2. Building blocks of e-commerce
• A major revolution has taken place during the last five years in the
way business is done.
• This revolution is primarily due to the convergence(union) of
computers and telecommunication technologies and the
emergence of a number of Internet Service Providers (ISPs) who
facilitate the connection of computers to the internet–the world
wide network of computers.
• Internet has spawned (produced) a number of innovations in
business between commercial organizations, between individuals
and commercial organizations, and between individuals and
individuals. Slide 3-2
3. Cont’’’
• These transactions are commonly known as business-to-business
(B2B), business-to-customer (B2C) and customer-to-customer
(C2C) electronic commerce and is abbreviated as e-commerce.
• The important point is that all transactions are carried out
electronically using a network of computers.
Slide 3-3
4. Cont’’’
• The telecommunication system may be a public network (as used in
internet) or a secure private network.
• There are a variety of e-commerce applications.
• Some of these are as listed below.
• Retail stores such as those selling books, music, toys etc.
Auction sites using which an individual buyer/seller can buy/sell
goods.
Cooperating businesses connected using their own private
telecommunication network carrying out transactions in a semi-
automated way.
Slide 3-4
5. Cont’’’
• Banks connected to their customers providing services such as
deposits, payments, and providing information on status of an
account.
• Railways/airlines/cinema theatres permitting booking of tickets on-
line and paying for them on-line using credit cards or electronic cash.
• Electronic publishing to promote marketing, advertising, sales and
customer support.
• Web-based educational material which allow students to learn
anytime and anywhere.
Slide 3-5
6. Cont’’’
• Typical applications of e-commerce by businesses are listed
below.
(1) Publishing on-line catalogues (collection) and price lists on
their website.
(2) Placing caring requests on their websites.
(3) Following supply chains to minimize delays.
Slide 3-6
7. Cont’’’
• e-Commerce has a lot of advantages among which are the
following.
(1) Businesses using the world wide web have an international
presence and can operate .24 7/ at low cost.
(2) In several cases, middle men can be eliminated with direct
business-to-business contact.
(3) All transactions are very fast as electronic communication is
almost instantaneous.
(4) Delay in fund transfer is minimal.
Slide 3-7
8. Key e-commerce Technology Concepts behind the internet
• Different important concepts that are basis for understanding the
Internet:
Packet switching
TCP/IP communications protocol
Domain Names and URLs
Client/server computing
Slide 3-8
9. Packet Switching
• A method of dividing digital messages into packets, sending the
packets along different communication paths as they become
available, and then reassembling the packets once they arrive at their
destination
• It uses routers: special purpose computers that interconnect the
computer networks that make up the Internet and route packets
to their ultimate destination
• Routers use computer programs called routing algorithms to
ensure packets take the best available path toward their
destination
Slide 3-9
11. TCP/IP (Transmission Control Protocol/Internet Protocol)
• Protocol: a set of rules for formatting, ordering, compressing and
error-checking messages
• TCP: Establishes the connections among sending and receiving
Web computers, handles the assembly of packets at the point of
transmission, and then reassembly at the receiving end
• IP: Provides the Internet’s addressing scheme
• TCP/IP is divided into 4 separate layers:
Slide 3-11
15. IP Addresses
• Internet address (also called IP address): a 32-bit number
expressed as a series of four separate numbers marked off by
periods, such as 201.61.186.227
• IPv4 the current version of IP. Can handle up to 4 billion
addresses
• IPv6 (next generation of IP) will use 128-bit addresses and be
able to handle up 1 quadrillion addresses
Slide 3-15
17. Domain Names and URLs
• Domain name: IP address expressed in natural language
• Domain name system (DNS): allows numeric IP addresses to be
expressed in natural language
• Example: cnet.com = 216.200.247.134
• Uniform resource locator (URL): addresses used by Web
browsers to identify location of content on the Web
Slide 3-17
18. Client/Server Computing
• Model of computing in which very powerful personal
computers (clients) are connected in a network with one or
more server computers that perform common functions for
the clients, such as
• storing files,
• software applications, etc.
