elc 200 day 23. agenda questions from last class? assignment 6, 7 & 8 all posted assignment 6...
Post on 21-Dec-2015
216 views
TRANSCRIPT
Agenda
Questions from last Class? Assignment 6, 7 & 8 all posted
Assignment 6 due Today Will have them back to you on Monday
Assignment 7 due May 1 @ 12:30PM Assignment 8 due May 8 @ 8AM
EBiz plan and presentations Due May 8 @ 8AM More information in assignments section of WebCT
Today we will the discussing on Payment systems and start talking about eCommerce Strategies.
Person-to-Person Payments
Person-to-person (P2P) payments—e-payment schemes (such as paypal.com) that enable the transfer of funds between two individuals Repaying money borrowed Paying for an item purchased at online auction Sending money to students at college Sending a gift to a family member
Global B2B Payments
Letters of credit (LC)—a written agreement by a bank to pay the seller, on account of the buyer, a sum of money upon presentation of certain documents
TradeCard (tradecard.com)—innovative e-payment method that uses a payment card
Electronic Letters of Credit (LC)
Benefits to sellers Credit risk is
reduced Payment is highly
assured Political/country
risk is reduced
Benefits to the buyer Allows buyer to negotiate for a
lower purchase price Buyer can expand its source of
supply Funds withdrawn from buyer’s
account only after the documents have been inspected by the issuing bank
TradeCard Payments
TradeCard allows businesses to effectively and efficiently complete B2B transactions whether large or small, domestic or cross-border, or in multiple currencies Buyers and sellers interact with each other via the
TradeCard system System
Checks purchase orders for both parties Awaits confirmation from a logistics company that deliveries
have been made and received Authorizes payment completing financial transaction
between the buyer and seller
E-Checking
E-check—the electronic version or representation of a paper check Eliminate need for expensive process
reengineering and takes advantage of the competency of the banking industry
eCheck Secure (from vantaguard.com) and checkfree.com provide software that enables the purchase of goods and services with e-checks
Used mainly in B2B
Order Fulfillment: Overview
Order fulfillment—all the activities needed to provide customers with ordered goods and services, including related customer services Back-office operations—the activities that
support fulfillment of sales, such as accounting and logistics
Front-office operations—the business processes, such as sales and advertising, that are visible to customers
Overview of Logistics
Logistics—the operations involved in the efficient and effective flow and storage of goods, services, and related information from point of origin to point of consumption
Delivery of materials or services Right time Right place Right cost
EC Order Fulfillment Process
1. Payment clearance2. In-stock availability3. Arranging
shipments4. Insurance 5. Production
(planning, execution)
6. Plant services
7. Purchasing and warehousing
8. Customer contacts
9. Returns (Reverse logistics—movement of returns from customers to vendors)
10. Demand forecast
11. Accounting, billing
Steps in the process of order fulfillment
Order Fulfillment and the Supply Chain
Order fulfillment and order taking are integral parts of the supply chain.
Flows of orders, payments, and materials and parts need to be coordinated among Company’s internal participants External partners
The principles of supply chain management must be considered in planning and managing the order fulfillment process
Problems in Order Fulfillment
Manufacturers, warehouses, and distribution channels were not in sync with the e-tailers
High inventory costsQuality problems exist due to
misunderstandingsShipments of wrong products, materials, and
partsHigh cost to expedite operations or shipments
Problems in Order Fulfillment (cont.)
Uncertainties Major source of uncertainty is demand forecast Demand is influenced by
Consumer behavior Economic conditions Competition Prices Weather conditions Technological developments Customers’ confidence
Problems in Order Fulfillment (cont.)
Demand forecast should be conducted frequently with collaborating business partners along the supply chain in order to correctly gauge demand and make plans to meet it
Delivery times depend on factors ranging from machine failures to road conditions
Quality problems of materials and parts (may create production time delays)
Labor troubles (such as strikes) can interfere with shipments
Problems in Order Fulfillment (cont.)
Order fulfillment problems are created due by lack of coordination and inability or refusal to share information
Bullwhip effect—large fluctuations in inventories along the supply chain, resulting from small fluctuations in demand for finished products
Solutions to Order Fulfillment Problems
Improvements to order taking process Order taking can be done on EDI, EDI/Internet, or
an extranet, and it may be fully automated. In B2B, orders are generated and transmitted
automatically to suppliers when inventory levels fall below certain levels.
