© prentice hall 2002 7.1 chapter 7 electronic commerce applications
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7.1
© Prentice Hall 2002
CHAPTER 7CHAPTER 7
Electronic CommerceElectronic Commerce
ApplicationsApplications
7.2
© Prentice Hall 2002
ELECTRONIC COMMERCEELECTRONIC COMMERCE
• ELECTRONIC TRANSMISSIONELECTRONIC TRANSMISSION• BUYER/SELLER TRANSACTIONSBUYER/SELLER TRANSACTIONS• RELATED INFORMATIONRELATED INFORMATION• BETWEEN INDIVIDUALS & BETWEEN INDIVIDUALS &
BUSINESSES OR BETWEEN TWO BUSINESSES OR BETWEEN TWO OR MORE TRADING PARTNERSOR MORE TRADING PARTNERS
**
7.3
© Prentice Hall 2002
APPLICATIONS APPLICATIONS via via INTERNETINTERNET
• IT: IT: Internet TechnologyInternet Technology
• B2C: B2C: Business-to-customerBusiness-to-customer• B2B: B2B: Business-to businessBusiness-to business• EDI: EDI: Electronic Data InterchangeElectronic Data Interchange
**
7.4
© Prentice Hall 2002
ITIT REACH* REACH*
• INSIDE COMPANY:INSIDE COMPANY:– WITHIN SINGLE LOCATION– DOMESTIC LOCATIONS– GLOBAL LOCATIONS
• OUTSIDE COMPANY:OUTSIDE COMPANY:– CUSTOMERS, SUPPLIERS WITH SAME PLATFORM– CUSTOMERS, SUPPLIERS WITH ANY PLATFORM– ANYONE, ANYWHERE
**
*Adapted from Keen, 1991
7.5
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STRATEGIC ADVANTAGESTRATEGIC ADVANTAGE
• COST: COST: Low cost producerLow cost producer
• DIFFERENTIATION: DIFFERENTIATION: Customer Customer perceives superior image, quality, perceives superior image, quality, serviceservice
• FOCUS: FOCUS: Competing on cost or Competing on cost or differentiation within market nichedifferentiation within market niche
**
7.6
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VALUE CHAIN MODELVALUE CHAIN MODEL
• MARKET STRATEGYMARKET STRATEGY• DEVELOPDEVELOP• SOURCESOURCE• MANUFACTUREMANUFACTURE• SELLSELL• FULFILLFULFILL
**
7.7
© Prentice Hall 2002
FIVE COMPETITIVE FORCES*FIVE COMPETITIVE FORCES*
*Adapted from Porter, 1985
INDUSTRYINDUSTRYCOMPETITORCOMPETITOR
SS
SUPPLIER SUPPLIER POWERPOWER
CUSTOMER CUSTOMER POWERPOWER
THREAT OF THREAT OF NEWNEW
ENTRANTSENTRANTS
THREAT OF THREAT OF
SUBSTITUTE SUBSTITUTE PRODUCTSPRODUCTS
7.8
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INTERNET TECHNOLOGYINTERNET TECHNOLOGY
• TOOLS FOR WEB PAGE TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCEDEVELOPMENT & SITE MAINTENANCE
• SEARCH ENGINES FOR PORTALSSEARCH ENGINES FOR PORTALS• EXTENSIBLE MARKUP LANGUAGE EXTENSIBLE MARKUP LANGUAGE (XML)(XML): : Expected to become standard Expected to become standard language for e-businesslanguage for e-business
• COOKIES: COOKIES: User profiles stored on user’s User profiles stored on user’s computercomputer
**
7.9
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TECHNOLOGY ENABLERSTECHNOLOGY ENABLERS
• BROWSERBROWSER• WEB PRESENCE WITH CONTENTWEB PRESENCE WITH CONTENT• SEARCH ENGINES, AGENTSSEARCH ENGINES, AGENTS• PUSH TECHNOLOGY, JAVA APPLETSPUSH TECHNOLOGY, JAVA APPLETS• PORTALS & CREDIT CARD PROCESSINGPORTALS & CREDIT CARD PROCESSING• CUSTOMIZATION & TRACKINGCUSTOMIZATION & TRACKING• PEER-TO-PEER DIGITAL SIGNATUREPEER-TO-PEER DIGITAL SIGNATURE
**
7.10
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METCALFE’S LAWMETCALFE’S LAW
• VALUE OF NETWORK VALUE OF NETWORK PROPORTIONAL TO PROPORTIONAL TO nn, THE NUMBER , THE NUMBER OF USERS: OF USERS: (n(n22 - n)/2 - n)/2
• INCREASING RETURNS TO INTERNET INCREASING RETURNS TO INTERNET USERS AS MORE JOIN NETWORKUSERS AS MORE JOIN NETWORK
**
7.11
© Prentice Hall 2002
ELECTRONIC COMMERCE ELECTRONIC COMMERCE FRAMEWORKFRAMEWORK
