Presentation on theme: "Chapter Three Overview"— Presentation transcript:
1Chapter Three Overview SECTION BUSINESS AND THE INTERNETDisruptive TechnologyEvolution of the InternetAccessing Internet InformationProviding Internet InformationSECTION E-BUSINESSE-Business BasicsE-Business ModelsOrganizational Strategies for E-BusinessMeasuring E-Business SuccessE-Business Benefits and ChallengesNew Trends in E-Business: E-Government and M-CommerceSection 3.1 begins by discussing disruptive technology with the Internet causing complete business disruptionSection 3.1 then focuses on how the Internet began, and how to access and provide information on the InternetSection 3.2 discusses e-business models and how departments can use e-business to enhance performanceAsk your students how many of them have Internet access. How are they accessing the Internet?Soon Internet access will be offered through electrical outletsHow will this type of technology change the way people and businesses use the Internet?
2BUSINESS AND THE INTERNET SECTION 3.1BUSINESS AND THE INTERNETOne-hour film processing and digital cameras both contributed to the demise of Polaroid, a solid company that had an innovative technology and a captive customer base. The dilemma that faced Polaroid is a dilemma that most organization face – the criteria an organization uses to make business decisions for its present business could possibly create issues for its future business. Essentially, what is best for the current business could ruin it in the long term.In the past few years, e-business seems to have permeated every aspect of daily life. In just a short time, both individuals and organizations have embraced Internet technologies to enhance productivity, maximize convenience, and improve communications globally. This chapter focuses on the disruptive technology, the Internet, and e-business processes that are changing the nature of the buyer-seller relationship, the role of information technology (IT), and organizational structures and tasks. The chapter also discusses the opportunities and advantages found with developing e-businesses. Specific relationships have been developed in the chapter between disruptive technologies and e-businesses.
3Disruptive versus Sustaining Technology What do steamboats, transistor radios, and Intel’s 8088 processor all have in common?Disruptive technology – a new way of doing things that initially does not meet the needs of existing customersSustaining technology – produces an improved product customers are eager to buy
4Disruptive versus Sustaining Technology Innovator’s Dilemma - discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers, partners, and stakeholders
5The Internet – Business Disruption One of the biggest forces changing business is the InternetOrganizations must be able to transform as markets, economic environments, and technologies changeFocusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technologyDo your students agree that the Internet is an example of a disruptive technology?When it was first introduced would they consider it a form of disruptive technology?CLASSROOM EXERCISEFinding InnovationInnovation, new ideas, and new technology are exciting. It is currently estimated that everything we know technically will represent 1 percent of all technology in Break your students into groups and ask them to search the Internet for the most exciting form of innovation that is going to hit our market and change our lives over the next ten years. Have your students present their findings to the class and offer a small prize to the winner.A few examples include:Computers that offer smells, click on a perfume and the scent permeates from your computer, movie theatres will offer smells that correspond to the movieElectronic toilets – analyze output and let you know if you getting sick days before the cold actually hits. Great for rest homes and hospitalsPlanes the size of small ships that offer shopping and restaurantsShips the size of small cities where you can purchase an apartmentWhat's For Dinner? Just Call Your Refrigerator – show your student’s the kitchen of the future
6The Internet – Business Disruption Estimates predict more than 3 billion Internet users by 2010
7EVOLUTION OF THE INTERNET The Internet began as an emergency military communications system operated by the Department of DefenseGradually the Internet moved from a military pipeline to a communication tool for scientists to businessesInternet – computer networks that pass information from one to another using common computer protocolsProtocol – standards that specify the format of data as well as the rules to be followed during transmission
9Evolution of the World Wide Web The Internet’s impact on informationEasy to compileIncreased richnessIncreased reachImproved contentInternet’s Impact on InformationEasy to compile - Searching for information on products, prices, customers, suppliers, and partners is faster and easier when using the Internet.Increased richness - refers to the depth and breadth of information transferred between customers and business. Businesses andcustomers can collect and track more detailed information when using the Internet.Increased reach - refers to the number of people a business can communicate with, on a global basis. Businesses can share information with numerous customers all over the world.Improved content - A key element of the Internet is its ability to provide dynamic relevant content. Buyers need good content descriptions to make informed purchases, and sellers use content to properly market and differentiate themselves from the competition. Content and product description establish the common understanding between both parties to the transaction. As a result, the reach and richness of that content directly affects the transaction.
