4.1 © 2004 by prentice hall management information systems 8/e chapter 4 the digital firm:...

4.1 © 2004 by Prentice Hall

Management Information Systems 8/eManagement Information Systems 8/e

Chapter 4 The Digital Firm: Electronic Business & Electronic CommerceChapter 4 The Digital Firm: Electronic Business & Electronic Commerce

THE DIGITAL FIRM: THE DIGITAL FIRM: ELECTRONIC ELECTRONIC

BUSINESS AND BUSINESS AND ELECTRONIC ELECTRONIC COMMERCECOMMERCE

Chapter 44




• How has Internet technology changed How has Internet technology changed value propositions and business models?value propositions and business models?

• What is electronic commerce? How has What is electronic commerce? How has electronic commerce changed consumer electronic commerce changed consumer retailing and business-to-business retailing and business-to-business transactions?transactions?

• What are the principal payment systems What are the principal payment systems for electronic commerce?for electronic commerce?

OBJECTIVES




• How can Internet technology support management How can Internet technology support management and coordination of internal business processes and coordination of internal business processes and supply chain management?and supply chain management?

• What are the major managerial and organizational What are the major managerial and organizational challenges posed by electronic business and challenges posed by electronic business and electronic commerce?electronic commerce?

OBJECTIVES




• Emerging digital firmEmerging digital firm

• Electronic commerceElectronic commerce

• Electronic businessElectronic business

• Challenges and opportunitiesChallenges and opportunities

MANAGEMENT CHALLENGES




1.1. Digitally enabling the enterprise requires a Digitally enabling the enterprise requires a new mind setnew mind set

2.2. Finding a successful Internet business modelFinding a successful Internet business model

MANAGEMENT CHALLENGES




Internet Technology and The Digital Firm

• Information technology infrastructure:Information technology infrastructure: Provides a universal and easy-to-use set of Provides a universal and easy-to-use set of technologies and technology standards that technologies and technology standards that can be adopted by all organizationscan be adopted by all organizations

• Direct communication between trading Direct communication between trading partners:partners: Disintermediation removes Disintermediation removes intermediate layers, streamlines processintermediate layers, streamlines process

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM




• Round-the-clock service:Round-the-clock service: Web sites available Web sites available to consumers 24 hours a dayto consumers 24 hours a day

• Extended distribution channels: Extended distribution channels: Outlets created for attracting customers who Outlets created for attracting customers who otherwise would not patronize otherwise would not patronize

• Reduced transaction costs:Reduced transaction costs: Costs of Costs of searching for buyers, sellers, etc. reducedsearching for buyers, sellers, etc. reduced

Internet Technology and the Digital Firm





Business Model: Business Model: • Defines an enterprise Defines an enterprise

• Describes how the enterprise delivers a Describes how the enterprise delivers a product or serviceproduct or service

• Shows how the enterprise creates wealthShows how the enterprise creates wealth

New Business Models and Value Propositions





• Information asymmetry: Information asymmetry: One party in a One party in a transaction has more information than the othertransaction has more information than the other

• Increases richness:Increases richness: Depth and detail of Depth and detail of informationinformation

• Increases reach:Increases reach: Number of people contacted Number of people contacted

The Changing Economics of Information





Ric

hn

es

sR

ich

ne

ss New levels of richness and reach attainable

Reach

ENABLERS

Explosion of connectivity

Dissemination of

standards

Figure 4-1

The Changing Economics of Information





Internet Business Models

• Virtual storefront:Virtual storefront: Sells goods, services Sells goods, services on-lineon-line

• Information broker:Information broker: Provide info on Provide info on products, pricing, etc.products, pricing, etc.

• Transaction broker:Transaction broker: Buyers view rates, Buyers view rates, terms from various sourcesterms from various sources





• OnlineOnline Marketplace:Marketplace: Concentrates Concentrates information from several providersinformation from several providers

• Content provider:Content provider: Creates revenue Creates revenue through providing client for a fee, and through providing client for a fee, and advertisingadvertising






• On-line service provider:On-line service provider: Provides Provides service, support for hardware, software service, support for hardware, software productsproducts

• Virtual community:Virtual community: Chat room, on-line Chat room, on-line meeting placemeeting place

• Portal:Portal: Initial point of entry to Web, Initial point of entry to Web, specialized content, servicesspecialized content, services


EELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM




• Syndicator:Syndicator: Online content provider that Online content provider that aggregates information from several aggregates information from several sources sold to other companiessources sold to other companies

• Auction: Auction: PProducts, prices, change in roducts, prices, change in response to demand. Used in online response to demand. Used in online marketplacesmarketplaces






• Dynamic pricing: Dynamic pricing: real-time interactions real-time interactions

betweenbetween buyers and sellersbuyers and sellers determine determine worth of itemsworth of items

• Banner ad:Banner ad: Graphic display used for Graphic display used for advertising, linked to the advertiser’s Web advertising, linked to the advertiser’s Web sitesite


ELECTRONIC COMMERCE




Categories of Electronic Commerce

• Business-to-customer (B2C):Business-to-customer (B2C): Retailing Retailing of products and services directly to of products and services directly to individual customersindividual customers

• Business-to-business (B2B): Business-to-business (B2B): Sales of Sales of goods and services among businessesgoods and services among businesses

• Consumer-to-consumer (C2C):Consumer-to-consumer (C2C): Individuals use Web for private sales or Individuals use Web for private sales or exchangeexchange

ELECTRONIC COMMERCE




Business-To-Consumer

• Customer-centered retailing:Customer-centered retailing: Closer, Closer, yet more cost-effective relationship with yet more cost-effective relationship with customerscustomers

