bit 541 - week 1 - fall 08

8/2/2019 BIT 541 - Week 1 - Fall 08

1/24

BIT 541Electronic Commerce

Week 1

Walsh CollegeBarbara L.Ciaramitaro, Ph.D.

8/2/2019 BIT 541 - Week 1 - Fall 08

2/24

Definition of E-Commerce

E-Commerce is defined as those transactions of business activities that occurthrough networks, most prominently, the Internet, utilizing electronic data

transmission technologies. Transactions are defined as an exchange of value such as a purchase or

sale.

The E-Commerce transactions can occur between businesses, betweenbusinesses and consumers, and between consumers. The term businessincludes governmental agencies as well as individual entrepreneurs.

E-Business is defined as those set of activities, processes and underlyingtechnology that provides support for internal activities such as inventorymanagement, recruitment and hiring.

8/2/2019 BIT 541 - Week 1 - Fall 08

3/24

Introduction To E-Commerce

Prior to the 1990s electronic commerce primarily focused on electronic datainterchange (EDI) of transactional documents including invoices, purchase

orders, and bills of lading.

In the early 90s, we saw the emergence of the use of HTML and the graphicaluser interface which combined to initiate the emergence of the World WideWeb.

Additionally during the early 90s the telecommunications companies investedin installing a backbone infrastructure that could support high speed, highvolume interactions through the Internet.

The combined effect of the Internet, World Wide Web and the backboneinfrastructure allowed electronic commerce initiatives to grow dramatically.

8/2/2019 BIT 541 - Week 1 - Fall 08

4/24


During the late 90s through 2000, there was an explosion of electronicbusiness initiatives known as the dot-com boom.

During this time a wide variety of initiatives emerged with investors willing tomake large investments in electronic commerce initiatives on the belief that ifyou built a web site customers would come.

In 2000, the electronic commerce environment imploded resulting in a dramaticnumber of electronic business failures. This time period is referred to as thedot-com bust. Many investors and entrepreneurs lost their investments in theseinitiatives as they learned that electronic commerce is just as challenging, if notmore so, than traditional commerce.

Over the last few years, the electronic commerce environment has regainedmarket strength and this re-emergence is sometimes referred to as the secondwave of electronic commerce.

8/2/2019 BIT 541 - Week 1 - Fall 08

5/24


According to Laudon et al (2006), E-Commerce involves three interrelated

themes.

The underlying technologyon which it is built, including the Internet and the World

Wide Web.

The evolution of business practices resulting in new ways to interact with customers

and conduct transactions through the Internet.

The societal impactand resulting issues resulting from the ability to more easily shareand access information through the Internet.

8/2/2019 BIT 541 - Week 1 - Fall 08

6/24


Laudon et al identifies seven (7) unique features of E-Commerce

It is ubiquitous in that it is available anywhere and at all times as long as

there is access to the Internet.

E-Commerce has globalreach and impact as there are no geographicalboundaries to the Internet.

The underlying E-commerce technologies are guided primarily by a set ofuniversally adopted standards.

The current available technology allows E-Commerce communications andinteractions to be rich in complexity, dense in contentand also allowsfor a high level of interactivitybetween participants in the transaction.

E-Commerce technology allows E-Commerce vendors to target their effortstoward specific markets through the use ofpersonalization andcustomization technology and processes.

8/2/2019 BIT 541 - Week 1 - Fall 08

7/24

Benefits of E-Commerce

The potential benefits to organizations who are able to successfully capitalize on E-Commerce initiatives are many. (Turban, 2002)

Expand the marketplace to national and international markets.

Decrease the costof creating, processing, distributing, and storinginformation.

Improve the efficiencies of procurement activities.

Minimize supply chain inefficiencies such as excessive inventories anddelivery delays.

Encourage innovative business models.

Lower telecommunication costs as much of the business in transacted overthe public Internet.

Allow companies to interact more closely with their customers.

8/2/2019 BIT 541 - Week 1 - Fall 08

8/24

Limitations of E-Commerce

The major limitations of E-Business include the following. (Turban, 2002)

System security, reliability, and communication protocols are still

evolving.

In many global areas, the underlying telecommunication backbone isinsufficient.

It can be difficult to integrate the Internet and other software utilized inE-Business.

It can be difficult to integrate systems and software betweenbusinesses.

Special hardware and software along with specialized skills are required.

E-Business reduces face-to-face social interactions which could result

in a breakdown in the traditional human relationships.

8/2/2019 BIT 541 - Week 1 - Fall 08

9/24

Categories of E-Commerce

According to Schneider (2004) and Laudon, et al. (2006), there are generallyconsidered to be six categories of E-Commerce activities:

B2C Business to Consumer in which business sell product and/orservices directly toindividual consumers.

B2B Business to Business in which businesses sell products or servers directly to otherbusinesses.

