Presentation on theme: "Chapter 14 and Plug-in B11 E-Business CLASSROOM OPENER"— Presentation transcript:
1 Chapter 14 and Plug-in B11 E-Business CLASSROOM OPENER GREAT BUSINESS DECISIONS – Jeff Bezos Decides to Sell Books over the InternetJeff Bezos owns 41 percent of Amazon and is estimated to be worth over $900 million. Bezos graduated from Princeton and was the youngest Vice President at Banker’s Trust in New York. Bezos had to make a decision to stay and receive his 1994 Wall Street bonus or leave and start a business on the Internet. “I tried to imagine being eighty years old, looking back on my life. I knew that I would hardly regret having missed the 1994 Wall Street bonus. But having missed being part of the Internet boom – that would have really hurt,” stated Bezos. The first books ordered through Amazon were dispatched in the fall of 1994 (personally packaged by Bezos and his wife). Amazon.com is now the biggest bookstore on the planet. It is the exemplar of electronic business.
2 Learning Outcomes Compare e-commerce and e-business Compare the four types of e-businessmodelsDescribe the benefits and challengesassociated with e-business14.1 Compare e-commerce and e-businessE-commerce is the buying and selling of goods and services over the Internet. E-commerce refers only to online transactions. E-business is the conducting of business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners. The primary difference between e-commerce and e-business is that e-business also refers to online exchanges of information. For example, a manufacturer allowing its suppliers to monitor production schedules or a financial institution allowing its customers to review their banking, credit card, and mortgage accounts.14.2 Compare the four types of e-business modelsBusiness-to-business (B2B) Applies to businesses buying from and selling to each other over the Internet.Business-to-consumer (B2C) Applies to any business that sells its products or services to consumers over the Internet.Consumer-to-business (C2B) Applies to any consumer that sells a product or service to a business over the Internet.Consumer-to-consumer (C2C) Applies to sites primarily offering goods and services to assist consumers interacting with each other over the Internet.The primary difference between B2B and B2C are the customers; B2B customers are other businesses while B2C markets to consumers. Overall, B2B relations are more complex and have higher security needs; plus B2B is the dominant e-business force, representing 80 percent of all online business.14.3 Describe the benefits and challenges associated with e-businessE-business is the conducting of business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners. E-business benefits include Highly accessible, Increased customer loyalty, Improved information content, Increased convenience, Increased global reach, Decreased costE-business challenges include Protecting consumers, Leveraging existing systems, Increasing liability, Providing security, Adhering to taxation rules14.4 Explain the differences among e-shops, e-malls, and online auctionsAn e-shop is a version of a retail store where customers can shop at any hour of the day without leaving their home or office. An e-mall consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shops. An online auction is a place where buyers and sellers come together to auction items and prices are determined dynamically.
3 E-BusinessOne of the biggest benefits of the Internet is its ability to allow organizations to perform business with anyone, anywhere, anytime.Touch customersEnrich products and services with informationReduce costsStrategic alliances enable businesses to gain competitive advantage(s) through access to partner(s) resources, including markets, technologies, capital, and peopleTeaming up with another business adds complementary resources and capabilities, enabling participants to grow and expand more quickly and efficiently - especially fast growing companies who rely heavily on outsourcing many areas of their business to extend their technical and operational resourcesCLASSROOM EXERCISEWhere the Internet Really StartedAsk students, “How did the Internet (really) get started.” A few responses might include: Al Gore (“Information Superhighway”), or the Department of Defense (ARPANET), or even Bill Gates (Microsoft).For many people, the Internet is the epitome of cutting-edge technology. However, in the nineteenth century, the first “online communications network” was already in place - the telegraph! In addition, at the time, it was just as perplexing, controversial, and revolutionary as the Internet is today. In essence, the telegraph was the first incarnation of the Internet.Ask students to “Imagine an almost instantaneous communication system that would allow people and governments all over the world to send and receive messages about politics, war, illness, and family events. The government has tried and failed to control it.” Was it the Internet? Nope, the humble telegraph fit this bill way back in the 1800s. The parallels between the now-ubiquitous Internet and the telegraph are amazing, offering insight into the ways new technologies can change the very fabric of society within a single generation.Emphasize the history of the telegraph:Begin with the funny story of a mile-long line of monks holding a wire and getting simultaneous shocks in the interest of investigating electricity, and ending with the advent of the telephone (this is the true scenario).Discuss the early “online” pioneers: Samuel Morse, Thomas Edison, and a seemingly endless parade of code-makers, entrepreneurs, and spies who helped ensure the success of this communications revolution.With the invention of the telegraph, the world of communications was forever changed. The telegraph gave rise to creative business practices and new forms of crime. Romances blossomed over its wires. In addition, attitudes toward everything from news gathering to war had to be completely rethought. The saga of the telegraph offers many parallels to that of the Internet in our own time, and is a remarkable episode in the history of technology.