Result is a fast, inexpensive, and a more accurate process
Web-based ordering using electronic forms expedites the process
Makes it more accurate Reduces the processing cost for sellers
Solutions to Order Fulfillment Problems (cont.)Implementing linkages between order-
taking and payment systems can also be helpful in improving order fulfillment
Electronic payments can expedite order fulfillment cycle and payment delivery period Payment processing significantly less
expensive Fraud can be controlled better
Inventory Management Improvements
Inventories can be minimized by: Introducing a make-to-order (pull) production
process Providing fast and accurate demand information
to suppliers Inventory management can be improved
(inventory levels and administrative expenses) can be minimized by: Allowing business partners to electronically track
and monitor orders and production activities Having no inventory at by digitizing products
Automated Warehouses
B2C order fulfillment—send small quantities to a large number of individuals Step 1: retailers contract Fingerhut to stock
products and deliver Web orders Step 2: merchandise stored SKU warehouse Step 3: orders arrive Step 4: computer program consolidates orders
from all vendors into “pick waves”
Automated Warehouses (cont.)
Step 5: picked items moved by conveyors to packing area; computer configures size and type of packing; types special packing instructions
Step 6: conveyer takes packages to scanning station (weighed)
Step 7: scan destination; moved by conveyer to waiting trucks
Step 8: full trucks depart for Post Offices
Same Day, Even Same Hour Delivery
Role of FedEx and similar shippers From a delivery to all-logistics Many services Complete inventory control Packaging, warehousing, reordering, etc. Tracking services to customers
Same Day, Even Same Hour Delivery (cont.)
Supermarket deliveries Transport of fresh food to people who are
in homes only at specific hours Distribution systems are critical Fresh food may be spoiled
Partnering Efforts
Collaborative commerce among members of the supply chain results in: Shorter cycle times Minimal delays and work interruptions Lower inventories Less administrative cost Minimize bullwhip effect problem
Order Fulfillment in B2B
Using e-marketplaces and exchanges to ease order fulfillment problems
Both public and private marketplaces E-procurement system controlled by one large
buyer, suppliers adjust their activities and IS to fit the IS of the buyer
Company-centric marketplace can solve several supply chain problems
Use an extranet Use a vertical exchange
Order Fulfillment in B2B (cont.)
Shippers (sellers) Receivers (buyers) Carriers Third-party logistics
providers Warehouse
companies
Vertical e-marketplaces
Transportation
e-marketplaces Logistics software
application vendors
Players in B2B fulfillment
Handling Returns
Necessary for maintaining customer trust and loyalty using: Return item to place it was purchased Separate logistics of returns from logistics of
delivery Completely outsource returns Allow customer to physically drop returned
items at collection stations
UPS Provides Broad EC Services
Electronic tracking of packagesElectronic supply chain services for
corporate customers by industry including: Portal page with industry-related information Statistics
Calculators for computing shipping feesHelp customers manage electronic supply
chains
The UPS Strategy (cont.)
Improved inventory management, warehousing, and delivery
Integration with shipping management system
Notify customers by e-mail of: Delivery status Expected time of arrival of incoming
packages
The UPS Strategy (cont.)
Representative tools 7 transportation and delivery applications
Track packages Analyze shipping history Calculate exact time-in-transit
Downloadable tools Proof of delivery Optimal routing features
Delivery of digital documents Wireless access to UPS system
Summary
Crucial factors determining the success of an e-payment method
Key elements in securing an e-paymentOnline credit card players and processesThe uses and benefits of purchasing cardsCategories and potential uses of smart
cardsOnline alternatives to credit card payments
Summary (cont.)
E-check processes and involved partiesThe role of order fulfillment and back-office
operations in ECThe order fulfillment processProblems in order fulfillmentSolutions to order fulfillment problems
Learning Objectives
Describe the importance and essentials of business and EC strategies
Describe the strategy planning and formulation process for EC
Understand how EC applications are discovered, justified, and prioritized
Describe strategy implementation and assessment including the use of metrics
Understand EC failures and lessons for success
Learning Objectives (cont.)
Describe the role and impact of virtual communities on EC
Evaluate the issues involved in global ECAnalyze the impact of EC on small businessesDescribe the relationship between EC and BPR,
knowledge management, and virtual corporationsDescribe the future of EC
IBM’s E-Business Strategy
The Problem Need to capture new business opportunities and
technologies (like EC) Develop a business strategy for that purpose IBM’s current strategy is to transform itself into an
e-business in order to provide business value to the corporation and its shareholders
IBM views e-business as being much broader than EC because it:
Serves a broader constituency Offers a variety of Web-based processes and transactions
IBM’s E-Business Strategy (cont.)