B2G Business to Government in which businesses sell goods or services to governmentalagencies.

C2C Consumer to Consumer in which individual participants in an online marketplace buyand sell goods directly to each other.

P2P Person to Person in which Internet users are able to share files and computer resourcesdirectly without having to go through a central Web server.

M-Commerce Involves the use of wireless devices to enable transactions on the Web.

8/2/2019 BIT 541 - Week 1 - Fall 08

10/24

Categories of E-Commerce

In this course, we will focus much of our discussion on two categories of E-

Commerce:

B2C in which business sell product and/or services directly to individual consumers.

B2B in which businesses sell products or servers directly to other businesses. (We will

include B2G in this category).

8/2/2019 BIT 541 - Week 1 - Fall 08

11/24

B2C Business to Consumer

B2C refers to any business or organization that sells products orservices to consumer over the Internet for the consumers own use.

(Patton, 2005)

In addition to online retailers, B2C includes services such as onlinebanking, travel services, online auctions, health information, real estate,and many others.

Historically B2C was viewed a a threat to traditional brick and mortar

businesses. Although some pure Internet based companies have survivedthe dot-com bust (e.g. Amazon), over the last several years traditional brickand mortar retailers are investing more in online transactions.

The major challenge of B2C is to get online browsing customers topurchase products or services.

One lesson learned from the dot-com bust is that web site traffic alonedoes not denote success.

8/2/2019 BIT 541 - Week 1 - Fall 08

12/24

B2B Business to Business

B2B refers to any business or organization that sells products or services to otherbusinesses over the Internet.

There are two significant differences between B2B and B2C efforts (Varon, 2005).

B2B involves negotiation between businesses over prices, delivery and specifications.

B2B requires integration of technology and processes between businesses.

B2B interactions often include exchanges where products are bought and sold usinga common platform.

Public B2B exchange are operated by industry consortia who establish their rules andmanagement structure.

Private B2B exchanges are run by a single company for doing business with its suppliers andcustomers.

8/2/2019 BIT 541 - Week 1 - Fall 08

13/24

E-Commerce Concepts

E-Commerce utilizes several structures and concepts. These were discussed anddefined by Schneider (2004) and include:

Market. A real or virtual space in which potential buyers and sellers interact andagree on a medium of exchange.

Hierarchical business organization. Structure that includes a number of levelswith different levels of responsibility. (e.g. CEO, President, VPs, MiddleManagers).

Network effect. An increase in the value of a network to its participants as thenumber of participants increase.

Value chain. A way of organizing business activities so that each strategicbusiness unit focuses on the design, manufacture, marketing, and delivery of the

products or services it sells.

8/2/2019 BIT 541 - Week 1 - Fall 08

14/24

Variables that Impact E-Commerce Success

or Failure

Organizational Structure

Research has found that a significant element of E-Commerce success is the

role of senior management (BCS Socio Technical Group, 2003).

Senior managers need to provide understand, vision and leadership concerning the E-Business initiative.

Research has also found that a range of human and organizational issues andpotential changes in organizational structure and working practices lie at thecenter of the ability of E-Commerce to succeed. (Clegg, et al., 2005) (Discuss

findings)

Simplify business processes Empower employees Develop and implement new business models Focus on customers Develop appropriate skills and training

Implement effective change strategies

8/2/2019 BIT 541 - Week 1 - Fall 08

15/24

Variables that Impact E-Commerce Successor Failure

Strategic Business Unit Value Chains - In order to implement successful E-

Business strategies, organizations must build and maintain organizations

structures to perform a combination of primary and supporting businessactivities. (Schneider, 2004).

Primary activities (E-Commerce) include:

Identification of customers

Design of product or service

Procurement of materials, supplies and personnel

Manufacture of product or creation of service Market and selling of product or service

Distribution of product or service

After-sales support

Supporting Activities (E-Business):

Finance and administration

Human resources

Technology support

8/2/2019 BIT 541 - Week 1 - Fall 08

16/24


or Failure

Technology and Process Infrastructure

Researchers have identified several E-Business Myths (Janenko, 2003).(Discuss findings)

Many E-Businesses learned that a quality Web site does not translate to aquality customer experience.

E-Commerce looks as if it is almost completely automated but the degree ofautomation is an illusion. There are still a considerable amount of manualprocesses involved in E-Commerce.

E-Commerce is very open to observation and analysis by competitors whocan not only duplicate your successful processes but identify yourunsuccessful processes into to compete effectively against them.

8/2/2019 BIT 541 - Week 1 - Fall 08

17/24


or Failure

Technology and Process Infrastructure

Researchers have identified a series of steps to build effective E-Commerce environments. (Janenko, 2003)

Design and document a companies internal process

Identify what steps can be automated and which steps must beperformed manually.

Design the functionality of the E-Business efforts to support internaloperational processes.