COMPONENTS ARE SUPPORTED BY TWO COMPONENTS ARE SUPPORTED BY TWO PILLARSPILLARS
• COMPONENTS: COMPONENTS: Applications, common Applications, common business services, messaging & knowledge business services, messaging & knowledge distribution, electronic publication, electronic distribution, electronic publication, electronic highwayhighway
• PILLAR 1: PILLAR 1: Public policy, legal environment, Public policy, legal environment, privacy issuesprivacy issues
• PILLAR 2:PILLAR 2: Technological standards, Technological standards, communications protocols, security technologycommunications protocols, security technology
**
7.12
© Prentice Hall 2002
LEGAL & REGULATORY LEGAL & REGULATORY ENVIRONMENTENVIRONMENT
• TAX POLICIES: TAX POLICIES: Initially sales tax Initially sales tax enforcement was low to encourage enforcement was low to encourage growth. Currently this is changinggrowth. Currently this is changing
• COPYRIGHT & PATENT LAWS: COPYRIGHT & PATENT LAWS: Difficult to enforce at international Difficult to enforce at international levellevel
• ANTITRUST LAWS: ANTITRUST LAWS: Market share and Market share and mergers could lead to monopoliesmergers could lead to monopolies
**
7.13
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ORGANIZATIONAL ORGANIZATIONAL CONCERNSCONCERNS
• SECURITY: SECURITY: Must safeguard Must safeguard proprietary and customer data. proprietary and customer data. Primary control is FIREWALL, a Primary control is FIREWALL, a barrier between organization’s barrier between organization’s network and Internetnetwork and Internet
• ENCRYPTION: ENCRYPTION: Uses encryption code Uses encryption code to secure communication; uses to secure communication; uses decryption code to unscramble itdecryption code to unscramble it
**
7.14
© Prentice Hall 2002
ORGANIZATIONAL ORGANIZATIONAL CONCERNSCONCERNS
• ANTIVIRUS PROTECTION:ANTIVIRUS PROTECTION: Use Use software to detect and negate virusessoftware to detect and negate viruses
• PRIVACY: PRIVACY: Legal requirements to Legal requirements to maintain employee & customer maintain employee & customer confidentiality. A major concern is the confidentiality. A major concern is the ability for profiling habits, selling ability for profiling habits, selling profiles to others. A related concern profiles to others. A related concern is protecting freedom of expression.is protecting freedom of expression.
**
7.15
© Prentice Hall 2002
REQUIREMENTS FOR SUCCESSFUL REQUIREMENTS FOR SUCCESSFUL ONLINE MERCHANTSONLINE MERCHANTS
• INSTALL FIREWALLINSTALL FIREWALL• KEEP SECURITY PATCHES UP-TO-DATEKEEP SECURITY PATCHES UP-TO-DATE• ENCRYPT STORED AND TRANSMITTED ENCRYPT STORED AND TRANSMITTED
DATADATA• USE & UPDATE ANTIVIRUS SOFTWAREUSE & UPDATE ANTIVIRUS SOFTWARE• RESTRICT EMPLOYEE ACCESS TO RESTRICT EMPLOYEE ACCESS TO
SENSITIVE DATASENSITIVE DATA
**
7.16
© Prentice Hall 2002
BUSINESS TO CONSUMER BUSINESS TO CONSUMER B2CB2C
B2C E-COMMERCE IS B2C E-COMMERCE IS ELECTRONIC TRANSMISSION ELECTRONIC TRANSMISSION OF BUYER-SELLER OF BUYER-SELLER TRANSACTIONS, RELATED TRANSACTIONS, RELATED INFORMATION BETWEEN END-INFORMATION BETWEEN END-CONSUMERS AND ONE OR CONSUMERS AND ONE OR MORE COMPANIESMORE COMPANIES
**
7.17
© Prentice Hall 2002
B2C BENEFITS B2C BENEFITS SELLER:SELLER:
• LOWER COSTSLOWER COSTS• GLOBAL REACHGLOBAL REACH• MULTIMEDIA MARKETING MULTIMEDIA MARKETING
OPPORTUNITIESOPPORTUNITIES• 24x7 SALES & CUSTOMER SUPPORT 24x7 SALES & CUSTOMER SUPPORT
CHANNELCHANNEL• DIGITIZED DISTRIBUTION CHANNELDIGITIZED DISTRIBUTION CHANNEL
