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Chapter 3 3-1 CHAPTER THREE OVERVIEW SECTION 3.1 - BUSINESS AND THE INTERNET  Disruptive Technology  Evolution of the Internet  Accessing Internet Information.

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Presentation on theme: "Chapter 3 3-1 CHAPTER THREE OVERVIEW SECTION 3.1 - BUSINESS AND THE INTERNET  Disruptive Technology  Evolution of the Internet  Accessing Internet Information."— Presentation transcript:

1 Chapter CHAPTER THREE OVERVIEW SECTION BUSINESS AND THE INTERNET  Disruptive Technology  Evolution of the Internet  Accessing Internet Information  Providing Internet Information SECTION EBUSINESS  Ebusiness Basics  Ebusiness Models  Organizational Strategies for Ebusiness  Measuring ebusiness Success  Ebusiness Benefits and Challenges  New Trends in Ebusiness: Egovernment and Mcommerce

2 Chapter DISRUPTIVE VERSUS SUSTAINING TECHNOLOGY Disruptive technology – a new way of doing things that initially does not meet the needs of existing customers Sustaining technology – produces an improved product customers are eager to buy

3 Chapter EVOLUTION OF THE INTERNET The Internet began as an emergency military communications system operated by the Department of Defense Gradually the Internet moved from a military pipeline to a communication tool for scientists to businesses

4 Chapter EVOLUTION OF THE WORLD WIDE WEB The Internet’s impact on information  Easy to compile  Increased richness and reach  Improved content The Internet makes it possible to perform business in ways not previously imaginable It can also cause a digital divide

5 Chapter EVOLUTION OF THE WORLD WIDE WEB World Wide Web (WWW) – a global hypertext system that uses the Internet as its transport mechanism  Web 2.0  Mashups  Web 3.0 Hypertext transport protocol (HTTP) – the Internet standard that supports the exchange of information on the WWW

6 Chapter ACCESSING INTERNET INFORMATION Four tools for accessing Internet information 1. Intranet – internalized portion of the Internet, protected from outside access, for employees 2. Extranet – an intranet that is available to strategic allies 3. Portal – website that offers a broad array of resources and services 4. Kiosk – publicly accessible computer system that allows interactive information browsing

7 Chapter PROVIDING INTERNET INFORMATION Three common forms of service providers 1. Internet service provider (ISP) –provides individuals and other companies access to the Internet 2. Online service provider (OSP) – offers an extensive array of unique Web services 3. Application service provider (ASP) – offers access over the Internet to systems and related services that would otherwise have to be located in organizational computers

8 Chapter What’s a URL? Uniform Resource Locator It provides not only location of a file but also how to access that file your browser, uses the URL to retrieve a file from the host computer where it is stored Ex: http: is the protocol hypertext transfer protocol Next is the host address, i.e., Ubalt is university of Baltimore Edu..i mplies education

9 Chapter E-commerce is changing everything Electronic commerce (e-commerce) – commerce, but it is commerce accelerated and enhanced by IT  Build powerful relationships with customers  Build powerful relationships with suppliers  Build powerful relationships with partners

10 Chapter EGOVERNMENT AND MCOMMERCE

11 Chapter E-COMMERCE BUSINESS MODELS There are 2 that are most prominent Business to Business (B2B) – when a business sells products and services to customers who are primarily other businesses Business to Consumer (B2C) – when a business sells products and services to individuals McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

12 Chapter E-COMMERCE BUSINESS MODELS B2B is where most of the money is  About 97% B2C is the most well-known  Amazon, eBay, etc. B2B and B2C differences require that you know your customers well, develop the right marketing mix, and move money easily McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

13 Chapter Who Are Your Customers? Business to Business  Other businesses Business to Consumer  Individuals Each is different and has different needs and wants McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

14 Chapter B2C: Convenience Versus Specialty Convenience  Lower priced  Purchased frequently  Example: common food items Specialty  Higher priced  Purchased less frequently  Example: Stereos, computers McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

15 Chapter B2C: Commoditylike and Digital Commoditylike  Same no matter where you purchase it  Examples: books, music, movies  Price and ease of ordering are important Digital  Purchased and delivered over the Internet  Best product type for B2C e-commerce  Examples: Music, software McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

16 Chapter B2C: Mass Customization Mass customization – the ability of an organization to give its customers the opportunity to tailor its products or services  Dell – customized computer purchases  Apple iTunes – only the music you want (not necessarily the whole album) McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

