Chapter 1 Overview of Electronic Commerce
Learning Objectives <ul><li>Define electronic commerce (EC) and describe its various categories. </li></ul><ul><li>Describ...
Learning Objectives  (cont.) <ul><li>Describe the benefits of EC to organizations, consumers, and society. </li></ul><ul><...
Electronic Commerce: Definitions and Concepts <ul><li>The Internet has emerged as a major, perhaps eventually  the  major,...
EC: Definitions and Concepts (cont.) <ul><li>E-commerce  defined from the following perspectives: </li></ul><ul><ul><li>Co...
EC: Definitions and Concepts  (cont.) <ul><li>Business process:  doing business electronically by completing business proc...
EC: Definitions and Concepts (cont.) <ul><li>Learning:   an enabler of online training and education in schools, universit...
EC: Definitions and Concepts (cont.) <ul><li>e-business:   a broader definition of EC, which includes: </li></ul><ul><ul><...
EC: Definitions and Concepts (cont.) <ul><li>Pure vs. Partial EC   depends upon the  degree of digitization  (the transfor...
E C : Definitions and Concepts (cont.) <ul><li>Virtual (pure-play) organizations  conduct their business activities solely...
E C : Definitions and Concepts (cont.) <ul><li>Interorganizational information systems (IOSs)  allow routine transaction p...
 
The EC Framework, Classification, and Content <ul><li>Two major types of e-commerce: </li></ul><ul><ul><li>business-to-con...
The EC Framework, Classification, and Content (cont.) <ul><li>Computer environments </li></ul><ul><ul><li>Internet:  globa...
EC Framework <ul><li>EC applications are supported by infrastructure and by five support areas: </li></ul><ul><ul><li>Peop...
 
Classification of EC by Transactions or Interactions <ul><li>business-to-consumer (B2C)  : online transactions are made be...
Classification of EC by Transactions or Interactions (cont.) <ul><li>business-to-business-to-consumer (B2B2C):   e-commerc...
Classification of EC by Transactions or Interactions (cont.) <ul><li>consumer-to-consumer (C2C):   </li></ul><ul><li>e-com...
Classification of EC by Transactions or Interactions (cont.) <ul><li>mobile commerce ((m-commerce):   </li></ul><ul><li>e-...
Classification of EC by Transactions or Interactions (cont.) <ul><li>intrabusiness EC:   e-commerce category that includes...
Classification of EC by Transactions or Interactions (cont.) <ul><li>collaborative commerce (c-commerce):   </li></ul><ul>...
Classification of EC by Transactions or Interactions (cont.) <ul><li>exchange-to-exchange (E2E):  e-commerce model in whic...
The Interdisciplinary Nature of EC <ul><li>Major EC disciplines  </li></ul><ul><ul><li>Computer science </li></ul></ul><ul...
A Brief History of EC <ul><li>1970s: innovations like  electronic funds transfer  (EFT)—funds routed electronically from o...
A Brief History of EC  (cont.) <ul><li>1969 U.S. government experiment—the Internet came into being initially used by tech...
A Brief History of EC  (cont.) <ul><li>Most medium- and large-sized organizations have a Web site </li></ul><ul><li>Most l...
A Brief History of EC  (cont.) <ul><li>EC successes </li></ul><ul><ul><li>Virtual EC companies  </li></ul></ul><ul><ul><ul...
The Future of EC
The Future of EC <ul><li>2004—total online shopping and B2B transactions in the US between $3 to $7 trillion by 2008: </li...
E-commerce Business Models <ul><li>Business models —a method of doing business by which a company can generate revenue to ...
BUSINESS MODELS ON THE WEB   <ul><li>The basic categories of business models </li></ul><ul><li>Brokerage   </li></ul><ul><...
E-commerce Business Plans and Cases <ul><li>Business plan:  a written document that identifies the business goals and outl...
Structure of Business Models <ul><li>Business model:   A method of doing business by which a company can generate revenue ...
Structure of Business Models   (cont.) <ul><li>Revenue model:   description of how the company or an EC project will earn ...
Structure of Business Models (cont.) <ul><li>Value proposition:   The benefits a company can derive from using EC </li></u...
