electronic commerce e-business, ninth edition. chapter 1 the second wave of global e-business...

Electronic Commerce

E-Business, Ninth Edition

Chapter 1The Second Wave of Global E-Business

E-Business, Ninth Edition

• What electronic commerce is

• Second wave of electronic commerce

• Revenue model, business processes,

business models

• Economic Forces

• Identify electronic commerce

opportunities

• The international nature of electronic commerce

Learning Objectives

23/4/19 3Chapter1 The Second of Wave of Global E-Business

4

Two Business models

revenue modesbusiness processes

Three Advantages and disadvantages of EC

Six International nature of EC

Five Identifying EC opportunities

Four Economic forces and EC

One EC: The 2nd wave

23/4/19

Contents

Chapter1 The Second of Wave of Global E-Business

Key Terms

electronic business 电子商务electronic commerce 电子商务business-to-business (B2B) 企业间business-to-consumer (B2C) 企业与消费者间business-to-government (B2G) 企业与政府间consumer-to-consumer (C2C) 消费者间

commodity item 商品merchandise 商品procurement 采购e-procurement电子采购electronic data interchange (EDI) 电子数据交换electronic fund transfer (EFT) 电子资金转帐firm 企业flat rate access固定费率访问localization 本地化

Key Terms Cont’d

Key Terms Cont’d

business model 商业模式revenue model 盈利模式business process 业务流程shipping profile 运输规格strategic alliance 战略联盟strategic partner 战略伙伴strategic partnership 战略伙伴关系trading partner 贸易伙伴

Key Terms Cont’d

supply management 供应管理SWOT （ Strengths, Weaknesses, Opportunities,

Threats ） analysis SWOT 分析transaction 交易transaction cost 交易成本telecommuting 远程办公telework 远程工作virtual community 虚拟社区virtual company 虚拟企业

Key Terms Cont’d

value-added network(VAN) 增值网增值网 : 租用公用网的通信线路与计算机连接，进行信息

的存储、处理的通信网系统 . 例如企业外部网（ Extranet ）

Electronic Commerce:

1.1The Second Wave


1.1 Electronic Commerce: The second wave

23/4/19 11

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e


1.1.1 Electronic Commerce and Electronic Business

1.1.2 Categories of Electronic Commerce

1.1.3 The Development and Growth of Electronic Commerce

1.1.4 The Dot-Com Boom, Bust, and Rebirth

1.1.5 The Second Wave of Electronic Commerce

1.1 Electronic Commerce: The second wave

23/4/19 12

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Electronic commerce history– Mid-1990s to 2000: rapid growth– “Dot-com boom” followed by “dot-com bust”– 2000 to 2003: overly gloomy news reports– 2003: signs of new life

• Sales and profit growth return• Electronic commerce growing at a rapid pace• Electronic commerce becomes part of general economy

– 2008 general recession• Electronic commerce hurt less than most of economy

– Second wave underway


1.1.1 Electronic commerce and Electronic Business

23/4/19 13

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Electronic commerce (e-commerce, EC)– Shopping on the Web

– Includes many other activities

– Such as businesses trading with other businesses and internal company processes

– Broader term: electronic business (e-business)

– The transformation of key business processes through the use of internet technologies (IBM)( 使用互联网技术进行的关键业务流程转型 )

– “electronic commerce” and “electronic business ” interchangeablyChapter1 The Second of Wave of Global E-Business

1.1.1 Electronic commerce and Electronic Business

23/4/19 14

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Electronic commerce includes: – All business activities using Internet technologies

• Internet and World Wide Web (Web)

• Other technologies, such as wireless transmissions on mobile telephone networks

• Dot-com (pure dot-com)– Companies operating only online



23/4/19 15

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e – E-commerce categories• Five general e-commerce categories (by types of entities

participating in the transactions or business process)

– Business-to-consumer (B2C)

– Business-to-business (B2B)

– Business processes

– Consumer-to-consumer (C2C)

– Business-to-government (B2G)

most commonly used


1.1.2 Categories of Electronic Commerce （ P7 ）

23/4/19 16

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e



23/4/19 17

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Related terms– Supply management/procurement

• Entire departments devoted to negotiating purchase transactions with their suppliers.

