Module 1: Introduction to E-Business & E-Commerce PDF

Introduction to E-Business & E-Commerce 1. Introduction 2. Define electronic commerce (EC) and describe its various categories. 3. Describe and discuss the content and framework of EC. 4. Describe the major types of EC transactions. 5. Describe the digital revoluti...

Introduction to E-Business & E-Commerce 1. Introduction 2. Define electronic commerce (EC) and describe its various categories. 3. Describe and discuss the content and framework of EC. 4. Describe the major types of EC transactions. 5. Describe the digital revolution as a driver of EC. 6. Describe the business environment as a driver of EC. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 2 6. Describe some EC business models. 7. Describe the benefits of EC to organizations, consumers, and society. 8. Describe the limitations of EC. 9. Describe the contribution of EC to organizations responding to environmental pressures. 10. Describe online social and business networks. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 3   Organizations has now been applying technologies based on the Internet, WWW and wireless communications to transform the way they do business.  New opportunities and challenges for innovative e-business based on these new approaches to business Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 4   electronic commerce (EC) The process of buying, selling, transferring, or exchanging products, services, or information via computer networks.  Different perspective for e-commerce:  Communication – delivery of information, products  Business process – automation of business transactions and workflows  Service – cost cutting, increasing speed and quality of service delivery  Online – buying and selling of products and info Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 5   Types of e-commerce  Buy-side : between a purchasing organization and suppliers  Refers to transactions to procure resources needed by an organization from its suppliers  Sell-side : between a supplier organization and its customers  Refers to transactions involved with selling products to an organization’s customers  Transactional, service-oriented relationship- building, brand-building, portal, publisher or media sites Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 6   e-business A broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 7 Tangible benefits Intangible benefits Increased sales from new sales leads Corporate image communication to increased revenue from: Enhancement of brand - new customers, new markets - existing customers Marketing cost reduction from : More rapid, more responsive - reduced time in customer service marketing - online sales Faster product development lifecycle enabling faster response to market needs Supply chain cost reductions from Improved customer service - reduced levels of inventory Learning for the future - increased competition from Meeting customer expectations to suppliers have a web site - shorter cycle time in ordering Identify new partners, supporting existing partners better Administrative cost reductions from Better management of marketing and Copyright © 2009 Pearson Education, more efficient Chapter 1 routine business Inc. Publishing ascustomer Prentice Hall information 8 Figure 1.2 The distinction between buy-side and sell-side e-commerce   PURE VERSUS PARTIAL EC  EC Organizations  brick-and-mortar (old economy) organizations Old-economy organizations (corporations) that perform their primary business off-line, selling physical products by means of physical agents.  virtual (pure-play) organizations Organizations that conduct their business activities solely online. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 10   click-and-mortar (click-and-brick) organizations Organizations that conduct some e-commerce activities, usually as an additional marketing channel. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 11  1.1 Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 12   INTERNET VERSUS NON-INTERNET EC  intranet An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols.  extranet A network that uses the Internet to link multiple intranets. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 13 Figure 1.12 The relationship between access to intranets, extranets and the Internet   electronic market (e-marketplace) An online marketplace where buyers and sellers meet to exchange goods, services, money, or information. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 15   Interorganizational information systems (IOSs) Communications systems that allow routine transaction processing and information flow between two or more organizations.  intraorganizational information systems Communication systems that enable e-commerce activities to go on within individual organizations. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 16   CLASSIFICATION OF EC BY THE NATURE OF THE TRANSACTIONS OR INTERACTIONS  business-to-business (B2B) E-commerce model in which all of the participants are businesses or other organizations.  business-to-consumer (B2C) E-commerce model in which businesses sell to individual shoppers. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 17   e-tailing Online retailing, usually B2C.  business-to-business-to-consumer (B2B2C) E-commerce model in which a business provides some product or service to a client business that maintains its own customers. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 18   consumer-to-business (C2B) E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they need.  mobile commerce (m-commerce) E-commerce transactions and activities conducted in a wireless environment. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 19   location-based commerce (l-commerce) M-commerce transactions targeted to individuals in specific locations, at specific times.  intrabusiness EC E-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 20   business-to-employees (B2E) E-commerce model in which an organization delivers services, information, or products to its individual employees.  collaborative commerce (c-commerce) E-commerce model in which individuals or groups communicate or collaborate online.  consumer-to-consumer (C2C) E-commerce model in which consumers sell directly to other consumers. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 21   peer-to-peer Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce.  e-learning The online delivery of information for purposes of training or education.  e-government E-commerce model in which a government entity buys or provides goods, services, or information from or to businesses or individual citizens. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 22   exchange A public electronic market with many buyers and sellers.  exchange-to-exchange (E2E) E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 23   THE INTERDISCIPLINARY NATURE OF EC  The Google Revolution  EC Failures  EC Successes Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 24   Web 2.0 The second-generation of Internet-based services that let people generate content, collaborate, and share information online in perceived new ways—such as social networking sites, wikis, communication tools, and folksonomies. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 25   digital economy An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 26   The digital revolution accelerates EC mainly by providing competitive advantage to organizations.  