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4273ElectronicCommerce1AgendaYourinstructorCourseoutlineQ&Aaboutthecourse4. LectureOverviewofeCommerce2YourInstructorWhatwouldyouliketoknowaboutme?3ResearchInterestsM.Sc.inComputerScienceMBAinElectronicBusinessPhDinMISThirdyearatLU4OverviewofElectronicCommerce
EC20065PrenticeHallLearningObjectivesDefineelectroniccommerce(EC)anddescribeitsvariouscategories.DescribeanddiscussthecontentandframeworkofEC.DescribethemajortypesofECtransactions.DescribethedigitalrevolutionasadriverofEC.6LearningObjectivesDescribethebusinessenvironmentasadriverofEC.DescribesomeECbusinessmodels.DescribethebenefitsofECtoorganizations,consumers,andsociety.DescribethelimitationsofEC.DescribethecontributionofECtoorganizationsrespondingtoenvironmentalpressures.7ElectronicCommerce:
DefinitionsandConcepts electroniccommerce(EC) Theprocessofbuying,selling,orexchanging products,services,orinformationviacomputer networks8ElectronicCommerce:
DefinitionsandConceptsECisdefinedthroughtheseperspectivesCommunications–deliveryofinfoandproductsovernetworksCommercial(trading)–buyingandsellingBusinessprocess–virtualinfoexchangeService–cutservicecostsandimprovequalityLearningCollaborativeCommunity9ElectronicCommerce:
DefinitionsandConcepts
e-business AbroaderdefinitionofECthatincludesnotjustthe buyingandsellingofgoodsandservices,butalso servicingcustomers,collaboratingwithbusiness partners,andconductingelectronictransactionswithin anorganizationInthiscourse,weusethebroadestmeaningofEC,whichisequivalenttoEB(above)10ElectronicCommerce:
DefinitionsandConceptsPureVersusPartialECECtakesseveralformsdependingonthedegreeofdigitization(thetransformationfromphysicaltodigital)(1)theproduct(service)sold,(2)theprocess,(3)thedeliveryagent(orintermediary)11TheDimensionsof
ElectronicCommerce12ElectronicCommerce:
DefinitionsandConceptsECorganizations brick-and-mortarorganizations Old-economyorganizations(corporations)thatperformmostoftheirbusinessoff-line,sellingphysicalproductsbymeansofphysicalagents virtual(pure-play)organizations Organizationsthatconducttheirbusinessactivitiessolelyonline click-and-mortar(click-and-brick)organizations Organizationsthatconductsomee-commerceactivities,butdotheirprimarybusinessinthephysicalworld13ElectronicCommerce:
DefinitionsandConceptsWhereECisconducted electronicmarket(e-marketplace) Anonlinemarketplacewherebuyersandsellersmeettoexchangegoods,services,money,orinformation interorganizationalinformationsystems(IOSs) Communicationssystemthatallowsroutinetransactionprocessingandinformationflowbetweentwoormoreorganizations intraorganizationalinformationsystems Communicationsystemsthatenablee-commerceactivitiestogoonwithinindividualorganizations14TheECFramework,
Classification,andContentAnEC
Framework—supportsfivepolicymakingsupportareasPeoplePublicpolicyMarketingandadvertisementSupportservicesBusinesspartnerships
15AFrameworkforeCommerce16ECClassificationClassificationbynatureofthetransactionsorinteractions business-to-business(B2B) E-commercemodelinwhichalloftheparticipantsarebusinessesorotherorganizations business-to-consumer(B2C) E-commercemodelinwhichbusinessesselltoindividualshoppers17ECClassification e-tailing Onlineretailing,usuallyB2C business-to-business-to-consumer(B2B2C) E-commercemodelinwhichabusinessprovidessomeproductorservicetoaclientbusinessthatmaintainsitsowncustomers18ECClassification consumer-to-business(C2B) E-commercemodelinwhichindividualsusetheInternettosellproductsorservicestoorganizationsorindividualsseeksellerstobidonproductsorservicestheyneed