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Chapter 5: Electronic Commerce

Chapter 5: Electronic Commerce. Management Information Systems for the Information Age. Strategies for a New Economy. Introduction. Sound Bites “Dot-coms” and “Dot-bombs” Fortunes have been made and lost

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Chapter 5: Electronic Commerce

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  1. Chapter 5:Electronic Commerce Management Information Systemsfor the Information Age Strategies for a New Economy

  2. Introduction • Sound Bites • “Dot-coms” and “Dot-bombs” • Fortunes have been made and lost • Still riding the learning curve on what works and what doesn’t (trial and error for early adopters) • Riding the competitive advantage curve • Which is why it is so important that MIS staff can help organizations strategize for success in the new e-Business economy Chapter 5: Electronic Commerce

  3. What Is Electronic Commerce? • Technically,… • “E-Commerce is the exchange of information across electronic networks at any stage in the supply chain whether within an organization, between businesses, between business & consumers, or between public and private sectors whether paid or unpaid” • Basically,… • E-Commerce is commerce, but it is commerce accelerated and enhanced by IT, in particular the Internet. Source: Industry Canadahttp://e-com.ic.gc.ca Chapter 5: Electronic Commerce

  4. What Is Electronic Business? • IBM’s definition of e-Business: • “The transformation of key business processes through the use of Internet technologies” • E-Business encompasses e-commerce &… • “includes the front & back-office applications that form the engine for modern business. Its not just about e-commerce transactions, it’s about redefining old business models with the aid of technology to maximize customer value” Source: Industry Canadahttp://e-com.ic.gc.ca Chapter 5: Electronic Commerce

  5. Corporate e-Business Strategy Adapted from Web:www.coursecompass.com Chapter 5: Electronic Commerce

  6. E-Commerce vs. E-Business Adapted from Web:www.coursecompass.com Chapter 5: Electronic Commerce

  7. What Kind of Networks are Used? • Technically,… • Open networks, like the Internet, or closed, private networks. Electronic commerce first emerged in the 1960s on private networks for electronic data interchange (EDI) and in banks for Electronic Funds Transfer (EFT). • Basically,… • Small businesses can climb aboard the Internet, which amounts to a free electronic highway. Once you're hooked up, you can buy, sell, and connect with the people who matter to you. Source: Industry Canadahttp://e-com.ic.gc.ca Chapter 5: Electronic Commerce

  8. Using the Internet as a Channel Adapted from Web:www.coursecompass.com Chapter 5: Electronic Commerce

  9. Growth of e-Commerce Chapter 5: Electronic Commerce

  10. Four Categories of e-Commerce Demand Aggregation(i.e., consumer groups) Supply Chain; Value Chain(i.e., Dell and Frito Lay) Community Groups(i.e., auctions like eBay) Commerce over the Net(i.e., Amazon and Dell) Chapter 5: Electronic Commerce

  11. Growth and the Digital Divide • Not everyone is able to procure equal opportunity of access • Number of Internet users varies from region to region; and country to country • Internet access in Toronto versus Fort St. John • Internet access in Canada versus Ethiopia • African Internet access at http://www3.wn.apc.org/ Chapter 5: Electronic Commerce

  12. Business-to-Consumer Electronic Commerce B2C Chapter 5: Electronic Commerce

  13. The Business of B2C (1/4) • Types of Businesses (e-Tailers) • Pure Plays: No physical store • Amazon.com • Clicks-and-Mortar: Both physical and Internet • Future Shop • M-Commerce: e-Commerce over wireless devices, like PDAs Chapter 5: Electronic Commerce

  14. The Business of B2C (2/4) • Advantages over “Brick-and-Mortar” stores: • Shopping can be faster and more convenient • Hours of operation: 24 x 7 • Offerings and prices can change instantaneously • Real-time information of demand and sales • Call centers can be integrated into the Web site • Interactive chat and telephony; speak to a human • Broadband telecommunications will enhance the buying experience • Purchase a feature-length film for download • View interactive movies whilst researching products Chapter 5: Electronic Commerce

  15. The Business of B2C (3/4) • Keys to successful offerings: • Commodity items work best • Safe purchases like books, computers, and giftware • Digital products are best of all, because: • Examples: MP3s, movies, software, ebooks, articles • They are commodity-like products • They can be mass-customized and personalized • They can be delivered immediately upon purchase • They foster disintermediation • They have global reach Chapter 5: Electronic Commerce