• B2B electronic commerce is sometimes called

e-procurement

– Activity 业务活动• A task performed by a worker in the course of doing

his or her job



23/4/19 18

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e

• Related terms– Transaction 交易

• An exchange of value• such as a purchase, a sale, or the conversion of raw

materials into a finished product• All transactions involve at least one activity , some

transactions involve many activities.– Business processes 业务流程

• The group of logical, related, and sequential activities and transactions in which businesses engage

– Telecommuting or telework 远程办公• Employees log in to company computers through the

Internet instead of traveling to the officeChapter1 The Second of Wave of Global E-Business


23/4/19 19

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e FIGURE 1-1 Elements of electronic commerce

– Relative sizes of elements• Rough approximation

– Dollar volume and number of transactions• B2B much greater than B2C

– Number of transactions• Supporting business processes greater than B2C

and B2B combined



23/4/19 20

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e



23/4/19 21

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e

• Classification of EC by transactions or interactions (from Turban)

• Business-to-consumer (B2C)• Business-to-business (B2B)• Consumer-to-business (C2B)• Consumer-to-consumer (C2C)• Mobile commerce (m-commerce)• Intrabusiness EC• Business-to-employees (B2E)• E-learning• E-government


23/4/19 22

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e

Case• Consider a company that manufactures stereo speakers

The company might sell its finished product to consumers on the Web

It might also purchase the materials it uses to make the speakers from other companies on the Web

The company must also undertake many other activities to convert the purchased materials into speakers. These activities might include:• hiring and managing the people who make the speakers,• renting or buying the facilities in which the speakers are made

and stored, • shipping the speakers, • maintaining accounting records, • purchasing insurance, • developing advertising campaigns, • designing new versions of the speakers.

An increasing number of these transactions and business processes can be done on the Web.



23/4/19 23

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e – The Internet has changed the way people buy, sell, hire and

organize business activities in more ways and more rapidly than

any other technology in the history of business.

– In a broader sense, EC has existed for many years.

– Electronic funds transfers (EFTs) 电子资金转帐 : using by

banks

• Also called wire transfers （电信传输）

• Electronic transmissions of account exchange information

over private communications networksChapter1 The Second of Wave of Global E-Business


23/4/19 24

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Electronic data interchange (EDI) 电子数据交换– Transmitting computer-readable data in a standard format to

another business – By creating a set of standard formats for transmitting that

information electronically, businesses were able to reduce errors, avoid printing and mailing costs, and eliminate the need to reenter the data.

– The standard formats used in EDI contain the same information that business have always included in their standard paper invoices, purchase orders, and shipping documents.

– initiator:• GE and Wal-Mart



23/4/19 25

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e – Trading partners 贸易伙伴• Businesses that engage in EDI with each other

– One serious problem that potential adopters of EDI faced was the high cost of implementation.

• To use EDI: buying expensive computer hardware and software; establishing direct network connections to all trading partners or subscribing to a VAN.

– Value-added network (VAN) 增值网• Independent firm that offers connection and transaction-

forwarding services to buyers and sellers engaged in EDI– Gradually moved EDI traffic to the Internet

• Reduced EDI cost


1.1.4 The Dot-Com Boom, Bust, and Rebirth （ P9 ）

23/4/19 26

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Dot-Com Boom 繁荣• Between 1997 and 2000:internet-related businesses were

started with more than $100 billion of investors’ money

• Dot-Com Bust 破产• More than 5000 of these companies went out of business

or were acquired in the downturn that began in 2000

• Dot-Com Rebirth 重生• Between 2000 and 2003:more than $200 billion was

invested in purchasing electronic commerce businesses that were in trouble and starting new online ventures


1.1.4 The Dot-Com Boom, Bust, and Rebirth

23/4/19 27

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Between 2000 and 2003:more than $200 billion was invested in purchasing electronic commerce businesses that were in trouble and starting new online ventures. – This second wave of financial investment has not been reported

extensively in either the general or business media, but it is fueling a rebirth of growth in online business activity

• Between 2008 and 2009 ： Although the recession devastated many traditional retailers, online sales continued to grow during that period. – B2C and B2B increasing growth rates continue– Driving force: people with Internet access increasing



23/4/19 28

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Many researchers have noted that electronic commerce is a major change in the way business is conducted and compare it to other historic changes in economic organization such as the Industrial Revolution.

