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Course Overview & Introduction Lectures 1,2,3

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1 Course Overview & Introduction Lectures 1,2,3
E-Commerce Course Overview & Introduction Lectures 1,2,3

2 Electronic Commerce & E-Business
Overview of Electronic Commerce & E-Business

3 EC Definitions & Concepts
Electronic Commerce (EC) is the process of buying, selling, or exchanging products, services, and information via computer networks

4 E-Business Definitions & Concepts
E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but also Servicing customers (Value Added Information) Collaborating with business partners Conducting electronic transactions within an organization (Intra-Business Activities) Non-Profit Activities (Community Building)

5 Basic Definition & Concepts
E-Business & E-Commerce defined from these perspectives Communications Business process Service Online Collaborations Community

6 E-Business Quote for Lou Gerstner, IBM’s CEO:
“E-Business is all about speed, globalization, enhanced productivity, reaching new customers, and sharing knowledge across institutions for competitive advantage.”

7 Basic Concepts & Definition
So what is E-Business? Simple definition: Any business carried out in electronic form. “The complex fusion of business processes, enterprise applications, and organizational structure to create a high-performance business model.” (Kalakota and Robinson) Electronic Business has often been defined as any business carried out in electronic form (p.4). This would include electronic data interchange (EDI). This means that E-Business can trace its roots back to the 1960’s, when a few LARGE companies established dedicated communications links to allow their suppliers to dial in and download orders from their computers. Initially the term eCommerce was used for describing the sales of goods and services on the Internet. The term E-Business has now become more common, as it reflects the broader interaction of business processes, applications, and organizational structure (see Kalakota and Robinson definition). It includes strategy and the use of information technology to improve quality, reduce cost, speed delivery and achieve other organizational goals. While definitions vary, the Internet remains central to any discussion of E-Business. Not all e-business is carried out on the Internet, but it is undeniable that the rise in the use of the Internet is the single most important enabler of e-business of any type. (p.6) You’ll see later in the course how the costs of EDI have been dramatically lowered by the Internet.

8 Examples of E-Business
Yahoo eBay Amazon Priceline Sears Virtual University of Pakistan ATM machines??? Yahoo, eBay, Amazon and Priceline are all examples of “pure-play” Internet companies. They have no offline physical presence (except for advertising). Sears is an example of an offline company that now does significant business online. ATM machines represented a significant step in the banks’ process of moving customer service to an electronic format. Doing so dramatically reduced their costs, as represented by the graph on p.7, which shows the costs of banking for different delivery channels. The cost of doing business in a bank branch (personally seeing a teller) was over $1.00 (probably much higher than that). By using the telephone the cost drops to under 60 cents. An ATM cuts that in half, to about 30 cents. But the cost of an Internet transaction can be less than a penny.

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10 EC Definitions & Concepts
Traditional commerce: all dimensions are physical Brick-and-mortar organizations Old-economy organizations (corporations) Perform all business off-line Sell physical products by means of physical agents

11 EC Definitions & Concepts
Pure EC: all dimensions are digital Pure online (virtual) organizations New-economy organization Sell products or services only online Partial EC: a mix of digital and physical dimensions Click-and-mortar organizations Conduct EC activities Do their primary business in the physical world

12 The Dimensions of Electronic Commerce

13 Physical to Virtual Interfacing
Old-economy companies are extending their reach by offering on-line services (catalogs, commodities, and e-services), Office Depot (Office supplies; #2 web retailer, after Amazon) (www.officedepot.com) & (www.amazon.com) LL Bean (Catalog sales; Dogs are in at LL Bean) (www.llbean.com) Barnes and Noble(Booksellers) (www.bn.com) Boeing Parts Network (24/7 parts for airlines) (www.boeing.com/assocproducts/direct/bd_home.html) Outreach to customers. Commodities sell well in e-space.

