MIS 648 Lecture 8 1

MIS 648 Presentation Notes: Lecture 8

Global Aspects of E-Commerce

MIS 648 Lecture 8 2

AGENDA

Goal of the Lecture Global Aspects of E-Commerce Global Economies of Style Cultural Influences

MIS 648 Lecture 8 3

Goals of the Lecture

Understand E-commerce as a global phenomenon, with global impact and driving forces

Describe the networked economy as the platform for global e-commerce

Understand the impact of differential infrastructure availability on the networked economy and hence on global e-commerce

Speculate about the future of e-commerce and properties of marginalization and hollowing out.

MIS 648 Lecture 8 4

Global Aspects of E-Commerce

Any business can now transact globally This is enabled through the ubiquitous and

non-proprietary idea of a web browser. HTML (and its successors) have empowered

individuals to access information worldwide without proprietary networks and software.

Competitive advantage is now in the ability to capitalize on the capabilities of the ubiquitous browser.

MIS 648 Lecture 8 5

Global Aspects of E-Commerce II

The “new economy” is the economy enabled by the Internet and the browser with open standards.

All new economy businesses are global Each business can be intermediated and

disintermediated almost at will. Hence business models must be agile

and businesses must be flexible.

MIS 648 Lecture 8 6

Global Economies of Style

Licker, 2005; Presented at the 6th Global Information Technology Management World Conference, Anchorage, June.

Major Thesis: Global Networked infrastructure enables value networks and a new way to compete.

Competing on style means managing a network of values delivered through relationships.

MIS 648 Lecture 8 7

Value Networks

Achieving Economies of Style and Extracting Profit through Agility in a

Value NetworkGITMA Anchorage, June 2005

MIS 648 Lecture 8 8

Agenda

Supply Chain Value Chain Value Chain Value Network Economies of Style Moving around the Value Network Profit: Avoiding commoditization Extracting Profit from the Value Network

MIS 648 Lecture 8 9

The Supply CHAIN

SupplierProducer

(focal firm)

Supplies Products

Logistical Support

MIS 648 Lecture 8 10

The Value CHAIN

SupplierProducer(focal firm

Supplies Products

Logistical Support

Value is added by bringing together

supplies

Value is added by creating a product

via processes

Value is added by distributing the product where

needed or desired

G=g(S1, S2, …Sn) P V=G*P

MIS 648 Lecture 8 11

The Value NETWORK

Supplier-1

Producer

Supplier-2

Supplier-3

Supplier-4

Buyer-5

Buyer-3

Buyer-2

Buyer-4

Buyer-1

Buyer/Supplier

MIS 648 Lecture 8 12

Putting the “Value” in the Value Network

Supplier-1

Producer

Supplier-2

Supplier-3

Supplier-4

Buyer-3

Buyer-2

Buyer-4

Buyer-1

Buyer/Supplier

At any point in this network, value can

be added

At any point in this network, value can

be added

At any point in this network, value can be

added

MIS 648 Lecture 8 13

Multiple, Volatile Relationships

X

AC

D

B

E

FG

H

p

MIS 648 Lecture 8 14

Relationship Management

X

AC

D

B

E

FG

H

p

VALUE NETWORK V1

ax

bx

da

ca

ed

fdgf

fh

MIS 648 Lecture 8 15

Economies of Style

Economy of Scale: Reducing variable cost of production of product.

Economy of Scope: Reducing variable cost of variation in product.

Economy of Style: Reducing variable cost of relationship.

MIS 648 Lecture 8 16

Avoiding Commoditization

SupplierProducer(focal firm

Supplies Products

Buyer

1. Compete on price (economy of scale)

2. Compete on design/differentiation (economy of scope)

3. Compete on relationship (economy of style)

MIS 648 Lecture 8 17

Moving Around the Value Network

At each , value is added and profit can be extracted in return for this value. “Moving around the value network” can

be very profitable for the agile firm

MIS 648 Lecture 8 18

Extracting Profit Around the Value Network

Profit comes from

locating supplier for

producer

Profit comes from

facilitating supplier alliance

Profit comes from finding

buyer for reseller

Profit comes from turning

buyer into low risk

producer

MIS 648 Lecture 8 19

Extracting Profit through Economies of Style

X EDABC F

First-order

Second-order

Third-order

G

MIS 648 Lecture 8 20

General Principle

Value network integration means firms can play more roles more quickly

Finding out where value is added and how to manage that value-adding process is important

The more information content to the physical product, the more likely it is that agility holds the key to increased profit

MIS 648 Lecture 8 21

Cultural Influences

Globalization is not automatic, however Although the browser is ubiquitous,

websites may be tuned locally. Each culture has its own preferences for

style, layout, language, symbols, pace, emphasis, and especially content.

There are far too many examples These cultural influences might not be

fixed.

MIS 648 Lecture 8 22

Culture Clash and Influences

Presumed “World Culture”NationalCulture

“IT”Culture

BusinessCulture

SpecializedCulture

SellerCulture

Nat’lCulture

ConsumerCulture

Nat’lCulture

DesignerCulture

Prof’l Culture

ProviderCulture

BusinessCulture

Infrastructure Culture

MIS 648 Lecture 8 23

Major Battleground

Cultural symbols Language (English?) Literacy requirements Gender taboos IT “culture” symbols, rites, practices Consumerism/western culture