4Lecture

Electronic Business Electronic Business and Electronic and Electronic

CommerceCommerce

Electronic Business Electronic Business and Electronic and Electronic

CommerceCommerce

OBJECTIVES

• Analyze how Internet technology has changed business value and models

• Define electronic commerce and describe how it has changed consumer retailing and business-to-business transactions

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

Internet Technology and the Digital Firm

• Information technology infrastructure: The Internet provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations.

• Direct communication between trading partners: Disintermediation removes intermediate layers.

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

• Round the clock service: Web sites available to consumers 24 hours

• Reduced transaction costs: Costs of searching for buyers, declines

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

Internet Technology and the Digital Firm (Continued)

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

Business Model:

• Defines an enterprise – offer the scope of business.

• Describes how the enterprise delivers a product or service

• Shows how the enterprise creates wealth

New Business Models and Value Propositions

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

• Information asymmetry: One party in a transaction has more information than the other. The Internet decreases information asymmetry.

• Increases richness: The Internet increases the depth, detail, and scope of information.

• Increases reach: The Internet increases the number of people who can be contacted efficiently.

The Changing Economies of Information

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

The Changing Economics of Information

Figure 4-1

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

• Virtual storefront: Sells goods or services online (Amazon.com)

• Information broker: Provides information on products or services (Edmunds.com)

• Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com)

• Online marketplace: Provides a trading platform for individuals and firms (eBay.com)

Internet Business Models

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC COMMERCE

Categories of Electronic Commerce

• Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com)

• Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com)

• Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com )

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

Business-To-Consumer

Advantages of E-commerce:

• Customer-centered retailing: Closer and more personalized relationship with customers is possible

• Web sites: Provide a corporate-centered portal for the consumer to quickly find information on products, services, prices, orders

ELECTRONIC COMMERCE

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

• Disintermediation: The elimination of organizations or business process, responsible for certain intermediary steps in a value chain, reducing costs to the consumer

ELECTRONIC COMMERCE

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

Business-To-Consumer

Advantages of E-Commerce: (Continued)

The Benefits of Disintermediation to the Consumer

Figure 4-2

ELECTRONIC COMMERCE

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

Clickstream tracking tools:

• Collect data on customer activities at Web sites and store them in a log • Predict what the user would like to see next. The software then makes

recommendations to users based on their assumed interests

ELECTRONIC COMMERCE

Interactive Marketing and Personalization

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

• Create unique personalized Web pages for each customer

• Increased closeness to customer, while reducing costs of interacting with the customer

ELECTRONIC COMMERCE

Web Personalization

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

• Electronic Data Interchange (EDI): Enables the computer-to-computer exchange between two organizations of standard transactions. Currently 80% of B2B e-commerce uses this system.

• EDI is being replaced by more powerful Web-based alternatives.

Business-to-Business Electronic Commerce: New Efficiencies and Relationships

ELECTRONIC COMMERCE

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC COMMERCE

• Distributors: B2B online catalogs provide buyers with access to thousands of parts and other goods (Grainger.com)

• Procurement platforms: Platforms for purchasing goods and materials, negotiating with suppliers, paying for goods, and making delivery arrangements (Ariba.com)

Two different types of Net Marketplaces:

Net Marketplaces

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS AND THE DIGITAL FIRM

• Connectivity: Accessible from most computing platforms

• Can be tied to internal corporate systems and core transaction databases

• Platforms for interactive applications

• Scalable to larger or smaller computing platforms

Benefits of Intranets

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS AND THE DIGITAL FIRM

• Finance and accounting

• Human resources

• Sales and marketing

• Manufacturing and production

Functional Applications of Intranets

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

ELECTRONIC BUSINESS AND THE DIGITAL FIRM

Functional Applications of Intranets

Figure 4-8

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

The Internet provides firms with extraordinary

opportunities to develop:

1.new products and services

2.new distribution channels

3.new avenues for marketing and sales

4.new business models.

Management Information SystemsManagement Information SystemsLecture 4 Lecture 4

Electronic Business and Electronic CommerceElectronic Business and Electronic Commerce

Management Opportunities: