Download E-Business Systems - WordPress @ VIU Sites

5/19/2014
1
Professor Lili Saghafi
MANAGING INFORMATION TECHNOLOGY
Lecture 7
E- BUSINESS
SYSTEMS
• By : Prof. Lili Saghafi
1-2
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)
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-3
SOME DEFINITIONS
Internet
A 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)
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-4
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-5
• The law is said to be true for any type of
communications network, whether it involves
telephones, computers, or users of the World
Wide Web. While the notion of "value" is
inevitably somewhat vague, the idea is that a
network is more valuable the more people
you can call or write to or the more Web
pages you can link to.
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-6
Communications networks increase in value as they add members--but by how
much? The devil is in the details
Metcalfe's Law is Wrong
• By seeming to assure that the value of a
network would increase quadratically-proportionately to the square of the number
of its participants--while costs would, at most,
grow linearly, Metcalfe's Law gave an air of
credibility to the mad rush for growth and the
neglect of profitability. It may seem a
mundane observation today, but it was hot
stuff during the Internet bubble.
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-7
E-BUSINESS FRAMEWORK
Internet Applications and Services are built upon
two types of pillars
LEGAL AND REGULATORY
TECHNOLOGY
PILLAR
PILLAR
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-8
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-9
E-BUSINESS TECHNOLOGIES: FIRST DECADE
.
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-10
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-11
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-12
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>
.
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-13
E-BUSINESS TECHNOLOGIES
• The availability of broadband increased user
access to different types of file content from
their homes
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-14
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-15
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-16
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-17
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-18
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-19
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-20
THE DOT-COM MELTDOWN
• E-business changes after the “dot-com
meltdown”
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-21
B2B APPLICATIONS
• If buyers and sellers are fragmented markets,
Independent intermediaries are more likely to
be needed
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-22
B2B APPLICATIONS
• If sellers are concentrated, sellers are likely to
dominate
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-23
B2B APPLICATIONS
• If buyers are concentrated, buyers are likely to
dominate
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-24
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-25
B2B APPLICATIONS-
• Reverse Auctions
Suppliers bid online in real time for a
customer contract. They lower their prices to
out bid their competitors.
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-26
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-27
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-28
INTERNET USAGE ACROSS THE GLOBE
.
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-29
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-30
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-31
B2C APPLICATIONS FOR RETAILERS
• Dot-com
- Amazon.com
- Netflix.com
• Traditional Catalog
- Dell
- Lands’ End
• Traditional Store
- Staples
- Tesco
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-32
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
AMAZON
7-33
DOT-COM RETAILERS
• NETFLIX
- Established in 1998
- DVD rentals mailed to members
- 2007: Proprietary video streaming
- 2010: Greater market share than Blockbuster
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
Netflix
7-34
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-35
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 customersDELL
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-36
CATALOG RETAILERS
• LANDS’ END
- Traditional catalog seller
- Developed capability for online sales of custom–
crafted clothing
- Acquired by Sears in 2002
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
Landsend.com
7-37
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
Staples
7-38
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
TESCO
7-39
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
eBay
7-40
DOT-COM INTERMEDIARIES
• Google
- 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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
Google
7-41
DOT-COM INTERMEDIARIES
• Facebook
- 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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
Facebook
7-42
WHAT MAKES A GOOD WEBSITE FOR
CONSUMERS
Context: Site layout and design - functionally vs. aesthetically dominant or
both (integrated)
.C
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
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-43
WHAT MAKES A GOOD B2C SOCIAL MEDIA
PLATFORM
.
• Capabilities to:
Brand the company or its products/services
Support for sales and customer services
Leverage consumers for product development and
marketing
• Usage goals aligned with business strategy
• Providing users control over their privacy settings
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-44
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-45
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-46
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
7-47
Thank you
Any
Question?
5/19/2014
48
Professor Lili Saghafi
5/19/2014
Professor Lili Saghafi