Electronic Commerce

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Electronic Commerce

  1. 1. Electronic Commerce ( 电子商务 ) Lecture 1: Introduction to Electronic Commerce TSL School of Business and Technology Information ( TSBIT ) 泉州师院陈守仁工商信息学院 Instructor: Zhonghui Ouyang ( [email_address] )
  2. 2. The Position of Electronic Commerce ( 电子商务 ) in Your 4YR Study A type courses Economics Biz English Management HR Behavior of Consumer Accounting Market B2B TSBIT’s Graduate Student B2C SCM CRM ERP Electronic Commerce Linear Algebra Calculus SeCM Graduate Schools Public Sectors Companies Business Information
  3. 3. Course Administration <ul><li>Instructor: Zhonghui Ouyang ( [email_address] ) </li></ul><ul><li>Teaching assistants: 王建福、马瑾玉、刘小铭、黄哲日 </li></ul><ul><li>Course web page: http://210.34.121.252:82/index.htm </li></ul><ul><li>Course -> EC -> Outline , Plan , Work </li></ul><ul><li>Slides posted on web page the night before lecture </li></ul><ul><li>18 Lectures, 16 Computer Lab , 1 Middle Exam, 1 Final Exam </li></ul><ul><li>Grading: </li></ul><ul><ul><li>Computer Lab & Homework 32% (2% each) </li></ul></ul><ul><ul><li>Class Participation 8% </li></ul></ul><ul><ul><li>Middle Exam 10% </li></ul></ul><ul><ul><li>Final Exam 50% </li></ul></ul>
  4. 4. EC Computer Lab Schedule (TSBIT Building RM 412) 王建福 刘小铭 黄哲日 马瑾玉 Lab Instr. 03 级营销 60-100 号 03 级国贸 85-109 号 03 级营销 1-17 号 03 级国贸 1-42 号 02 级国贸 39-76 号 7:40PM 9 、 10 03 级营销 18-59 号 03 级国贸 43-84 号 02 级国贸 77-114 号 02 级国贸 1-38 号 6:00PM 7 、 8 Thr Wed Tue Mon
  5. 5. <ul><li>CASE1: Students’ experience for purchasing a ref book </li></ul><ul><li>CASE2: US buyer’s experience for purchasing a car </li></ul><ul><ul><li>Autobytel.com >> Autoweb.com & CarSmart.com </li></ul></ul><ul><ul><li>From this CASE, we learn the impact of Internet on Car Biz : </li></ul></ul><ul><ul><ul><li>About 70% of car buyers do research on the internet before buying their cars </li></ul></ul></ul><ul><ul><ul><li>Autobytel processes 800,000 trans. worth $21 billion per year </li></ul></ul></ul><ul><ul><ul><li>Autobytel sales accounted 5% of all US new vehicle sales in 2002 </li></ul></ul></ul><ul><ul><ul><li>Car buyer benefits 2-4% less via Autobytel </li></ul></ul></ul><ul><ul><ul><li>Car dealers reduce selling cost from $420 to $150 per car via Autobytel </li></ul></ul></ul>
  6. 6. <ul><li>Traditional Commerce and Electronic Commerce </li></ul><ul><ul><li>The basic info of changing direction from traditional commerce to electronic commerce: </li></ul></ul><ul><ul><ul><li>Internet Activities </li></ul></ul></ul><ul><ul><ul><li>Daily Internet Activities </li></ul></ul></ul><ul><ul><ul><li>Overall Growth of Online Pursuits </li></ul></ul></ul><ul><ul><ul><li>Daily Growth of Online Pursuits </li></ul></ul></ul><ul><ul><ul><li>Worldwide consumer shopping on the Web: $130 billion (2002) => $500 billion (2004) </li></ul></ul></ul><ul><ul><ul><li>Worldwide business activities on the Web: $6 trillion (2004) </li></ul></ul></ul><ul><ul><ul><li>Intel accepts 95% of orders through the Internet & did $24 billion in Web site sales (2002) </li></ul></ul></ul>
  7. 7. <ul><li>Traditional Commerce and Electronic Commerce (Cont) </li></ul><ul><ul><li>The useful types of electronic commerce: </li></ul></ul><ul><ul><ul><li>Business-to-consumer (or B2C ) </li></ul></ul></ul><ul><ul><ul><li>Business-to-business (or B2B ) </li></ul></ul></ul><ul><ul><ul><li>The transactions & biz processes of government & other org. invoked the Internet </li></ul></ul></ul><ul><ul><ul><li>Consumer-to-consumer (or C2C ) </li></ul></ul></ul><ul><ul><ul><li>Business-to-government (or B2G) </li></ul></ul></ul><ul><ul><ul><li>Telecommuting or telework </li></ul></ul></ul><ul><ul><ul><li>Before Web, electronic funds transfers (or: EFT, wire transfers) and electronic data interchange (EDI) occurs </li></ul></ul></ul>
