1 1 chapter 1 introduction to electronic commerce
TRANSCRIPT
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Chapter 1
Introduction to
Electronic Commerce
Electronic Commerce
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Objectives
Differences between e-commerce and traditional commerce
Advantages and disadvantages of using e-commerce to conduct business
International nature of e-commerce Fostering of e-commerce through
economic forces Utilizing value chains
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What is Electronic Commerce?
Also known as “e-commerce” More than on-line shopping Encompasses other business activities Used interchangeably with “Electronic
Business”
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EFT and EDI
Electronic Funds Transfers (EFT) Used by the banking industry to exchange
account information over secured networks
Electronic Data Interchange (EDI) Used by businesses to transmit data from
one business to another
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Traditional Commerce
The exchange of valuable objects or services between at least two parties
Includes all activities that each party undertakes to complete the transaction
Barter system eventually gave way to the use of currency
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The BuyerFigure 1-1
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The SellerFigure 1-2
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Activities as Business Processes
The activities in which businesses engage as they conduct commerce are often referred to as Business Processes. Transferring funds Placing orders Sending invoices Shipping goods to customers
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Traditional vs. Electronic CommerceFigure 1-3
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Business Processes SuitabilityFigure 1-4
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Advantages of Electronic Commerce
Increased sales Reach narrow market segments in
geographically dispersed locations Create virtual communities
Decreased costs Handling of sales inquiries Providing price quotes Determining product availability
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Disadvantages of Electronic Commerce
Loss of ability to inspect products from remote locations
Rapid developing pace of underlying technologies
Difficult to calculate return on investment
Cultural and legal impediments
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International Electronic Commerce
Language barriers must be overcome Political structures
Currency conversion Tariffs and import/export restrictions
Legal, tax, and privacy concerns Who has jurisdiction to levy taxes? How is personal information handled?
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The Internet and World Wide Web
The Internet is a large system of interconnected networks that spans the globe
The World Wide Web (WWW) is part of the Internet and allows users to share information with an easy-to-use interface
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Origins of the Internet
Developed by the U.S. Department of Defense in the early 1960s
The world’s telephone companies were early models for networked computers
Researchers at universities were connected in 1969
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New Uses for the Internet
E-mail The ability to send messages to one or many
across the Internet File Transfer Protocol (FTP)
The ability to transfer data files from one computer to another
Telnet The ability to remotely logon to another computer
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New Uses for the Internet
World Wide Web (WWW) The ability to access information using a common
interface Videoconferencing
The ability to use video across the Internet for conferencing purposes
Multimedia The ability to use video, audio, and animations
across the Internet
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Commercial Use of the Internet
During the 1980s, the National Science Foundation prohibited commercial network traffic on its networks
In 1989, the NSF permitted MCI Mail and CompuServe to establish limited connections to the Internet
By 1990, over 300,000 computers were connected to the Internet
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Growth of the Internet and the WebFigure 1-5
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Hypertext Markup Language (HTML)
A language that uses codes attached to text <img src=“photo.jpg”> <a href=“mailto:[email protected]”>mail</a>
Hypertext links, or hyperlinks, allow the user to move from one HTML document to another on a different computer
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Growth of the World Wide WebFigure 1-6
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Economic Forces andElectronic Commerce
Transaction Costs The total of all costs that the buyer and
seller incur as they gather information and negotiate a purchase-sale transaction
The “Market” Potential sellers must come in contact with
potential buyers A medium of exchange must be available
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Transaction Costs
Brokerage fees Sales Commissions Information search and acquisition Investment in equipment Hiring of skilled employees
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Markets and HierarchiesFigure 1-7
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Markets and HierarchiesFigure 1-8
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Role of Electronic Commerce
Reduces transaction costs Improves information flow Increases coordination of actions
Improvement of existing markets Creation of new markets
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Network Form of Economic OrganizationFigure 1-9
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Value Chains inElectronic Commerce
Defined as the way of organizing the activities undertaken to design, produce, promote, market, deliver, and support the products or services a business sells.
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Strategic Business Unit Value ChainsFigure 1-10
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Value Chain Primary Activities
Identify customers Market research, customer satisfaction
surveys Design
Concept research, engineering, test marketing
Purchase materials and supplies Vendor selection, quality and timeliness of
delivery
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Value Chain Primary Activities
Manufacture Fabrication, assembly, testing, packaging
Market and sell Advertising, promotion, pricing, monitoring
sales and distribution channels Deliver
Warehousing, materials handling, monitoring timeliness of delivery
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Value Chain Primary Activities
Provide after-sale service and support Installation, testing, maintenance, repair,
warranty replacement, replacement parts
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Value Chain Support Activities
Finance and administration Accounting, bill payment, borrowing, regulations, compliance with
laws Human resources
Recruiting, hiring, training, compensation, benefits Developing technology
Research, development, improvement studies, maintenance procedures
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Industry Value ChainsFigure 1-11
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Role of Electronic Commerce
Reducing costs Improving product quality Reaching new customers or suppliers Creating new ways of selling existing
products