E- BusinessE- Business

What is E businessWhat is E business

IntroductionIntroduction Digital enablement of transactions and Digital enablement of transactions and

processes processes withinwithin a firm, involving a firm, involving information systems under the control of information systems under the control of the firm.the firm.

E-business primarily involves the E-business primarily involves the applications of digital technologies to applications of digital technologies to business processes within the firm.business processes within the firm.

Businesses are using electronic medium Businesses are using electronic medium to distribute information and provide to distribute information and provide customer support and these activities customer support and these activities are called as e-business activities.are called as e-business activities.

The E-business applications turn into The E-business applications turn into e-commerce when an exchange of value e-commerce when an exchange of value takes place.takes place.

Concept of E-BusinessConcept of E-Business E- business refers to all those E- business refers to all those

commercial activities performed over commercial activities performed over the internet by using web based the internet by using web based technologies.technologies.

It creates value and strengthens It creates value and strengthens relationship with customers, suppliers, relationship with customers, suppliers, business partners, shareholders and business partners, shareholders and employee by connecting them via employee by connecting them via internet, intranet and extranets.internet, intranet and extranets.

The The three primary processesthree primary processes that are that are enhanced in e- business are –enhanced in e- business are –

Production processesProduction processes (procurement, (procurement, ordering, payment, links with suppliers and ordering, payment, links with suppliers and vendors)vendors)

Customer focused processesCustomer focused processes (promotional & (promotional & marketing efforts, sales over internet, marketing efforts, sales over internet, purchasing, payment, customer support & purchasing, payment, customer support & feedback)feedback)

Internal management processesInternal management processes (recruiting, (recruiting, employee services, training and internal employee services, training and internal information sharing)information sharing)

E- Commerce vs. E-Business E- Commerce vs. E-Business Electronic commerce describes the buying

and selling of products, services, and information via computer networks including the Internet, where e-Business includes not only e- commerce but also other electronically conducted business functions such as production, accounting, inventory management, acconting, finance and hrm.

E business applications turn into e-commerce precisely when an exchange of value occurs.

Few E- business Applications –Few E- business Applications – E- Bidding/ e-auctionE- Bidding/ e-auction E- communication (e-promotion)E- communication (e-promotion) E- delivery of goods (videos, software ,e books E- delivery of goods (videos, software ,e books

etc.)etc.) E- trading (online buying and selling of shares E- trading (online buying and selling of shares

etc.)etc.)

Advantages of E- businessAdvantages of E- business Lower CostLower Cost ConvenienceConvenience SpeedSpeed Global reach/ AccessGlobal reach/ Access DisintermediationDisintermediation Expansion of MarketExpansion of Market Acquire greater business visibilityAcquire greater business visibility Maximize Customer relationship and Maximize Customer relationship and

improves responsivenessimproves responsiveness

Factors affecting e - business successFactors affecting e - business success

Network EffectNetwork Effect New business marketing ideasNew business marketing ideas ScalabilityScalability Ease of entry into marketsEase of entry into markets Accepting ChangeAccepting Change

E- CommerceE- Commerce E commerce means buying and selling E commerce means buying and selling

of products and/or services over the of products and/or services over the internet by means of computers internet by means of computers sending and processing electronic sending and processing electronic transmission to each other.transmission to each other.

Definition-Definition-

“ “ E- commerce describes the process of E- commerce describes the process of buying and selling or exchanging of buying and selling or exchanging of products, services and information via products, services and information via computer networks including the computer networks including the internet.”internet.”

It focuses on digitally enabled It focuses on digitally enabled commercial transactions between and commercial transactions between and among organizations and individuals.among organizations and individuals.

Digitally enabled transactionsDigitally enabled transactions include include all transactions mediated by digital all transactions mediated by digital technology (occur on internet and web)technology (occur on internet and web)

Commercial transactionsCommercial transactions involve the involve the exchange of value (e.g, money) across exchange of value (e.g, money) across organizational or individual boundaries organizational or individual boundaries in return for products and services.in return for products and services.