10Evolution of the World Wide Web The Internet makes it possible to perform business in ways not previously imaginableIt can also cause a digital divideDigital divide – when those with access to technology have great advantages over those without access to technologyPeople living in the village of Siroha, India, must bike five miles to find a telephone. For over 700 million rural people living in India, the digital divide was a way of life, until recently. Media Lab Asia sells telephony and services via a mobile Internet kiosk mounted on a bicycle, which is known as an “info-thelas.” The kiosk has an onboard computer equipped with an antenna for Internet service and a specially designed all-day battery. Over 2,000 villages have purchased the kiosk for $1,200, and another 600,000 villages are interestedWhat impact does the digital divide have on society?How is MIT’s $100 laptop program going to help the digital divide?
11ACCESSING INTERNET INFORMATION Four tools for accessing Internet informationIntranet – internalized portion of the Internet, protected from outside access, for employeesExtranet – an intranet that is available to strategic alliesPortal – Web site that offers a broad array of resources and servicesKiosk – publicly accessible computer system that allows interactive information browsing
12PROVIDING INTERNET INFORMATION Three common forms of service providersInternet service provider (ISP) –provides individuals and other companies access to the InternetOnline service provider (OSP) – offers an extensive array of unique Web servicesApplication service provider (ASP) – offers access over the Internet to systems and related services that would otherwise have to be located in organizational computersInternet service provider (ISP) – a company that provides individuals and other companies access to the Internet along with additional related services, such as Web site building. Many but not all ISPs are telephone companies. ISPs provide services such as Internet transit, domain name registration and hosting, dial-up or DSL access, leased line access, and collocation. ISPs mostly provide access to the Internet and charge a monthly access fee to the consumer.Online service provider (OSP) – offers an extensive array of unique services such as its own version of a Web browser. An OSP offers services such as access to private computer networks and information resources such a bulletin boards, downloadable programs, news articles, chat rooms, and electronic mail services.Application service provider (ASP) – a company that offers an organization access over the Internet to systems and related services that would otherwise have to be located in personal or organizational computers. Software offered using an ASP model is also sometimes called On-demand software. The most limited sense of this business is that of providing access to a particular application program (such as medical billing) using a standard protocol such as HTTP. The need for ASPs has evolved from the increasing costs of specialized software that have far exceeded the price range of small to medium sized businesses. As well, the growing complexities of software have lead to huge costs in distributing the software to end-users. Through ASPs, the complexities and costs of such software can be cut down. In addition, the issues of upgrading have been eliminated from the end-firm by placing the onus on the ASP to maintain up-to-date service.
