Introduction To Electronic Commerce
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Introduction To Electronic Commerce

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Introduction To Electronic Commerce Introduction To Electronic Commerce Presentation Transcript

  • Chapter 3 Introduction to Electronic Commerce
  • Learning Objectives
    • In this chapter, you will learn about:
    • The basic elements of electronic commerce
    • Differences between electronic commerce and traditional commerce
    • Advantages and disadvantages of using electronic commerce
    • The international nature of electronic commerce
  • Learning Objectives
    • The Internet and the World Wide Web have stimulated the emergence of electronic commerce.
    • Economic forces that have created a business environment to foster electronic commerce
    • The ways by which businesses use value chains to identify electronic commerce opportunities
  • Defining Electronic Commerce
    • Electronic commerce refers to business activities conducted using electronic data transmission via the Internet and the World Wide Web.
    • Three main elements of e-commerce:
      • Business-to-consumer
      • Business-to-business
      • The transactions and business processes that support selling and purchasing activities on the Web
      • Click to see Figure 1-1
  •  
  • Forms of Electronic Commerce
    • Web-based e-commerce
    • Electronic funds transfers (EFTs)
    • Electronic data interchange (EDI)
      • General Electric
      • Wal-Mart
  • Value Added Network (VAN)
    • A value added network is an independent firm that offers connection and EDI transaction forwarding services to buyers and sellers engaged in EDI.
    • VANs are responsible for ensuring the security of data transmitted.
    • VANs charged a fixed monthly fee plus a per-transaction charge to subscribers.
  • Elements of Traditional Commerce: the Buyer’s Side
    • Identify specific need
    • Search for products or services that will satisfy the specific need
    • Select a vendor
    • Negotiate a purchase transaction
    • Make payment
    • Perform regular maintenance and make warranty claims
    • Click to see Figure 1-2
  •  
  • Elements of Traditional Commerce: the Seller’s Side
    • Conduct market research to identify customer needs
    • Create product or service that will meet customers’ needs
    • Advertise and promote product or service
    • Negotiate a sale transaction
  • Elements of Traditional Commerce: the Seller’s Side
    • Ship goods and invoice customer
    • Receive and process customer payments
    • Provide after-sale support, maintenance, and warranty services
    • Click to see Figure 1-3
  •  
  • Activities as Business Processes
    • Business Processes refer to activities in which businesses engage as they accomplish a specific element of commerce, including:
      • Transfer funds
      • Placing orders
      • Sending invoices
      • Shipping goods to customers
  • Electronic Commerce Processes
    • Electronic fund transfer (EFT)
    • Electronic data interchange (EDI)
    • Internet commerce
    • Electronic business (IBM style)
  • Electronic Commerce Processes
    • Examples of business processes:
      • Well suited to electronic commerce
      • Well suited to traditional commerce
      • A combination of both strategies
    • Click to see figure 1-4
    • Click to see figure 1-5
  •  
  •  
  • Well-suited E-commerce Business Processes
    • Sale/purchase of books and CDs and other commodities
    • Online delivery of software
    • Promotion and delivery of travel services
    • Online shipment tracking
  • Well-suited Traditional Business Processes
    • Sales/purchase of high-fashion clothing
    • Sale/purchase of perishable food products
    • Processing of small-denomination transactions
    • Sale of high-value jewelry and antiques
  • Business Processes Suited to Both Commerce Strategies
    • Sale/purchase of automobiles
    • Online banking
    • Roommate-matching services
    • Sale/purchase of investment and insurance products
  • Advantages of Electronic Commerce
    • Electronic commerce can increase sales and decrease costs.
    • Web advertising reaches to potential customers in the world.
    • Web creates virtual communities for specific products or services.
  • Advantages of Electronic Commerce
    • A business can reduce the costs by using electronic commerce in its sales support and order-taking processes.
    • Electronic commerce increases sale opportunities for the seller.
    • Electronic commerce increases purchasing opportunities for the buyer.
  • General Welfare of Society
    • Electronic commerce benefits the general welfare of society because:
      • Electronic payments of tax refunds and welfare cost less to issue and arrive securely.
      • Electronic payments can be audited easily.
      • Electronic commerce enables people to work from home.
      • Electronic commerce makes products and services available in remote areas.
  • Disadvantages of Electronic Commerce
    • Some business processes are difficult to be implemented through electronic commerce.