Exhibit 1.4:  Common Revenue Models
Typical Business Models  i n EC <ul><li>Online direct marketing </li></ul><ul><li>Electronic tendering systems </li></ul><...
Typical Business Models in EC (cont.) <ul><li>Affiliate marketing: an arrangement whereby a marketing partner (a business,...
Typical Business Models in EC (cont.) <ul><li>Group purchasing: quantity purchasing that enables groups of purchasers to o...
Typical Business   Models in EC (cont.) <ul><li>Product and service customization </li></ul><ul><li>customization:  creati...
Typical Business Models in EC (cont.) <ul><li>Information brokers </li></ul><ul><li>Bartering  </li></ul><ul><li>Deep disc...
Exp: Supply Chain Improver <ul><li>Orbis Group changes a linear physical supply chain to an electronic hub </li></ul><ul><...
Exp: Supply Chain Improver (cont.) <ul><ul><li>ProductBank simplifies this lengthy process changing the linear flow of pro...
Benefits of EC <ul><li>Global reach </li></ul><ul><li>Cost reduction </li></ul><ul><li>Supply chain improvements </li></ul...
Benefits of EC  (cont.) <ul><li>Ubiquity </li></ul><ul><li>More products and services </li></ul><ul><li>Cheaper products a...
Benefits of EC  (cont.) <ul><li>Benefits to society </li></ul><ul><ul><li>Telecommuting </li></ul></ul><ul><ul><li>Higher ...
Limitations of EC <ul><li>Limitation of Electronic Commerce  </li></ul><ul><li>Technological Limitations </li></ul><ul><li...
Limitations of EC   (cont.) <ul><li>Non-technological Limitation </li></ul><ul><li>Security and privacy concerns deter cus...
Limitations of EC   (cont.) <ul><li>Non-technological Limitation </li></ul><ul><li>Some customers like to feel and touch p...
Barriers of EC <ul><li>Security  </li></ul><ul><li>Trust and risk </li></ul><ul><li>Lack of qualified personnel </li></ul>...
The Digital Revolution <ul><li>Digital economy :   An economy that is based on digital technologies, including digital com...
The Digital Revolution  (cont.) <ul><li>A global platform over which people and organizations interact, communicate, colla...
New Business Environment <ul><li>Customers are becoming more powerful </li></ul><ul><li>Created due to advances in science...
New Business Environment (cont.) <ul><li>Characteristics in the business environment  </li></ul><ul><ul><li>A more turbule...
Environment-Response-Support Model <ul><li>Critical response activities </li></ul><ul><ul><li>traditional actions such as ...
 
Major Business Pressures <ul><li>Market and </li></ul><ul><li>economic </li></ul><ul><li>pressures </li></ul><ul><li>Stron...
Major Business Pressures (cont.) <ul><li>Societal and </li></ul><ul><li>environmental </li></ul><ul><li>pressures </li></u...
Major Business Pressures (cont.) <ul><li>Technological </li></ul><ul><li>pressures </li></ul><ul><li>Rapid technological o...
Organizational Responses <ul><li>Strategic systems </li></ul><ul><li>Continuous improvement efforts and business process r...
Organizational Responses  (cont.) <ul><li>Business alliances  </li></ul><ul><li>Electronic markets </li></ul><ul><li>Reduc...
Organizational Responses  (cont.) <ul><li>Empowerment of employees </li></ul><ul><li>Supply chain improvements  </li></ul>...
Organizational Responses  (cont.) <ul><li>Intrabusiness: from sales force automation to inventory  </li></ul><ul><li>Knowl...
Putting It All Together <ul><li>Task facing each organization is how to put together the components that will enable the o...
Exhibit 1.8:  The Networked  Organization
Managerial Issues <ul><li>Is it real?  </li></ul><ul><li>How should we evaluate the magnitude of the business pressures?  ...
Managerial Issues  (cont.) <ul><li>What should be my company’s strategy toward EC? </li></ul><ul><li>How do we transform o...
Summary <ul><li>Definition of EC and description of its various categories. </li></ul><ul><li>The content and framework of...
Summary  (cont.) <ul><li>Benefits to organizations, consumers, and society. </li></ul><ul><li>Limitations of EC. </li></ul...
