Download - E-Commerce 01
![Page 1: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/1.jpg)
Chapter 1Chapter 1
Foundation of Foundation of
Electronic CommerceElectronic Commerce
![Page 2: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/2.jpg)
Learning ObjectivesLearning Objectives
Define electronic commerce (EC) Define electronic commerce (EC) and describe its various categoriesand describe its various categories
Distinguish between electronic Distinguish between electronic markets and interorganizational markets and interorganizational systemssystems
Describe and discuss the content Describe and discuss the content and framework of ECand framework of EC
![Page 3: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/3.jpg)
Learning Objectives Learning Objectives (cont.)(cont.)
Understand the forces that drive Understand the forces that drive the widespread use of ECthe widespread use of EC
Describe the benefits of EC to Describe the benefits of EC to organizations, consumers, and organizations, consumers, and societysociety
Describe the limitations of ECDescribe the limitations of EC Discuss some major managerial Discuss some major managerial
issues regarding ECissues regarding EC
![Page 4: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/4.jpg)
Electronic Commerce: Definitions and Concepts
The Internet has emerged as a major, perhaps eventually the major, worldwide distribution channel for goods, services, managerial and professional jobs
This is profoundly changing economics, markets and industry structure, products and services and their flow, consumer segmentation, consumer values, consumer behavior, jobs, and labor markets
The impact may be even greater on societies and politics, and on the way we see the world and ourselves in it
![Page 5: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/5.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
e-business:e-business: a broader definition of a broader definition of EC, which includes:EC, which includes:• buying and selling of goods and buying and selling of goods and
servicesservices• servicing customersservicing customers• collaborating with business partnerscollaborating with business partners• conducting electronic transactions conducting electronic transactions
within an organizationwithin an organization
![Page 6: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/6.jpg)
Electronic Commerce TermsElectronic Commerce Terms
E-businessE-business EC defined from these perspectivesEC defined from these perspectives
• CommunicationsCommunications• Business processBusiness process• ServiceService• OnlineOnline• CollaborationsCollaborations• CommunityCommunity
![Page 7: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/7.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
E-commerce E-commerce defined from the following perspectives:• Communications: delivery of goods,
services, information, or payments over computer networks or any other electronic means
• Commercial (trading): provides capability of buying and selling products, services, and information on the Internet and via other online services
![Page 8: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/8.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
Business process: doing business electronically by completing business processes over electronic networks, thereby substituting information for physical business processes
Service: a tool that addresses the desire of governments, firms, consumers, and management to cut service costs while improving the quality of customer service and increasing the speed of service delivery
![Page 9: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/9.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
Learning: an enabler of online training and education in schools, universities, and other organizations, including businesses
Collaborative: the framework for inter- and intraorganizational collaboration
Community: provides a gathering place for community members to learn, transact, and collaborate
![Page 10: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/10.jpg)
Electronic Commerce Terms Electronic Commerce Terms (cont.)(cont.)
Internet vs. Non-Internet ECInternet vs. Non-Internet EC• VANsVANs• LANsLANs• Click and MortarClick and Mortar
![Page 11: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/11.jpg)
Electronic Commerce Terms Electronic Commerce Terms (cont.)(cont.)
Pure vs. Partial EC: based on the degree of Pure vs. Partial EC: based on the degree of digitization ofdigitization of• ProductProduct• ProcessProcess• Delivery agentDelivery agent
Traditional commerce: all dimensions are Traditional commerce: all dimensions are physicalphysical
Pure EC: all dimensions are digitalPure EC: all dimensions are digital Partial EC: all other possibilities include a Partial EC: all other possibilities include a
mix of digital and physical dimensionsmix of digital and physical dimensions
![Page 12: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/12.jpg)
Exhibit 1.1: The Dimensions of Exhibit 1.1: The Dimensions of Electronic CommerceElectronic Commerce
![Page 13: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/13.jpg)
The EC Framework, Classification, and Content
Two major types of e-commerce:• business-to-consumer (B2C) : : online online
transactions are made between transactions are made between businesses and individual consumers businesses and individual consumers
• business-to-business (B2B):business-to-business (B2B): businesses make online transactions businesses make online transactions with other businesseswith other businesses intrabusiness intrabusiness EC: EC conducted inside an EC: EC conducted inside an
organization (e.g., organization (e.g., business-to-employeesbusiness-to-employees B2E)B2E)
![Page 14: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/14.jpg)
The EC Framework, Classification, and Content (cont.)