consumer-to-consumer(C2C) E-commercemodelinwhichconsumersselldirectlytootherconsumers19ECClassification peer-to-peer Technologythatenablesnetworkedpeercomputerstosharedataandprocessingwitheachotherdirectly;canbeusedinC2C,B2B,andB2Ce-commerce mobilecommerce(m-commerce) E-commercetransactionsandactivitiesconductedinawirelessenvironment20ECClassification location-basedcommerce(l-commerce) M-commercetransactionstargetedtoindividualsinspecificlocations,atspecifictimes intrabusinessEC E-commercecategorythatincludesallinternalorganizationalactivitiesthatinvolvetheexchangeofgoods,services,orinformationamongvariousunitsandindividualsinanorganization e.g.,onedepartmentsellsinfotoanotherdept21ECClassification business-to-employees(B2E) E-commercemodelinwhichanorganizationdeliversservices,information,orproductstoitsindividualemployees collaborativecommerce(c-commerce) E-commercemodelinwhichindividualsorgroupscommunicateorcollaborateonline e-learning Theonlinedeliveryofinformationforpurposesoftrainingoreducation22ECClassification exchange(electronic)
Apublicelectronicmarketwithmanybuyersandsellers
exchange-to-exchange(E2E)
E-commercemodelinwhichelectronicexchangesformallyconnecttooneanotherforthepurposeofexchanginginformation e-government E-commercemodelinwhichagovernmententitybuysorprovidesgoods,services,orinformationtobusinessesorindividualcitizens23TheFutureofECOverall,thegrowthofthefieldwillcontinuetobestrongintotheforeseeablefutureDespitethefailuresofindividualcompaniesandinitiatives,thetotalvolumeofECisgrowingby15to25%everyyear24DigitalEvolutionDrivesEC
digitaleconomy Aneconomythatisbasedondigitaltechnologies, includingdigitalcommunicationnetworks,computers, software,andotherrelatedinformationtechnologies; alsocalledtheInterneteconomy,theneweconomy, ortheWebThedigitalrevolutionacceleratesECbyprovidingcompetitiveadvantagetoorganizationsandenablinginnovations25BusinessEnvironmentDrivesECEconomic,legal,societal,andtechnologicalfactorshavecreatedahighlycompetitivebusinessenvironmentinwhichcustomersarebecomingmorepowerful26BusinessEnvironmentDrivesECTheenvironment–response–supportmodel Companiesmustnotonlytaketraditionalactionssuchasloweringcostsandclosingunprofitablefacilities,butalsointroduceinnovativeactionssuchascustomizing,creatingnewproducts,orprovidingsuperbcustomerservice -Thesearecriticalresponseactivities -Insomecases,ECistheonlysolution27MajorBusinessPressuresandtheRoleofEC28BusinessEnvironmentDrivesECOrganizationalresponsestrategiesStrategicsystems(e.g.,supplychainmgtsystems)AgilesystemsContinuousimprovementeffortsandbusinessprocessrestructuringCustomerrelationshipmanagementBusinessalliancesElectronicmarkets29BusinessEnvironmentDrivesECReductionsinCycleTimeandTime-to-Market cycletimereduction
ShorteningthetimeittakesforabusinesstocompleteaproductiveactivityfromitsbeginningtoendEmpowermentofEmployees
ECallowsthedecentralizationofdecisionmakingandauthorityviaempowermentanddistributedsystems,butsimultaneouslysupportsacentralizedcontrolSupplyChainImprovements
ECcanhelpreducesupplychaindelays,reduceinventories,andeliminateotherinefficiencies30BusinessEnvironmentDrivesECMassCustomization:Make-to-OrderinLargeQuantities masscustomization ProductionoflargequantitiesofcustomizeditemsIntrabusiness:FromSalesForceAutomationtoInventoryControl knowledgeManagement(KM) Theprocessofcreatingorcapturingknowledge,storingandprotectingit,updatingandmaintainingit,andusingit31ECBusinessModels