  8. 8. <ul><li>Traditional Commerce and Electronic Commerce (Cont) </li></ul><ul><ul><li>Traditional Commerce </li></ul></ul><ul><ul><ul><li>The (car) Buyer: </li></ul></ul></ul><ul><ul><ul><ul><li>Identify specific need </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Search for products or services that will satisfy the specific need </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Select a vendor </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Negotiate a purchase transaction, including: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Delivery logistics </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Inspection, testing, and acceptance </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Make payment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Perform regular maintenance and make warranty claims </li></ul></ul></ul></ul><ul><ul><ul><li>The (car) Seller: </li></ul></ul></ul><ul><ul><ul><ul><li>Conduct market research to identify customer needs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Create product or service that will meet customers’ needs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Advertise and promote product or service </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Negotiate a sale transaction, including: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Delivery logistics </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Inspection, testing, and acceptance </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Ship goods and invoice customer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Receive and process customer payment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Provide after-sale support, maintenance, and warranty services </li></ul></ul></ul></ul>
  9. 9. <ul><li>Traditional Commerce and Electronic Commerce (Cont) </li></ul><ul><ul><li>Traditional Commerce </li></ul></ul><ul><ul><ul><li>Activities, Transactions, and Business Processes </li></ul></ul></ul><ul><ul><ul><ul><li>Activity: a task performed by a business worker </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Transaction: the records of business activities are performing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Business Processes: the group of logical, related, and sequential activities and transactions </li></ul></ul></ul></ul>
  10. 10. <ul><li>Traditional Commerce and Electronic Commerce (Cont) </li></ul><ul><ul><li>Electronic Commerce </li></ul></ul><ul><ul><ul><li>Business Processes in Commerce </li></ul></ul></ul>Sale/purchase of investment and insurance products Sale/purchase of high-value jewelry and antiques Sale/purchase of residential real estate Online shipment tracking Small-denomination purchase and sales Roommate-matching services Sale/purchase of travel services Sale/purchase of perishable food products Online banking Online delivery of software Sale/purchase of impulse items for immediate use Sale/purchase of automobiles Sale/purchase of books and CDs Well suited to traditional commerce Suited to a combination of electronic and traditional commerce strategies Well suited to electronic commerce
  11. 11. <ul><li>Traditional Commerce and Electronic Commerce (Cont) </li></ul><ul><ul><li>Electronic Commerce </li></ul></ul><ul><ul><ul><li>Advantage of Electronic Commerce </li></ul></ul></ul><ul><ul><ul><ul><li>EC can increase sales & decrease costs </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cisco: 72% of its 1998 sales -> 97% of its 2003 sales, it avoided handling 500,000 calls monthly and saved $500 million in that year alone </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>EC can help general welfare of society: tax refunds, public retirement </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>EC has accomplished remote