4 E-Business 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 partnersAsk your students to differentiate between e-commerce and e-businessE-commerce refers only to online transactionsE-business refers to online transactions, serving customers and collaborating with business partnersOn July 18,2005 media conglomerate News Corp. bought Intermix Media, the company that owns MySpace and about 30 other sites, for $580 million in cash. Los Angeles-based Intermix owns 53% of MySpace and plans to buy the rest. It will become part of News Corp.'s new Fox Interactive Media unit, which was created on July 15, 2005 and also is based in L.A.Since MySpace is a social networking site, why would a business conglomerate such as News Corporation want to purchase it for $580 million?
5 Industries Using E-Business CLASSROOM EXERCISEE-business BusinessAsk your students to list the types of companies they want to work for when they graduateList the companies on the board and categorize them by industryAssign each industry to a group, or assign the industry to each individual depending on the company they want to work for, and have the students research how the different industries are using e-businessManufacturing and Retail: RFID, online payments and orders, sales via the Internet, customer service via the InternetFinancial: online banking, online mortgages, online loansTelecommunications: Voice over the Internet (VoIP)Healthcare: digital hospitals, pharmacy orders via the InternetTravel: online reservations, Travelocity, Expedia
6 E-Business ModelsE-business model – an approach to conducting electronic business on the InternetCan a business operate with more than one e-business model?Yes, eBay and Amazon are prime examples. eBay and Amazon’s e-business models change depending on who is posting the goods for sale and who is buying the goods for sale?
7 E-Business Models Business to Business Business to Consumer Consumer to BusinessConsumer to ConsumersBusiness to Bussiness:Samsung selling processors to AppleBusiness to Consumer:StandardConsumer to Business:Think contractor, consultantConsumer to Consumer:Think Kijijii
8 E-Business ModelsThis is a new service by Google that allows customers to checkout - Google e-BusinessBusiness to BusinessBusiness to ConsumerConsumer to BusinessConsumer to Consumers
9 E-Business ModelsCan you define a business the operates in each segment?B2B: Electronic marketplace, Google search marketingB2C: Progressive insurance, Carfax, Best Buy, AmazonC2B: eBay, AmazonC2C: eBay, Amazon
10 Business-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
11 Processing and Fulfillment E-MarketplacesCompanies can use their own web sites for B2B commerce or use electronic hubsElectronic hubs OR ExchangeOnline marketplaces with many buyers and many sellersAvoid point-to-point connectionsintegrated information – one stop shopping for supplier and supplier product informationSellersBuyersExample: Covisint for auto industry, now healthcare, manu and energyCatalogsAutomated purchasingPricingProcessing and Fulfillment
13 Business-to-Consumer (B2C) Common B2C e-business models include:e-shop – a version of a retail store where customers can shop at any hour of the day without leaving their home or officee-mall – consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shopsBusiness types:Brick-and-mortar businessoperates in a physical store without an Internet presence.Pure-play businessa business that operates on the Internet only (Amazon)Click-and-mortar businessa business that operates in a physical store and on the Internet ( Sears & Canadian Tire)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.Ebay is an e-mallAmazong is both an e-mall and e-shopCan 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