Computer environmentsComputer environments• Internet:Internet: global networked global networked
environment environment • Intranet:Intranet: a corporate or government a corporate or government
network that uses Internet tools, such as network that uses Internet tools, such as Web browsers, and Internet protocols Web browsers, and Internet protocols
• Extranet:Extranet: a network that uses the a network that uses the Internet to link multiple intranetsInternet to link multiple intranets
![Page 15: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/15.jpg)
EC Framework
EC applications are supported by infrastructure and by five support areas:• People• Public policy• Marketing and advertising• Support services• Business partnerships
![Page 16: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/16.jpg)
Exhibit 1.2: A Framework for Exhibit 1.2: A Framework for Electronic CommerceElectronic Commerce
![Page 17: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/17.jpg)
• Interorganizational information system Interorganizational information system (IOS) involves information flow among (IOS) involves information flow among two or more organizationstwo or more organizations
• Major objective is efficient routine Major objective is efficient routine transaction processing, such as transaction processing, such as transmitting orders, bills, and payments transmitting orders, bills, and payments using EDI or extranetsusing EDI or extranets
• Scope: Unified system encompassing Scope: Unified system encompassing two or several business partnerstwo or several business partners
• Typical IOS includes a company, its Typical IOS includes a company, its suppliers, and and/or customerssuppliers, and and/or customers
Interorganization Information Systems
![Page 18: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/18.jpg)
Classification of EC by Classification of EC by Transactions or InteractionsTransactions or Interactions
business-to-consumer (B2C) : online : online transactions are made between transactions are made between businesses and individual consumers businesses and individual consumers
business-to-business (B2B): business-to-business (B2B): businesses make online transactions businesses make online transactions with other businesseswith other businesses
e-tailing:e-tailing: online retailing, usually B2Conline retailing, usually B2C
![Page 19: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/19.jpg)
Classification of EC by Classification of EC by Transactions or Interactions Transactions or Interactions (cont.)(cont.) business-to-business-to-consumer (B2B2C):business-to-business-to-consumer (B2B2C):
e-commerce model in which a business e-commerce model in which a business provides some product or service to a client provides some product or service to a client business that maintains its own customersbusiness that maintains its own customers
consumer-to-business (C2B):consumer-to-business (C2B):
e-commerce model in which individuals use e-commerce model in which individuals use the Internet to sell products or services to the Internet to sell products or services to organizations or individuals seek sellers to organizations or individuals seek sellers to bid on products or services they needbid on products or services they need
![Page 20: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/20.jpg)
Classification of EC by Classification of EC by Transactions or Interactions Transactions or Interactions (cont.)(cont.) consumer-to-consumer (C2C):consumer-to-consumer (C2C):
e-commerce model in which consumers e-commerce model in which consumers sell directly to other consumerssell directly to other consumers
peer-to-peer (P2P):peer-to-peer (P2P): technology that technology that enables networked peer computers to enables networked peer computers to share data and processing with each other share data and processing with each other directly; can be used in C2C, B2B, and B2C directly; can be used in C2C, B2B, and B2C e-commercee-commerce
![Page 21: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/21.jpg)
Classification of EC by Classification of EC by Transactions or Interactions Transactions or Interactions (cont.)(cont.)
