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MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Economic Success Factors.

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Presentation on theme: "MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Economic Success Factors."— Presentation transcript:

1 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Economic Success Factors

2 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Economic Success Factors Cost Curves Bundling Critical Mass of Buyers and Sellers Pricing Consumer Characteristics Brokers and Disintermediarisation

3 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Costs Curves Quantity Cost Quantity Cost Physical ProductsDigital Products

4 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Bundling More opportunities with EC Pricing becomes critical Eg Telstra

5 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Critical Mass of Buyers and Sellers To overcome initial high costs Size of market depends on demographics National Competitive Advantage

6 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Pricing Auctions of unused capacity Price searching reverse auctions prices will be determined by buyers willingness to pay rather than production costs convenience versus price

7 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Consumer Characteristics EC is more suited to analytical rather than impulse buyers What about patient buyers?

8 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Disintermediarisation vs Brokers Brokers lower search costs Privacy greater information risk reduction matching supply & demand Disintermediarisation reduces steps in value chain removes wholesalers and brokers

9 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Winners ISPs Portals Software Companies Network Owners Mid-size Manufacturers Technology Suppliers

10 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Winners (Cont.) Security Providers Electronic Payment Gateways Dedicated Online Companies Conventional Retailers that use online extensively eMarketplaces Niche manufacturers

11 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Losers Wholesalers Brokers Salespeople Non-differentiated manufacturers

12 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Virtual Communities Electronic Communities Replace Geographical Communities Serves the analytical and patient buyer

13 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Virtual Communities (Cont.) Types Communities of Transactions Facilitate Buying and Selling Communities of Interests Specific Topic or Interest Communities of Relations Organised Around Certain Life Experiences Communities of Fantasy Imaginary Environments

14 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Virtual Communities (Cont.) Creating a Virtual Community Creates a Market Understand a particular niche industry and its information needs Build a site that provides that information Set up the site to mirror the steps that a user goes through in the information gathering and decision making process Build a community that relies on the site for decision support Start selling products that fir the decision support process

15 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Globalisation

16 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Emergence of Globalisation Greater imports by Industrialised Countries Low labour costs in Third World Countries Improved Telecommunications Growth of Networks Free Trade Agreements Growth of Knowledge & Information economy

17 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Farming White Collar Service Blue Collar

18 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Advantages of Globalisation Access to larger markets flexibility to employ workers and manufacture products anywhere 24/7 trade across time zones

19 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Barriers to Globalisation Legal issues Regulation Jurisdiction Market access Telecommunications Infrastructure Financial Issues Customs and Taxation Money Exchange Differing Currencies

20 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Barriers to Globalisation (cont.) Trust, Security & Authentication Language Cultural and Social differences Government Support or Interference

21 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Competitive Advantage

22 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Traditional Competitors The firm New Entrants Substitute Products SuppliersCustomers Porters 5 forces

23 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE EC and Porters 5 forces Customers increase in bargaining power due to increase in sellers and products Suppliers bargaining power decrease due to global competition Traditional rivals Greater presence due to virtual store fronts New entrants many new entrants global marketspace Substitute products more substitute products

24 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Business Responses to Competition Product differentiation focussed differentiation data mining Tight linkages to customers and suppliers switching costs Low cost producer lower internal costs lower price \ improved quality to customer

25 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Porters Value Chain Model Production consists of a series of activities that add a margin of value to a firms products or services The added value increases profits, enhances asset value and competitive position Primary activities Directly related to production and distribution Support activities Make delivery possible Include organisational structure, HR, technology and procurement

26 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Porters Value Chain Model Increase profits by: Increasing steps that involve primary activities Reducing steps that involve support activities Converting support activities to primary activities

27 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Use of EC for Competitive Advantage Strategic Systems FedEx American airlines

28 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Use of EC for Competitive Advantage Continuous Improvement Productivity improvement Just-in-time TQM Improved decision making Managing information and knowledge Innovation and creativity Change management Customer service

29 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Use of EC for Competitive Advantage Business Process Reengineering Reduced cycle time Employee empowerment (IT enables decentralised decision making) Knowledge management Customer focussed approach (mass production changed to mass customisation) Business alliances (General Motors, Ford and Chrysler) Virtual corporations

30 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE The Future of EC Improve Transform Redefine

31 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE The Future of EC (cont.) Improve New markets Customisation Ordering Delivery (digital products) New sales channels (Disintermediarisation) Demand driven supply Reduced cycle time Customer service (dialogue and feedback) Brand image

32 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE The Future of EC (Cont.) Transform The Horizontal Organisation Strategic Agility (Quick Reactions to Technological Change) Mobile Workforces Cross Functional Systems

33 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Strategic Systems Management Systems Knowledge Systems Operational Systems Sales & Marketing ProductionAccountingHuman resources Functional Business applications

34 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE The Future of EC (Cont.) Redefine New Products Services versus goods The revolution of open source New Business Models (?)

35 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE The Future of EC (Cont.) Redefine (cont.) Virtual Organisations Integration of the supply chain Human Resource Management Human Capital Online learning Integration

36 MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Business strategy and EC Lead Wait Experiment


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