Slide 3-18
19. Other Internet Protocols and Utility Programs
• HTTP: Protocol used to transfer Web pages
• SMTP, POP and IMAP: Protocols used to send and receive e-mail
• Post Office Protocol (POP); a protocol for client-server e-mail
systems
• Internet Message Access Protocol(IMAP):(internet) one of the
two most prevalent Internet standard protocols for e-mail retrieval
• FTP: Protocol that permits users to transfer files from server to
client and vice versa
• SSL: Protocol that provides secure communications between client
and server
Slide 3-19
20. Cont’’’
• Telnet: Program that enables a client to emulate a mainframe
computer terminal
• Telnet: a network protocol that enables a users on one computer
to log in on another via the Internet; the program that acts as the
client in this situation
• Finger: Utility program that lets you check who is logged on, for
how long and user name
• Ping: Utility program that allows you to check connection
between client and server
Slide 3-20
21. Current structure of the internet
• Client/server computing model, coupled with hourglass, has
allowed Internet to handle explosive growth without disruption
• Hourglass/layered architecture has 4 layers:
– Network Technology
– Transport Services and Representation Standards
– Middleware Services
– Application
Slide 3-21
23. The Internet Backbone
• Consists of high-bandwidth fiber-optic cable owned by a
variety of Network Service Providers (NSPs)
• Term bandwidth refers to how much data can be
transferred over the communications media within a fixed
period of time
• May be expressed bits per second (bps), kilobits per
second (Kbps), megabits per second (Mbps) or gigabits
per second (Gbps)
Slide 3-23
24. Internet Service Providers (ISPs)
• Rents Internet access to home owners, small businesses and some
large institutions
• ISPs can
• Offer both narrowband (traditional telephone modem connection at
56.6 Kbps) and broadband (service based on DSL, cable modem,
T1 or T3 telephone lines, and satellite)
• Broadband Service Choices
Slide 3-24
25. intranets and extranets
• Intranet: TCP/IP network located within a single
organization for purposes of communication and
information processing
• Extranet: Formed when firms permit outsiders to
access their internal TCP/IP networks
Slide 3-25
26. Who Governs the Internet?
• A number of different organizations that influence Internet and
monitor its operations including:
Internet Architecture Board (IAB)
Internet Corporation for Assigned Names and Numbers
(ICANN)
Internet Engineering Steering Group (IESG)
Internet Engineering Task Force (IETF)
Internet Society (ISOC)
World Wide Web Consortium (W3C)
Slide 3-26
27. Business Strategy
• Business Strategy is a plan for achieving superior long-term returns
on the capital invested in a business firm.
• A strategy of a business can be reduced to one of three generic
strategies.
• The generic strategies are: -
• Cost: -Cost Leadership is a strategy where "a firm set out to become
the low-cost producer in its industry."
• A firm with this strategy sets as a goal to produce or provide a
service for a lower operating cost than the competitors. Slide 3-27
28. Cont….
• This enables the firm to sell goods or services at the same
selling price as the competitors and make a larger profit.
• Also, the firm could lower the selling price to under bid the
competitors and still make a profit.
Slide 3-28
29. Cont’’’
• Differentiation: -The second generic business strategy is
differentiation: being different than every other firm.
• Grant states this is an "emphasis on branding advertising, design,
service, quality, and new product development."
• The firm adopting this strategy seeks to be unique in the industry.
This uniqueness must be a feature for which customers will pay a
premium price.
Slide 3-29
30. Cont’’’
• Differentiation can lead to profitability.
• However, it does not lead to market share.
• As Porter states, differentiation creates a perception of exclusivity
which is incompatible with a high market share.
• Thus, a firm with a differentiation strategy can focus on customer
loyalty instead of attempting to create a large market share.
Slide 3-30
31. • This differentiation does not have to be anything outlandish
(odd).
• It can be as simple as the best customer service in the
industry.
• Differentiation can also be speed in filling orders.
• The point of differentiation only has to be something that
customers will be willing to pay a larger selling price than that
of the cost leader.
Slide 3-31
32. Cont’’’
• Focus: -The focus strategy ignores most of a product or service
market and focuses upon a particular niche (place).
•
• The niche could be "a particular buyer group, segment of the
product line, or geographic market."
• For example, in the automobile industry there are companies that
specialize in selling vehicles for disabled people.
Slide 3-32
33. Cont..
• These firms do not compete with the dealerships (agreements)
because these firms have a special vehicle the dealerships do
not carry in inventory.
• The focus is to serve a very special group of customers.
Slide 3-33
34. Cont’’’
• As with the differentiation strategy, this also implies market share
will be limited.
• Porter states, "Focus necessarily involves a trade-off between
profitability and sales volume."
• However, if a firm adopts the focus strategy, the firm must ensure
the market segment that is being served is absolutely different than
the main market.
• If the segment is not different, then the focus strategy will not
succeed.
Slide 3-34
