, essentially, a new industrial order! 2  What is E-Commerce? Electronic commerce or e-commerce is a term for any type of business, or commercial transaction, that involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer-based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. E-commerce allows consumers to electronically exchange goods and services with no barriers of time or distance. In the near future the boundaries between “conventual” and "electronic" commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet. 3 Traditional Sales 4  Typical E-Commerce Process 5 Main Types of E-Commerce Business-to-business (B2B) Largest form of e-commerce E.g. Intel selling microprocessor to Dell Business-to-consumer (B2C) Basic concept is to sell the product online to the consumers. E.g. Dell selling me a laptop Business-to-employee (B2E) Uses an intra-business network which allows companies to provide products/services to their employees. E.g. Apple employees 27% internal discount on devices. Consumer-to-consumer (C2C) E.g. Mary buying an iPod from Tom on eBay. Consumer-to-business (C2B) E.g. John licenses his photo for a business to use. Mobile commerce (m-commerce) E.g. Mobile Banking (AIB online 24h) E.g. Mobile Ticketing 6  Digital Products The perfect match for digital markets are digital assets. Advantages: – A virtually free global distribution channel. – Marginal cost of production is virtually zero. – Pricing can be flexible. – Opening new markets. Disadvantages: – Dislocation of existing markets. – Piracy/Ethics… 7 Advantages of E-Commerce Faster buying/selling procedure, as well as easy to find products. Businesses can operate on a global scale. No distance barriers! No time barrier; buying/selling 24 hours a day. The cost of operating online can be cheaper than having a shop/office. Sales can be automated, meaning a reduction in staff. Advertising is cheaper. Savings passed on to customers! Businesses can use e-commerce to easily identify new suppliers and business partners. E-commerce provides buyers with a wider range of choices than traditional commerce because buyers can consider many different products and services from a wider variety of sellers. 8  Disadvantages of E-Commerce Unable to examine products personally i.e. no guarantee of product quality. Not everyone is connected to the Internet. Security concerns with people’s personal details which include credit card details. Lack of human contact/personal touch. Delay in receiving goods. Can be expensive to return. International legislation. On average, only 1/9th of stock is available on the Internet! 9 Crypto Currencies Commonly referred to with terms like digital currency, digital cash, virtual currency, electronic currency, or cryptocurrency. Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men - meaning, no banks! There are no transaction fees and no need to give your real name. Google the topic/read the Bitcoin Case Study on Brightspace and identify reasons why a business should or should not accept Bitcoin. 10  Competitive Advantage Strategic Information Systems: “An information system that gives it’s owner a competitive advantage” Reduce costs Raise Barriers to Entry Raise Switching Costs Create new products 11 Porter’s Five Forces Threat of New Entrants Existing Rivalry Bargaining Power Bargaining Power between of Suppliers of Buyers competitors Threat of Substitute Products Video: https://www.youtube.com/watch?v=YoXlJqX5Qf0 12  Threat of New Entrants How likely is a new competitor to enter the industry? “Barriers to Entry” - how easy or hard is it to enter an industry. Barriers to entry include High start-up costs Patents Brand Loyalty 13 Threat of Substitute Products How easily is our product replaced by an entirely different product? Vs Vs Vs 14  Power of Buyers How powerful are the buyers in your industry? Can they drive down your prices? Have buyers a wide choice? Is there a small number of buyers? 15 Power of Suppliers How powerful are the suppliers in your industry? Can they charge you more for their goods or services? This is the inverse of the previous factor Can I choose from many suppliers? Will “switching costs” be incurred in changing supplier 16  Existing Rivalry Between Companies Determined by Number of Firms Maturity of Industry Size of Industry 17 Industry Lifecycle Porter’s Five Forces allows an organisation to take a “snapshot” of the current state of the industry it is in. However, most industries tend to have a lifecycle. DVD Rentals surpass VHS (2003) First DVD Release (1996) Studios stop VHS & Betamax DVD Created(1984) releasing VHS(2004) Launched (1976) VHS ‘Wars’ (1980) Introduction Growth Maturity Decline 18  Five Forces Analysis: Dell Competition within the industry: Other computer manufacturers, Toshiba, HP etc. Market is growing globally, but tapering off in developing world. Power of suppliers: Dell is a powerful company, and has a lot of clout. However, certain components only produced by 1-2 companies globally. 19 Five Forces Analysis: Dell Power of Buyers: Buyers have a wide variety of options to choose from, both from different manufacturers and through stores, etc. Threat of new entrants: Computer manufacturing has large start-up costs (factories, technicians, etc). 20  Five Forces Analysis: Dell Threat of substitute products: The threat of substitute products is growing from Dell’s perspective – Games Consoles – Smartphones – Tablets – Internet Television 21 Responding to Competition Cost Leadership Alliance Differentiation Competition Growth Innovation 22  Responding to Competition Cost Leadership: Produce goods or services at the lowest possible cost: Example: Aldi and Lidl compete in the supermarket industry by keeping their costs as low as possible. 23 Responding to Competition Differentiation: Develop a product that is unique and different from other competitors. This can include developing “better” products and trading on a brand name, etc. Example: British Airways prides itself on customer services and being “the world’s favourite airline”. 24  Responding to Competition Growth: Expand the company’s market by selling into new markets, or leveraging economies of scale to manufacture new product lines. Example: McDonald’s, etc. faced too much competition in US so expanded abroad. 25 Responding to Competition Innovation: Developing completely new products and services to replace those under threat. Example: IBM in the 1980’s couldn’t compete with Intel/Microsoft so became a services company. 26  Responding to Competition Alliance: Establish new business linkages to allow focus on core competencies and outsource other activities. Example: Nike has no factories. It is a research, development and marketing company. It creates alliances to manufacture its goods. 27 28