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MANAGING INFORMATION TECHNOLOGY7th EDITION
CHAPTER 7
E- BUSINESS SYSTEMS
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SOME DEFINITIONS.
E-Business Systems Enable the electronic transmission of business transactions or other related information between a buyer and seller
Dot-Com (pure-play)A business that conducts business solely through their Web site (single channel)
Bricks and Clicks (click-and-mortar)A company that uses Internet sales as an additional channel to an offline business (multichannel)
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SOME DEFINITIONS.
InternetA worldwide network of networks, accessible to the public, that employs the TCP/IP protocol
Intranet A private network operating within an organization that employs the TCP/IP protocol, to provide information, applications, and other tools for use by the organization’s employees
Extranet A portion of a company’s private intranet that is accessible via the internet to authorized organizations that are business partners (such as customers or suppliers)
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E-BUSINESS GROWTH
• Metcalfe’s Law is a theoretical explanation for continued e-business growth
• Metcalfe’s Law: The value of a network to each of its members is proportional to the number of other connected users in the network
• By this law, the network on the right has a value that is 15 times that of the network on the left
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E-BUSINESS FRAMEWORK
Internet Applications and Services are built upon two types of pillars
TECHNOLOGY PILLAR
LEGAL AND REGULATORY PILLAR
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LEGAL AND REGULATORY ENVIRONMENT
Environmental influences on Internet growth:
• Sales tax policies- For example: Sales taxes in U.S. at State level, but “location”
of purchase not clear via Internet and federal government chose not to implement an Internet sales tax
• Laws to protect Individual Privacy
• Antitrust laws
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E-BUSINESS TECHNOLOGIES: FIRST DECADE.
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E-BUSINESS TECHNOLOGIES
• Pre-Internet B2B electronic commerce used EDI
EDI (Electronic Data Interchange): Proprietary applications for communicating with trading partners based on agreed-upon standards for business document transmission
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E-BUSINESS TECHNOLOGIES
• XML enables B2B electronic commerce via the Internet
XML (Extensible Markup Language): A markup language standard to facilitate data interchange across applications on the Web
XML specification: Tags to convey the meaning of data
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XML EXAMPLE.
<?xml version="1.0" ?> <NetworkTypes>
<type visibility="public"> <name>Internet</name> <definition>
A worldwide network of networks, accessible to the public, that employs the TCP/IP protocol
</definition> </type>
<type visibility="private"> <name>Intranet</name> <definition>
A private network operating within an organization that employs the TCP/IP protocol, to provide information, applications, and other tools (such as
collaboration tools), for use by the organization’s employees</definition>
</type><type visibility="private">
<name>Intranet</name> <definition>
A private network that is a portion of a company’s Intranet, which is made accessible (normally over the Internet) to business partners outside of the
company (such as customers or suppliers)</definition>
</type> </NetworkTypes>
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E-BUSINESS TECHNOLOGIES
• The availability of broadband increased user access to different types of file content from their homes
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E-BUSINESS TECHNOLOGIES
• Digital Signatures
Used to authenticate the sender of a digital message
Digital Signature: A type of asymmetric cryptography that provides message authentication by utilizing a public-private key pair
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STRATEGIC E-BUSINESS OPPORTUNITIES (AND THREATS)
• Porter’s Competitive Forces Model can be used to assess the opportunities and threats on pre-existing companies due to the influence of the Internet
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STRATEGIC E-BUSINESS OPPORTUNITIES (AND THREATS)
• Examples of potential Internet opportunities for existing companies:
- Procurement of supplies via Internet can increase company’s power over suppliers
- Size of potential market is expanded
- Distribution channels between traditional company and customer can be eliminated
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STRATEGIC E-BUINESS OPPORTUNITIES (AND THREATS)
• Examples of threats to existing companies:
- Migration to price competition – difficult to keep offerings proprietary
- Increased number of potential competitors
- Internet reduces some traditional barriers (such as in-person sales force)
- Customers increase their bargaining power – Internet reduces customer’s switching costs
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THE DOT-COM MELTDOWN
• E-business changes after the “dot-com meltdown”
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B2B APPLICATIONS
• If buyers and sellers are fragmented markets, Independent intermediaries are more likely to be needed
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B2B APPLICATIONS
• If sellers are concentrated, sellers are likely to dominate
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B2B APPLICATIONS
• If buyers are concentrated, buyers are likely to dominate
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B2B APPLICATIONS-
• Reverse Auctions
Suppliers bid online in real time for a customer contract. They lower their prices to out bid their competitors.