Electronic Commerce: IntroductionElectronic Commerce: Introduction

E-Business

E-Commerce

Internet Commerce

Commerce

Seven Unique Features of E-commerce Technology Seven Unique Features of E-commerce Technology and Their Business Significanceand Their Business Significance

13

Major types of E- commerceMajor types of E- commerce

Market relationshipsMarket relationships– Business-to-Consumers (B2C)Business-to-Consumers (B2C)– Business-to-Business (B2B)Business-to-Business (B2B)– Consumer-to-Consumer (C2C)Consumer-to-Consumer (C2C)

Technology-based Technology-based – Peer-to-Peer (P2P)Peer-to-Peer (P2P)– Mobile Commerce (M-commerce)Mobile Commerce (M-commerce)

Business-to-Consumers (B2C)Business-to-Consumers (B2C) Business that sells products or provides

services to end-user consumers e.g, Amazon.com Business-to-Business (B2B)Business-to-Business (B2B)

Business that sells products or provides services to other businesses

e.g, eSteel.com Consumer-to-Consumer (C2C)Consumer-to-Consumer (C2C) Consumers sell directly to other consumers e.g, eBay.com

Peer-to-Peer (P2P)Peer-to-Peer (P2P)

Enables Internet users to share files and Enables Internet users to share files and computer resources directly without having computer resources directly without having to go through a central web serverto go through a central web server

e.g, Gnutella is a software application that e.g, Gnutella is a software application that permits exchange of musical tracks,Skypepermits exchange of musical tracks,Skype

Mobile Commerce (M-commerce)Mobile Commerce (M-commerce) E-commerce transactions and activities

conducted in a wireless environment e.g, cell phones or PDA (personal digital

assistance)

Benefits of E- commerce to Benefits of E- commerce to organizationorganization

Reduced cost on paperReduced cost on paper Low barriers to entryLow barriers to entry Improved customer service, cost savingImproved customer service, cost saving Access to international marketsAccess to international markets Minimizes Supply chain inefficiencies, Minimizes Supply chain inefficiencies,

reduces delivery delaysreduces delivery delaysBenefits to societyBenefits to society Work from home, less traveling for Work from home, less traveling for

shopping, save time, distant learning and shopping, save time, distant learning and education,education,

enjoy the availability of product at doorstepenjoy the availability of product at doorstep

Limitations and Barriers of E commerceLimitations and Barriers of E commerce

Non Technical Limitation- Non Technical Limitation- people’s people’s attitude, lack of trust, faceless attitude, lack of trust, faceless transactions, resistance to change, transactions, resistance to change, Customers Can't Touch and Feel a Product , ,No Sales Staff Means No Chance of Up-Selling, , Language Barrier, , Geographical Barrier

Technical Limitation- Technical Limitation- related to related to security, databases, standards, security, databases, standards, applications etc.applications etc.

Costs, security, legal issues etc.Costs, security, legal issues etc.

1. Business to Consumer Business 1. Business to Consumer Business ModelModel

Online Businesses seek to reach individual Online Businesses seek to reach individual consumers.consumers.

Business Business ModelModel

variatiovariationn

EgEg DescriptioDescriptionn

Revenue Revenue model model (R.M.)(R.M.)

1.Portal1.Portal(offer users web (offer users web search tool as search tool as well as well as integrated pkg integrated pkg of content and of content and services all in services all in one placeone place

HorizonHorizontaltal

(general(general))

YahooYahoo

AOLAOL

MSNMSN

integrated pkg of integrated pkg of content and content and servicesservices

AdvertisingAdvertising

Subcription Subcription feesfees

Transaction Transaction feesfees

VerticalVertical

(speciali(specialized)zed)

iBoatsiBoats Offers services Offers services and products and products to specific to specific marketmarket

SearchSearch googlegoogle Focuses Focuses primarily on primarily on search servicessearch services

AdvertisingAdvertising

Affiliate Affiliate referralreferral

2. 2. E-Tailor- online retail storeE-Tailor- online retail store

i)i) Virtual merchantVirtual merchant (online retail store) (online retail store)

amazon (R.M-sales of goods)amazon (R.M-sales of goods)

ii) ii) Bricks and ClicksBricks and Clicks (online distribution channel (online distribution channel also have physical stores)- also have physical stores)-

Walmart (R.M-sales of goods)Walmart (R.M-sales of goods)

iii) iii) Catalog merchantCatalog merchant (online version of direct (online version of direct mail catalog) –LLBean (R.M-sales of goods)mail catalog) –LLBean (R.M-sales of goods)

iv) iv) Manufacturer DirectManufacturer Direct (manufacturer uses (manufacturer uses online channel to sell directly to customer)-online channel to sell directly to customer)-

Dell, Sony (R.M-sales of goods)Dell, Sony (R.M-sales of goods)

3.Content Provider- 3.Content Provider- distributes information distributes information content, such as digital news, music, photos, content, such as digital news, music, photos, videos, artwork over the web videos, artwork over the web