E-Commerce critical operational processes needs to be designed so

that any site visitor is able to quickly and successfully navigate the site.

8/2/2019 BIT 541 - Week 1 - Fall 08

18/24

Variables that Impact E-Business Success or

Failure

Other Technology Variables Infrastructure

There are several technological pressure that impact E-Commerceinitiatives. These include:

Rapid technological change and obsolescence

Increasing technological innovations

Information overload

Rapid decline in technology cost versus performance ratio

Competition for skilled technology resources

8/2/2019 BIT 541 - Week 1 - Fall 08

19/24


or Failure Market Environment

Market. A real or virtual space in which potential buyers and sellers interact and

agree on a medium of exchange.

There are several marketpressures which can impact the success of an

Commerce

Strong competition

Changes in the global economy environment

Regional trade agreements

Government deregulation

Unstable local government and/or rapid political changes

Increased importance of ethical and legal issues (e.g. privacy)

8/2/2019 BIT 541 - Week 1 - Fall 08

20/24


or Failure

Trust, Language and Culture Issues

Successful E-Commerce ventures have to learn how to establish trusting

relationships with their customers.

Traditional brick and mortar companies are often able to leverage their trustrelationship with customers as they move to offer more online services (e.g.bank, stock transactions, etc)

Schneider (p. 31, 2004) reports that researches estimate that about 60% of thecontent available on the Internet today is in English, but more than 50% of thecurrent Internet users do not read English.

As more companies are conducting business on a global basis, it is important forE-Commerce efforts to understand and respect local cultures.

8/2/2019 BIT 541 - Week 1 - Fall 08

21/24

Using SWOT Analysis in E-Commerce

In SWOT analysis, an organization examines and evaluates potential business

ventures (Schneiderman, 2004, p. 27). This approach can be effective in examining

E-Business plans.

Strengths

What does the company do well?

Is the company currently strong competitively in its market?

Does the company have a strong vision, and leadership and culture

supporting that vision.

Weaknesses

What does the company do poorly?

What problems could be avoided?

Does the company have serious financial liabilities.

8/2/2019 BIT 541 - Week 1 - Fall 08

22/24

Using SWOT Analysis in E-Business

SWOT Analysis (continued)

Opportunities

Are industry trends moving upward?

Do new markets exist for the companys products and/or services?

Are there new technologies that the company can utilize?

Threats What are the competitors doing well?

What obstacles does the company face?

Are there troubling changes in the companys business environment?

8/2/2019 BIT 541 - Week 1 - Fall 08

23/24

What Can We Expect for the Future of E-

Commerce

E-Commerce activities will continue to grow and expandthrough all

commercial activity and markets.

E-Commerceprices will rise to cover the real costs of doing business in

the Internet environment. As a result, E-Commerce margins and profits

will come in line consistent with more traditional commercial ventures.

Traditional brick and mortar companies will play an increasing role in E-

Commerce. As a result, the number of pure online companies willdecrease as most successful E-Commerce companies will offer a

combination of brick and mortar and online services.

Regulation of E-Commerce will continue to grow in the United States and

globally. This will put regulatory constraints on the ability to share and

access information through the Internet.

8/2/2019 BIT 541 - Week 1 - Fall 08

24/24

References

BCS SocioTechnical Group. (2003). Ebusiness examined. The Computer Bulletin. March2003. p. 26.

Clegg, et al. (2005). Sociotechnical Study of e-Business: Grappling with an Octopus. Journalof Electronic Commerce in Organizations. Vol. 3, Number 1. pp. 53-71.

Janenko, Patricia. (2003). E-Business: The Illusion of Automated Success. The TQMMagazine. Vol. 15; Number 15. pp. 180-186

Laudon, Kenneth & Traver, Carol. (2006). E-Commerce: Business, Technology, Society(Third Edition). Addison-Wesley.

Patton, Susannah. (2005). The ABCs of B2C. CIO E-Business Research Center. Retrievedon December 2, 2005 from http://www.cio.com/research/ec/edit/b2cabc.html.

Schneider, Gary. (2004). Electronic Commerce: The Second Wave. 5th Edition. Thomson

Course Technology. Turban, Efraim. (2002). Electronic Commerce: A Managerial Perspective. 2002 Edition.

Prentice Hall; New Jersey. Varon, Elana. (2005). The ABCs of B2B. CIO E-Business Research Center. Retrieved on

December 2, 2005 from http://www.cio.com/research/ec/edit/b2babc.html.
http://www.cio.com/research/ec/edit/b2cabc.htmlhttp://www.cio.com/research/ec/edit/b2babc.htmlhttp://www.cio.com/research/ec/edit/b2babc.htmlhttp://www.cio.com/research/ec/edit/b2cabc.html

bit 541 - week 1 - fall 08

Documents