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EC Overview

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Ec2009 ch01 overview of electronic commerce

  1. 1. Chapter 1 Overview of Electronic Commerce
  2. 2. Learning Objectives <ul><li>Define electronic commerce (EC) and describe its various categories. </li></ul><ul><li>Describe and discuss the content and framework of EC. </li></ul><ul><li>Describe the major types of EC transactions. </li></ul><ul><li>Describe some EC business models. </li></ul>
  3. 3. Learning Objectives (cont.) <ul><li>Describe the benefits of EC to organizations, consumers, and society. </li></ul><ul><li>Describe the limitations of EC. </li></ul><ul><li>Describe the role of the digital revolution in EC. </li></ul><ul><li>Describe the contribution of EC to organizations responding to environmental pressures. </li></ul>
  4. 4. Electronic Commerce: Definitions and Concepts <ul><li>The Internet has emerged as a major, perhaps eventually the major, worldwide distribution channel for goods, services, managerial and professional jobs </li></ul><ul><li>This is profoundly changing economics, markets and industry structure, products and services and their flow, consumer segmentation, consumer values, consumer behavior, jobs, and labor markets </li></ul><ul><li>The impact may be even greater on societies and politics, and on the way we see the world and ourselves in it </li></ul>
  5. 5. EC: Definitions and Concepts (cont.) <ul><li>E-commerce defined from the following perspectives: </li></ul><ul><ul><li>Communications: delivery of goods, services, information, or payments over computer networks or any other electronic means </li></ul></ul><ul><ul><li>Commercial (trading): provides capability of buying and selling products, services, and information on the Internet and via other online services </li></ul></ul>
  6. 6. EC: Definitions and Concepts (cont.) <ul><li>Business process: doing business electronically by completing business processes over electronic networks, thereby substituting information for physical business processes </li></ul><ul><li>Service: a tool that addresses the desire of governments, firms, consumers, and management to cut service costs while improving the quality of customer service and increasing the speed of service delivery </li></ul>
  7. 7. EC: Definitions and Concepts (cont.) <ul><li>Learning: an enabler of online training and education in schools, universities, and other organizations, including businesses </li></ul><ul><li>Collaborative: the framework for inter- and intraorganizational collaboration </li></ul><ul><li>Community: provides a gathering place for community members to learn, transact, and collaborate </li></ul>
  8. 8. EC: Definitions and Concepts (cont.) <ul><li>e-business: a broader definition of EC, which includes: </li></ul><ul><ul><li>buying and selling of goods and services </li></ul></ul><ul><ul><li>servicing customers </li></ul></ul><ul><ul><li>collaborating with business partners </li></ul></ul><ul><ul><li>conducting electronic transactions within an organization </li></ul></ul>
  9. 9. EC: Definitions and Concepts (cont.) <ul><li>Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of: </li></ul><ul><ul><li>the product (service) sold; </li></ul></ul><ul><ul><li>the process; and for </li></ul></ul><ul><ul><li>the delivery agent (or digital intermediary) </li></ul></ul><ul><li>Brick-and-Mortar organizations are old-economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents </li></ul>
  10. 10. E C : Definitions and Concepts (cont.) <ul><li>Virtual (pure-play) organizations conduct their business activities solely online </li></ul><ul><li>Click-and-mortar organizations conduct some EC activities, but do their primary business in the physical world </li></ul><ul><li>Electronic market </li></ul><ul><li>(e-marketplace) online marketplace where buyers and sellers meet to exchange goods, services, money, or information </li></ul>
  11. 11. E C : Definitions and Concepts (cont.) <ul><li>Interorganizational information systems (IOSs) allow routine transaction processing and information flow between two or more organizations </li></ul><ul><li>Intraorganizational information systems enable EC activities to go on within individual organizations </li></ul>