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INTERNET USAGE ACROSS THE GLOBE.
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B2C APPLICATIONS
• Benefits to Sellers
Seller Benefits:
• 24/7 access to customer for sales and support• Lower costs from online channel• Multimedia opportunities for marketing• New ways to research potential markets• New ways to distribute (if product/service can be digitized)• Global reach to buyers
Fig 7.9: Potential B2C benefits to Sellers
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B2C APPLICATIONS FOR RETAILERS
• Dot-com
- Amazon.com
- Netflix.com
• Traditional Catalog
- Dell
- Lands’ End
• Traditional Store
- Staples
- Tesco
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DOT-COM RETAILERS
• AMAZON
• Dot-com pioneer in online retailing of third-party products• Began as bookseller• Superior online shopping experiences for millions of customers
• By 1999: Competitor to Wal-Mart• 2003: First year profitable• 2007: Proprietary E-Book reader (Kindle)• 2008: Most popular shopping site worldwide
AMAZON
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DOT-COM RETAILERS
• NETFLIX
- Established in 1998- DVD rentals mailed to members
- 2007: Proprietary video streaming
- 2010: Greater market share than Blockbuster
Netflix
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CATALOG RETAILERS
• DELL
- Traditional direct seller- Early market leader of made-to-order PCs
- Developed custom software to support “mass customization” strategy
- Took advantage of early Internet-savvy users
- By 2010: Increased focus on Business customers
DELL
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CATALOG RETAILERS
• LANDS’ END
- Traditional catalog seller
- Developed capability for online sales of custom–crafted clothing
- Acquired by Sears in 2002
Landsend.com
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STORE RETAILERS
• STAPLES
- Superstore retailer of office products
- Launched online site in 1998
- Web site designed for online order efficiency
- By 2006: 25% of revenues from online sales; world’s largest office products company
Staples
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STORE RETAILERS
• TESCO
- Grocery supermarket, based in England- Launched online site after Y2K
- Delivery challenges due to perishable goods
- By 2009: One of four successful multichannel grocery retailers in the world
TESCO
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DOT-COM INTERMEDIARIES
• eBay
- Launched in 1995- Pioneer in electronic auctions (C2C)- Evolved to also be B2C and B2B intermediary- One of first dot-com’s to achieve profitability
- By 2000: 80% of online auctions worldwide- 2003: purchased PayPal for payment capability
eBay
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DOT-COM INTERMEDIARIES
- Founded in 1998 by Stanford University students
- Leading online search engine- Current world leader in online advertising revenues
- 2010: Renewed compromise agreement with China for censorship compliance
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DOT-COM INTERMEDIARIES
- Founded in 2004 by Harvard students- Social Networking site- Major challenge: User privacy versus revenue
- By 2010: 70% of users were outside of the U.S.- In 2010: Somewhat fictional account of startup days became
award-winning movie
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WHAT MAKES A GOOD WEBSITE FOR CONSUMERS.CContext: Site layout and design - functionally vs. aesthetically dominant or both (integrated)
Content: Text, pictures, sound, and video that Web site contains, including dominant “store types”
Commerce: Site’s capabilities to enable commercial transactions - functional tools and pricing
Community: Ways that the site utilizes user-to-user communication to enable feelings of membership and shared common interests
Connection: Extent to which the site is linked to other sites
Customization: Site’s ability to tailor itself to different users or to allow users to personalize the site
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WHAT MAKES A GOOD B2C SOCIAL MEDIA PLATFORM
.
• Capabilities to: Brand the company or its products/servicesSupport for sales and customer servicesLeverage consumers for product development and
marketing
• Usage goals aligned with business strategy
• Providing users control over their privacy settings
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COPYRIGHT
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transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher. Printed in the United States of
America.
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