E,g. CNN, ESPN, (E,g. CNN, ESPN, (R.M-Advertising, R.M-Advertising, Subscription fees, Affiliate referral fee)Subscription fees, Affiliate referral fee)

4.Transaction Broker-4.Transaction Broker- Site that processes Site that processes transactions for consumers that are normally transactions for consumers that are normally handled in person, by phone or by mail (help handled in person, by phone or by mail (help customer to get things done faster)customer to get things done faster)

e.g, E-Trade, hotels.com, expedia, monster e.g, E-Trade, hotels.com, expedia, monster

(R.M.-Transaction fees)(R.M.-Transaction fees)

5.Market Creator5.Market Creator – – builds a digital environmentbuilds a digital environment

where buyers and sellers can meet, displaywhere buyers and sellers can meet, displayproducts, search for products and establish a products, search for products and establish a price for product.price for product.

e.g. eBay, priceline (e.g. eBay, priceline (R.M- transaction feeR.M- transaction fee))6.Service provider6.Service provider – – offer services onlineoffer services online

e.g, Visanow.com (R.M- sales of Service)e.g, Visanow.com (R.M- sales of Service)

7.Community Provider7.Community Provider – – sites where individuals sites where individuals with particular interests, hobbies ,common with particular interests, hobbies ,common experiences or social n/ws can come together and experiences or social n/ws can come together and meet online.meet online.

e.g, facebook,myspace e.g, facebook,myspace ((R.M-Advertising, R.M-Advertising, Subscription fees, Affiliate referral fee)Subscription fees, Affiliate referral fee)

2.2. B to B Business Model- B to B Business Model- Business sell to other Business sell to other businessesbusinesses

A) A) Net Market PlaceNet Market Place (where buyers and sellers (where buyers and sellers exchanges goods and services for money)exchanges goods and services for money)

1)1)E-DistributorE-Distributor –company that supplies products –company that supplies products and services directly to individual businesses.and services directly to individual businesses.

e.g, Grainger.com, parts store (R.M.-Sales of e.g, Grainger.com, parts store (R.M.-Sales of good)good)

2)2)E-ProcurementE-Procurement – Single firm creating digital – Single firm creating digital markets where sellers and buyers transact for markets where sellers and buyers transact for indirect inputsindirect inputs

e.g, perfectcommerce (R.M- fees for market e.g, perfectcommerce (R.M- fees for market making services)making services)

3)3)ExchangeExchange –an independent digital electronic –an independent digital electronic marketplace for direct inputs to production marketplace for direct inputs to production and short term contactsand short term contacts

e.g,farms.com (R.M- fees and commisions on e.g,farms.com (R.M- fees and commisions on transactions)transactions)

4) 4) Industry ConsortiumIndustry Consortium – industry – industry owned vertical digital market open to owned vertical digital market open to select suppliersselect suppliers

e.g,Elemica, quadrem (mining) (R.M.-e.g,Elemica, quadrem (mining) (R.M.-fees fees and commisions on transactions)and commisions on transactions)

B. B. Private Industrial Networks-Private Industrial Networks-

networks that bring together a small no. of strategic networks that bring together a small no. of strategic partners who collaborate with one another to develop partners who collaborate with one another to develop higfhly efficient supply chains and to satisfy customer higfhly efficient supply chains and to satisfy customer demand for product.demand for product.

1)Single firm-1)Single firm- company owned network to coordinate company owned network to coordinate supply chains with a limited set of partners.supply chains with a limited set of partners.

E.g, Walmart, proctor & Gamble (R.M-cost absorbed by E.g, Walmart, proctor & Gamble (R.M-cost absorbed by n/w owner and recovered through production and n/w owner and recovered through production and distribution efficiencies)distribution efficiencies)

2)Industry wide-2)Industry wide- industry owned n/w to set standards, industry owned n/w to set standards, coordinate supply and logistics for the industry coordinate supply and logistics for the industry

E.g, Agentrics (same as above)E.g, Agentrics (same as above)

3.3. C to C Business ModelC to C Business Model (help (help consumers connect with other consumers consumers connect with other consumers to conduct business)to conduct business)

e.g, olx (R.M- transaction fee)e.g, olx (R.M- transaction fee)

4. 4. P to P Business ModelP to P Business Model (technology (technology enabling consumers to share files and enabling consumers to share files and services via the webservices via the web

e.g, whatsapp (R.M- subscription fee, e.g, whatsapp (R.M- subscription fee, transaction fee, advertising)transaction fee, advertising)

5. 5. M CommerceM Commerce (extending business (extending business application through wireless technology)application through wireless technology)

e.g,Paypal mobile (R.M- sales of goods and e.g,Paypal mobile (R.M- sales of goods and services)services)

E commerce enablers-E commerce enablers- focus on providingfocus on providing the infrastructure necessary for e-the infrastructure necessary for e-commerce companies to exist, grow and commerce companies to exist, grow and prosper. These are called as internet prosper. These are called as internet infrastructure company.infrastructure company.