mobile commerce ((m-commerce):mobile commerce ((m-commerce):
e-commerce transactions and e-commerce transactions and activities conducted in a wireless activities conducted in a wireless environmentenvironment
location-based commerce (l-location-based commerce (l-commerce):commerce): m-commerce m-commerce transactions targeted to individuals transactions targeted to individuals in specific locations, at specific in specific locations, at specific timestimes
![Page 22: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/22.jpg)
Classification of EC by Classification of EC by Transactions or Interactions Transactions or Interactions (cont.)(cont.) intrabusiness EC:intrabusiness EC: e-commerce category e-commerce category
that includes all internal organizational that includes all internal organizational activities that involve the exchange of activities that involve the exchange of goods, services, or information among goods, services, or information among various units and individuals in an various units and individuals in an organizationorganization
business-to-employees (B2E):business-to-employees (B2E): e-commerce e-commerce model in which an organization delivers model in which an organization delivers services, information, or products to its services, information, or products to its individual employeesindividual employees
![Page 23: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/23.jpg)
Classification of EC by Classification of EC by Transactions or Interactions Transactions or Interactions (cont.)(cont.) collaborative commerce (c-commerce):collaborative commerce (c-commerce):
e-commerce model in which individuals or e-commerce model in which individuals or groups communicate or collaborate onlinegroups communicate or collaborate online
e-learning:e-learning: t the online delivery of he online delivery of information for purposes of training or information for purposes of training or educationeducation
exchange (electronic):exchange (electronic): a a public electronic public electronic market with many buyers and sellersmarket with many buyers and sellers
![Page 24: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/24.jpg)
Classification of EC by Classification of EC by Transactions or Interactions Transactions or Interactions (cont.)(cont.) exchange-to-exchange (E2E):exchange-to-exchange (E2E): e-commerce e-commerce
model in which electronic exchanges model in which electronic exchanges formally connect to one another the formally connect to one another the purpose of exchanging informationpurpose of exchanging information
e-government:e-government: e-commerce model in e-commerce model in which a government entity buys or which a government entity buys or provides goods, services, or information to provides goods, services, or information to businesses or individual citizensbusinesses or individual citizens
![Page 25: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/25.jpg)
Figure 1-1Figure 1-1 Transactions in Electronic Markets Transactions in Electronic Markets
![Page 26: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/26.jpg)
A Brief History of ECA Brief History of EC 1970s: innovations like 1970s: innovations like electronic funds electronic funds
transfer transfer (EFT)—funds routed electronically (EFT)—funds routed electronically from one organization to another (limited to from one organization to another (limited to large corporations)large corporations)
electronic data interchange electronic data interchange (EDI)— (EDI)— electronically transfer routine documents electronically transfer routine documents (application enlarged pool of participating (application enlarged pool of participating companies to include manufacturers, companies to include manufacturers, retailers, services)retailers, services)
interorganizational system interorganizational system (IOS)—travel (IOS)—travel reservation systems and stock tradingreservation systems and stock trading
![Page 27: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/27.jpg)
A Brief History of EC A Brief History of EC (cont.)(cont.)
1969 U.S. government experiment—the 1969 U.S. government experiment—the Internet came into being initially used by Internet came into being initially used by technical audience of government agencies, technical audience of government agencies, academic researchers, and scientistsacademic researchers, and scientists
1990s the Internet commercialized and 1990s the Internet commercialized and users flocked to participate in the form of users flocked to participate in the form of dot-comsdot-coms, or , or Internet start-upsInternet start-ups
Innovative applications ranging from online Innovative applications ranging from online direct sales to e-learning experiencesdirect sales to e-learning experiences
![Page 28: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/28.jpg)
A Brief History of EC A Brief History of EC (cont.)(cont.)
Most medium- and large-sized organizations Most medium- and large-sized organizations have a Web sitehave a Web site
Most large U.S. corporations have Most large U.S. corporations have comprehensive portals comprehensive portals
1999 the emphasis of EC shifted from B2C to 1999 the emphasis of EC shifted from B2C to B2BB2B
2001 the emphasis shifted from B2B to B2E,2001 the emphasis shifted from B2B to B2E,c-commerce, e-government, e-learning, and c-commerce, e-government, e-learning, and m-commercem-commerce
EC will undoubtedly continue to shift and EC will undoubtedly continue to shift and changechange
![Page 29: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/29.jpg)
A Brief History of EC A Brief History of EC (cont.)(cont.)