  12. 13. The EC Framework, Classification, and Content <ul><li>Two major types of e-commerce: </li></ul><ul><ul><li>business-to-consumer (B2C) : online transactions are made between businesses and individual consumers </li></ul></ul><ul><ul><li>business-to-business (B2B): businesses make online transactions with other businesses </li></ul></ul><ul><ul><ul><li>intrabusiness EC: EC conducted inside an organization (e.g., business-to-employees B2E) </li></ul></ul></ul>
  13. 14. The EC Framework, Classification, and Content (cont.) <ul><li>Computer environments </li></ul><ul><ul><li>Internet: global networked environment </li></ul></ul><ul><ul><li>Intranet: a corporate or government network that uses Internet tools (Web browsers, Internet protocols) </li></ul></ul><ul><ul><li>Extranet: a network that uses the Internet to link multiple intranets </li></ul></ul><ul><ul><li>Wireless network : Ubiquitous </li></ul></ul><ul><ul><ul><li>Wireless Local Area Network ( WLAN ) </li></ul></ul></ul><ul><ul><ul><li>Wi-Fi </li></ul></ul></ul><ul><ul><ul><li>Fixed Wireless Data </li></ul></ul></ul><ul><ul><ul><li>Wireless Metropolitan area networks </li></ul></ul></ul><ul><ul><ul><li>Mobile devices networks </li></ul></ul></ul>
  14. 15. EC Framework <ul><li>EC applications are supported by infrastructure and by five support areas: </li></ul><ul><ul><li>People </li></ul></ul><ul><ul><li>Public policy </li></ul></ul><ul><ul><li>Marketing and advertising </li></ul></ul><ul><ul><li>Support services </li></ul></ul><ul><ul><li>Business partnerships </li></ul></ul>
  15. 17. Classification of EC by Transactions or Interactions <ul><li>business-to-consumer (B2C) : online transactions are made between businesses and individual consumers </li></ul><ul><li>business-to-business (B2B): businesses make online transactions with other businesses </li></ul><ul><li>e-tailing: online retailing, usually B2C </li></ul>
  16. 18. Classification of EC by Transactions or Interactions (cont.) <ul><li>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 </li></ul><ul><li>consumer-to-business (C2B): </li></ul><ul><li>e-commerce model in which individuals use the Internet to sell products or services to organizations or individuals seek sellers to bid on products or services they need </li></ul>
  17. 19. Classification of EC by Transactions or Interactions (cont.) <ul><li>consumer-to-consumer (C2C): </li></ul><ul><li>e-commerce model in which consumers sell directly to other consumers </li></ul><ul><li>peer-to-peer (P2P): 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 </li></ul>
  18. 20. Classification of EC by Transactions or Interactions (cont.) <ul><li>mobile commerce ((m-commerce): </li></ul><ul><li>e-commerce transactions and activities conducted in a wireless environment </li></ul><ul><li>location-based commerce (l-commerce): m-commerce transactions targeted to individuals in specific locations, at specific times </li></ul>
  19. 21. Classification of EC by Transactions or Interactions (cont.) <ul><li>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 </li></ul><ul><li>business-to-employees (B2E): e-commerce model in which an organization delivers services, information, or products to its individual employees </li></ul>
  20. 22. Classification of EC by Transactions or Interactions (cont.) <ul><li>collaborative commerce (c-commerce): </li></ul><ul><li>e-commerce model in which individuals or groups communicate or collaborate online </li></ul><ul><li>e-learning: the online delivery of information for purposes of training or education </li></ul><ul><li>exchange (electronic): a public electronic market with many buyers and sellers </li></ul>
  21. 23. Classification of EC by Transactions or Interactions (cont.) <ul><li>exchange-to-exchange (E2E): e-commerce model in which electronic exchanges formally connect to one another the purpose of exchanging information </li></ul><ul><li>e-government: e-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens </li></ul>
  22. 24. The Interdisciplinary Nature of EC <ul><li>Major EC disciplines </li></ul><ul><ul><li>Computer science </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Consumer behavior </li></ul></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Economics </li></ul></ul><ul><ul><li>Management information systems </li></ul></ul>
