unit 31 criteria 1-1

8/3/2019 Unit 31 Criteria 1-1

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Unit 31: E-business Operations

Session 3


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Learning Outcomes

1.1 Describe the extendedpurchasing process used

in e-business

1.2 Examine how use ofprofessional buyersaffects the buying process


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Topics

Review of Last session

Group Report

Lecture

The purchase processof b2c (business toconsumer) purchasing transactions

The purchase processof b2b (business to

business) buying transactions

Activities of professional buyers


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Review of Last Session


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Test of Baseline Knowledge -Review

What is E-business?

Types of E-Business Models

What are Purchase Processes?

Name some activities under thepurchase process

Name some activities of a Buyer


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Group 1

the term used to describe the informationsystems and applications that support anddrive business processes, most often usingweb technologies.

E-business allows companies to link theirinternal and external processes moreefficiently and effectively and work moreclosely with suppliers and partners to bettersatisfy the needs and expectations of theircustomers, leading to improvements inoverall business performance.


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Group 2 & 3

is the conduct of business on theInternet, not only buying and sellingbut also servicing customers andcollaborating with business partners


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Group 4

E-business is about utilizing theInternet technologies to providesuperior customer service, streamline

business processes, increase sales,and reduce costs. E-business usestools such as email, online banking

solutions, websites, supply chainmanagement software and web-basedcustomer relationship management.


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E-business

is the conduct of business usingelectronic means whether itsinternet, mobile, intranet, LAN,WAN or other electronic devices,not only buying and selling butalso servicing customers and

collaborating with businesspartners.


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Types of E-Business Group 1,2

Brokerage Model

Advertising Model

Merchant Model

Community Model

Subscription Model


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Types of E-Business Group 3

Storefront Model

Shopping-cartTechnology

Online Shopping Mall

Auction Model

Portal Model

Dynamic Pricing Models

B2B Exchanges B2b Services Providers

Online Trading andLending Models

Getting a Loan Online

Recruiting on the Web

Online News Services

Online Travel Services

Online Entertainment

Online Automotive Sites Energy Online

Selling Brainpower

Online Art Dealers

E-Learning Click and Mortar

Businesses


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Types of E-Business Group 4

E-shops

E-malls

E-auctions

Virtual Communities

Value-chain integrators

Information Brokerage


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Types of E-Business

B2C


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Types of E-Business

B2B


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Types of E-Business

P2P


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Types of E-Business

C2C


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Types of E-Business

Mobile Commerce


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Other types of E-Business

Business to Employee (B2E),

Government to Business (G2B) and

Government to Citizen (G2C)


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Purchase Transactions


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The purchase processof b2c

buying transactions

Needs and Wants

Information search,

comparisons and evaluation of alternatives,

purchase decision and purchase sequences

credit card information,

post-purchase communications


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B2C Information Search

Initial use of search engines to look forthe needs or wants Food

Luxury Items Etc

Think of a 5 commodities you want

now Search the internet for that commodity

with specifics

Submit links via email


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B2C comparisons andevaluation of alternatives,

Compare alternatives using acomparison software in the internet

Search a comparative software inthe internet


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B2C purchase decision andpurchase sequences

Price

Quality

After Sales Service Industry mark


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B2C purchase decision andpurchase sequences

Order Information

Customer Information

Billing address Click what credit card to use


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B2C credit card information,

Name

Credit Card Number

Amount Security Code questions

Security Token

Hard Virtual


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Credit Card Steps

S.E.T.

stands for Secure ElectronicTransactions and is a proposedstandard for performing credit cardtransactions over the Internet.

Used by VISA and Mastercard


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Credit Card Steps

The buyer indicates that they are interested inmaking a credit a card purchase.

The merchant's system generates and sends thebuyer an invoice for the purchase.

The buyer selects a VISA or MasterCard credit cardfor payment

The buyer's software initiates the payment processby sending a request to the merchant's software forboth their encryption public key and the public key ofthe payment gateway

The request indicates the type of credit card thebuyer will use, as a merchant may use differentpayment gateways for different types of cards.


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Credit Card Steps

The merchant's software generates a responseto the request and replies back to the buyer'ssoftware.

The buyer's software then verifies the merchant'sand payment's gateways

The buyer's software generates two packets ofinformation to send back to the merchant, theOrder Information packet (OI), and the Purchase

Instructions (PI) packet

The buyer's software transmits the OI and PI tothe merchant.


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Credit Card Steps

The merchant's software checks the messagefrom the buyer with the OI and PI for anytampering

The merchant's software generates anauthorization request for the credit card paymentrequest.

