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1,ElectronicCommerce:ManagerialPerspective,2,Textbook,ElectronicCommerce2004:AManagerialPerspective,3/eEfraimTurbanDavidKingJaeLeeDennisViehland,3,Chapter1,OverviewofElectronicCommerce,4,LearningObjectives,Defineelectroniccommerce(EC)anddescribeitsvariouscategoriesDescribeanddiscussthecontentandframeworkofECDescribethemajortypesofECtransactionsDescribesomeECbusinessmodelsDiscussthebenefitsofECtoorganizations,consumers,andsociety,5,LearningObjectives(cont.),DescribethelimitationsofECDescribetheroleofthedigitalrevolutioninECandtheeconomicimpactofECDiscussthecontributionofECinhelpingorganizationsrespondtoenvironmentalpressuresDiscusssomemajormanagerialissuesregardingEC,6,QantasAirwaysANewWaytoCompete,TheProblemIncreasedfuelcostsplacedpressureontheairlineindustryQantasfacedtwomajorcompetitorsandhigherfeesatSydneyAirportAirtrafficdwindledafterSeptember11thQantasneededtoreplaceaircraftinordertostaycompetitiveAustralianeconomysloweddown,7,QantasAirways(cont.),TheSolutionBoughtfuelcontractsforfuturedates(traditionalresponse)Tookmajorstepstoimplemente-commerce(EC)involvingbuying,selling,andexchanginggoods,services,information,andpaymentselectronically,8,QantasAirways(cont.),E-marketplacememberJoinedAirnewCo.linksmajorairlineswithsuppliersFuelFuelservicesLightmaintenanceservicesCatering,JoinedC.auwith13otherlargeAustraliancorporationsElectronicallypurchasegeneralgoodsandservicesOfficesuppliesLightbulbsMaintenanceservices,Business-to-business(B2B),9,QantasAirways(cont.),FormedPan-PacificexchangeE-marketplaceBusiness-to-business-to-consumer(B2B2C)ProvidesFullspectrumtravelservicesProductsandservicestobusinesspartnersTravelagencieswhocanusethismarketplacetoselldirectlytoconsumers,10,QantasAirways(cont.),Business-to-customer(B2C):OnlinebookingE-mailstofrequent-flyermembersMileagebonusesandopportunitiestowin$10,000AUWirelesscommunications,Business-to-employee(B2E):OnlinetrainingOnlinebanking,B2CB2E,11,QantasAirways(cont.),TheResultsQantasexpectstoseeanestimated$85millionAUincostreductionsperyearby2003Qantasexpectstoincreaseannualrevenuesby$700millionAUfromnontravelsalesOutlastedonecompetitor,12,ECDefinitionstheclientbusinessmaintainsitsowncustomers,towhomtheproductorserviceisprovided,22,ClassificationofECbytheNatureoftheTransaction(cont.),Consumer-to-business(C2B):individualswhousetheInternettosellproductsorservicestoorganizationsand/orseeksellerstobidonproductsorservicestheyneedConsumer-to-consumer(C2C):consumersselldirectlytootherconsumers,23,ClassificationofECbytheNatureoftheTransaction(cont.),Mobilecommerce(m-commerce)ECtransactionsandactivitiesconductedinawirelessenvironmentLocation-commerce(l-commerce)m-commercetransactionstargetedtoindividualsinspecificlocations,atspecifictimes,24,ClassificationofECbytheNatureoftheTransaction(cont.),Intrabusiness(organizational)EC:ECcategorythatincludesallinternalorganizationalactivitiesthatinvolvetheexchangeofgoods,services,orinformationamongvariousunitsandindividualsinanorganization,25,ClassificationofECbytheNatureoftheTransaction(cont.),Business-to-employee(B2E):ECmodelinwhichanorganizationdeliversservices,information,orproductstoitsindividualemployeesCollaborativecommerce(c-commerce):ECmodelinwhichindividualorgroupscommunicateorcollaborateonlineE-government:Government-to-citizens(G2C):ECmodelinwhichagovernmententitybuysorprovidesgood,services,orinformationtobusinessesorindividualcitizens,26,ClassificationofECbytheNatureoftheTransaction(cont.),Exchange(electronic):apublice-marketwithmanybuyersandsellersExchange-to-exchange(E2E):ECmodelinwhichelectronicexchangesformallyconnecttooneanotherforthepurposeofexchanginginformation,27,MarketingComputersciencesConsumerbehaviorandpsychologyFinanceEconomics,ManagementinformationsystemsAccountingandauditingManagementBusinesslawandethicsOthers,InterdisciplinaryNatureofEC,28,BriefHistoryofEC,ECapplicationsfirstdevelopedintheearly1970sElectronicfundstransfer(EFT),Limitedto:LargecorporationsFinancialinstitutionsAfewotherdaringbusinesses,EFT,29,BriefHistoryofEC(cont.),Electronicdatainterchange(EDI)electronictransferofdocuments:PurchaseordersInvoicesE-paymentsbetweenfirmsdoingbusiness,Enlargedpoolofparticipantstoinclude:ManufacturersRetailersServiceproviders,30,BriefHistoryofEC(cont.),Interorganizationalsystems(IOS)StocktradingTravelreservationsystemsInternetbecamemorecommercializedintheearly1990sAlmostallmedium-andlarge-sizedorganizationintheworldnowhasaWebsiteMostlargecorporationshavecomprehensiveportals,31,BriefHistoryofEC(cont.),ECSuccessesPureonlineeBayVeriSignAOLCheckpointClick-and-mortarGEIBMIntelSchwab,ECFailuresE-tailersbegantofailin1999ThisdoesnotmeanthatECsdaysarenumberedLargeECcompanieslikeAareexpandingbutsuccessorfailureisnotcertain,32,SuccessStoryofC,CsrecipeforsuccesswastoprovideinteractivemenustocollegestudentsUsingthepoweroftheInternettoenhancetraditionaltelephoneorderingofmealsTakingthousandsofordersforlocalrestaurants,bringingpizzas,hoagies,andwingstothePenncommunity,33,C(cont.),BuildingthecompanyscustomerbaseinvolvedRegisteringotheruniversitiesAttractingstudentsGeneratingalistofrestaurantsfromwhichstudentscouldorderfoodfordeliverySomeactivitiesareoutsourcedtoamarketingfirmenablingtheadditionofdozensofschoolsnationwide,34,C(cont.),Builtonaninvestmentoflessthan$1millionPrivateinvestorsFriendsFamilymembersRevenueisgeneratedthroughtransactionfees5percentcommissiononeachorder,35,C(cont.),Ayoucan:Navigatethroughalistoflocalrestaurants,Browseaninteractivemenu.Bypass“busy”telephonesignalstoplaceanorderonlineGetaccesstospecialfoods,promotions,andrestaurantgiveawaysArrangeelectronicpaymentofyourorder,36,AmethodofdoingbusinessbywhichacompanycangeneraterevenuetosustainitselfSpellsoutwherethecompanyispositionedinthevaluechainBusinessmodelsareacomponentofabusinessplanorabusinesscase,BusinessModels,37,BusinessPlansitsmajoremphasisisthejustificationforaspecificinvestment,38,TheContentofaBusinessPlan,MissionstatementandcompanydescriptionThemanagementteamThemarketandthecustomersTheindustryandcompetitionThespecificsoftheproductsand/orservices,MarketingandsalesplanOperationsplanFinancialprojectionsandplansRiskanalysisTechnologyanalysis,39,StructureofBusinessModels,TransactionfeesSubscriptionfeesAdvertisementfees,AffiliatefeesSalesOthermodels,Allbusinessmodelsmustspecifytheirrevenuemodel(thedescriptionofhowthecompanyoranECprojectwillearnrevenue)Revenuesourcesare,ValuepropositionisthedescriptionofthebenefitsacompanycanderivefromusingEC,40,TypicalBusinessModelsinEC,Online,directmarketingElectronictenderingsystemsReverseauctionisatenderingsystemsellersareinvitedtobidonthefulfillmentofanordertoproduceaproductorprovideaservice;thelowestbidwinsNameyourownpriceFindthebestprice,41,TypicalBusinessModelsinEC(cont.),Affiliatemarketingisanarrangementwherebyamarketingpartner(business,organizationorindividual)refersconsumerstothesellingcompanysWebsiteViralmarketingisword-or-mouthmarketinginwhichcustomerspromoteaproductorservicetofriendsorotherpeoplebyusingtheInternet,42,TypicalBusinessModelsinEC(cont.),GrouppurchasingisgettingmanysmallbuyerstogethertobyinlargequantitiesOnlineauctionsProductandservicecustomizationCustomizationisthecreationofaproductorserviceaccordingtothebuyersspecificationsElectronicmarketplacesandexchangesVerticalmarketplaceisamarketplacethatconcentratesononeindustry;alsocalledverticalportalsorvortalsSupplychainimprovers,43,Exhibit1.3TheBusinessM,44,TheBenefitsofEC,BenefitstoOrganizationsExpandsthemarketplacetonationalandinternationalmarketsDecreasesthecostofcreating,processing,distributing,storingandretrievingpaper-basedinformationAllowsreducedinventoriesandoverheadbyfacilitatingpull-typesupplychainmanagement,45,BenefitsofEC(cont.),Thepull-typeprocessingallowsforcustomizationofproductsandserviceswhichprovidescompetitiveadvantagetoitsimplementersReducesthetimebetweentheoutlayofcapitalandthereceiptofproductsandservicesSupportsbusinessprocessesreengineering(BPR)effortsLowerstelecommunicationscost-theInternetismuchcheaperthanvalueaddednetworks(VANs),46,BenefitsofEC(cont.),BenefitstoconsumersEnablesconsumerstoshopordoothertransactions24hoursaday,allyearroundfromalmostanylocationProvidesconsumerswithmorechoicesProvidesconsumerswithlessexpensiveproductsandservicesbyallowingthemtoshopinmanyplacesandconductquickcomparisons,47,BenefitsofEC(cont.),Allowsquickdeliveryofproductsandservices(insomecases)especiallywithdigitizedproductsConsumerscanreceiverelevantanddetailedinformationinseconds,ratherthanindaysorweeksMakesitpossibletoparticipateinvirtualauctionsAllowsconsumerstointeractwithotherconsumersinelectroniccommunitiesandexchangeideasaswellascompareexperiencesFacilitatescompetition,whichresultsinsubstantialdiscounts,48,BenefitsofEC(cont.),BenefitstosocietyEnablesmoreindividualstoworkathome,andtodolesstravelingforshopping,resultinginlesstrafficontheroads,andlowerairpollutionAllowssomemerchandisetobesoldatlowerprices,benefitinglessaffluentpeopleEnablespeopleinThirdWorldcountriesandruralareastoenjoyproductsandserviceswhichotherwisearenotavailabletothemFacilitatesdeliveryofpublicservicesatareducedcost,increaseseffectiveness,and/orimprovesquality,49,InterorganizationandCollaboration,OrbisCorporationchangeslinearphysicalsupplychaintoanelectronichub,50,OrbisCorporation(cont.),51,TheLimitationsofEC,TechnicallimitationsThereisalackofuniversallyacceptedstandardsforquality,security,andreliabilityThetelecommunicationsbandwidthisinsufficientSoftwaredevelopmenttoolsarestillevolvingTherearedifficultiesinintegratingtheInternetandECsoftwarewithsomeexisting(especiallylegacy)applicationsanddatabases.SpecialWebserversinadditiontothenetworkserversareneeded(addedcost).Internetaccessibilityisstillexpensiveand/orinconvenient,52,TheDigitalRevolutionandtheEconomicImpactofEC,IntheDigitalRevolutiontheeconomyisbasedondigitaltechnologiesincluding:DigitalcommunicationnetworksComputersSoftwareOtherrelatedinformationtechnologiesAlsocalled:InterneteconomyNeweconomyWebeconomy,53,TheDigitalRevolutionandtheEconomicImpactofEC(cont.),Digitalnetworkingandcommunicationinfrastructuresprovideaglobalplatformwherepeopleandorganizations:InteractCommunicateCollaborateSearchforinformation,54,TheDigitalRevolutionandtheEconomicImpactofEC(cont.),TheglobalplatformincludesthesecharacteristicsAvastarrayofdigitizableproductsConsumersandfirmsconductfinancialtransactionsdigitallyMicroprocessorsandnetworkingcapabilitiesembeddedinphysicalgoods,55,TheDigitalRevolutionandtheEconomicImpactofEC(cont.),ThetermdigitaleconomyalsoreferstotheconvergenceofcomputingandcommunicationtechnologiesontheInternetandothernetworksandtheresultingflowofinformationandtechnologythatisstimulatinge-commerceandvastorganizationalchanges,56,TheDigitalRevolutionandtheEconomicImpactofEC(cont.),Thisconvergenceenablesalltypesofinformation(data,audio,video,etc.)tobestored,processed,andtransmittedovernetworkstomanydestinationsworldwideWeb-basedECsystemsareacceleratingthedigitalrevolutionbyprovidingcompetitiveadvantagetoorganizations,57,Exhibit1.5CostCurveofRegularpublicpressuretoapprovenewdrugsquicklyFDArequires:ExtensiveresearchClinicaltestingVerybulkydocumentationisnecessaryManualreviewprocessslows,73,Time-to-MarketforNewDrugs(cont.),Computer-AidedDrugApplicationSystems(softwareprogram)offersacomputerizedsolutionNetwork-distributeddocumentprocessingsystemEnablesthepharmaceuticalcompanytoscandocumentsintoadatabaseSavestimeInformationcanbeprocessedorprintedattheusersdesktopcomputer,74,Time-to-MarketforNewDrugs(cont.),RemotecorporateandbusinesspartnerscanalsoaccessthesystemTheoverallresult:time-to-marketofanewdrugisreducedbyuptoayearISISPharmaceuticals,Inc.()developedanextranet-basedsystemUsesCD-ROMstosubmitreportstotheFDAOpensitsintranettoFDApersonnelSave6to12months,75,OrganizationalResponses(cont.),EmpowermentofemployeesandcollaborativeworkEmployeesgiventheauthoritytoactandmakedecisionsontheirownimprovesProductivityCustomerrelationshipmanagement(CRM)Empoweredsalespeopleandcustomerserviceemployees:MakecustomershappyquicklyHelpincreasecustomerloyalty,76,OrganizationalResponses(cont.),SupplychainimprovementsHelpreducesupplychaindelays,inventoriesandeliminateotherinefficienciesMasscustomizationproductionoflargequantitiesofcustomizeditemsBusinessproblemishowtoefficientlyprovidecustomizationECisanidealfacilitatorofmasscustomizationbyenablingelectronicorderingtoreachtheproduc
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