    • Return-on-investment is difficult to apply to electronic commerce.
    • Businesses face cultural and legal obstacles to conducting electronic commerce.
  • International Electronic Commerce
    • About 60 percent of all electronic commerce sites are in English, languages barrier needs to be overcome.
    • The political structures of the world presents some challenges.
    • Legal, tax, and privacy are concerns of the international electronic commerce.
  • The Internet and World Wide Web
    • The Internet is a large system of interconnected computer networks that spans the globe.
    • The Internet supports e-mail, online newspapers and publications, discussion group, game, and free software.
    • The World Wide Web includes an easy-to-use standard interface for Internet resources accesses.
  • Origins of the Internet
    • In the early 1960s, the U.S. Department of Defense started research on networking computers.
    • Its researchers developed a multiple channels network.
    • In 1969, the Defense Department used this network model to connect four mainframe computers at different locations.
  • New Uses for the Internet
    • In 1972, a researcher wrote a program that could send and receive messages over the network.
    • E-mail was born and became widely used.
    • The network software include:
      • File Transfer Protocol (FTP)
      • User’s News Network (Usenet)
  • Commercial Use of the Internet
    • Companies used PC to construct their networks in 1980s.
    • National Science Foundation (NSF) funded the network services in 1980s.
    • In 1989, NSF permitted two commercial e-mail services.
    • As the 1990s began, the Internet started to serve the global resource accesses.
  • Growth of the Internet
    • In 1991, the NSF further eased its restriction on Internet commercial activity.
    • The privatization of the Internet was substantially completed in 1995.
    • The new structure of the Internet was based on four network access points (NAPs).
    • Internet service providers (ISPs) sell Internet access rights directly to customers.
    • Click to see Figure 1-6
  •  
  • Development of Hypertext
    • In the 1960s, Ted Nelson described his page-linking system hypertext.
    • In 1987, Nelson published a book about a global system for online hypertext publishing and commerce.
    • In 1991, Berners-Lee of CERN developed the code for a hypertext server program and made it available on the Internet.
  • HTML
    • A hypertext server is a computer that stores files written in the hypertext markup language (HTML).
    • HTML is a language that includes a set of codes (or tags) attached to text.
    • A hypertext link points to another location in the same or another HTML document.
  • Web Browser and Markup Languages
    • A web browser is a software interface that lets users browse HTML documents.
    • HTML is based on Standard Generalized Markup Language (SGML).
    • eXtensible Markup Language (XML) allows users to define new meanings for its commands in web page.
    • Click to see Figure 1-7
  •  
  • Graphical User Interface
    • A graphical user interface (GUI) is a way of presenting program control functions and program output to users.
    • Web browsers include:
      • Mosaic
      • Netscape Navigator
      • Microsoft Internet Explorer
      • Click to see Figure 1-8
  •  
  • Economic Forces of Electronic Commerce
    • Transaction costs were the main motivation for moving economic activity from markets to hierarchically structured firms.
    • Transaction costs are the total of all costs that a buyer and a seller incur for business.
    • Types of economic organization:
      • Market form
      • Hierarchically-structured form
      • Click to see Figure 1-9
      • Click to see Figure 1-10
  •  
  •  
  • The Role of Electronic Commerce
    • Businesses and individuals can use electronic commerce to reduce transaction cost.
    • Electronic commerce can make network economic structure, which rely on information sharing, much easier to construct and maintain.
    • Click to see Figure 1-11
  •  
  • Value Chains
    • A strategic business unit is one particular combination of product, distribution channel, and customer type.
    • A value chain is a way of organizing the activities that each strategic business unit undertakes to design, produce, promote, market, deliver, and support the products or services it sells.
  • Strategic Business Unit Value Chains
    • For each business unit, the primary activities are:
      • Identify customers
      • Design
      • Purchase materials and supplies
      • Manufacture
      • Market and sell
      • Deliver
      • Provide after-sale service and support
  • Strategic Business Unit Value Chains
    • The support activities of value chain for a strategic business unit include:
      • Finance and administration
      • Human resources
      • Technology development
            • Click to see Figure 1-12
  •  
  • Industry Value Chains
    • Value system describes the larger stream of activities into which a particular business unit’s value chain is embedded.
    • Industry value chain refers to value systems.
    • Using the value chain reinforces the idea that electronic commerce should be a business solution.
    • Click to see Figure 1-13
  •