The digital revolution enables many innovations Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 27   THE BUSINESS ENVIRONMENT  The Business Environment Impact Model  Business Pressures and Opportunities  Organizational Response Strategies Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 28  Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 29   business model A method of doing business by which a company can generate revenue to sustain itself. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 30   TYPICAL EC BUSINESS MODELS  Online direct marketing  Electronic tendering systems for procurement  tendering (bidding) system Model in which a buyer requests would-be sellers to submit bids; the lowest cost or highest value bidder wins.  name-your-own-price model Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 31   Find the best price  also known as a search engine model  affiliate marketing An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site.  viral marketing Word-of-mouth marketing in which customers promote a product or service to friends or others. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 32   group purchasing Quantity (aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased.  SMEs Small-to-medium enterprises.  e-co-ops Another name for online group purchasing organizations. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 33   Online auctions  Product customization and service personalization  customization Creation of a product or service according to the buyer’s specifications.  personalization The creation of a service or information according to specific customer specifications. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 34   Electronic marketplaces and exchanges  Information brokers (infomediaries)  Bartering  Value-chain integrators  Value-chain service providers  Supply chain improvers  Social networks, communities, and blogging  Negotiation Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 35   virtual world A user-defined world in which people can interact, play, and do business. The most publicized virtual world is Second Life. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 36   THE BENEFITS OF EC  Benefits to Organizations  Benefits to Consumers  Benefits to Society  Facilitating Problem Solving Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 37   Decreasing costs – marketing, transportation  Increase profits – sales, market share  Expand the size of the market – regional national , national international , reach narrow markets  Competitive advantages in satisfying the customer  Minimize Supply Chain inefficiencies – reduces delivery delays  Build more collaborative and stronger relationship with suppliers  Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 38   Increased consumer satisfaction – more choices  Greater information leads to more confidence to make a purchase decision  More information also leads to enhanced customer satisfaction because the customers has a better idea how to use the product Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 39   Access to stores located remotely  Easier to compare prices  Opened all the time 24/7/365  No queues / being placed hold forever  Common availability of coupons and deals  Lots of choices  Quicker delivery  Receive more information about the products, to make a more informed decision Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 40   Cocooning – more individuals can work offsite, less parking spaces, fewer IT services  Less affluent people can buy more  Increase standard of living  Facilitate delivery of public services Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 41   THE LIMITATIONS AND BARRIERS OF EC  Technological Limitations  Nontechnological Limitations  SOCIAL AND BUSINESS NETWORKS  social networks Web sites that connect people with specified interests by providing free services such as photo presentation, e-mail, blogging, and so on.  Business-Oriented Networks  Revenue Models of Social and Business Networks Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 42  Costs of a technological solution  Some protocols are not standardized around the world  Reliability for certain processes  Insufficient telecommunications bandwidth  Software tools are not fixed but constantly evolving (ie. Netscape 3,4,4.7,4.75 etc.)  Integrating digital and non-digital sales and production information  Access limitations of dial-up, cable, ISDN, wireless Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 43   Some vendors require certain software to show features on their pages, which is not common in the standard browser used by the majority  Difficulty in integrating e-Commerce infrastructure with current organizational IT systems Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 44   Customer fear of personal information being used wrongly  Security and Privacy issues  Customer expectations unmet  Rules and regulations that govern the company and country may limit on-line activity  Opens up vulnerability to fraud and other crimes Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 45   Lack of trust and user resistance  Cultural obstacles - People's resistance to change, people not used to faceless / paperless / non-physical transactions  Linguistic challenges - sourcing technical support in foreign languages  Limitations of support services  Financial cost to consumer for Internet communication needs Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 46   Lack of critical mass in certain market areas for sellers and buyers  Accessibility outside of urban/suburban and areas effects universality  Higher employee training required to be click and mortar  People not used to faceless/paperless/non-physical transactions. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 47   3 pitfalls/mistakes that will undercut or delay the benefits of e-commerce:  Broad expectations: over-expecting/over promising  Rote applications: little/no improvements will come from the rote imposition of e-commerce techniques on bad practices.  Incomplete implementation: Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 48   digital enterprise A new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: reach and engage customers more effectively, boost employee productivity, and improve operating efficiency. It uses converged communication and computing technology in a way that improves business processes. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 49   corporate portal A major gateway through which employees, business partners, and the public can enter a corporate Web site. Portal: a specially designed web pages on a web site which brings information together from diverse sources in a uniform way. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 50 1. Is it real? 2. Why is B2B e-commerce so attractive? 3. There are so many EC failures—how can one avoid them? 4. How can we exploit social/business networking? 5. What should be my company’s strategy toward EC? 6. What are the top challenges of EC? Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 51 1. Definition of EC and description of its various categories. 2. The content and framework of EC. 3. The major types of EC transactions. 4. The role of the digital revolution. 5. The role of the business environment as an EC driver. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 52 6. The major EC business models. 7. Benefits of EC to organizations, consumers, and society. 8. Barriers to EC. 9. Social and business online networks. Copyright © 2009 Pearson Education, Chapter 1 Inc. Publishing as Prentice Hall 53