They provide the h/w ,operating system They provide the h/w ,operating system s/w,n/w and communication technology, s/w,n/w and communication technology, application s/w, web designsapplication s/w, web designs

HardwareHardware – IBM, Dell, HP, Sun – IBM, Dell, HP, Sun

SoftwareSoftware – Microsoft, RedHAt, Linux, Sun – Microsoft, RedHAt, Linux, Sun

NetworkingNetworking- Cisco- Cisco

Payment SystemsPayment Systems – Verisign ,Paypal – Verisign ,Paypal

DatabaseDatabase- Oracle, Microsoft, IBM- Oracle, Microsoft, IBM

Value chains in E commerceValue chains in E commerce

Value chain is the set of activities performed in an Value chain is the set of activities performed in an industry or in a firm that transforms raw inputs into industry or in a firm that transforms raw inputs into final products and services.final products and services.

A value chain is a way of organizing the activities of a A value chain is a way of organizing the activities of a business so that each activity adds value or business so that each activity adds value or productivity to the total operations of the business.productivity to the total operations of the business.

Porter model of value chainPorter model of value chain

- - Porters model was essentially concerned with the Porters model was essentially concerned with the internal activities of the company. internal activities of the company.

- These activities are divided into - These activities are divided into primary activityprimary activity and and secondary activity.secondary activity.

Two broad categories of value activitiesTwo broad categories of value activities

1) 1) Primary Activities:Primary Activities: Activities connected with the Activities connected with the Physical Creation of the Firm’s Product and Service, Physical Creation of the Firm’s Product and Service, its Marketing and Delivery and provision of After-sale its Marketing and Delivery and provision of After-sale support.support.

a) a) Inbound Logistics-Inbound Logistics- Procurement, storage, flow of i/p, Procurement, storage, flow of i/p, vendor selection, negotiation supply contacts etcvendor selection, negotiation supply contacts etc

b) b) OperationsOperations- Machining, assembly, packaging, - Machining, assembly, packaging, maintenance, testing etc.maintenance, testing etc.

c) c) Outbound logisticsOutbound logistics-- collection, storage & physical collection, storage & physical distribution, warehousing etc.distribution, warehousing etc.

d) d) Marketing and Sales-Marketing and Sales- Advertising, sales promotion, Advertising, sales promotion, channel selection, channel relation, pricing.channel selection, channel relation, pricing.

e) e) ServiceService- - to enhance & maintain the value like repair, to enhance & maintain the value like repair, installation supply of partsinstallation supply of parts

2) Support Activities: 2) Support Activities: Activities which provide Input or Activities which provide Input or infrastructure for Primary Activities to be performed.infrastructure for Primary Activities to be performed.

a) a) ProcurementProcurement- purchase of materials and service - purchase of materials and service inputs.inputs.

b) b) Technology Development-Technology Development- perfection & upgradation perfection & upgradation

c) c) HRMHRM-recruitment, training & development of manpower-recruitment, training & development of manpower

d) d) Firm Infrastructure- Firm Infrastructure- general management, general management, accounting, finance ,legal affairs ,strategic planning.accounting, finance ,legal affairs ,strategic planning.

In e business value chain ,internet and web technologiesIn e business value chain ,internet and web technologies

Competitive Advantage Competitive Advantage - - is achieved when an is achieved when an organization links the activities in its value chain more organization links the activities in its value chain more cheaply and more efficiently than its competitors.cheaply and more efficiently than its competitors.

Porter’s “Value Chain”

Firm Infrastructure

Human Resources Management

Technology Development

Procurement

InboundLogistics Operations

OutboundLogistics

Marketing& Sales Service

ProfitMargin

Porter’s Value Chain ModelPorter’s Value Chain Model

• No vendor loyally• No switching costs• Time-insensitive• Short-term• Casual• Many vendors• Products differentiated

on price, image

• Relationship-based• Very high switching costs• Extremely time-sensitive• Long-term• Mission-critical• Few partners• Partners differentiated on

reliability, flexibility

Business-to-ConsumerBusiness-to-Consumer Business-to-BusinessBusiness-to-Business

Business-to-Business vs. Business-to-Business-to-Business vs. Business-to-ConsumerConsumer