• Four waves based on the Industrial Revolution• Electronic commerce and the information revolution brought

about by the Internet will likely go through a series of waves, too.


1.1.5 The Second Wave of Electronic Commerce （ P13 ）

23/4/19 29

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e



23/4/19 30

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Start-up capital– First wave: Investors were excited about

electronic commerce and wanted to participate, no matter how much it cost or how weak the underlying ideas were.

• Internet technologies used• Second wave: The increase in broadband

connections in homes is a key element in the B2C component of the second wave



23/4/19 31

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e



23/4/19 32

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Digital product sales– Second wave: fulfilling available technology promise

• Mobile telephone based • Smart phone technology enabling m-commerce• Web 2.0: making new Web business possible

Blog, SNS, Twitter, wiki



23/4/19 33

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e • Business online strategy– First wave: first-mover advantage

• Many companies and investors believed that being the first Web site to offer a particular type of product or service would give them an opportunity to be successful

– Second wave: businesses not relying on first-mover advantage



23/4/19 34

Ele

ctro

nic

Com

mer

ce:

The

Sec

ond

Wav

e

• Not all of the future of EC is based in it’s second wave.

• Some of the first wave companies were successful, such as Amazon.com, eBay, and Yahoo. The second wave of EC will provide new opportunities for these business .


23/4/19 35

Business models, Revenue models

1.2and Business processes


23/4/19 36

Business m

odels, revenue models, and business processes

1.2 Business models, revenue models, and business processes

Focus on Specific Business Process

1.2.1

1.2.2

1.2.3

Role of Merchandising

Product/Process Suitability to Electronic Commerce


23/4/19 37

Business m



• Business model 商业模式– A set of processes that combine to achieve a company's goal,

which is to yield a profit– A good business model was expected to lead to rapid sales

growth and market dominance. – The idea that the key to success was simply to copy the

business model of a successful dot-com business led the way to many business failures, some of them quite dramatic.


23/4/19 38

Business m



• Business model 商业模式– copying or adapting someone else‘s business model is neither

an easy nor wise road map to success. – Instead, companies should examine the elements of their

business; that is, they should identify business processes that they can streamline, enhance, or replace with processes driven by Internet technologies.


23/4/19 39

Business m



• Revenue model 盈利模式– A specific collection of business processes used to:

• Identify customers

• Market to those customers

• Generate sales to those customers

– The revenue model idea is helpful for classifying revenue generating activities for communication and analysis purposes.


23/4/19 40

Business m


1.2.1 Focus on Specific Business Processes

• Companies think in terms of business processes– Purchasing raw materials or goods for resale– Converting materials and labor into finished goods– Managing transportation and logistics– Hiring and training employees– Managing business finances

• Identify those businesses processes that firm benefiting from e-commerce technology

• Uses of Internet technologies– Improve existing business processes, identify new business

opportunities, adapt to change


23/4/19 41

Business m


1.2.2 Role of Merchandising


• Merchandising 零售推销– Combination of store design, layout, product display

knowledge• Salespeople skills

– Identify customer needs and find products or services meeting needs

• The skills of merchandising and personal selling– Difficult to practice remotely

• Web site success– Transfer merchandising skills to the Web

• Easier for some products than others

23/4/19 42

Business m


1.2.3 Product/Process Suitability to Electronic Commerce （ P16 ）


FIGURE 1-5 Business process suitability to type of commerce

23/4/19 43

Business m


1.2.3 Product/Process Suitability to Electronic Commerce


• Commodity item: 商品，日用品

– Well suited to e-commerce selling

– Product or service hard to distinguish from same products or services provided by other sellers

– Features: standardized and well known

– Price: distinguishing factor

– Gasoline, office supplies, soap, computers, and airline transportation are all examples of commodity products or services, as are the books and CDs sold by Amazon.com

23/4/19 44

Business m




• Shipping profile 运输规格– Another key factor that can make an item well suited to EC– Collection of attributes affecting how easily that product

can be packaged and delivered– Note value-to-weight ratio 价值 / 重量比

• Can help by making overall shipping cost a small fraction of the selling price

• An airline ticket is an excellent example of an item that has a high value-to-weight ratio.