17 Chapter B2B: MRO Versus Direct Maintenance, repair, and operations (MRO) materials (indirect materials) – materials necessary for running a company but do not relate to the company’s primary business activities  Similar to convenience items in B2C  Office supplies, repair parts, lubricating oils McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

18 Chapter MRO Materials Buyers in B2B make large purchases Can then demand a discount (not true in B2C) Can team up with other buyers to create demand aggregation Demand aggregation – combining purchase requests from multiple buyers which justifies a larger discount McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

19 Chapter Direct Materials Direct materials – materials that are used in production in a manufacturing company or are placed on the shelf for sale in retail environments  Relate directly to a company’s primary business activities  Quality, quantity, and delivery timing are important McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

20 Chapter Direct Materials Buyers can participate in reverse auctions for direct materials Reverse auction – process in which a buyer posts its interests in buying items and sellers compete by submitting successively lower bids  The lowest bidder wins McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

21 Chapter B2B: Horizontal Versus Vertical B2B e-commerce takes advantage of e- marketplaces Electronic marketplace (e-marketplace) – interactive business providing a central market where multiple buyers and sellers can engage in e-commerce  Horizontal e-marketplaces  Vertical e-marketplaces McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

22 Chapter E-Marketplaces McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

23 Chapter Business to Consumer Need to determine your marketing mix Marketing mix – set of marketing tools your organization will use to pursue its marketing objectives in reaching and attracting potential customers  There are many such tools for B2C McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

24 Chapter B2C Marketing Mix Tools Registering with search engines Online ads Viral marketing Affiliate programs McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

25 Chapter Registering with Search Engines Some search engines will list your site for free Others charge a fee For an additional fee, your site can appear at top of a search list (every time) McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

26 Chapter Online Ads Online ads (banner ads) – small advertisements that appear on other sites Two variations are:  Pop-up ad – small Web page advertisement that appears on your screen outside the current Web site  Pop-under ad – pop-up ad you do not see until you close your current browser window McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

27 Chapter Viral Marketing Viral marketing – encourages users of a product or service supplied by a B2C business to encourage friends to join in as well  Blue Mountain Arts (www.bluemountain.com)www.bluemountain.com  Send a card  Card has link so the other person can send you a card back McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

28 Chapter Affiliate Programs Affiliate program – arrangement between two e- commerce sites that directs viewers from one site to another  If viewers buy at the second site, the second site pays a small fee to the first site  Usually a percentage of the sale McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

29 Chapter Affiliate Programs Click-throughs and conversion rates are important Click-through – count of the number of people who visit one site and use an ad to get to another Conversion rate – percentage of potential customers who actually buy something McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

30 Chapter Business to Business Marketing Much more personal Not usually done with generic ads designed for mass distribution Often take place in e-marketplaces McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

31 Chapter Business to Business Marketing Once a contact is made, the relationship must be established This often requires face-to-face meetings Must also integrate the IT systems to the supplier business and customer business McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

32 Chapter MOVE MONEY EASILY & SECURELY In e-commerce, most money moves electronically Security becomes very important McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

33 Chapter B2C Payment Systems Credit cards Financial cybermediaries Electronic checks Electronic Bill Presentment and Payment Smart cards McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

34 Chapter Financial Cybermediaries Financial cybermediary – Internet-based company that makes it easy for one person to pay another person or organization over the Internet  PayPal (www.paypal.com) is the most well-knownwww.paypal.com McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

35 Chapter Electronic Checks Electronic check – mechanism for sending money from your checking or savings account to another person or organization  Many implementations  Most common implementation is online banking McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

36 Chapter Electronic Bill Presentment & Payment Electronic Bill Presentment and Payment (EBPP) – system that sends bills over the Internet and provides an easy-to-use mechanism (perhaps a button) to pay for them if the amount looks correct  Available through Checkfree (www.checkfree.com) and Quicken (www.quicken.com)www.checkfree.comwww.quicken.com McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

37 Chapter Smart Cards Smart card – plastic card (the size of a credit card) that contains an embedded chip on which digital information can be stored and updated  Debit cards are an implementation McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