EC successesEC successes• Virtual EC
companies eBay VeriSign AOL Checkpoint
• Click-and-mortar Cisco General Electric IBM Intel Schwab
EC failuresEC failures• 1999, a large number of
EC-dedicated companies began to fail
• EC’s days are not numbered!
dot-com failure rate is declining sharply
EC field is experiencing consolidation
most pure EC companies, are expanding operations and generating increasing sales (Amazon.com)
![Page 30: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/30.jpg)
The Interdisciplinary Nature of EC
Major EC disciplines Major EC disciplines • Computer scienceComputer science• MarketingMarketing• Consumer behaviorConsumer behavior• FinanceFinance• EconomicsEconomics• Management information systems Management information systems
![Page 31: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/31.jpg)
MarketingMarketing Computer sciencesComputer sciences Consumer behavior Consumer behavior
and psychologyand psychology FinanceFinance EconomicsEconomics
Management Management information information systemssystems
Accounting and Accounting and auditingauditing
ManagementManagement Business law and Business law and
ethicsethics Others Others
Electronic Commerce is Electronic Commerce is InterdisciplinaryInterdisciplinary
![Page 32: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/32.jpg)
The Driving Forces ofThe Driving Forces ofElectronic CommerceElectronic Commerce
The New World of BusinessThe New World of Business• Business pressuresBusiness pressures• Organizational responsesOrganizational responses• The role of Information Technology The role of Information Technology
(including electronic commerce)(including electronic commerce)
![Page 33: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/33.jpg)
Exhibit 1.3: Major Business Exhibit 1.3: Major Business Pressures and the Role of ECPressures and the Role of EC
![Page 34: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/34.jpg)
Major Business PressuresMajor Business Pressures
Market andMarket and
economic economic pressurespressures
Strong competitionStrong competitionGlobal economyGlobal economyRegional trade Regional trade agreements (e.g. agreements (e.g. NAFTA)NAFTA)Extremely low labor Extremely low labor cost in some countriescost in some countriesFrequent and Frequent and significant changes in significant changes in marketsmarketsIncreased power of Increased power of consumersconsumers
![Page 35: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/35.jpg)
Major Business Pressures Major Business Pressures (cont.)(cont.)
Societal and Societal and environmental environmental pressurespressures
Changing nature of Changing nature of workforceworkforce
Government Government deregulation of banking deregulation of banking and other servicesand other services
Shrinking government Shrinking government subsidiessubsidies
Increased importance of Increased importance of ethical and legal issuesethical and legal issues
Increased social Increased social responsibility of responsibility of organizationsorganizations
Rapid political changesRapid political changes
![Page 36: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/36.jpg)
Major Business Pressures Major Business Pressures (cont.)(cont.)
Technological Technological pressurespressures
Rapid Rapid technological technological obsolescenceobsolescenceIncrease Increase innovations and innovations and new technologiesnew technologiesInformation Information overloadoverloadRapid decline in Rapid decline in technology cost technology cost vs. performance vs. performance ratioratio
![Page 37: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/37.jpg)
Organizational ResponsesOrganizational Responses Strategic systemsStrategic systems Continuous improvement effortsContinuous improvement efforts Business process reengineering Business process reengineering
(BPR)(BPR) Business AlliancesBusiness Alliances Electronic commerceElectronic commerce
![Page 38: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/38.jpg)
Organizational Responses
Framework for Organizational and Societal Impacts of Information Technology
Management
and
Business Process
Organization
Structure and the
Corporate Culture
Individual
and Roles
Information
Technology
The Organization’s
Strategy
External Environment, Social, Economic, Political, etc
![Page 39: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/39.jpg)
Reducing cycle time and time to market
Empowerment of employees and collaborative work
Supply chain improvements Mass customization Change management
IT Support and EC
![Page 40: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/40.jpg)
The Benefits of ECThe Benefits of EC
Benefits to OrganizationsBenefits to Organizations• Expands the marketplace to national Expands the marketplace to national
and international marketsand international markets• Decreases the cost of creating, Decreases the cost of creating,
processing, distributing, storing and processing, distributing, storing and retrieving paper-based informationretrieving paper-based information
![Page 41: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/41.jpg)
Benefits of ECBenefits of EC (cont.) (cont.)