  16. The Business of B2C (4/4) • Keys to attracting and retaining customers: • Design an attractive and functional Web site • Register with online search engines • Advertise using online ads (banner ads) • Use e-mail (spam) and viral marketing (pyramid) • Implement affiliate programs (click-throughs) • Sell to existing customers; give them a reason to keep coming back and increase conversion rate • Keep track of your competition • There’s not much customer loyalty in cyberspace Chapter 5: Electronic Commerce

  17. B2B Business-to-Business Electronic Commerce Chapter 5: Electronic Commerce

  18. The Business of B2B (1/3) • Over 95% of all money spent online is through B2B transactions • Value Networks • Service -> Fulfillment -> Shipping -> Financing • Intermediaries (outsourcing to specialist companies) • Complementors (value-added capabilities) • Corporate Purchasing • Direct materials, Indirect (MRO), and Services • Intranet (internal) & Extranet (external) Portals • B2B Marketplaces • CRM Customer Relationship Management Chapter 5: Electronic Commerce

  19. The Business of B2B (2/3) • Most important element of B2B: • Relationship with trusted partners • Most important form of B2B: • Electronic data interchange (EDI) • Direct computer-to-computer transfer of transaction information contained in standard business documents, such as invoices, purchase orders, etc. • Future emphasis on making EDI affordable • Using the Internet instead of private networks • Using XML as opposed to other document formats Chapter 5: Electronic Commerce

  20. The Business of B2B (3/3) Adapted from Web:www.coursecompass.com Chapter 5: Electronic Commerce

  21. Next e-Government and e-Payments Chapter 5: Electronic Commerce

  22. Other Areas of E-Commerce • E-Government • E-Filing of Tax Returns • Disintermediation for improved access to services and information • E-Commerce Payment Systems • Credit Cards and Smart Cards • PayPal and HyperWallet • Elec. Bill Presentment & Payment (EBPP) • Canada’s E-Post Service Chapter 5: Electronic Commerce

  23. Summary Chapter 5: Electronic Commerce

  24. E-Commerce Drivers & Factors • Increased Revenue – access to a wider market • Reduce Costs – direct delivery; disintermediation • Other Factors: • Increased Speed & Response Time • Reduce Sales & Purchase Costs • Reduce Operating Expenditures • Meet and Satisfy Customer Demand • Barriers to Entry: • Infrastructure and Access Limitations • Cost-Efficiency Competitiveness • Poor Understanding of Services • Fraud & Confidentiality Chapter 5: Electronic Commerce

  25. Eight Simple Rules of E-Business (1/2) • Rule 1: Technology is no longer an afterthought in forming business strategy; it’s the actual cause & driver • Whilst computers haven’t fundamentally altered business models and foundations – the Internet definitely has. • Rule 2: Ability to streamline, structure, influence and control the flow of information is more powerful & cost-effective than moving & manufacturing physical products • Intangibles are becoming more valuable - branding, customer relationship, integration • Rule 3: Inability to overthrow or displace dominant and outdated business designs often leads to failure • Move to outsourcing & high levels of dynamic internal integration • Rule 4: Goal of new business design is to create flexible outsourcing alliances between companies that not onlyoff-load costs, but also excites and satisfies customers • Speed, Convenience, Personalisation, Price Adapted from Web:www.coursecompass.com Chapter 5: Electronic Commerce

  26. Eight Simple Rules of E-Business (2/2) • Rule 5: e-Commerce enables companies to listen to their customers and become either the cheapest, the most familiar, or the best at offering a product or service • Wal-Mart, McDonalds, Coca–Cola – What have you done for me lately? • Rule 6: Use technology to innovate, entertain, and enhance the entire transaction process from selection to receipt and service (like Amazon) • Rule 7: Future e-business design models will increasingly use re-configurable e-business community models to best meet customer’s needs • Integrated customer centric business models – supporting complex business designs – Amazon, ePinions, and E*Trade • Rule 8: Management’s task is to align business strategies, processes, and applications; all at the same time – very difficult Adapted from Web:www.coursecompass.com Chapter 5: Electronic Commerce

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