13PROVIDING INTERNET INFORMATION ISPs, OSPs, and ASPs use service level agreements (SLA) which define the specific responsibilities of the service provider and set the customer expectationsReview Figure 3.10 for a listing of the top ISPs, OSPs, and ASPs
15E-BUSINESS BASICS How do e-commerce and e-business differ? E-commerce – the buying and selling of goods and services over the InternetE-business – the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners
17Business-to-Business (B2B) Electronic marketplace (e-marketplace) – interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activitiesElectronic marketplaces, or e-marketplaces, present structures for conducting commercial exchange, consolidating supply chains, and creating new sales channelsTheir primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellersExisting e-marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials
18Business-to-Consumer (B2C) Common B2C e-business models include:e-shop – a version of a retail store where customers can shop any time without leaving their homee-mall – consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shopsBusiness types include:Brick-and-mortar businessPure-play businessClick-and-mortar businessBusiness Types:Brick-and-mortar business - operates in a physical store without an Internet presence.Pure-play (virtual) business - a business that operates on the Internet only without a physical store. Examples include Amazon.com and Expedia.com.Click-and-mortar business – a business that operates in a physical store and on the Internet. Examples include REI and Barnes and Noble.Can you name a company that operates in each of the different business types?Brick-and-mortar business – local book store, college book store (there are not many today)Pure-play business – Amazon.com, eBayClick-and-mortar business – Barnes and Noble
19Consumer-to-Business (C2B) Priceline.com is an example of a C2B e-business modelThe demand for C2B e-business will increase over the next few years due to customer’s desire for greater convenience and lower prices
20Consumer-to-Consumer (C2C) Online auctionsElectronic auction (e-auction) - Sellers and buyers solicit consecutive bids from each other and prices are determined dynamicallyForward auction - Sellers use as a selling channel to many buyers and the highest bid winsReverse auction - Buyers use to purchase a product or service, selecting the seller with the lowest bid
21Consumer-to-Consumer (C2C) C2C CommunitiesCommunities of interest - People interact with each other on specific topics, such as golfing and stamp collectingCommunities of relations - People come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiastsCommunities of fantasy - People participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan
22ORGANIZATIONAL STRATEGIES FOR E-BUSINESS Primary business areas taking advantage of e-business include:Marketing/salesFinancial servicesProcurementCustomer serviceIntermediaries
23Marketing/Sales Generating revenue on the Internet Online ad (banner ad) - box running across a Web page that contains advertisementsPop-up ad - a small Web page containing an advertisementAssociate program (affiliate program) - businesses generate commissions or royaltiesViral marketing - a technique that induces Web sites or users to pass on a marketing messageMass customization - gives customers the opportunity to tailor products or services
24Marketing/Sales Generating revenue on the Internet (cont.) Personalization - occurs when a Web site can fashion offers that are more likely to appeal to that personBlog - Web site in which items are posted on a regular basis and displayed in reverse chronological orderReal simple syndications (RSS) - a Web feed format used for Web syndication of contentPodcasting - the distribution of audio or video files, such as radio programs or music videos, over the Internet to play on mobile devices
25Marketing/Sales Generating revenue on the Internet (cont.) Search engine optimization (SEO) - a set of methods aimed at improving the ranking of a Web site in search engine listingsSpamdexing - uses a variety of deceptive techniques in an attempt to manipulate search engine rankings, whereas legitimate SEO focuses on building better sites and using honest methods of promotion
26Financial Services Online consumer payments include: Financial cybermediaryElectronic checkElectronic bill presentment and payment (EBPP)Digital walletOnline Consumer PaymentsFinancial cybermediary - an Internet-based company that facilitates cybermediary payments over the Internet. PayPal is the best-known example of a financial cybermediary.Electronic check - a mechanism for sending a payment from a checking or savings account. There are many implementations of electronic checks, with the most prominent being online banking.Electronic bill presentment and payment (EBPP) - a system that sends presentment and bills over the Internet and provides an easy-to-use mechanism (such as payment (EBPP) clicking on a button) to pay the bill. EBPP systems are available through local banks or online services such as Checkfree and Quicken.Digital wallet - both software and information—the software provides security for the transaction and the information includes payment and delivery information (for example, the credit card number and expiration date).There is currently a move towards converging and consolidating Finance provisions into shared services within an organization. Rather than an organization having a number of separate Finance departments performing the same tasks from different locations a more centralized version can be created. Information systems will greatly help the achievement of this goal.As a consumer, which type of payment do you use the most on the Internet?What will be the driving force that changes online consumer payments in the future?SecurityEase of useCommon formats