  23. 25. A Brief History of EC <ul><li>1970s: innovations like electronic funds transfer (EFT)—funds routed electronically from one organization to another (limited to large corporations) </li></ul><ul><li>electronic data interchange (EDI)— electronically transfer routine documents (application enlarged pool of participating companies to include manufacturers, retailers, services) </li></ul><ul><li>interorganizational system (IOS)—travel reservation systems and stock trading </li></ul>
  24. 26. A Brief History of EC (cont.) <ul><li>1969 U.S. government experiment—the Internet came into being initially used by technical audience of government agencies, academic researchers, and scientists </li></ul><ul><li>1990s the Internet commercialized and users flocked to participate in the form of dot-coms , or Internet start-ups </li></ul><ul><li>Innovative applications ranging from online direct sales to e-learning experiences </li></ul>
  25. 27. A Brief History of EC (cont.) <ul><li>Most medium- and large-sized organizations have a Web site </li></ul><ul><li>Most large U.S. corporations have comprehensive portals </li></ul><ul><li>1999 the emphasis of EC shifted from B2C to B2B </li></ul><ul><li>2001 the emphasis shifted from B2B to B2E, </li></ul><ul><ul><li>c-commerce, e-government, e-learning, and </li></ul></ul><ul><ul><li>m-commerce </li></ul></ul><ul><li>EC will undoubtedly continue to shift and change </li></ul>
  26. 28. A Brief History of EC (cont.) <ul><li>EC successes </li></ul><ul><ul><li>Virtual EC companies </li></ul></ul><ul><ul><ul><li>eBay </li></ul></ul></ul><ul><ul><ul><li>VeriSign </li></ul></ul></ul><ul><ul><ul><li>AOL </li></ul></ul></ul><ul><ul><ul><li>Checkpoint </li></ul></ul></ul><ul><ul><li>Click-and-mortar </li></ul></ul><ul><ul><ul><li>Cisco </li></ul></ul></ul><ul><ul><ul><li>General Electric </li></ul></ul></ul><ul><ul><ul><li>IBM </li></ul></ul></ul><ul><ul><ul><li>Intel </li></ul></ul></ul><ul><ul><ul><li>Schwab </li></ul></ul></ul><ul><li>EC failures </li></ul><ul><ul><li>1999, a large number of EC-dedicated companies began to fail </li></ul></ul><ul><ul><li>EC’s days are not numbered! </li></ul></ul><ul><ul><ul><li>dot-com failure rate is declining sharply </li></ul></ul></ul><ul><ul><ul><li>EC field is experiencing consolidation </li></ul></ul></ul><ul><ul><ul><li>most pure EC companies, are expanding operations and generating increasing sales (Amazon.com) </li></ul></ul></ul>
  27. 29. The Future of EC
  28. 30. The Future of EC <ul><li>2004—total online shopping and B2B transactions in the US between $3 to $7 trillion by 2008: </li></ul><ul><ul><li>number of Internet users worldwide should reach 750 million </li></ul></ul><ul><ul><li>50 percent of Internet users will shop (~) </li></ul></ul><ul><ul><li>EC growth will come from: </li></ul></ul><ul><ul><ul><li>B2C </li></ul></ul></ul><ul><ul><ul><li>B2B </li></ul></ul></ul><ul><ul><ul><li>e-government </li></ul></ul></ul><ul><ul><ul><li>e-learning </li></ul></ul></ul><ul><ul><ul><li>B2E </li></ul></ul></ul><ul><ul><ul><li>c-commerce </li></ul></ul></ul>the future is bright อนาคตสดใส
  29. 31. E-commerce Business Models <ul><li>Business models —a method of doing business by which a company can generate revenue to sustain itself </li></ul><ul><ul><ul><li>Examples : </li></ul></ul></ul><ul><ul><ul><ul><li>Name your price </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Find the best price </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Dynamic brokering </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Affiliate marketing </li></ul></ul></ul></ul>
  30. 32. BUSINESS MODELS ON THE WEB <ul><li>The basic categories of business models </li></ul><ul><li>Brokerage </li></ul><ul><li>Advertising </li></ul><ul><li>Infomediary </li></ul><ul><li>Merchant </li></ul><ul><li>Manufacturer ( Direct ) </li></ul><ul><li>Affiliate </li></ul><ul><li>Community </li></ul><ul><li>Subscription </li></ul><ul><li>Utility </li></ul>
  31. 33. E-commerce Business Plans and Cases <ul><li>Business plan: a written document that identifies the business goals and outlines the plan of how to achieve them </li></ul><ul><li>Business case: a written document that is used by managers to garner funding for specific applications or projects; its major emphasis is the justification for a specific investment </li></ul>