• Web sites:Web sites: Provide information on Provide information on products, services, prices, ordersproducts, services, prices, orders

ELECTRONIC COMMERCE




Business-To-Consumer

• Disintermediation:Disintermediation: The removal of The removal of organizations or business process layers organizations or business process layers responsible for certain intermediary steps responsible for certain intermediary steps in a value chainin a value chain

• Reintermediation:Reintermediation: The shifting of the The shifting of the intermediary role in a value chain to a new intermediary role in a value chain to a new sourcesource

ELECTRONIC COMMERCE




Benefits of Disintermediation to the Consumer

Figure 4-2

Cost/

Sweater

Manufacturer

Manufacturer

Manufacturer

Distributor Retailer

Retailer

Customer

Customer

Customer

$48.50

$40.34

$20.45

ELECTRONIC COMMERCE




Interactive Marketing and Personalization

Web personalization:Web personalization:

• Benefits of using individual sales peopleBenefits of using individual sales people

• Dramatically lower costsDramatically lower costs

ELECTRONIC COMMERCE




Web Site Personalization

ELECTRONIC COMMERCE

Figure 4-3




M-Commerce and Next Generation Marketing

Mobile commerce (m-commerce):Mobile commerce (m-commerce):• Wireless devices used to conduct both Wireless devices used to conduct both

business-to-consumer and business-to-business-to-consumer and business-to-business e-commerce transactions over business e-commerce transactions over the Internetthe Internet

• Extend personalization by delivering new Extend personalization by delivering new value-added services directly to value-added services directly to customers at any time and placecustomers at any time and place

ELECTRONIC COMMERCE




Customer Personalization

Figure 4-4

ELECTRONIC COMMERCE




Business-To-Business Electronic Commerce

Automation of purchase, sale transactions Automation of purchase, sale transactions from business to business from business to business • Private industrial networks (private Private industrial networks (private

exchanges):exchanges): Coordination between Coordination between companies for efficient supply chain companies for efficient supply chain management and collaborative activitiesmanagement and collaborative activities

• Net marketplaces:Net marketplaces: On-line marketplaces, On-line marketplaces, point-to-point connections, integrated point-to-point connections, integrated informationinformation

ELECTRONIC COMMERCE




A Private Industrial Network

Figure 4-5

ELECTRONIC COMMERCE




A Net Marketplace

Figure 4-6

ELECTRONIC COMMERCE




Exchanges: Third-party net marketplaceExchanges: Third-party net marketplace

• Primarily transaction orientedPrimarily transaction oriented

• Connects buyers and suppliers for spot Connects buyers and suppliers for spot purchasingpurchasing

ELECTRONIC COMMERCE




Electronic Commerce Payment Systems

ELECTRONIC COMMERCE




Electronic Commerce Information Flows

Figure 4-7

ELECTRONIC COMMERCE




• BenefitsBenefits

• Group collaboration Group collaboration

• Functional applicationsFunctional applications

• Supply chain managementSupply chain management

How Intranets Support Electronic Business

ELECTRONIC BUSINESS AND THE DIGITAL FIRM




• Connectivity: accessible from most Connectivity: accessible from most computing platformscomputing platforms

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

• Can create interactive applicationsCan create interactive applications

• Scalable to larger or smaller computing Scalable to larger or smaller computing platformsplatforms

Benefits of Intranets





• Easy-to-use, universal Web interfaceEasy-to-use, universal Web interface

• Low start-up costsLow start-up costs

• Richer, more responsive information Richer, more responsive information environmentenvironment

• Reduced information distribution costsReduced information distribution costs

Benefits of Intranets





• Finance and accountingFinance and accounting

• Human resourcesHuman resources

• Sales and marketingSales and marketing

• Manufacturing and productionManufacturing and production

Functional Applications of Intranet





Figure 4-8

Functional Applications of Intranets





Finance and Accounting

• General ledger reportingGeneral ledger reporting

• Project costingProject costing

• Annual reportsAnnual reports

• BudgetingBudgeting





Human Resources

CompanyCompany• On-line publishing of corporate policyOn-line publishing of corporate policy• Job postings and internal job transfersJob postings and internal job transfers• Company telephone directories, and Company telephone directories, and

trainingtraining

Employees Employees • HealthcareHealthcare• Employee savingsEmployee savings• Competency testsCompetency tests





Sales and Marketing

• Competitor analysisCompetitor analysis

• Price updatesPrice updates

• Promotional campaignsPromotional campaigns

• Sales presentationsSales presentations

• Sales contractsSales contracts





Manufacturing and Production

• Quality measurementsQuality measurements

• Maintenance schedulesMaintenance schedules

• Design specificationsDesign specifications

• Machine outputsMachine outputs

• Order trackingOrder tracking





The Future Internet-Driven Supply Chain

Figure 4-9





• Unproven business modelsUnproven business models

• Business process change requirementsBusiness process change requirements

• Channel conflictsChannel conflicts

• Legal issuesLegal issues

• Security and privacySecurity and privacy

MANAGEMENT CHALLENGES & OPPORTUNITIES




THE DIGITAL FIRM: THE DIGITAL FIRM: ELECTRONIC ELECTRONIC

BUSINESS AND BUSINESS AND ELECTRONIC ELECTRONIC COMMERCECOMMERCE

Chapter 44

4.1 © 2004 by prentice hall management information systems 8/e chapter 4 the digital firm:...

Documents

electronic commerce

process electronic business

business models

business transactions

supply chain management

technology standards

principal payment systems

objectives slide