The merchant sends to the payment gateway oftheir acquiring bank a message encrypted using

the payment gateway's public key. :

The payment gateway then decrypts themessage and its various


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Credit Card Steps

The payment gateway then sends a request forpayment authorization to the buyer's credit cardissuer through customary bankcard channels

The issuing bank sends back an approval ordenial response and code to the paymentgateway in response to the authorizationrequest.

The payment gateway generates an

authorization response message to be sent backto the merchant.

The payment gateway encrypts and sends theauthorization response message back to the

merchant's software.


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Credit Card Steps

The merchant's software decrypts the authorization notice fromthe payment gateway

If the transaction is approved, the merchant's software thencreates a purchase response message which is sent to the

buyer's software. The buyer's software processes the purchase response

message and informs the buyer that payment was accepted.

At a later time, the merchant's software generates a capturerequest message to send to the payment gateway. This request

includes the capture token (optional), transaction ID, andauthorization information. The sequence of events surroundingthe capture are very similar to steps 13 - 15 of the authorizationprocess.


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B2C post-purchasecommunications

Customer Support

Sales returns


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B2C Purchase Diagram

informa

tion

search,

comparisons and

evaluation of

alternatives,

purchase

decisionand

purchase

sequences

credit card

information,

post-purchase

communications

Existence of

Need / Want


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The purchase processof b2bbuying transactions

Problem/ Need Recognition requisition from person who needs the items,

review quotations from alternative suppliers,

negotiate contract,

place purchase order,

allow leadtime for supply (often longer for non-standard items), delivery,

goods receiving,

check quality,

receive invoice,

buyer approves payment, payment authorised by accounts,

often by credit transfer through banking system


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B2B Problem Recognition

Needs Assessment Capital Expenditure

Operational Expense Marketing Incentives

Other needs


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B2B Requisition

Items Required

Specifications

Number of Items needed


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B2B supplier search

Via current suppliers

Via referrals

Via yellow pages Via internet


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B2B review of quotations

Company being chosen

Amount

Specifications given After sales support

Warranty

Payment Terms available


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B2B negotiate contract

Contracting Parties

Product

Qty

Unit Price

Amount Total

Payment Terms

Date Due

Details

Amount Due Inspection Terms

Delivery Terms

Other Terms


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B2B place purchase order

Placement of order

Detail of product/ Services

Placement of terms and conditionsplaced on the contract


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B2B delivery

Physical Delivery

Online Delivery


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B2B goods receiving

Warehouse

Office

Computer Other Protocol


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B2B quality check

Compare products withspecifications

Detailed quality check as prescribedby system

Quality Check system varies percompany


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B2B Invoicing

Accept invoice from Suppliers

Check Invoice based on paymentterms

Revision of Invoice (if needed)


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B2B buyer approves payment

Authorization of buyer to pay

Agreement of contract

Sign with digital Signature

B2B payment authorized by


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B2B payment authorized byaccounts

Single signatory

Dual Signatory

Documentations by other officeunits

B2B payment made via


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B2B payment made viaElectronic Fund Transfer (EFT)

Electronic Fund Transfer

Bank Account to bank account

E-check

Electronic Wallet

Credit/ Cash Card


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B2B Purchase Diagram

problemrecognition

requisition

supplier

search

review ofquotations,

negotiate

contract,

place purchase

order,

delivery,

goods receiving,

quality check,

receive invoice,buyer approves

payment,

payment

authorised by

accounts

payment made via

Electronic Fund

Transfer (EFT)


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Activity

Experience the whole cycle of boththe b2c and b2b transactions viaresearch of related materials

Submit via Email Links of yourresearch


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Professional Buyer


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Activities of professional buyers

Contracts

High proportion of business costs,

Negotiation of contract includes Products and services,

Quantities,

Delivery dates,

Prices and payment terms

B


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Buyer

Plans and directs procurement activities of theorganization.

Creates, assesses and consents to improvedadministrative, clerical and purchasing procedures;and ensures that the economy and efficiency ofoperation is maintained in the organization.

Responsible for approving bid proposals together withspecifications.

Recommends for purchases that need approval;

Liaises with purchasing officers, contractors, vendorsas well as city department officials; and

Carries out research on commodity areas


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Contracts

Request for Quotes

Terms and Conditions acceptable toboth parties

Preparation of Contract


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High proportion of business costs

Virtue of procurement

Capital Expenditure

Operational Expense Special Procurement


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Negotiation of contract

Products and services,

Quantities,

Delivery dates, Prices and payment terms

unit 31 criteria 1-1

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