  32. 34. Structure of Business Models <ul><li>Business model: A method of doing business by which a company can generate revenue to sustain itself </li></ul>
  33. 35. Structure of Business Models (cont.) <ul><li>Revenue model: description of how the company or an EC project will earn revenue </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Transaction fees </li></ul></ul><ul><ul><li>Subscription fees </li></ul></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Affiliate fees </li></ul></ul><ul><ul><li>Other revenue sources </li></ul></ul>
  34. 36. Structure of Business Models (cont.) <ul><li>Value proposition: The benefits a company can derive from using EC </li></ul><ul><ul><li>search and transaction cost efficiency </li></ul></ul><ul><ul><li>complementarities </li></ul></ul><ul><ul><li>lock-in </li></ul></ul><ul><ul><li>novelty </li></ul></ul><ul><ul><li>aggregation and interfirm collaboration </li></ul></ul>
  35. 37. Exhibit 1.4: Common Revenue Models
  36. 38. Typical Business Models i n EC <ul><li>Online direct marketing </li></ul><ul><li>Electronic tendering systems </li></ul><ul><li>tendering (reverse auction): model in which a buyer requests would-be sellers to submit bids, and the lowest bidder wins </li></ul><ul><li>Name your own price: a 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 </li></ul>
  37. 39. Typical Business Models in EC (cont.) <ul><li>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 </li></ul><ul><li>Viral marketing: word-of-mouth marketing in which customers promote a product or service to friends or other people </li></ul>
  38. 40. Typical Business Models in EC (cont.) <ul><li>Group purchasing: quantity purchasing that enables groups of purchasers to obtain a discount price on the products purchased </li></ul><ul><li>SMEs: s mall to medium enterprises </li></ul><ul><li>Online auctions </li></ul>
  39. 41. Typical Business Models in EC (cont.) <ul><li>Product and service customization </li></ul><ul><li>customization: creation of a product or service according to the buyer’s specifications </li></ul><ul><li>Electronic marketplaces and exchanges </li></ul><ul><li>Value-chain integrators </li></ul><ul><li>Value-chain service providers </li></ul>
  40. 42. Typical Business Models in EC (cont.) <ul><li>Information brokers </li></ul><ul><li>Bartering </li></ul><ul><li>Deep discounting </li></ul><ul><li>Membership </li></ul><ul><li>Supply chain improvers </li></ul><ul><li>Business models can be independent or they can be combined amongst themselves or with traditional business models </li></ul>
  41. 43. Exp: Supply Chain Improver <ul><li>Orbis Group changes a linear physical supply chain to an electronic hub </li></ul><ul><ul><li>Traditional process in the B2B advertising field </li></ul></ul>
  42. 44. Exp: Supply Chain Improver (cont.) <ul><ul><li>ProductBank simplifies this lengthy process changing the linear flow of products and information to a digitized hub </li></ul></ul>
  43. 45. Benefits of EC <ul><li>Global reach </li></ul><ul><li>Cost reduction </li></ul><ul><li>Supply chain improvements </li></ul><ul><li>Extended hours: 24/7/365 </li></ul><ul><li>Customization </li></ul><ul><li>New business models </li></ul><ul><li>Vendors’ specialization </li></ul><ul><li>Rapid time-to-market </li></ul><ul><li>Lower communication costs </li></ul><ul><li>Efficient procurement </li></ul><ul><li>Improved customer relations </li></ul><ul><li>Up-to-date company material </li></ul><ul><li>No city business permits and fees </li></ul><ul><li>Other benefits </li></ul><ul><li>Benefits to organizations </li></ul>
  44. 46. Benefits of EC (cont.) <ul><li>Ubiquity </li></ul><ul><li>More products and services </li></ul><ul><li>Cheaper products and services </li></ul><ul><li>Instant delivery </li></ul><ul><li>Information availability </li></ul><ul><li>Participation in auctions </li></ul><ul><li>Electronic communities </li></ul><ul><li>“ Get it your way” </li></ul><ul><li>No sales tax </li></ul>Benefits to consumers