businessmodel Amethodofdoingbusinessbywhichacompanycan generaterevenuetosustainitselfECfacilitatesthecreationofnovelbusinessmodels32ECBusinessModelsTheStructureofBusinessModelsAdescriptionofthecustomerstobeservedandthecompany’srelationshipswiththesecustomersAdescriptionofallproductsandservicesthebusinesswilloffer(customers’valueproposition)Adescriptionofthebusinessprocessrequiredtomakeanddelivertheproductsandservices33ECBusinessModelsTheStructureofBusinessModelsAlistoftheresourcesrequiredandtheidentificationofwhichonesareavailable,whichwillbedevelopedin-house,andwhichwillneedtobeacquiredAdescriptionoftheorganizationsupplychain,includingsuppliersandotherbusinesspartnersAdescriptionoftherevenuesexpected(revenuemodel),anticipatedcosts,sourcesoffinancing,andestimatedprofitability(financialviability)34ECBusinessModelsRevenueModels
DescriptionofhowthecompanyoranECprojectwillearnrevenueMajorrevenuemodelsSalesTransactionfeesSubscriptionfeesAdvertisingfeesAffiliatefees(referrals)OtherrevenuesourcesIntermsofEC,therearetwocriticalelementsofallbusinessmodels:35ECBusinessModelsValuepropositionvaluepropositionThebenefitsacompanycanderivefromusingEC e.g.,howtheproductorservicemayfulfilltheneedsofcustomersHowdoe-marketplacescreatevalue?SearchandtransactioncostefficiencyComplementaritiesLock-inNovelty36CommonRevenueModels37ECBusinessModelsTypicalECBusinessModelsOnlinedirectmarketingElectronictenderingsystems tendering(reverseauction) Modelinwhichabuyerrequestswould-besellerstosubmitbids;thelowestbidderwins name-your-own-pricemodel Modelinwhichabuyersetsthepriceheorsheiswillingtopayandinvitessellerstosupplythegoodorserviceatthatprice38ECBusinessModelsTypicalECBusinessModels findthebestprice
S,tryourtextbookbyISBN affiliatemarketing Anarrangementwherebyamarketingpartner(abusiness,anorganization,orevenanindividual)refersconsumerstothesellingcompany’sWebsite viralmarketing Word-of-mouthmarketinginwhichcustomerspromoteaproductorservicetofriendsorotherpeople39ECBusinessModelsTypicalECBusinessModels grouppurchasing Quantitypurchasingthatenablesgroupsofpurchaserstoobtainadiscountpriceontheproductspurchased e-co-ops Anothernameforonlinegrouppurchasingorganizations40ECBusinessModelsTypicalECBusinessModels productandservicecustomization customization
Creationofaproductorserviceaccordingtothe buyer’sspecifications
electronicmarketplacesandexchanges informationbrokers41BenefitsofECBenefitstoOrganizations42BenefitsofECGlobalReachCostReductionSupplyChainImprovementsExtendedHoursCustomizationNewBusinessModelsVendors’SpecializationRapidTime-to-MarketLowerCommunicationCostsEfficientProcurementImprovedCustomerRelationsUp-to-DateCompanyMaterialNoCityBusinessPermitsandFeesOtherBenefitsBenefitstoOrganizations43BenefitsofECBenefitstoConsumers44BenefitsofECUbiquityMoreProductsandServicesCustomizedProductsandServicesCheaperProductsandServicesInstantDeliveryInformationAvailabilityParticipationinAuctionsElectronicCommunitiesNoSalesTaxinsomecasesBenefitstoConsumers45BenefitsofECBenefitstoSociety46BenefitsofECBenefitstoSocietyTelecommutingHigherStandardofLivingHopeforthePoorAvailabilityofPublicServices47Exhibit1.7
LimitationsofEC48ManagerialIssues1.IsitrealthatEChaschangedthebusinessworld?49ManagerialIssues1.IsitrealthatEChaschangedthebusinessworld?Probably,yes.RecallECactivitiesinwhichyouhavebeenalreadyinvolved.CanyouimaginethewordwithouttheInternet?50ManagerialIssues2.WhyisB2Be-commercesoattractive?51ManagerialIssues2.WhyisB2Be-commercesoattractive?B2Biseasiertoimplementthantraditionaloff-linemodelsB2ChassomeproblemsEasytomoveoff-lineB2BrelationshipsonlineThevalue/volumeoftransactionsinB2BislargeEasiertoachievecriticalmass52ManagerialIssues3.TherearesomanyECfailures—howcanoneavoidthem?53ManagerialIssues3.TherearesomanyECfailures—howcanoneavoidthe
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