• Expensive jewelry has a high value-to-weight ratio, but many people are reluctant to buy it without examining it in person unless the jewelry is sold under a well-known brand name and with a generous return policy

23/4/19 45

Business m




• Easier-to-sell products have:– Strong brand reputation

• A product that has a strong brand identity—such as a Kodak camera—is easier to sell on the Web than an unbranded item, because the brand‘s reputation reduces the buyer’s concerns about quality when buying that item sight unseen

– Appeal to small but geographically diverse groups• Other items that are well suited to electronic commerce are those

that appeal to small, but geographically 地理上 dispersed, groups of customers.

• Collectible comic books are an example of this type of product.

23/4/19 46

Business m




• Traditional commerce– Better for products relying on personal selling skills, as in

commercial real estate sales, or when the condition of the products is difficult to determine without making a personal inspection as in purchases of high-fashion clothing, antiques, or perishable food products

• Combination of electronic and traditional commerce– Business process includes both commodity and personal

inspection items can be a better way to sell the items or services

23/4/19 47

Business m




• Many people are finding information on the Web about new and used automobiles.

• Autobytel has had much success handling new car transactions.

– People are willing to take delivery of （提货） a particular make （构造） and model of a new vehicle even if they did not testdrive the specific car they are purchasing through Autobytel.

– Fewer people are willing to buy a used car without driving that specific car and personally inspecting it.

– In the case of used cars, electronic commerce provides a good way for buyers to obtain information about available models, features, reliability 可信度 , prices, and dealerships; but the variability 可变性 in the condition of used cars makes the traditional commerce component of personal inspection a key part of the transaction negotiation.

Advantages and DisadvantagesOf Electronic Commerce

23/4/19 48

1.3


23/4/19 49

1.3 Advantages and Disadvantages of Electronic Commerce


Chapter1 The Second Wave of Global E-Business

• 1.3.1

• 1.3.2

Advantages of Electronic Commerce

Disadvantages of Electronic Commerce

23/4/19 50




• Electronic commerce is a major development in the way business is conducted

• However, it is not something that every business can or should do

• Like any business strategy, electronic commerce has advantages and disadvantages

23/4/19 51


1.3.1 Advantages of Electronic Commerce


• All the advantages of electronic commerce for businesses can be summarized in one statement: Electronic commerce can increase sales and decrease costs

– If advertising is done well on the Web, it can get a firm’s promotional message out to potential customers in every country

– A firm can use electronic commerce to reach small groups of customers that are geographically scattered.

– The Web is particularly useful in creating virtual communities that become ideal target markets for specific types of products or services.

• virtual community 虚拟社区 is a gathering of people who share a common interest, but instead of this gathering occurring in the physical world, it takes place on the Internet.

23/4/19 52




• E-commerce buyer opportunities– Increases purchasing opportunities– Identifies new suppliers and business partners– Efficiently obtains competitive bid information

• Easier to negotiate price and delivery terms– Increases speed, information exchange accuracy– Wider range of choices available 24 hours a day

• Immediate access to prospective purchase information

23/4/19 53




• Benefits extend to general society welfare– Lower costs to issue and secure:

• Electronic payments of tax refunds• Public retirement• Welfare support

– Provides faster transmission– Provides fraud, theft loss protection

• Electronic payments easier to audit and monitor– Reduces commuter-caused traffic, pollution

• Due to telecommuting– Products and services available in remote areas

23/4/19 54


1.3.2 Disadvantages of Electronic Commerce


• Problems– Calculating return on investment– Recruiting and retaining employees– Technology and software issues– Cultural differences– Consumers resistant to change– Conflicting laws

23/4/19 55


1.3.2 Disadvantages of Electronic Commerce


• Disadvantages will disappear when:

– E-commerce matures• Becomes more available to and accepted by general

population

– Critical masses of buyers become equipped, willing to

buy through Internet • Online grocery industry example

56

Economic Forces

And Electronic Commerce

23/4/19

1.4


23/4/19 57

1.4 Economic Forces and Electronic Commerce

1.4 Economic Foreces and Electronic Commerce


1.4.1 Transaction Costs

1.4.2 Markets and Hierarchies

1.4.3 Using EC to Reduce Transaction Costs

1.4.4 Network Economic Structures

1.4.5 Network Effects

1.4.6 Using EC to Create Network Effects

23/4/19 58




• Economics– Is the study how people allocate scarce resources

• One important way that people allocate resource is through commerce• The other major way is through government actions, such as taxes or

subsides

• Many economists are interested in how people organize their commerce activities. One way people do commerce activities is to participate in markets.

• Two conditions of a market– Potential sellers come into contact with potential buyers– A medium of exchange is available (currency or barter)

23/4/19 59




• Most economists agree that markets are strong and effective mechanisms for allocating scarce resources. – Thus, one would expect most business transactions to occur within

markets. – However, much business activity today occurs within large hierarchical

business organizations, which economists generally refer to as firms, or companies.

– These large firms often conduct many different business activities entirely within the organizational structure of the firm and participate in markets only for purchasing raw materials and selling finished products.

– If markets are indeed highly effective mechanisms for allocating scarce resources, these large corporations should participate in markets at every stage of their production and value-generation processes.

23/4/19 60




• Organization hierarchy (flat or many levels)– Bottom level includes largest number of employees– Pyramid structure

• Nobel laureate Ronald Coase wrote an essay in 1937:why individuals who engaged in commerce often created firms to organize their activities.– Coase concluded : that transaction costs were the main

motivation for moving economic activity from markets to hierarchically structured firms.

23/4/19 61

1.4.1 Transaction Costs



• Transaction cost 交易成本

– Total costs that a buyer and seller incur as they gather information and negotiating purchase-and-sale transaction

– Significant components of transaction costs:• Brokerage fees and sales commissions• Cost of information search and acquisition• Investment of the seller in equipment or in the hiring of skilled

employees to supply products or services to the buyer

• Sweater dealer example (Figure 1-6)

23/4/19 62




• Coase reasoned that when transaction costs were high, businesspeople would form organizations to replace market-negotiated transactions.

• The organization may:– Hire knitters instead of negotiating with individuals – Supply them with yarn and knitting tools– Supervise and monitor their work activity– Information flow

• Supervision and monitoring from lower levels to higher levels• Control from upper levels to lower levels

23/4/19 63




• Vertical integration– The practice of an existing firm replacing one or more of its

supplier markets with its own hierarchical structure for creating the supplied product

• During the years from the Industrial Revolution through the present, the size and level of vertical integration of firms have increased.

• In some very large organizations, however, monitoring systems have not kept pace with the organization’s increase in size.

• Strategic business unit (business unit)– One particular combination of product, distribution channel,

and customer type

23/4/19 64

1.4.3 Using Electronic Commerce to Reduce Transaction Costs



• Businesses and individuals can use electronic commerce to reduce transaction costs by:– Improving the flow of information– Increasing coordination of actions

• EC can change the attractiveness of vertical integration for many firms by:– Reducing the cost of searching for potential buyers and sellers – increasing the number of potential market participants

• Electronic commerce– Change vertical integration attractiveness– Change transaction costs’ level and nature– Example: employment transaction

23/4/19 65

1.4.4 Network Economic Structure



• Network economic structures– Neither a market nor a hierarchy– Companies coordinate their strategies, resources, and skill sets by forming

long-term, stable relationships with other companies and individuals based on shared purposes

• Strategic alliances (strategic partnerships)– Relationships created within the network economic structure

• Virtual companies– Strategic alliances that occur between or among companies operating on

the Internet

• Strategic partners– Entitles that come together for specific project or activity

23/4/19 66

1.4.4 Network Economic Structure



• Network organizations– Are particularly well suited to technology industries that are

information intensive.– Sweater example

• Knitters organize into networks of smaller organizations• Specialize in styles or designs

– Electronic commerce can make such networks ,which rely extensively on information sharing, much easier to construct and maintain.