27Financial Services Online business payments include: Electronic data interchange (EDI)Value-added network (VAN)Financial EDI (financial electronic data interchange)Online Business PaymentsElectronic data interchange (EDI) - a standard format for exchanging business data. One way an organization can use EDI is through a value-added network.Value-added network (VAN) - a private network, provided by a third party, for exchanging information through a high-capacity connection. VANs support electronic catalogs (from which orders are placed), EDI-based transactions (the actual orders), security measures such as encryption, and EDI mailboxes.Financial EDI (financial electronic data interchange) is a standard electronic process for B2B market purchase payments. National Cash Management System is an automated clearinghouse that supports the reconciliation of the payments.Why do businesses use different forms of online payments than consumers?Business payments are typically much larger than consumer payments and need additional securityWith supply chain management systems online business payments are automated using EDI
28ProcurementMaintenance, repair, and operations (MRO) materials (also called indirect materials) – materials necessary for running an organization but do not relate to the company’s primary business activitiesE-procurement - the B2B purchase and sale of supplies and services over the InternetElectronic catalog - presents customers with information about goods and services offered for sale, bid, or auction on the InternetWeb-based procurement of maintenance, repair, and operations (MRO) supplies is expected to reach more than $200 billion worldwide by the year 2009Maintenance, repair, and operations (MRO) materials (also called indirect materials) - materials necessary for running an organization but do not relate to the company’s primary business activities. Typical MRO goods include office supplies (such as pens and paper), equipment, furniture, computers, and replacement parts.Name a few types of MRO goods?Office suppliesEquipmentFurnitureComputers
29IntermediariesIntermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance e-businessReintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways
30MEASURING E-BUSINESS SUCCESS Most companies measure the traffic on a Web site as the primary determinant of the Web site’s successHowever, a large amount of Web site traffic does not necessarily equate to large salesMany organizations with high Web site traffic have low sales volumes
31MEASURING E-BUSINESS SUCCESS Web site traffic analysis can include:CookieClick-throughBanner adInteractivityWeb site traffic analysis can include:Cookie – a small file deposited on a hard drive by a Web site containing information about customers and their Web activitiesClick-through – a count of the number of people who visit one site and click on an advertisement that takes them to the site of the advertiserBanner ad – a small ad on one Web site that advertises the products and services of another business, usually another dot-com businessInteractivity – visitor interactions with the target adAnalyzing Web site traffic is one way organizations can understand the effectiveness of Web advertisingAsk your students how interactivity is a giant advancement in the advertising industryAns: Prior to computers there was no way for the advertiser to know if the customer actually read or even looked at an ad in a newspaper or magazineInteractivity measures allow advertisers to know exactly how long a customer spends viewing an adAsk your students about privacy and how do these types of Web traffic analysis tools invade user privacy
32Web Site MetricsClickstream data tracks the exact pattern of a consumer’s navigation through a Web siteClickstream data can reveal:Number of pageviewsPattern of Web sites visitedLength of stay on a Web siteDate and time visitedNumber of customers with shopping cartsNumber of abandoned shopping cartsClick-stream data can reveal a number of basic data points on how consumers interact with Web sitesAsk your students what an organization can learn from understanding click-stream dataFor example, what does number of abandoned shopping carts tell an organization?
33Web Site Metrics Web site metrics include: Visitor metrics Exposure metricsVisit metricsHit metricsReview each section of Figure 3.30 for a detailed listing of visitor, exposure, visit, and hit metricsCLASSROOM EXERCISEMeasuring MetricsBreak your students into groups and assign each group one of the four categories found in the above FigureHave your students detail each category explaining how each metric can be used to help an organization improve its operationsAsk your students to share their answers with the class
34E-BUSINESS BENEFITS AND CHALLENGES E-business benefits include:Highly accessibleIncreased customer loyaltyImproved information contentIncreased convenienceIncreased global reachDecreased cost
35E-BUSINESS BENEFITS AND CHALLENGES E-business challenges include:Protecting consumersLeveraging existing systemsIncreasing liabilityProviding securityAdhering to taxation rules
36NEW TRENDS IN E-BUSINESS: E-GOVERNMENT AND M-COMMERCE E-government - involves the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government
37NEW TRENDS IN E-BUSINESS: E-GOVERNMENT AND M-COMMERCE Mobile commerce - the ability to purchase goods and services through a wireless Internet-enabled device