14 Consumer-to-Business (C2B) Priceline.com is an example of a C2B e-business modelNOT REALLY: demand is still directed by the Consumer; supply provided by the company… nothing new hereHowever, Google AdSense, online advertising, are great examples of C2BOnline surveys are also C2BTHE CONSUMER:A webmaster/ blogger offering advertising service (through Google Adsense program for example or amazon.com affiliation program)A photographer or a designer offering stock images to companies by selling his artwork through Fotolia or istockphoto for exampleAny individual answering a poll through a survey siteAny individual with connections offering job hiring service by referring someone through referral hiring sites like jobster.com or h3.comTHE BUSINESS:Any company which wants to fill a job (through referral hiring sites)Any company needing to advertise online (through Google Adwords program for example)Any advertising agency which needs to buy a stock photo (through microstock sites)Online Ad companies:Individuals can display advertising banners, contextual text ads or any other promotional items on their personal websites. Individuals are directly commissioned to provide an advertising/selling service to companies. Good article on C2B
15 How AdSense Works You make your ad spaces available Highest Paying ads appear on your siteYou get paidYou make your website ad spaces available by pasting ad code on your site, and choose where you want the ads to appear.Advertisers bid to show in your ad spaces in a real-time auction. The highest paying ad will show on your site.We handle the process of billing all advertisers and networks for the ads on your site, to make sure you receive your payments.
16 Consumer-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 wins ( eBay)Reverse auction - Buyers use to purchase a product or service, selecting the seller with the lowest bid ( Priceline)eBay is the Internet’s most successful C2C site and is now ranked in the top 15 retailers in the United StatesWhich products or services would they want to purchase using an online auction? Which type of auction would they use?CarBoatVacationBicycleCoatDVDsPet grooming serviceDog walking serviceWedding catering
18 Consumer-to-Consumer (C2C) C2C communities include:Communities 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 JordanBLOGS!Forums around company’s products…
19 Accessing Internet Information Four tools for accessing Internet informationIntranet – internalized portion of the Internet, protected from outside access, for employees onlyExtranet – an intranet that is available to strategic allies (suppliers, distributors, etc.)Portal – Web site that offers a broad array of resources and services ( yahoo & MSN)Kiosk – publicly accessible computer system that allows interactive information browsing ( used in museums and showrooms)19
20 Intranets http://apollo.hal.keane.com/ Using Internet technology to support internal organizational needsDocument sharingOnline repositories of informationRemote access to resources (employee’s handbook)Group collaborationExtranet – intranet that is available to authorized outsiders.Example of an Intranet System:
21 Providing Internet Information Three common forms of service providersInternet service provider (ISP) –provides individuals and other companies access to the Internet ( Eastlink, Aliant)Online service provider (OSP) – offers an extensive array of unique Web services and content (gone: American Online- AOL, today: Google)Application service provider (ASP) – offers access over the Internet to systems and related services that would otherwise have to be located in organizational computers: Google Docs21
22 Providing Internet Information Common ISP services include:Web hostingHard-disk storage spaceSupport22
23 Providing Internet Information Wireless Internet service provider (WISP)23
24 Measuring 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 volumes24
25 Measuring E-Business Success Web site traffic analysis can include:CookieSmall file saved on local client machine sent by the business serverClick-throughCounts the number of users visited a website and clicked on an adBanner ad25
26 Behavioral 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 carts26
30 Interactive Marketing/Personalization How do web sites know it’s you?Answer: using a “cookie”
31 How a cookie worksA cookie is a tiny file deposited on the user’s computer hard drive when an individual visits certain Web sites; used to identify the visitor and track visits to the Web sites.