– Some researchers believe that these network forms of organizing commerce will become predominant in the near future

23/4/19 67

1.4.5 Network Effects



• Law of diminishing returns 边际效益递减– Most activities yield less value as the amount of consumption increases– Example ： hamburger

• Network effect– As more people or organizations participate in a network, the value of

the network to each participant increases– Example ： Email

• Internet e-mail accounts are far more valuable than single-organization e-mail accounts because of the network effect.

23/4/19 68

1.4.6 Using Electronic Commerce to Create Network Effects



• E-mail account example– Provides access to network of people with e-mail accounts– If e-mail account is part of smaller network

• E-mail generally less valuable

• Internet e-mail accounts– Far more valuable than single-organization e-mail

• Due to network effect

• Need way to identify business processes– Regardless of how businesses in a particular industry organize

themselves—as markets, hierarchies, or networks—you will need a way to identify business processes and evaluate electronic commerce suitability for each process

Commerce Opportunities

23/4/19 69

1.5


Identifying Electronic

23/4/19 70

1.5 Identifying Electronic Commerce Opportunities



Strategic Business Unit Value Chains

1.5.1

1.5.2

1.5.3

Industry Value Chains

SWOT Analysis: Evaluating Business Unit Opportunities

23/4/19 71




• Identifying electronic commerce opportunities– One way to focus on specific business processes as candidates

for EC is to break business down into a series of value-adding activities that combine to generate profits, meet firm’s goal

• Commerce conducted by firms of all sizes• Firm

– Multiple business units owned by a common set of shareholders or company

• Industry– Multiple firms selling similar products to similar customers

23/4/19 72


1.5.1 Strategic Business Unit Value Chains


• Value chain– A way of organizing strategic business unit activities to design,

produce, promote, market, deliver, and support the products or services

– In addition to these primary activities, Porter also includes supporting activities

• Strategic business unit primary activities– Identify customers, design, purchase materials and supplies,

manufacture product or create service, market and sell, deliver, provide after-sale service and support

23/4/19 73




• Strategic business unit primary activities– The importance of each primary activity depends on:

• Product or service business unit provides• To which customers is sells

• Central corporate organization support activities– Finance and administration– Human resource– Technology development

23/4/19 74




FIGURE 1-9 Value chain for a strategic business unit

• Left-to-right flow

– Does not imply strict time sequence

23/4/19 75


1.5.2 Industry Value Chains


• Value system — Porter– Michael Porter introduced the idea of value chains in his

1985 book, Competitive Advantage

– Porter use the term Value system to describe the larger stream of activities into which a particular business unit’s value chain is embedded

– Also referred to as industry value chain — subsequent researchers and business consultants

• Delivery of product to customer– Use as purchased materials in its value chain

23/4/19 76


1.5.2 Industry Value Chains


• By becoming aware of how other businesses units in the industry value chain conduct their activities– Managers can identify new opportunities for cost

reduction, product improvement, or channel reconfiguration

• The value chain concept is a useful way to think about business strategy in general

• Electronic commerce should be a business solution, not a technology implemented for its own sake.