Benefits to Organizations Benefits to Organizations (cont.)(cont.)• Allows reduced inventories and Allows reduced inventories and
overhead by facilitating pull-type overhead by facilitating pull-type supply chain managementsupply chain management
• The pull-type processing allows for The pull-type processing allows for customization of products and customization of products and services which provides competitive services which provides competitive advantage to its implementersadvantage to its implementers
![Page 42: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/42.jpg)
Benefits of ECBenefits of EC (cont.) (cont.)
Benefits to Organizations Benefits to Organizations (cont.)(cont.)• Reduces the time between the outlay Reduces the time between the outlay
of capital and the receipt of products of capital and the receipt of products and servicesand services
• Supports business processes Supports business processes reengineering (BPR) effortsreengineering (BPR) efforts
• Lowers telecommunications cost - the Lowers telecommunications cost - the Internet is much cheaper than value Internet is much cheaper than value added networks (VANs) added networks (VANs)
![Page 43: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/43.jpg)
Benefits of EC Benefits of EC (cont.)(cont.)
Benefits to consumersBenefits to consumers• Enables consumers to shop or do other Enables consumers to shop or do other
transactions 24 hours a day, all year transactions 24 hours a day, all year round from almost any locationround from almost any location
• Provides consumers with more choicesProvides consumers with more choices• Provides consumers with less Provides consumers with less
expensive products and services by expensive products and services by allowing them to shop in many places allowing them to shop in many places and conduct quick comparisonsand conduct quick comparisons
![Page 44: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/44.jpg)
Benefits of ECBenefits of EC (cont.) (cont.) Benefits to consumers Benefits to consumers (cont.)(cont.)
• Allows quick delivery of products and Allows quick delivery of products and services (in some cases) especially with services (in some cases) especially with digitized productsdigitized products
• Consumers can receive relevant and Consumers can receive relevant and detailed information in seconds, rather than detailed information in seconds, rather than in days or weeksin days or weeks
• Makes it possible to participate in virtual Makes it possible to participate in virtual auctionsauctions
![Page 45: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/45.jpg)
Benefits of ECBenefits of EC (cont.) (cont.)
Benefits to consumers Benefits to consumers (cont.)(cont.)• Allows consumers to interact with other Allows consumers to interact with other
consumers n electronic communities consumers n electronic communities and exchange ideas as well as compare and exchange ideas as well as compare experiencesexperiences
• Facilitates competition, which results in Facilitates competition, which results in substantial discountssubstantial discounts
![Page 46: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/46.jpg)
Benefits of EC (cont.)Benefits of EC (cont.)
Benefits to societyBenefits to society• Enables more individuals to work at home, Enables more individuals to work at home,
and to do less traveling for shopping, and to do less traveling for shopping, resulting in less traffic on the roads, and resulting in less traffic on the roads, and lower air pollutionlower air pollution
• Allows some merchandise to be sold at Allows some merchandise to be sold at lower prices benefiting less affluent peoplelower prices benefiting less affluent people
![Page 47: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/47.jpg)
Benefits of ECBenefits of EC (cont.) (cont.)
Benefits to society Benefits to society (cont.)(cont.)• Enables people in Third World countries Enables people in Third World countries
and rural areas to enjoy products and and rural areas to enjoy products and services which otherwise are not services which otherwise are not available to themavailable to them
• Facilitates delivery of public services at Facilitates delivery of public services at a reduced cost, increases effectiveness, a reduced cost, increases effectiveness, and/or improves qualityand/or improves quality
![Page 48: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/48.jpg)
The Limitations of ECThe Limitations of EC
Technical limitations of electronic Technical limitations of electronic commercecommerce• Lack of sufficient system’s security, reliability, Lack of sufficient system’s security, reliability,
standards, and communication protocolsstandards, and communication protocols• Insufficient telecommunication bandwidthInsufficient telecommunication bandwidth• The software development tools are still The software development tools are still
evolving and changing rapidlyevolving and changing rapidly
![Page 49: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/49.jpg)
The Limitations of EC The Limitations of EC (cont.)(cont.)