32 Organizational Strategies for E-Business Primary business areas taking advantage of e-business include:Marketing/salesFinancial servicesProcurementCustomer serviceIntermediaries32
33 MARKETING/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 programs - businesses generate commissions or royalties ( e.g. sending potential buyers to Amazon. com) OR Google business modelViral marketing - a technique that induces Web sites or users to pass on a marketing message ( msg in Hotmail)33
34 MARKETING/SALES Generating revenue on the Internet: 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 devices34
35 MARKETING/SALES Generating revenue on the Internet: Search engine optimization (SEO) - a set of methods aimed at improving the ranking of a Web site in search engine listings- pay-per-clickSpamdexing - 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 promotion35
37 FINANCIAL SERVICES Online consumer payments include: Financial cybermediary OR P2P payment (e.g. PayPal)Electronic check & Electronic cashElectronic bill presentment and payment (EBPP)Sends bill over the Internet and provides easy-to-use paymentDigital wallet (e.g. providing credit card number and its expiry date, used in many online stores such as Amazon)37
38 Some Examples of E-commerce Payment Systems Electronic bill paymentPay your bills using your credit card or your bank accountAll major banks.epostDigital walletSoftware that Stores your credit card information securely at the e-Commerce siteE-cashUsed instead of cash, cheque or credit card.Peer-to-Peer paymentsTo pay sellers not set up to process credit cardsDemo: sign up on passport system
39 FINANCIAL SERVICES Online business payments include: Differs from consumers payment because of large purchases and No use of credit cardsElectronic data interchange (EDI), standard format for exchanging business dataFinancial EDI (financial electronic data interchange) – standard for B2B payments39
41 PROCURMENTMaintenance, 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 Internet41
42 CUSTOMER SERVICECustomer service is the business process where the most human contact occurs between a buyer and a sellere-business strategists are finding that customer service via the Web is one of the most challenging areas of e-businessThe primary issue facing customer service departments using e-business is consumer protection42
44 Consumer Protection E-business security Encryption Scrambling of info which requires a key to decryptSecure socket layer (SSL)(1) Creates secure and private connection between a client and server computer (2) encrypts the info (3) sends the info over the Internet ( e.g. websites with https URL)Secure electronic transaction (SET)Similar to SSL but also enables customer authentications for credit card transaction44
45 Disintermediation Sell directly to consumers Eliminate the ‘middleman’ Disintermediation: the removal of organizations or business process layersExample of disintermediation: selling a sweaterManufacturerDistributorRetailerCustomerCost$48.50$40.34$20.45
46 ReintermediationReintermediation: The shifting of the intermediary role to a new source ( e.g. Information Brokers)Auto DealerConsumerInfo Broker(Edmonds.com)Auto DealerConsumer
47 INTERMEDIARIESIntermediaries – 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 ways47
48 New 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 government48
49 New Trends in E-Business: E-Government and M-Commerce 49
50 New Trends in E-Business: E-Government and M-Commerce Mobile commerce - the ability to purchase goods and services through a wireless Internet-enabled device.50
51 E-Business Benefits and Challenges E-Business benefits include:Highly accessible (24/7/365)Increased customer loyaltyImproved information contentIncreased convenienceIncreased global reachDecreased costWhich benefit would you pick if asked to identify the most important e-business benefit?Would it change depending on the industry?Would it change depending on the company?Would it change depending on the customer?E-Business BenefitsHighly Accessible - Businesses can operate 24 hours a day, 7 days a week, 365 days a yearIncreased Customer Loyalty - Additional channels to contact, respond to, and access customers helps contribute to customer loyaltyImproved Information Content- In the past, customers had to order catalogs or travel to a physical facility before they could compare price and product attributes. Electronic catalogs and Web pages present customers with updated information in real-time about goods, services, and pricesIncreased Convenience - E-business automates and improves many of the activities that make up a buying experienceIncreased Global Reach - Businesses, both small and large, can reach new marketsDecreased Cost - The cost of conducting business on the Internet is substantially smaller than traditional forms of business communication51
52 E-Business Benefits and Challenges E-business challenges include:Protecting consumersProviding securityRespecting taxation rulesReview the figure for a full listing of e-business challengesWhich challenge would you pick if asked to identify the most difficult e-business challenge?Would it change depending on the industry?Would it change depending on the company?Would it change depending on the customer?52