23/4/19 77


1.5.3 SWOT Analysis: Evaluating Business Unit Opportunities


• Most electronic commerce initiatives add value by either reducing transaction costs, creating some type of network effect, or a combination of both

• SWOT analysis– Strengths, weaknesses, opportunities, and threats

• Consider all issues systematically– First: look into business unit

• Identify strengths and weaknesses

– Then: review operating environment• Identify opportunities and threats presented

• Take advantage of opportunities– Build on strengths, avoid threats, compensate for weaknesses

23/4/19 78




FIGURE 1-11 SWOT analysis questions

23/4/19 79




FIGURE 1-12 Results of Dell’s SWOT analysis

80

Electronic Commerce

23/4/19

1.6


International Nature of

23/4/19 81

1.6 International Nature of Electronic Commerce



1.6.1 Trust Issues on the Web

1.6.2 Language Issues

1.6.3 Cultural Issues

1.6.4 Infrastructure Issues

23/4/19 82




• Internet connects computers worldwide• When companies use Web to improve business

process:– They automatically operate in global environment

• Key international commerce issues– Trust – Language– Culture– Infrastructure

23/4/19 83




• It is important for all businesses to establish trusting relationships with customers– Companies with established reputations:

• Often create trust by ensuring that customers know who they are in the physical world

• Can rely on their established brand names to create trust on the Web

– New companies• That want to establish online business face a more difficult challenge

because a kind of anonymity exists for companies trying to establish a Web presence

23/4/19 84




• Customers’ inherent lack of trust in “strangers” on the Web is logical and to be expected

• For businesses to succeed on the Web, they must find ways to generate quickly the trust that traditional businesses took years to develop.

23/4/19 85

1.6.2 Language Issues



• Business must adapt to local cultures– “Think globally, act locally”– Provide local language versions of Web site

• The first step that a Web business usually takes to reach potential customers in other countries or other cultures

– Customers more likely to buy from sites translated into own language

– 50 percent of Internet content in English– Half of current Internet users do not read English

• By 2015: 70% of e-commerce transaction will involve at least one party outside of the United States

• Languages may require multiple translations– Separate dialects

23/4/19 86




• Culture

– Combination of language and customs

– Varies across national boundaries

– Varies across regions within nations

23/4/19 87




• Cultural issue example– Virtual Vineyards (now Wine.com)

• Subtle language and cultural standard errors– General Motors’ Chevrolet Nova automobile

– Baby food in jars in Africa

• Select icons carefully– Shopping cart versus shopping baskets, trolleys

– Hand signal for “OK”: obscene gesture in Brazil

23/4/19 88




• Dramatic cultural overtones– India: inappropriate to use cow image in cartoon– Muslim countries: offended by human arms or legs

uncovered– White color (purity versus death)

• Online business apprehension– Japanese shoppers’ unwillingness to pay by credit

• Softbank– Devised a way to introduce electronic commerce to a

reluctant Japanese population

23/4/19 89

1.6.4 Infrastructure Issues



• Businesses still face the challenges posted by

– Variations and inadequacies In the infrastructure that

supports the internet throughout the world

• Internet infrastructure

– Computers and software connected to Internet

– Communications networks’ message packets travel

Summary

23/4/19 90

• Electronic commerce

– Application of new Internet and Web technologies

• Helps individuals, businesses, other organizations conduct effective business

– Adopted in waves of change

• First wave ended in 2000

• Second wave focuses on improving specific business processes


Summary

23/4/19 91

• Technology improvements– Create new products and services– Improved promotion, marketing, delivery of existing

offerings– Improve purchasing and supply activities– Identify new customers– Operate finance, administration, human resource

management activities more efficiently– Reduce transaction costs– Create network economic effects

• Leads to greater revenue opportunities


Summary

23/4/19 92

• Electronic commerce

– Fits into markets, hierarchies, networks

• Value chains

– Occur at business unit, industry levels

• Value chains and SWOT analysis

– Tools to understand business processes

• Analyze suitability for electronic commerce implementation

• Key international commerce issues

– Trust, language, culture and infrastructure


23/4/19 Charpter1 The second of wave of global e-business 93

Review Question

• P44 and• RQ8. In a paragraph, describe the advantages of a

flat-rate telecommunications access system for countries that want to encourage electronic commerce.

Chapter 1


electronic commerce e-business, ninth edition. chapter 1 the second wave of global e-business...

Documents

electronic business

electronic commerce

growth of electronic

electronic commerce

business b2b business

rapid pace electronic

business activities

consumer b2c business