**
7.18
© Prentice Hall 2002
B2C BENEFITS B2C BENEFITS BUYER:BUYER:
• EASY ACCESS TO PRODUCT EASY ACCESS TO PRODUCT INFORMATIONINFORMATION
• ANYTIME, ANYWHEREANYTIME, ANYWHERE• AGENTS HELP FIND THINGS, AGENTS HELP FIND THINGS,
COMPARE COSTSCOMPARE COSTS• ONLINE DISTRIBUTION OF ONLINE DISTRIBUTION OF
DIGITIZED PRODUCT/SERVICEDIGITIZED PRODUCT/SERVICE
**
7.19
© Prentice Hall 2002
B2CB2C APPLICATIONS APPLICATIONS
FORECAST TO GROW AS MORE FORECAST TO GROW AS MORE CUSTOMERS HAVE INTERNET ACCESSCUSTOMERS HAVE INTERNET ACCESS
• PRODUCT RETAILERS: PRODUCT RETAILERS: Site allows Site allows customers to browse available wares, select, customers to browse available wares, select, order, arrange for paymentorder, arrange for payment
• SERVICE RETAILERS: SERVICE RETAILERS: Information intensive. Information intensive. Buyer may download materials for feeBuyer may download materials for fee
• RETAILING INTERMEDIARIES:RETAILING INTERMEDIARIES: Allows client Allows client to compare models and prices of many vendorsto compare models and prices of many vendors
**
7.20
© Prentice Hall 2002
B2CB2C STRATEGIES* STRATEGIES*
ONLINE OFFLINEONLINE OFFLINE
CUSTOMER CUSTOMER INTERFACEINTERFACE
FULFILLMENT FULFILLMENT SYSTEMSSYSTEMS
*RAYPORT & JAWORSKI, 2000
EG
GH
EA
EG
GH
EA
DDYAHOO!YAHOO!
BN.COMBN.COM
AMAZON.COMAMAZON.COM
Mc DONALD’SMc DONALD’S
7.21
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BUSINESS-TO-BUSINESS BUSINESS-TO-BUSINESS (B2B)(B2B)
B2B E-COMMERCE IS B2B E-COMMERCE IS ELECTRONIC TRANSMISSION OF ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS & BUYER-SELLER TRANSACTIONS & INFORMATION BETWEEN TWO OR INFORMATION BETWEEN TWO OR MORE BUSINESSESMORE BUSINESSES
• PREDECESSOR WAS PREDECESSOR WAS INTERORGANIZATIONAL SYSTEM INTERORGANIZATIONAL SYSTEM (IOS)(IOS)
**
7.22
© Prentice Hall 2002
ELECTRONIC DATA ELECTRONIC DATA INTERCHANGE INTERCHANGE (EDI)(EDI)
• COMPUTER-TO-COMPUTER COMPUTER-TO-COMPUTER COMMUNICATION BETWEEN COMMUNICATION BETWEEN TRADING PARTNERS: TRADING PARTNERS: Hub Hub organization and spoke customers & organization and spoke customers & suppliers use structured formatssuppliers use structured formats
• EXAMPLES: EXAMPLES: Purchase orders, invoices, Purchase orders, invoices, shipping notices, price listingsshipping notices, price listings
**
7.23
© Prentice Hall 2002
EDIEDI BENEFITS BENEFITS
• REDUCED CYCLE TIMESREDUCED CYCLE TIMES• COST SAVINGS: COST SAVINGS: Automated Automated
transactions, reduced papertransactions, reduced paper
• IMPROVED INTER-FIRM IMPROVED INTER-FIRM COORDINATION: COORDINATION: Reduced Reduced coordination costscoordination costs
**
7.24
© Prentice Hall 2002
CHANNELS FOR INTERNET CHANNELS FOR INTERNET EDIEDI**
• WEB EDI: WEB EDI: Use Use EDIEDI templates templates designed by Web serverdesigned by Web server
• FTP EDI: FTP EDI: EDIEDI transactions stored at transactions stored at spoke company. Periodically spoke company. Periodically transmitted as batch to hub companytransmitted as batch to hub company
• E-MAIL EDI: E-MAIL EDI: EDIEDI transactions sent transactions sent as e-mail over Internetas e-mail over Internet
***Senn, 2000
7.25
© Prentice Hall 2002
EXTRANETEXTRANET
B2BB2B APPLICATIONS BASED ON APPLICATIONS BASED ON WEB TECHNOLOGY: WEB TECHNOLOGY: Business Business partners use Web browser on client partners use Web browser on client machine to gain access to another machine to gain access to another company’s intranetcompany’s intranet
**
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