e lectronic b usiness, i ntranets & e xtranets. 5-2 e lectronic c ommerce the online exchange of...
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ELECTRONIC BUSINESS, INTRANETS & EXTRANETS
5-2
ELECTRONIC COMMERCE
The online exchange of goods, services, and money among firms, and between firms and their customers
5-3
TYPES OF ELECTRONIC COMMERCE
4
REVENUE PARADIGMS
Sales
- Cost of goods sold
Gross margin
- Expenses
Net income
• How do we make a buck?
• Margin * Volume
(SP – cost) * Volume
5
BUSINESS ADVANTAGES OF B2B INCLUDE:
Sales
- Cost of goods sold
Gross margin
- Expenses
Net income
Managing inventory more efficiently Adjusting more quickly to customer demand Getting products to market faster Obtaining lower prices on supplies
6
BUSINESS ADVANTAGES OF B2C INCLUDE:
Access to a wider selection of products and servicesAccess to products at lower costsConvenience for transactions or for obtaining information
Sales
- Cost of goods sold
Gross margin
- Expenses
Net income
Ebake.com
• How do we make a buck?
• Margin * Volume
(SP – cost) * Volume
5-7
INTERNET &WORLD WIDE WEB CAPABILITIES
World Wide WebWorld Wide Web
CollaborationCollaboration Interactive Communication
Interactive Communication
IntegrationIntegrationTransactionSupport
TransactionSupport
MassCustomization
MassCustomization
InformationDissemination
InformationDissemination
5-8
IMPACT OF THE WEB: DISINTERMEDIATION
Manufactureror
Service Provider
Manufactureror
Service Provider
Intermediary(Middleman)
Intermediary(Middleman)
Customer(Consumer
or Business)
Customer(Consumer
or Business)
Disintermediation• Removal of the intermediary (middleman) in a sale.• Companies can sell directly to customers (retail or
wholesale) without assistance using the Internet
6%
6%Are there any downsides to
disintermediation for a manufacturer or primary creator of services?
If yes , what are the disadvantages?
If no, why don’t all “manufacturers disintermediate their distribution channel?
ELECTRONIC COMMERCE BUSINESS STRATEGIES
Business Strategies come in one of the following three types. All require a sound business model to be successful
chapters Amazon
5-11
KEY INGREDIENTS OF A BUSINESS MODEL
5-12
CLICK-ONLY STRATEGY
5-13
STAGES OF BUSINESS-TO-CONSUMER TRANSACTIONS
(e.g. Electronic Brochure)
(e.g. displaying a bank balance)
(e.g. buying a book)
14
MOBILE COMMERCE
Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business
Issues confronting m-commerce User-friendliness of the wireless device Network speed Security Quality of life
Working 24//7
5-15
M-COMMERCE AND THE KEY DRIVERS FOR GROWTH
Driver One: Interest in the Internet
Any electronic transaction or information interaction conducted using a wireless, mobile device, and mobile networks, that leads to transfer of real or perceived value in exchange for information, service, or goods
Driver Two: Deployment of High Speed Networks
Driver Three: Growth in Mobile Devices
5-16
HOW M-COMMERCE DIFFERS FROM GENERAL EB
5-17
INTRANETS
Intranets• An internal, private network using Web technologies to
securely transmit information within the organization.• This private internal Web limits viewing access to authorized
users within the organization
Intranets• An internal, private network using Web technologies to
securely transmit information within the organization.• This private internal Web limits viewing access to authorized
users within the organization
Intranet Benefits• Improved information access to authorized user• Improved timeliness and accuracy of information• Global reach allowing employees access from anywhere• Cross-platform integration• Low cost deployment• Positive return on investment
Intranet Benefits• Improved information access to authorized user• Improved timeliness and accuracy of information• Global reach allowing employees access from anywhere• Cross-platform integration• Low cost deployment• Positive return on investment
5-18
INTRANET APPLICATIONS
Intranet HubIntranet Hub
Online Entry ofInformation
Online Entry ofInformation
Application Integration
Application Integration
TrainingTrainingCollaborationCollaboration
Real-time AccessTo Information
Real-time AccessTo Information
5-19
EXTRANETS – BUSINESS TO BUSINESS ECOMMERCE
• Extranets enable two or more firms to use the Internet to do business together
5-20
ELECTRONIC DATA INTERCHANGE (EDI)
Electronic Data Interchange• The transmission of electronic business forms between
business partners (e.g. purchase order)• Typically used by large organizations…very expensive• The internet has opened this technology to smaller firms
Electronic Data Interchange• The transmission of electronic business forms between
business partners (e.g. purchase order)• Typically used by large organizations…very expensive• The internet has opened this technology to smaller firms
How it works• EDI transactions are system generated by the sender and then
transmitted to the receiver by a VAN• VAN (Value Added Network) providers are private network
operators that provide guaranteed delivery
How it works• EDI transactions are system generated by the sender and then
transmitted to the receiver by a VAN• VAN (Value Added Network) providers are private network
operators that provide guaranteed delivery
Standards• Document types and formats are universally standardized• Two standards exist: ANSI X.12 and UN/EDIFACT
Standards• Document types and formats are universally standardized• Two standards exist: ANSI X.12 and UN/EDIFACT
5-21
ELECTRONIC DATA INTERCHANGE (EDI) EXAMPLE
5-22
EXTRANETS
Extranets• secure networks that provide customers, suppliers, and
employees with access to internal systems• replaced EDI for smaller firms
Extranet Benefits• timeliness &accuracy of communications, reducing errors &
misunderstandings• Allows central management of documents allowing single
updates• Uses standard web protocols• Easy to use, requires little training • Used to automate transactions, reducing cost and cycle time
23
Virtual private network (VPN): a secure connection between two points across the Internet
Tunneling: the process by which VPNs transfer information by encapsulating traffic in IP packets over the Internet
5-24
EXTRANET APPLICATIONS
ExchangesExchanges
Distribution Portals
Distribution Portals CollaborationCollaboration
Real-TimeInfo Access
Real-TimeInfo Access
ProcurementPortals
ProcurementPortals
Enterprise Portals
Enterprise Portals
Supply ChainManagement
Supply ChainManagement
5-25
EXTRANET APPLICATIONS: EXCHANGES AND PORTALS
e.g. SciQuest.com e.g. Premier.Dell.com e.g. Ford Supplier Portal)
5-26
NEW TECHNOLOGIES FOR B2B ELECTRONIC COMMERCE
XML - Extensible Markup Language
EBRL - Extensible Business Reporting Language
5-27
NEW TECHNOLOGIES FOR B2B ELECTRONIC COMMERCE
RFID - Radio Frequency Identification• Used for tagging and tracking physical items• RFID system uses a transceiver and antenna to transfer
information to a processing device from an RFID tag
RFID Benefits• RFID is more powerful than bar-code technology because it
does not require visual line-of-sight reading• RFID tags can be placed anywhere (e.g. clothes, pets, cars,
parts, store items, etc.)
RFID Issues• Deployment is growing rapidly but it is still expensive• There is no clear set of data standards• Global radio frequencies differ between countries
RFID LIBRARY EXAMPLE