mis10 ch10 ppt
TRANSCRIPT
4.1 © 2006 by Prentice Hall
10Chapter
Electronic Business and Electronic Business and
E-Commerce E-Commerce
Digital Markets,Digital GoodsDigital Markets,Digital Goods
4.2 © 2006 by Prentice Hall
OBJECTIVES
• Analyze how Internet technology has changed value propositions and business models
• Define electronic commerce and describe how it has changed consumer retailing and business-to-business transactions
• Compare the principal payment systems for electronic commerce
Management Information SystemsManagement Information SystemsChapter 10Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.3 © 2006 by Prentice Hall
10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
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 and streamlines processes.
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
• Round the clock service: Web sites available to consumers 24 hours
• Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize a firm
• Reduced transaction costs: Costs of searching for buyers declines
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Internet Technology and the Digital Firm (Continued)
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
Business Model:
• Defines an enterprise
• Describes how the enterprise delivers a product or service
• Shows how the enterprise creates wealth
New Business Models and Value Propositions
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
New Business Model: • In the past information about the products tightly
bundled with physical store value chain
• Because of internet, information is available to everyone. Customers can buy directly from internet bypassing retails stores.
• This unbundling of information creates new business model
New Business Models and Value Propositions
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
• 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
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
The Changing Economics of Information
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
• Virtual storefront: Sells goods or services online (Amazon.com)
• Information broker: Provides information on products or services (Edmunds.com,Insweb.com,Kbb.com,Realtor.com
• Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com)
Internet Business Models – (pure play )
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
• Online marketplace: Provides a trading platform for individuals and firms (eBay.com,priceline.com,ChemConnect.com)
• Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com,GettyImages.com)
• Online service provider: Provides online services, including search service. (Google.com, Xdrive.com,Employease.com,backup.com)
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Internet Business Models (Continued)
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
• Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com)
• Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)
• Specialized portal: Helps users with specific interest(StarMedia.com,Sina.com)
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Internet Business Models (Continued)
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10.1 ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE INTERNET
• The source of revenue for this web sites are through
• Banner-ads
• Pop-up ads
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10.2 ELECTRONIC COMMERCE
Categories of Electronic Commerce
• Business-to-customer (B2C): Retailing of products and services directly to individual customers (BarnesandNoble.com,Amazon.com)
• Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com,Milacron.com)
• Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com )
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Business-To-Consumer
Direct sales over the web:
• 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
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• Disintermediation: The elimination of organizations or business process layers responsible for certain intermediary steps in a value chain, reducing costs to the consumer
10.2 ELECTRONIC COMMERCE
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Business-To-Consumer
Direct sales over the web: (Continued)
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The Benefits of Disintermediation to the Consumer
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Clickstream tracking tools:
• Collect data on customer activities at Web sites and store them in a log
10.2 ELECTRONIC COMMERCE
Interactive Marketing and Personalization
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Interactive Marketing
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Web Site Visitor Tracking
10.2 ELECTRONIC COMMERCE
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• Create unique personalized Web pages that display contents and ads for products or services of special interest to each user
• Increased closeness to customer increases value to the customer, while reducing costs of interacting with the customer
10.2 ELECTRONIC COMMERCE
Web Personalization
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Web Site Personalization
10.2 ELECTRONIC COMMERCE
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• Compares information gathered about a specific
user’s behavior at a Web site to data about other
customers with similar interests to predict what
the user would like to see next. The software then
makes recommendations to users based on their
assumed interests.
10.2 ELECTRONIC COMMERCE
Techniques for web personalization is collaborative filtering
Collaborative filtering:
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Management Information SystemsManagement Information SystemsChapter 10Chapter 10
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Blogs
Web based tools for marketing-where individuals
can publish,stories,opinions
Example
Macro media uses web logs to nurture ties with
customer and introduce them to new features in the
software.
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• The use of Web sites to provide customers with access to information and answers to questions
• Replacing human call center operators and clerks
• UPS.com: Customer tracking of packages
• Orbitz.com: Customer self-help for organizing and managing a trip
• Dell.com: “My Order Status” facility
10.2 ELECTRONIC COMMERCE
Customer self-service:
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• 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.
Business-to-Business Electronic Commerce: New Efficiencies and Relationships
10.2 ELECTRONIC COMMERCE
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Electronic Data Interchange (EDI)
10.2 ELECTRONIC COMMERCE
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10.2 ELECTRONIC COMMERCE
Private Industrial Networks or private exchange
• The largest Web-based form of B2B commerce
• Private B2B extranets that focus on continuous
business process coordination between a small group
of companies for collaboration and supply chain
management. Wal-Mart uses its own private network
to coordinate more than 15,000 suppliers to its stores.
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10.2 ELECTRONIC COMMERCE
Extranets
Private intranets extended to authorized users outside
the company.
B2B use extranets for linking to other business
for purchase and sales transactions.
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10.2 ELECTRONIC COMMERCE
A Private Industrial Network
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10.2 ELECTRONIC COMMERCE
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• Companies use internet than private network for EDI
Example
• E-Procurement: Platforms for purchasing goods and
materials and also sourcing, negotiating with suppliers,
paying for goods, and making delivery arrangements
(Ariba.com)
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10.2 ELECTRONIC COMMERCE
A Net Marketplace
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-Single digital market place based on Internet technology for
many different buyers and sellers
-Generating revenue from purchase and sale transactions
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Types of net marketplace
1.Sells direct goods
2.Sells indirect goods
3.Contractual purchasing based on long-time
4.Short term spot puchasing
5.Vertical markets
6. Horizontal markets
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Industry owned Net market place
Focus on long-term contract purchasing relationships and
on providing common networks and computing
platforms for reducing supply chain inefficiencis.
Example – Exostar
This aerospace and defence industry-sponsored Net
Marketplace to connect these companies to their suppliers
and facilitate collaboration on major projects.
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Independently owned third-party or Exchanges
Net marketplaces that can connect thousands of suppliers
and buyers for spot purchasing.Many exchanges provide
vartical markets for a single industry, such as
food,electronics.
Eg: FoodTrader.com
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10.2 ELECTRONIC COMMERCE
A Net Marketplace
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4.35 © 2006 by Prentice Hall
10.4 Electronic Commerce Payment Systems
Digital wallets Electronic storage of I.D. and digital cash. Not widely used.
Accumulated balance Used for micro payments. Similar to monthly telephone bills.
Stored value Used for micro payments. Pre-payment of funds, debited on use.
Smart Cards I.D. and credit information stored on a chip attached to a card. Used in Europe.
Digital cash Electronic currency that can be transferred over the Web.
Peer-to-Peer payment Interpersonal transfer of funds such as PayPal.
Digital checking Electronic checks with digital signatures, used most often in B2B commerce.
Electronic billing presentmentand payment
Used by consumers to pay bills online, provided by many banks.
Credit cards The most common form of payment. $50 Limited customer liability.
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
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1.Digital Credit card Payment System
Extends the functionality of Credit card payment for on-line
purchasing. Capability for processing Credit card purchases on
the web.
Authenticating the purchaser's credit card to make sure
that it is valid and arranging for the bank that issued the
credit card to deposit in seller's bank account.
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
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2. Digital wallet
Eliminating the need for entering address and Credit card
information.A digital wallet securely stores Credit card
and owner identification information and provides that
information at an E-Commerce site's “Checkout counter”
A digital wallet enters the shopper's name,credit card
number and shipping information automatically when
invoked to complete the purchase.
Example: Amazon,MSN wallet.
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
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3. Micropayments
Developed for purchases of less than $10,such us downloads of
individual articles or music clips
(a) Accumulated balance digital payment systems
accumulating a debit balance that they must pay periodically on
their credit card or telephone bills
Example
PaymentOne and Trivnet enable consumers to charge small
purchases to their monthly telephone bill.
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
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(b) Stored value payment systems
Enables the consumers to make instant online payments to
merchants and other individuals based on value stored in a
digital account. On-line value systems rely on the value stored in
a consumer's bank or credit card
Example
Ecount offers a prepaid debit account for online purchases
RocketCash
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
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(c) Smart card
Another type of stored value system for micropayments. It is a
plastic card stores digital information.It can store health records,
identification data or telephone number or it can serve as
'electronic purse' in the place of cash.But it needs a Smart card
reader
Example
Mondex and American Express Blue Smart cards.
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
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4. Digital cashAlso known as electronic cash used for micropayments orlarger purchases. Digital cash is currency represented inelectronic form.Exchange money with other e-cash user.
useful for people who do not have credit card and wish tomake web purchases
example
eCoin.net
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10.4 Electronic Commerce Payment Systems
Electronic Commerce Payment Systems
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5.Peer-to-peer payment systems
serve people who want to send money to vendors or individuals who
are not set up to accept credit card payments.
The party sending money uses his credit card to create an account
with the designated payment at a web site dedicated to peer-to-peer
payments.
The recipient 'picks up' the payment by visiting the web site and supplying
information about where to send the payment
(a bank account or physical address)
Example PayPal
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Electronic Commerce Payment Systems
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6. Digital checking payment systems
Extend the functionality of existing checking accounts sothey can be used for on-line shopping payments.
These checks are encrypted with a digital signature that can be verified and used for payments in E-commerce. It is useful in B2B E-commerce.
ExampleWestern Union MoneyZap
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Electronic Commerce Payment Systems
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7. Electronic billing presentment and payment systemsused for paying monthly routine bills. They enable users to view their bills electronically and pay them through electronic fund transfers from bank or credit card accounts. These services support payment for on-line and physical store purchases about bills that are due, present the bills, and process the payments
ExampleCheckFree consolidate subscribers bills from various sources so that they can all be paid at one time.