education, remote medicare, etc </li></ul></ul></ul></ul></ul><ul><ul><ul><li>Disadvantage of Electronic Commerce </li></ul></ul></ul><ul><ul><ul><ul><li>Some goods could not be delivered or inspected remotely (perishable foods, custom-designed jewelry, etc) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Cultural and legal obstacles (fearful of sending credit card numbers over the Internet, privacy issues, etc) </li></ul></ul></ul></ul><ul><ul><li>International Commerce </li></ul></ul><ul><ul><ul><li>60% of all EC sites on the Web are in English while 75% of world population is non-English speaking </li></ul></ul></ul><ul><ul><ul><li>Currency conversions, tariffs, import and export restrictions, local business customs, and laws of each country in which a trading partner resides can make int’l e-Commerce difficult </li></ul></ul></ul>
  12. 12. <ul><li>Economic Forces and Electronic Commerce </li></ul><ul><ul><li>Economics = study of how people allocate scarce resources </li></ul></ul><ul><ul><ul><li>1st way people allocate scarce resources: commerce </li></ul></ul></ul><ul><ul><ul><li>2nd way people allocate scarce resources: government tax </li></ul></ul></ul><ul><ul><li>Market = how people organize their commerce activities </li></ul></ul><ul><ul><ul><li>Sellers and buyers of a good </li></ul></ul></ul><ul><ul><ul><li>A medium of exchange </li></ul></ul></ul><ul><ul><li>Hierarchical business organizations = firms/companies </li></ul></ul><ul><ul><ul><li>Hierarchical organization has a pyramid-shaped structure (President, CEO, Managers) </li></ul></ul></ul><ul><ul><ul><li>The transaction costs is the main motivation for moving economic activity from markets to hierarchical firms </li></ul></ul></ul><ul><ul><li>Transaction Costs </li></ul></ul><ul><ul><ul><li>The total costs of seller/buyer’s activities on the s/b transaction of a good: info, negotiation, investment, equipment, post-s/b support, and hiring employees for the good </li></ul></ul></ul>
  13. 13. <ul><li>Economic Forces and Electronic Commerce (cont) </li></ul><ul><ul><li>Markets and Hierarchies </li></ul></ul><ul><ul><ul><li>Before Industry Revolution: The transaction costs and the economic needs are the forces for moving market-negotiated transaction to forming hierarchical organizations – we learn this from EC4e’s sweater case </li></ul></ul></ul><ul><ul><ul><li>From Industry Revolution to middle 20 century: the size and level of vertical integration of firms have increased </li></ul></ul></ul><ul><ul><ul><li>From later 20 century to present: the decentralization approaches seems back to the world because more customized needs force firms to re-organize their structures </li></ul></ul></ul><ul><ul><ul><li>Why changes were happened? Answer: for low transaction costs </li></ul></ul></ul><ul><ul><li>The Role of Electronic Commerce </li></ul></ul><ul><ul><ul><li>Benefits of EC: improving the flow of information and increasing the coordination of actions -> reduce transaction costs </li></ul></ul></ul>
  14. 14. <ul><li>Economic Forces and Electronic Commerce (cont) </li></ul><ul><ul><li>The Role of Electronic Commerce </li></ul></ul>BUYER FINDS SELLER NEGOTIATION PAYMENT SALE DELIVERY POST-SALE ACTIVITY SELECTION OF GOODS SEARCH ENGINE SHOPPING BOT AGGREGATOR ON-LINE CATALOG AUTOMATED AGENTS TRACKING AGENT ON-LINE HELP INTERNET TELEPHONY CUSTOMER PREFERENCES BARGAINING STRATEGIES PRICE SENSITIVITIES CREDIT/PAYMENT INFORMATION ON-LINE PROBLEM REPORTS FOLLOW-ON SALES OPPORTUNITIES SOME TECHNOLOGIES USED: SOME INFORMATION GATHERED: BROWSING BEHAVIOR DELIVERY REQUIREMENTS E-PAYMENT SYSTEMS CONFIGURATOR RECOMMENDER AGENT TRANSACTION PROCESSOR DATA INTERCHANGE CRYPTOGRAPHY BROWSER SHARING MARKET BASKET INTERNET PERSONAL DATA CUSTOMER SATISFACTION SEARCH BEHAVIOR EFFECTIVENESS OF PROMOTIONS INFORMATION PHYSICAL+ INFORMATION