The Solution is based on four goals: Lead IBM’s strategy to transform itself into e-
business Act as a catalyst to help facilitate that
transformation Help business units become more effective
in their use of the Internet/intranet Internally With their customers
IBM’s E-Business’s Strategy (cont.)
Establish a strategy for the corporate Internet site
Including definition of how it should look, “feel” and be navigated
Create an online environment most conducive to customers doing business with IBM
Leverage the wealth of e-business transformational case studies within IBM to highlight the potential of e-business to IBM’s customers
IBM’s E-Business Strategy (cont.)
E-commerce E-care for customers E-care for business
partners
E-care for influencers E-care for employees E-procurement E-marketing
communications
IBM focused on seven key initiatives:
IBM’s E-Business Strategy (cont.)
The Results Implementation of an e-procurement system
that spans IBM globally Saved IBM almost $5 billion over a 3-year
period Electronic invoicing:
Reduces the number of paper invoices Enables fast, competitive tendering from its suppliers
IBM’s E-Business Strategy (cont.)
IBM’s evaluation of the procurement process determined where the use of the Web adds value
Identification of more than 20 initiatives to reduce costs and improve purchasing including:
Collaboration with suppliers Online purchasing Knowledge-management-based applications
E-Strategy: Concepts & Overview
Strategy—search for revolutionary actions that will significantly change the current position of a company, shaping its future Finding the position in a marketplace that best
fits the firm’s skills Company’s choice of new position that must be
driven by its ability to find new trade-offs and leverage a new system of complementary activities into sustainable advantage
Elements of Strategy
Elements of a strategy Forecasting Resource allocation Core competency Environmental analysis Company analysis Business planning
Strategic Management Process Model
Develop Mission and Vision Statements
Chap 2
Measure and Evaluate
PerformanceChap 9
Implement StrategiesManagement Issues
Chap 7
Generate, Evaluate and Select Strageies
Chap 6
Implement StrategiesMarketing, Finance, accounting, R&D,
MIS issuesChap 8
Perfrom External Audit
Chap 3
Establish Long-termObjectives
Chap 5
Perform Internal Audit
Chap 4
Types of E-Strategies
EC strategy (e-strategy)—an organization’s strategy for use of e-commerce or e-business Click-and-mortar companies that use many EC
applications Click-and-mortar companies that use only one or two
EC applications Click-and-mortar companies that use one EC
application that fundamentally changes all their business
Pure-play EC companies
Source: adapted from www.mohanbirsawhney.com
Activity
Business Process
Enterprise
PurePlayBusiness transformation
(competitive advantage,industry redefinition)
Effectiveness(Incremental sales,customer retention)
Efficiency(Cost
reduction)
Pure dot-com(E*Trade)
Click and Mortar(eSchwab)
Customerrelationshipmanagement
Brochureware,Order processing
Leve
l of
busi
ness
impa
ct
Need for a Strategy
Why does a company need an e-strategy? Fast changes in business and technology means
that opportunities and threats can change in a minute
Company must consider EC strategy that includes contingency plans to deal with changes
May be too costly not to have one
Charles Schwab’s EC Strategy
In 1998 Schwab launched schwab.com—one of the first click-and-mortar stockbrokers Changed the company pricing structure
radically Took a short-term revenue loss Looking toward a long-term strategic gain
EC strategy fit well with company’s overall strategy emphasizing a one-to-one relationship with its customers
Charles Schwab (cont.)
Schwab had first-mover advantage in securing key partnerships Schwab and Nextel agreed to build an
infrastructure allowing investment opportunities over mobile phones or wireless handheld devices
Initial target was existing off-line customers with incomes over $150,000 a year and who buy and hold
Key benefits: Innovative products Superior service Low fees Cutting-edge technology
Charles Schwab (cont.)
Partnered with content providers and technology companies to offer: Large number of financial services online Community and personalized services
Financial model composed of three parts: The revenue model The value model The growth model
Charles Schwab (cont.)
CyberTrader's services are designed for online, self-directed active traders who use short-term trading strategies to generate current income
Cybertrader features include:Nasdaq Level II quotes Direct Access trading capabilities Risk management toolsGraphical decision support modules Streaming NewsIntelligent order routingDirect options routing
E-Strategy Landscape
Strategy initiation: organization prepares information about its vision,mission,purpose,and the contribution that EC could make to the business
Strategy formulation: Identification of EC applications Cost-benefit analysis Risk analysis
E-Strategy Landscape (cont.)
