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

7. PROVIDING INTERNET INFORMATION
Three common forms of service providers
Internet service provider (ISP) –provides individuals and other companies access to the Internet
Online service provider (OSP) – offers an extensive array of unique Web services
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. 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. 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. EGOVERNMENT AND MCOMMERCE

11. 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
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12. 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
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13. Who Are Your Customers? Business to Business Business to Consumer
Other businesses
Business to Consumer
Individuals
Each is different and has different needs and wants
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14. B2C: Convenience Versus Specialty
Lower priced
Purchased frequently
Example: common food items
Specialty
Higher priced
Purchased less frequently
Example: Stereos, computers
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15. B2C: Commoditylike and Digital
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
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16. 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)
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17. 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
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18. 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
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19. 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
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20. 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
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21. 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
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22. E-Marketplaces McGraw-Hill
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23. 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
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24. B2C Marketing Mix Tools Registering with search engines Online ads
Viral marketing
Affiliate programs
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25. 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)
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26. 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
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27. 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 (
Send a card
Card has link so the other person can send you a card back
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28. 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
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29. 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
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30. Business to Business Marketing
Much more personal
Not usually done with generic ads designed for mass distribution
Often take place in e-marketplaces
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31. 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
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32. MOVE MONEY EASILY & SECURELY
In e-commerce, most money moves electronically
Security becomes very important
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33. B2C Payment Systems Credit cards Financial cybermediaries
Electronic checks
Electronic Bill Presentment and Payment
Smart cards
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34. Financial Cybermediaries
Financial cybermediary – Internet-based company that makes it easy for one person to pay another person or organization over the Internet
PayPal ( is the most well-known
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35. 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
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36. 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 ( and Quicken (
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37. 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
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38. 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
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39. 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
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40. 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)
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41. 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
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42. 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
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43. Security: The Pervading Concern
Security is very important when moving money
Some security measures…
Encryption
Secure Sockets Layers
Secure Electronic Transactions
Many, many others
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44. 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
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45. Public Key Encryption McGraw-Hill
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46. 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 (notice the “s”)
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47. 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
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48. 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)
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49. E-Government Focuses Government to Government (G2G, intra-G2G)
Government to Business (G2B)
Government to Consumer (G2C)
International Government to Government (inter- G2G)
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50. 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
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51. 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
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52. 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
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53. 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
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54. ORGANIZATIONAL STRATEGIES FOR EBUSINESS
Primary business areas taking advantage of ebusiness include:
Marketing/sales
Financial services
Procurement
Customer service
Intermediaries

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