Technical Limitations of EC Technical Limitations of EC (cont.)(cont.)• Difficulties in integrating the Internet Difficulties in integrating the Internet
and electronic commerce software with and electronic commerce software with some existing applications and some existing applications and databasesdatabases
• The need for special Web servers and The need for special Web servers and other infrastructures, in addition to the other infrastructures, in addition to the network servers (additional cost)network servers (additional cost)
![Page 50: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/50.jpg)
The Limitations of EC The Limitations of EC (cont.)(cont.)
Technical Limitations of EC Technical Limitations of EC (cont.)(cont.)• Possible problems of interoperability, Possible problems of interoperability,
meaning that some EC software does meaning that some EC software does not fit with some hardware, or is not fit with some hardware, or is incompatible with some operating incompatible with some operating systems or other componentssystems or other components
![Page 51: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/51.jpg)
Non-Technical LimitationsNon-Technical Limitations Cost and justificationCost and justification
• The cost of developing an EC in house can The cost of developing an EC in house can be very high, and mistakes due to lack of be very high, and mistakes due to lack of experience may result in delays. experience may result in delays.
• There are many opportunities for There are many opportunities for outsourcing, but where and how to do it is outsourcing, but where and how to do it is not a simple issuenot a simple issue
• In order to justify the system, one needs to In order to justify the system, one needs to deal with some intangible benefits which deal with some intangible benefits which are difficult to quantify.are difficult to quantify.
![Page 52: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/52.jpg)
Security and PrivacySecurity and Privacy • These issues are especially important in These issues are especially important in
the B2C area, but security concerns are the B2C area, but security concerns are not so serious from a technical not so serious from a technical standpoint standpoint
• Privacy measures are constantly Privacy measures are constantly improving too improving too
• The EC industry has a very long and The EC industry has a very long and difficult task of convincing customers difficult task of convincing customers that online transactions and privacy are, that online transactions and privacy are, in fact, very securein fact, very secure
Non-Technical Limitations (cont.)
![Page 53: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/53.jpg)
Non-Technical Limitations Non-Technical Limitations (cont.)(cont.)
Lack of trust and user resistanceLack of trust and user resistance • Customers do not trust:Customers do not trust:
Unknown faceless sellersUnknown faceless sellers Paperless transactionsPaperless transactions Electronic moneyElectronic money
• Switching from a physical to a virtual Switching from a physical to a virtual store may be difficultstore may be difficult
![Page 54: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/54.jpg)
• Other limiting factors are:Other limiting factors are: Lack of touch and feel onlineLack of touch and feel online Many unresolved legal issuesMany unresolved legal issues Rapidly evolving and changing ECRapidly evolving and changing EC Lack of support servicesLack of support services Insufficiently large enough number of sellers Insufficiently large enough number of sellers
and buyersand buyers Breakdown of human relationshipsBreakdown of human relationships Expensive and/or inconvenient accessibility Expensive and/or inconvenient accessibility
to the Internetto the Internet
Non-Technical Limitations (cont.)
![Page 55: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/55.jpg)
Impact on EC: Everything will be Changed Impact on EC: Everything will be Changed The Analysis-of-Impacts FrameworkThe Analysis-of-Impacts Framework
![Page 56: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/56.jpg)
Impacts on Trading ProcessesImpacts on Trading Processesand Intermediaries and Intermediaries (cont.)(cont.)