  45. 47. Benefits of EC (cont.) <ul><li>Benefits to society </li></ul><ul><ul><li>Telecommuting </li></ul></ul><ul><ul><li>Higher standard of living </li></ul></ul><ul><ul><li>Hope for the poor </li></ul></ul><ul><ul><li>Availability of public services </li></ul></ul>
  46. 48. Limitations of EC <ul><li>Limitation of Electronic Commerce </li></ul><ul><li>Technological Limitations </li></ul><ul><li>There is a lack of universally accepted standards for quality, security, and reliability. </li></ul><ul><li>The telecommunications bandwidth is insufficient, especially for m-commerce. </li></ul><ul><li>Software development tools are still evolving. </li></ul><ul><li>There are difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases. </li></ul><ul><li>Special Web Servers are needs in addition to the Network servers (added cost). </li></ul><ul><li>Internet accessibility is still expensive and/or inconvenient. </li></ul><ul><li>Order fulfillment of large-scale B2C requires special automated warehouses. </li></ul>
  47. 49. Limitations of EC (cont.) <ul><li>Non-technological Limitation </li></ul><ul><li>Security and privacy concerns deter customer form buying. </li></ul><ul><li>Lack of trust in EC and in unknown sellers hinders buying. </li></ul><ul><li>Many legal and public policy issues, including taxation, are as yet unresolved. </li></ul><ul><li>National and international government regulations sometime get it the way. </li></ul><ul><li>It is difficult to measure some benefit of EC, such as advertising. There is a lack of mature measurement methodology. </li></ul>
  48. 50. Limitations of EC (cont.) <ul><li>Non-technological Limitation </li></ul><ul><li>Some customers like to feel and touch products. Also, customers are resistant to the change from a real to a virtual store. </li></ul><ul><li>People do not yet sufficiently trust paperless, faceless transaction. </li></ul><ul><li>In most case, there is an insufficient number (critical mass) of sellers and buyers which are needed for profitable EC operations. </li></ul><ul><li>There is an increasing amount of fraud on the Internet. </li></ul><ul><li>It is difficult to obtain venture capital due to the dot-com disaster (failure of many dot-coms). </li></ul>
  49. 51. Barriers of EC <ul><li>Security </li></ul><ul><li>Trust and risk </li></ul><ul><li>Lack of qualified personnel </li></ul><ul><li>Lack of business models </li></ul><ul><li>Culture </li></ul><ul><li>User authentication and lack of public key infrastructure </li></ul><ul><li>Organization </li></ul><ul><li>Fraud </li></ul><ul><li>Slow navigation on the Internet </li></ul><ul><li>Legal issues </li></ul>
  50. 52. The Digital Revolution <ul><li>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 </li></ul>
  51. 53. The Digital Revolution (cont.) <ul><li>A global platform over which people and organizations interact, communicate, collaborate, and search for information </li></ul><ul><li>Includes the following characteristics: </li></ul><ul><ul><li>A vast array of digitizable products </li></ul></ul><ul><ul><li>Consumers and firms conducting financial transactions digitally </li></ul></ul><ul><ul><li>Microprocessors and networking capabilities embedded in physical goods </li></ul></ul>
  52. 54. New Business Environment <ul><li>Customers are becoming more powerful </li></ul><ul><li>Created due to advances in science occurring at an accelerated rate </li></ul><ul><li>Results in more and more technology </li></ul><ul><li>Rapid growth in technology results in a large variety of more complex systems </li></ul>
  53. 55. New Business Environment (cont.) <ul><li>Characteristics in the business environment </li></ul><ul><ul><li>A more turbulent environment with more business problems and opportunities </li></ul></ul><ul><ul><li>Stronger competition </li></ul></ul><ul><ul><li>Need for organizations to make decisions more frequently </li></ul></ul><ul><ul><li>A larger scope for decisions because more factors </li></ul></ul><ul><ul><li>More information and/or knowledge needed for making decisions </li></ul></ul>
  54. 56. Environment-Response-Support Model <ul><li>Critical response activities </li></ul><ul><ul><li>traditional actions such as lowering cost and closing unprofitable facilities </li></ul></ul><ul><ul><li>introduce innovative actions such as customizing or creating new products or providing superb customer service </li></ul></ul>