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18 EC Definitions & Concepts
Internet vs. Non-Internet EC Internet EC Use of Websites to advertise, Buy & Sell Much cheaper and highly accessible Non-Internet EC VANs—value-added networks LANs—local area networks Single computerized machines Using a smart card in a vending machine Using a cell phone to make an online purchase

19 The EC Framework and Field
An EC Framework EC applications supported by infrastructure and 5 support areas People Public policy Technical standards and protocols Business partners (mutual collaboration) Support services

20 A Framework for EC

21 Classification of EC by the Nature of the Transaction
Business-to-business (B2B) : EC model in which all of the participants are businesses or other organizations Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers Business-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided

22 Examples! Business-to-Consumer (B2C)
Yahoo! (www.yahoo.com) - (aggregator) leading portal and most visited e-space! E-Trade (www.etrade.com) On-line investing and banking; moving to click-and-mortar outposts. McAfee (www.mcafee.com) Software subscription services for virus scanning. Software purchase, delivery and update, example is: Copernic (www.copernic.com) Digital Content Services; example is: Sony Music (www.sony.com)

23 Classification of EC by the Nature of the Transaction 2
Consumer-to-business(C2B): individuals who use the Internet to sell products or services to organizations and /or seek sellers to bid on products or services they need Consumer-to-consumer (C2C) : consumers sell directly to other consumers

24 Examples! Consumer-to-Consumer (C2C)
Ebay (www.ebay.com) - (facilitator) electronic auctions with consumers handling transaction and shipping. Napster (www.napster.com) - (facilitator) peer-to-peer music exchange; courts not happy. Groove Networks (www.groove.com) (facilitator) secure peer-to-peer collaboration services. Founded by Ray Ozzie, the creator of Lotus Notes.

25 Classification of EC by the Nature of the Transaction 3
Mobile commerce (m-commerce)—EC transactions and activities conducted in a wireless environment Location-commerce—(l-commerce) m-commerce transactions targeted to individuals in specific locations, at specific times

26 Classification of EC by the Nature of the Transaction 4
Intrabusiness (organizational) EC: EC category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization

27 Classification of EC by the Nature of the Transaction 5
Business-to-employee (B2E): EC model in which an organization delivers services, information, or products to its individual employees Collaborative commerce (c-commerce): EC model in which individual or groups communicate or collaborate online E-government: Government-to-citizens (G2C): EC model in which a government entity buys or provides good, services, or information to businesses or individual citizens

28 Interdisciplinary Nature of EC
Management information systems Accounting and auditing Management Business law and ethics Others Marketing Computer sciences Consumer behavior and psychology Finance Economics

29 Brief History of E-Commerce
Some major shifts from 70s till now Brief History of E-Commerce

30 Brief History of EC EC applications first developed in the early 1970s Electronic funds transfer (EFT) Limited to: Large corporations Financial institutions A few other daring businesses EFT

31 Brief History of EC 2 Electronic data interchange (EDI)—electronic transfer of documents: Purchase orders Invoices E-payments between firms doing business Enlarged pool of participants to include: Manufacturers Retailers Service providers

32 Brief History of EC 3 Interorganizational systems (IOS)
Stock trading Travel reservation systems Internet became more commercialized in the early 1990s Almost all medium-and large-sized organization in the world now has a Web site Most large corporations have comprehensive portals

33 Brief History of EC 4 EC Successes Pure online eBay VeriSign AOL
Checkpoint Click-and-mortar GE IBM Intel Schwab EC Failures E-tailors began to fail in 1999 This does not mean that EC’s days are numbered Large EC companies like Amazon.com are expanding but success or failure is not certain

34 The Benefits of EC Benefits to Organizations
Expands the marketplace to national and international markets Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information Allows reduced inventories and overhead by facilitating pull-type supply chain management

35 Benefits of EC The pull-type processing allows for customization of products and services which provides competitive advantage to its implementers Supports business processes reengineering (BPR) efforts Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)

36 Benefits of EC Benefits to consumers
Enables consumers to shop or do other transactions 24 hours a day, all year round from almost any location Provides consumers with more choices Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons

37 Benefits of EC Allows quick delivery of products and services (in some cases) especially with digitized products Consumers can receive relevant and detailed information in seconds, rather than in days or weeks Makes it possible to participate in virtual auctions Allows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiences Facilitates competition, which results in substantial discounts

38 Benefits of EC Benefits to society
Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution Allows some merchandise to be sold at lower prices, benefiting less affluent people Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality

39 The Limitations of EC Technical limitations
There is a lack of universally accepted standards for quality, security, and reliability The telecommunications bandwidth is insufficient Software development tools are still evolving There are difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases. Special Web servers in addition to the network servers are needed (added cost). Internet accessibility is still expensive and/or inconvenient

40 The Concept of Digital Economy
An Introduction The Concept of Digital Economy

41 The Digital Revolution and the Economic Impact of EC
In the Digital Revolution the economy is based on digital technologies including: Digital communication networks Computers Software Other related information technologies Also called: Internet economy New economy Web economy

42 The Digital Revolution and the Economic Impact of EC
Digital networking and communication infrastructures provide a global platform where people and organizations: Interact Communicate Collaborate Search for information

43 The Digital Revolution and the Economic Impact of EC 3
The global platform includes these characteristics A vast array of digitizable products Consumers and firms conduct financial transactions digitally Microprocessors and networking capabilities embedded in physical goods

44 The Digital Revolution and the Economic Impact of EC
The term digital economy also refers to the convergence of computing and communication technologies on the Internet and other networks and the resulting flow of information and technology that is stimulating e-commerce and vast organizational changes

45 The Digital Revolution and the Economic Impact of EC
This convergence enables all types of information (data, audio, video, etc.) to be stored, processed, and transmitted over networks to many destinations worldwide Web-based EC systems are accelerating the digital revolution by providing competitive advantage to organizations

46 Contributions of EC towards modern Organizations
Types of Pressures and EC as a solution Contributions of EC towards modern Organizations

47 Business Pressures The term business environment refers to the social, economic, legal, technological, and political actions that affect business activities Business pressures are divided into the following categories: Market (economic) Societal Technological

48 Major Business Pressures & the Role of EC

49 Organizational Responses
Strategic Planning and Systems Provide organizations with strategic advantages, enabling them to: Increase their market share Better negotiate with their suppliers Prevent competitors from entering into their territory

50 Organizational Responses 2
Continuous improvement efforts Many companies continuously conduct programs to improve: Productivity Quality Customer service Business process reengineering (BPR) Strong business pressures may require a radical change Such an effort is referred to as business process reengineering (BPR)

51 Organizational Responses 3
Business alliances Alliances with other companies, even competitors, can be beneficial Virtual corporation—electronically supported temporary joint venture Special organization for a specific time-limited mission Electronic markets Optimize trading efficiency Enable their members to compete globally Require the collaboration of the different companies and competitors

52 Organizational Responses 4
Reduction in cycle time and time to market Cycle time reduction—shortening the time it takes for a business to complete a productive activity from its beginning to end Extremely important for increasing productivity and competitiveness Extranet-based applications expedite steps in the process of product or service development, testing, and implementation

53 Organizational Responses 5
Empowerment of employees and collaborative work Employees given the authority to act and make decisions on their own improves Productivity Customer relationship management (CRM) Empowered sales people and customer service employees: Make customers happy quickly Help increase customer loyalty

54 Organizational Responses 6
Supply chain improvements Help reduce supply chain delays, inventories and eliminate other inefficiencies Mass customization—production of large quantities of customized items Business problem is how to efficiently provide customization EC is an ideal facilitator of mass customization by enabling electronic ordering to reach the production facility in minutes

55 Putting It All Together
The first step is to put in the right connective networks The vast majority of EC is done on computers connected to: Internet Intranet--An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols Extranet--A network that uses the Internet to link multiple intranets

56 Putting It All Together
Major concern of today’s companies—how to transform themselves to take part in digital economy Example:Toys, Inc. Uses intranet for internal communications, collaboration, dissemination of information Networked to e-marketspaces and large corporations Corporate portal for communication and collaboration with business partners

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