Winners in ECWinners in EC• Internet access Internet access
providersproviders• Diversified portal Diversified portal
service providersservice providers• EC software EC software
companiescompanies• Proprietary Proprietary
network ownersnetwork owners• Others Others
Losers in ECLosers in EC• Wholesalers Wholesalers
(particularly (particularly small ones)small ones)
• BrokersBrokers• SalespeopleSalespeople• Nondifferentiated Nondifferentiated
manufacturersmanufacturers
![Page 57: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/57.jpg)
Impact on Business ProcessesImpact on Business Processesand Organizationsand Organizations
Improving direct marketingImproving direct marketing• Product promotionProduct promotion• New sales channelsNew sales channels• Direct savingsDirect savings• Reduced cycle timeReduced cycle time• Customer serviceCustomer service• Brand or corporate imageBrand or corporate image
![Page 58: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/58.jpg)
Impact on Business ProcessesImpact on Business Processesand Organizations and Organizations (cont.)(cont.)
Other marketing-related impactsOther marketing-related impacts• Customization Customization • AdvertisingAdvertising• Ordering systemsOrdering systems• Markets Markets
Transforming organizationsTransforming organizations• Technology and organization learningTechnology and organization learning• Changing nature of workChanging nature of work
![Page 59: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/59.jpg)
Impact on Business ProcessesImpact on Business Processesand Organizations and Organizations (cont.)(cont.)
Redefining organizationsRedefining organizations• New product capabilitiesNew product capabilities• New business modelsNew business models
Impacts on manufacturingImpacts on manufacturing• Build-to-orderBuild-to-order
Impact on finance and accountingImpact on finance and accounting Human resource management, Human resource management,
training, and educationtraining, and education
![Page 60: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/60.jpg)
Putting It All TogetherPutting It All Together Major concern of today’s companies—Major concern of today’s companies—
how to transform themselves to take how to transform themselves to take part in digital economypart in digital economy
Example:Toys, Inc.Example:Toys, Inc.• Uses intranet for internal communications, Uses intranet for internal communications,
collaboration, dissemination of informationcollaboration, dissemination of information• Networked to e-marketspaces and large Networked to e-marketspaces and large
corporationscorporations• Corporate portal for communication and Corporate portal for communication and
collaboration with business partnerscollaboration with business partners
![Page 61: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/61.jpg)
Figure 1-2
Putting It All Together
Prentice Hall, 2002 61
![Page 62: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/62.jpg)
Is it real?Is it real? How to evaluate the magnitude of the How to evaluate the magnitude of the
business pressures.business pressures. What should be my company’s strategy What should be my company’s strategy
towards EC?towards EC? Why is the B2B area so attractive?Why is the B2B area so attractive? What is the best way to learn about EC?What is the best way to learn about EC? What ethical issues exist?What ethical issues exist? How can failures be avoided?How can failures be avoided?
Managerial IssuesManagerial Issues
![Page 63: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/63.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
Pure vs. Partial ECPure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of:1. the product (service)
sold;2. the process; and for3. the delivery agent (or
digital intermediary)
Brick-and-Mortar Brick-and-Mortar organizations organizations areare old-economy old-economy organizations organizations (corporations) that (corporations) that perform most of their perform most of their business off-line, business off-line, selling physical selling physical products by means of products by means of physical agentsphysical agents
![Page 64: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/64.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
Virtual (pure-play) Virtual (pure-play) organizationsorganizations conduct their business conduct their business activities solely onlineactivities solely online
Click-and-mortar Click-and-mortar organizations organizations conduct some EC conduct some EC activities, but do their activities, but do their primary business in primary business in the physical worldthe physical world
Electronic market Electronic market (e-marketplace) (e-marketplace) online marketplace online marketplace where buyers and where buyers and sellers meet to sellers meet to exchange goods, exchange goods, services, money, or services, money, or informationinformation
![Page 65: E-Commerce 01](https://reader033.vdocuments.site/reader033/viewer/2022061613/55494190b4c905054d8b511a/html5/thumbnails/65.jpg)
Electronic Commerce: Definitions and Concepts (cont.)
Interorganizational Interorganizational information information systems (IOSs) systems (IOSs) allow routine allow routine transaction transaction processing and processing and information flow information flow between two or more between two or more organizationsorganizations
IntraorganizatioIntraorganizational information nal information systems systems enable enable EC activities to go EC activities to go on on within within individual individual organizationsorganizations