  55. 58. Major Business Pressures <ul><li>Market and </li></ul><ul><li>economic </li></ul><ul><li>pressures </li></ul><ul><li>Strong competition </li></ul><ul><li>Global economy </li></ul><ul><li>Regional trade agreements </li></ul><ul><li>(e.g. NAFTA) </li></ul><ul><li>Extremely low labor cost in some countries </li></ul><ul><li>Frequent and significant changes in markets </li></ul><ul><li>Increased power of consumers </li></ul>
  56. 59. Major Business Pressures (cont.) <ul><li>Societal and </li></ul><ul><li>environmental </li></ul><ul><li>pressures </li></ul><ul><li>Changing nature of workforce </li></ul><ul><li>Government deregulation of banking and other services </li></ul><ul><li>Shrinking government subsidies </li></ul><ul><li>Increased importance of ethical and legal issues </li></ul><ul><li>Increased social responsibility of organizations </li></ul><ul><li>Rapid political changes </li></ul>
  57. 60. Major Business Pressures (cont.) <ul><li>Technological </li></ul><ul><li>pressures </li></ul><ul><li>Rapid technological obsolescence </li></ul><ul><li>Increase innovations and new technologies </li></ul><ul><li>Information overload </li></ul><ul><li>Rapid decline in technology cost vs. performance ratio </li></ul>
  58. 61. Organizational Responses <ul><li>Strategic systems </li></ul><ul><li>Continuous improvement efforts and business process reengineering—including business process reengineering (BPR) </li></ul><ul><li>Customer relationship management (CRM)—divided into the following areas </li></ul><ul><ul><li>Operational CRM </li></ul></ul><ul><ul><li>Analytical CRM </li></ul></ul><ul><ul><li>Collaborative CRM </li></ul></ul>
  59. 62. Organizational Responses (cont.) <ul><li>Business alliances </li></ul><ul><li>Electronic markets </li></ul><ul><li>Reductions in cycle time and time-to-market </li></ul><ul><ul><li>Cycle time reduction: Shortening the time it takes for a business to complete a productive activity from its beginning to end </li></ul></ul>
  60. 63. Organizational Responses (cont.) <ul><li>Empowerment of employees </li></ul><ul><li>Supply chain improvements </li></ul><ul><li>Mass customization: make-to-order in large quantities in an efficient manner </li></ul><ul><ul><li>Mass customization: Production of large quantities of customized items </li></ul></ul>
  61. 64. Organizational Responses (cont.) <ul><li>Intrabusiness: from sales force automation to inventory </li></ul><ul><li>Knowledge management </li></ul><ul><ul><li>Knowledge management (KM): The process of creating or capturing knowledge, storing and protecting it, updating and maintaining it, and using it </li></ul></ul>
  62. 65. Putting It All Together <ul><li>Task facing each organization is how to put together the components that will enable the organization to transform itself to the digital economy and gain competitive advantage by using EC </li></ul><ul><li>Many employ corporate portals </li></ul><ul><ul><li>A major gateway through which employees, business partners, and the public can enter a corporate Web site </li></ul></ul>
  63. 66. Exhibit 1.8: The Networked Organization
  64. 67. Managerial Issues <ul><li>Is it real? </li></ul><ul><li>How should we evaluate the magnitude of the business pressures? </li></ul><ul><li>Why is B2B e-commerce so attractive? </li></ul><ul><li>There are so many EC failures—how can one avoid them? </li></ul>
  65. 68. Managerial Issues (cont.) <ul><li>What should be my company’s strategy toward EC? </li></ul><ul><li>How do we transform our organization into a digital one? </li></ul><ul><li>What are the top challenges of EC? </li></ul>
  66. 69. Summary <ul><li>Definition of EC and description of its various categories. </li></ul><ul><li>The content and framework of EC. </li></ul><ul><li>The major types of EC transactions. </li></ul><ul><li>The major business models. </li></ul>
  67. 70. Summary (cont.) <ul><li>Benefits to organizations, consumers, and society. </li></ul><ul><li>Limitations of EC. </li></ul><ul><li>The role of the digital revolution. </li></ul><ul><li>The role of EC in combating pressures in the business environment. </li></ul>

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