Class 6 Systems Support to Organizational Strategy: Electronic Commerce  Asper School of Business 6150 Management of  Info...
6150 Management of Information Systems and Technology Outline <ul><li>Concept of E-Commerce </li></ul><ul><li>E-Commerce a...
Concept of E-commerce <ul><li>Two main domains: </li></ul><ul><li>- Business-to-Consumer (B2C), retail on the Internet via...
6150 Management of Information Systems and Technology <ul><li>E-Commerce is a matter of business strategy and IS strategy ...
6150 Management of Information Systems and Technology <ul><li>Boom 1994-2000, 2001 crash; pure vs. hybrid models </li></ul...
6150 Management of Information Systems and Technology Scope  Benefits Costs    IS Issues B2C E-commerce <ul><li>Firm pers...
6150 Management of Information Systems and Technology B2B E-commerce Scope    Benefits    Costs IS Issues <ul><li>Larger...
6150 Management of Information Systems and Technology Scope  Benefits  Costs   IS Issues B2B E-commerce <ul><li>Technolog...
6150 Management of Information Systems and Technology Class Activity: IT/IS does or does not matter for strategic advantag...
Messages for Change Leader 6150 Management of Information Systems and Technology <ul><li>Pay attention to e-commerce (B2B,...
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Class 6 Systems Support to Organizational Strategy:

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  • The U.S. Census Bureau defines e-commerce sales as “sales of goods and services where an order is placed by the buyer or price and terms of sale are negotiated over the Internet, an extranet, Electronic Data Interchange (EDI) network, or other online system. Payment may or may not be made online.” Canadian Gov’t uses the same definition. http://shielddigital.com/economicsofsellingonline/tag/b2b/
  • Class 6 Systems Support to Organizational Strategy:

    1. 1. Class 6 Systems Support to Organizational Strategy: Electronic Commerce Asper School of Business 6150 Management of Information Systems & Technology Instructor: Bob Travica April-June 2009 Updated May 2009
    2. 2. 6150 Management of Information Systems and Technology Outline <ul><li>Concept of E-Commerce </li></ul><ul><li>E-Commerce and Strategic Management </li></ul><ul><li>Business-to-Consumer (B2C) E-Commerce </li></ul><ul><li>Business-to-Business (B2B) E-Commerce </li></ul><ul><li>Class activity: IT/IS and Strategic Advantage </li></ul><ul><li>Messages for Change Leadership </li></ul>
    3. 3. Concept of E-commerce <ul><li>Two main domains: </li></ul><ul><li>- Business-to-Consumer (B2C), retail on the Internet via </li></ul><ul><li>Web storefronts ( Chapters.com ; Wine.com , music, electronics) </li></ul><ul><li>- Business-to-Business (B2B), buying & selling b/w firms </li></ul><ul><ul><li>via e-marketplaces ( Covisint ; Elance.com ) </li></ul></ul><ul><ul><li>directly (EDI, linking via private nets or Web; Dell-HP, </li></ul></ul><ul><ul><li>shipping industry, Cisco-UPS) </li></ul></ul><ul><li>Definition: E-commerce refers to performing buying and selling </li></ul><ul><li>operations electronically – fully or in part. </li></ul>* EDI = Electronic Data Interchange, technology for creating and transferring business electronic documents. ** Not as integrated function, Electronic Fund Transfer (EFT) needed. Money transfer (e-payment) Yes Invoicing No Proprietary technology Order placing & tracking EDI * Web x ** x x x x Functionality
    4. 4. 6150 Management of Information Systems and Technology <ul><li>E-Commerce is a matter of business strategy and IS strategy as </li></ul><ul><li>it affects business place and scope, alignment with traditional </li></ul><ul><li>business, IT, management techniques, and capital investments. </li></ul>E-Commerce and Strategic Management <ul><li>Supply chains turn electronic </li></ul>Consumer Supplier Organization Buyer Organization Supplier Organization
    5. 5. 6150 Management of Information Systems and Technology <ul><li>Boom 1994-2000, 2001 crash; pure vs. hybrid models </li></ul><ul><li>2006: 3% of all retail in U.S., 0.2% in Canada </li></ul><ul><li>Firm perspective benefits: </li></ul><ul><li>Global reach & 24/7 sales </li></ul><ul><li>Savings </li></ul><ul><li>Direct marketing & (customer profiling, personalized </li></ul><ul><li>Web storefronts) </li></ul><ul><li>Cross selling (automatic matching of customer profiles) </li></ul>B2C E-commerce Size  Benefits  Costs IS Issues
    6. 6. 6150 Management of Information Systems and Technology Scope Benefits Costs  IS Issues B2C E-commerce <ul><li>Firm perspective: </li></ul><ul><li>- Technology requirements) </li></ul><ul><li>- Delivery, Logistics </li></ul><ul><li>- Payment security </li></ul><ul><li>- Legal boundaries </li></ul><ul><li>- Competition increase </li></ul><ul><li>- E-branding </li></ul><ul><li>Consumer perspective: </li></ul><ul><li>- IT have-nots </li></ul><ul><li>- Privacy </li></ul><ul><li>- Payment anxiety </li></ul><ul><li>Recourse uncertainty </li></ul>
    7. 7. 6150 Management of Information Systems and Technology B2B E-commerce Scope  Benefits  Costs IS Issues <ul><li>Larger part of e-commerce (2006: 31% US, 1.8% CAN) </li></ul><ul><li>Firms’ benefits: </li></ul><ul><li>- Larger market </li></ul><ul><li>- Savings from efficiencies in supply chain (Cisco-UPS, </li></ul><ul><li>shipping industry, Dell-HP) </li></ul><ul><li>- Better coordination in supply chain </li></ul><ul><li>- Dynamic pricing (auctions) </li></ul><ul><li>24/7 business (via e-marketplaces) </li></ul>
    8. 8. 6150 Management of Information Systems and Technology Scope Benefits Costs  IS Issues B2B E-commerce <ul><li>Technology requirements (systems, links, security) </li></ul><ul><li>Volatile business relationships </li></ul><ul><li>Losses from increased competition & dynamic pricing </li></ul><ul><li>Legal boundaries (e.g., anti-monopoly pressures on </li></ul><ul><li>buyers-driven e-marketplaces) </li></ul><ul><li>Costs of intermediaries </li></ul><ul><li>Costs of private networks </li></ul>Sales Inventory Buyer Purchasing Bank Production Scheduling Supplier E-marketplace
    9. 9. 6150 Management of Information Systems and Technology Class Activity: IT/IS does or does not matter for strategic advantage? <ul><li>To provide a competitive advantage, any technology needs to be </li></ul><ul><li>scarce, rare (proprietary, can’t be copied) </li></ul><ul><li>expensive . </li></ul><ul><li>Nicholas Carr (2003) claims that IT doesn’t fit either criterion but has become </li></ul><ul><li>a commodity as electricity, which everyone can afford. Thus, IT enables no </li></ul><ul><li>competitive differentiation. </li></ul><ul><li>Opponents argue that Carr’s analogies are false, management of IT/IS </li></ul><ul><li>makes a difference, historical process of learning matters, first mover </li></ul><ul><li>advantage still applies, affordability is not universal… </li></ul><ul><li>Working in teams, take </li></ul><ul><li>the position of Carr, or </li></ul><ul><li>the opponents, or </li></ul><ul><li>(c) the middle way, </li></ul><ul><li>and build your argument on any case/cases we have studied. </li></ul>
    10. 10. Messages for Change Leader 6150 Management of Information Systems and Technology <ul><li>Pay attention to e-commerce (B2B, B2C), which increasingly is a necessary part of business, both from the seller and buyer perspective. (Cisco-UPS, E-markets…) </li></ul><ul><li>Think of using IT creatively to expand the sales processes via direct sales to corporate and individual customers (Dell example). </li></ul><ul><li>Be flexible in managing the sales processes over time as the </li></ul><ul><li>market changes (Compaq added direct sales process to </li></ul><ul><li>its indirect channel, while Dell added indirect sales to his </li></ul><ul><li>direct channel). </li></ul><ul><li>The case of e-commerce refutes Carr’s argument by </li></ul><ul><li>proving that a strategic advantage can still be gained by using </li></ul><ul><li>commonly available IT innovatively and before others. </li></ul>

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