  15. 15. <ul><li>Economic Forces and Electronic Commerce (cont) </li></ul><ul><ul><li>Network Economic Structure </li></ul></ul><ul><ul><ul><li>Network economic structure -> strategic alliance / strategic partnerships -> virtual companies </li></ul></ul></ul><ul><ul><ul><li>Strategic partners or sector associations share technological standards, information, resources, etc </li></ul></ul></ul><ul><ul><li>Network Effects </li></ul></ul><ul><ul><ul><li>Law of diminishing returns </li></ul></ul></ul><ul><ul><ul><li>Network effects </li></ul></ul></ul>
  16. 16. <ul><li>Value Chains in Electronic Commerce </li></ul><ul><ul><li>Strategic Business Units Value Chains </li></ul></ul>Design Deliver Manufacture Product or create service Market and sell Identify customers Finance and administration Human Resources Technology development Provide after- sale service and support Purchase materials and supplies Primary activities Support activities
  17. 17. <ul><li>Value Chains in Electronic Commerce (cont) </li></ul><ul><ul><li>Industry Value Chains </li></ul></ul>Cotton Apparel manufacturing Global logistics Manufactures fabric Orders from retailers Supply chain management Consumer purchasing
  18. 18. <ul><li>SWOT Analysis: Evaluating Business Unit Opportunities </li></ul><ul><li>Threats </li></ul><ul><li>What are competitors doing well? </li></ul><ul><li>What obstacles does the company face? </li></ul><ul><li>Are there troubling changes in the company’s business environment (technologies, laws, and regulations)? </li></ul><ul><li>Opportunities </li></ul><ul><li>Are industry trends moving upward? </li></ul><ul><li>Do new markets exist for the company’s products/services? </li></ul><ul><li>Are there new technologies that the company can exploit? </li></ul><ul><li>Weaknesses </li></ul><ul><li>What does the company do poorly? </li></ul><ul><li>What problems could be avoided? </li></ul><ul><li>Does the company have serious financial liabilities? </li></ul><ul><li>Strengths </li></ul><ul><li>What does the company do well? </li></ul><ul><li>Is the company strong in its market? </li></ul><ul><li>Does the company have a strong sense of purpose and the culture to support that purpose? </li></ul>
  19. 19. <ul><li>Dell’s SWOT Analysis </li></ul><ul><li>Threats </li></ul><ul><li>Competitors have stronger brand names </li></ul><ul><li>Competitors have strong relationships with computer retailers </li></ul><ul><li>Opportunities </li></ul><ul><li>Consumer desire for one-step shipping </li></ul><ul><li>Consumers know what they want to buy </li></ul><ul><li>Internet could be a powerful marketing tool </li></ul><ul><li>Weaknesses </li></ul><ul><li>No strong relationships with computer retailers </li></ul><ul><li>Strengths </li></ul><ul><li>Sell directly to consumers. </li></ul><ul><li>Keep costs below competitors’ costs. </li></ul>
  20. 20. <ul><li>SWOT Analysis: Evaluating Business Unit Opportunities </li></ul><ul><ul><li>The Role of Electronic Commerce (EC) </li></ul></ul><ul><ul><li>SWOT Analysis identifies that </li></ul></ul><ul><ul><ul><li>EC can reduce costs </li></ul></ul></ul><ul><ul><ul><li>EC can improve product quality </li></ul></ul></ul><ul><ul><ul><li>EC can reach new customers or suppliers </li></ul></ul></ul><ul><ul><ul><li>EC can create new ways of selling existing products. </li></ul></ul></ul><ul><ul><li>The value chain concept lets EC become a business solution for many firms. </li></ul></ul><ul><ul><li>Next lecture, we will learn how the Internet and the Web came to exist and grow to its current state. </li></ul></ul>
  21. 21. <ul><li>Review Questions </li></ul><ul><li>Exercises </li></ul><ul><li>For Further Study and Research </li></ul><ul><ul><ul><ul><ul><li>Q&A </li></ul></ul></ul></ul></ul>

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