Strategy implementation: Organization’s resources are analyzed A plan is developed for attaining the goals
Strategy assessment: Organization periodically assesses progress
toward the strategic goals Involves the development of EC metrics
Strategy Initiation
Strategy initiation—the initial phase of e-strategy in which an organization prepares information about its vision, mission, purpose, and the contribution that EC could make
1. Review the organization’s business and IT vision and mission
2. Generate vision and mission for EC
3. Begin with industry and competitive analysis
Industry Assessment
What industry is the EC initiative related to?
Who are the customers? What are the current
practices of selling and buying?
Who are the major competitors? (How intense is the competition?)
What e-strategies are used, by whom?
How is value added throughout the value chain?
What are the major opportunities and threats?
Are there any metrics or best practices in place?
What are the existing and potential partnerships for EC?
Company Assessment
The organization investigates its own: Business strategy Performance Customers Partners
It looks at everything that has an impact on its operations Processes People Information flows Technology support
Industry, Company, andCompetitive Analysis
SWOT analysis—a methodology that surveys the opportunities and threats in the external environment and relates them to the organization’s particular strengths and weaknesses
SWOT Analysis Strengths Opportunities Weaknesses Threats
Verizon 1.Top wireless provider in the U.S. serving 49 of the top 50 markets2.High-speed data network in all major markets3.Largest provider of local, long distance, data, and broadband services in 2/3 of the top 100 markets in the U.S.4.Leading print and on-line directory publisher with 2100 in U.S. and 13 other countries5.Verizon invested 12 billion in 2002 in 400,000 miles of fiber-optic cable.6.Marketing campaign – brand awareness
1.49 billion dollars in long term debt2.Lack of international presence3.Revenue only increased 4 percent since year end 2000.
S-O Strategies W-O Strategies
1.141 million possible investors in Europe, UK, and Germany2.Strengthening foreign currencies vs dollar- Euro advantages 3.Increased usage in wireless services4.Small wireless providers are consolidating with larger providers due to increased competition5.Increased desire for high-speed internet service
1.Expand wireless services into Europe, UK and/or Germany (S1, O1, O3)2.Expand high speed internet service in Europe, UK and/or Germany (S2,O5)3.Acquire small domestic wireless providers such as Powertel or Aerial (S1, O4)4.Invest capital into fiber optic cable to compete with cable companies. (S5, O5)
1.Purchase international wireless providers such as MMO2 (W2, O4)
2.Offer services to people in Europe to increase revenue due to the difference in foreign currency (W1, O2)
S-T Strategies W-T Strategies
1.New regulatory complaints (new phone # portability)2.Rising costs of healthcare3.Global unrest- economic monetary and financial4.Consumer privacy rights being attacked5.Weak Consumer spending6.Decreasing demand for traditional voice lines and fixed lines7.Increasing overlap of telecommunication territories8.Increasing competition for providers of web search directories9.Increasing providers of wireless services10.Brand recognition
1.Enter into a joint venture with MCI to offer a package deal (S1, T12)2.Proceed with legal battles to serve local markets to increase traditional voice and fixed lines.(S3, T7)
1.Expand globally in Europe (W2, T7)2.Liquidate the Telecommunications Services such as fixed lines and traditional lines business to reduce long-term debt. (W1, T6)
Competitive Intelligence on the Internet
Internet can play a major role as a source of competitive information (competitive intelligence)
Review competitors’ Web sites Examine publicly available financial
documents Ask the customers—award prizes to those
who best describe your competitors’ strengths and weaknesses
Competitive Intelligenceon the Internet (cont.)
Analyze related discussion groups Find out what people think about a company and its
products and competitor's products Reaction to new ideas and products
Use information delivery services Find out what it published on the Internet Known as push technologies
Corporate research companies provide information about your competitors:
Examine chat rooms
Issues in Strategy Initiation
Advantages Chance to capture
large markets Establishing a brand
name Exclusive strategic
alliances
Disadvantages Cost of developing EC
initiative is usually very high
Chance of failure is high System may be obsolete
as compared to second wave arrivals
No support services are available at the beginning
To be a first mover or a follower?
Should You Have a SeparateOnline Company?
Advantages Reducing or eliminating
internal conflicts Providing more freedom
to management in pricing, advertising, etc.
Can create new brands quickly
Take the e-business to an IPO and make a fortune
Disadvantages May be very costly
and risky Collaboration with off-
line business may be difficult
Lose expertise of business functions unless you use close collaboration