38 Chapter B2C Payment Systems Must move money and other information such as shipping address Digital wallets can help Digital wallet – software and information  Software provides transaction security  Information includes delivery information and other forms of necessary information McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

39 Chapter Digital Wallets Can be…  Client-side – you create this digital wallet and keep it on your computer  Server-side (also called a thin wallet) – an organization creates this for you and keeps it on its servers McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

40 Chapter B2B Payment Systems Business customers…  Make large purchases  Will not pay with credit card or financial cybermediary  Use financial EDI  Pay for many purchases at once (perhaps the end of the month) McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

41 Chapter EDI Electronic data interchange (EDI) – direct computer- to-computer transfer of transaction information in standard business documents, such as invoices and purchase orders, in a standard format  How businesses communicate with each other  Used in e-marketplaces and VANs McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

42 Chapter Financial EDI Financial EDI – an electronic process used primarily within B2B for the payment of purchases  This is electronic money in B2B  Often occurs through an automated clearing house McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

43 Chapter Security: The Pervading Concern Security is very important when moving money Some security measures…  Encryption  Secure Sockets Layers  Secure Electronic Transactions  Many, many others McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

44 Chapter Encryption Encryption – scrambles the contents of a file so that you can’t read it without having the right decryption key Often through public key encryption (PKE) – uses two keys: a public key for everyone and private key for only the recipient of the encrypted information McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

45 Chapter Public Key Encryption McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

46 Chapter Secure Sockets Layers Secure Sockets Layer (SSL)…  Creates a secure connection between a Web client and server  Encrypts the information  Sends the information over the Internet Denoted by lock icon on browser or https:// (notice the “s”) McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

47 Chapter Secure Electronic Transactions Secure Electronic Transaction (SET) – transmission method that ensures transactions are legitimate as well as secure  Helps verify use of a credit card, for example, by sending the transaction to the credit issuer as well as the seller/supplier McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

48 Chapter THE BROADENING OF E-GOVERNMENT Electronic government (e-government) – use of digital technologies to transform government operations in order to improve efficiency, effectiveness, and service delivery Make the government click-and-mortar Click-and-mortar – Presence in the real world (mortar) and also in the virtual world (click) McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

49 Chapter E-Government Focuses Government to Government (G2G, intra-G2G) Government to Business (G2B) Government to Consumer (G2C) International Government to Government (inter- G2G) McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

50 Chapter Government to Government Government to government (G2G, intra-G2G) – e- commerce activities performed within a single nation’s government  Vertical – up and down among federal, state, and local levels  Horizontal – integration of agencies within a specific level McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

51 Chapter Government to Business Government to Business (G2B) – e-commerce performed between a government and businesses  Purchasing direct and MRO materials  Soliciting bids for work  Licensing applications  Meeting regulations  Many other applications McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

52 Chapter Government to Consumer Government to consumer (G2C) – e-commerce performed between a government and its citizens or consumers  Paying taxes  Registering vehicles  Providing information and services  Student loans  Many other applications McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

53 Chapter International Government to Government International government to government (inter-G2G) – e-commerce performed between two or more governments  Providing foreign aid  Export and import transportation  Many other applications McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

54 Chapter ORGANIZATIONAL STRATEGIES FOR EBUSINESS Primary business areas taking advantage of ebusiness include:  Marketing/sales  Financial services  Procurement  Customer service  Intermediaries

55 Chapter MEASURING EBUSINESS SUCCESS Most companies measure the traffic on a website as the primary determinant of the website’s success Clickstream data tracks the exact pattern of a consumer’s navigation through a website Website metrics include visitor metrics, exposure metrics, visit metrics, and hit metrics

56 Chapter EBUSINESS BENEFITS AND CHALLENGES Ebusiness benefits include:  Highly accessible  Increased customer loyalty  Improved information content  Increased convenience  Increased global reach  Decreased cost Ebusiness challenges include:  Protecting consumers  Leveraging existing systems  Increasing liability  Providing security  Adhering to taxation rules

57 Chapter EBUSINESS BENEFITS AND CHALLENGES There are numerous advantages and limitations in ebusiness revenue models including:  Transaction fees  License fees  Subscription fees  Value-added fees  Advertising fees

58 Chapter EGOVERNMENT AND MCOMMERCE Mobile commerce - the ability to purchase goods and services through a wireless Internet-enabled device


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