Chapter 17 Using Technology in a Competitive Environment

Objectives of Chapter 17: Understand the key role of technology as it affects a company’s strategy. Describe how information can be provided using information technology. Explain the concept of e-commerce. Discuss the use of the Web for business-to-consumer marketing. Explain how business-to-business relationships work. Understand how technology can make a company more efficient. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Strategic Use of Information Technology Dell uses an almost total internet strategy to market their products. Southwest Airlines uses the internet extensively for on-line reservations. Best Buy uses the internet for marketing products which are primarily found in their traditional retail stores. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Why Buy Consumer Electronics in a Store? Eliminate shipping and handling costs 35.5% See product demonstration first 29.8 Returns less of a hassle 24.0 Shorter time before getting product 23.0 Check out quality 17.2 Speak with salesperson 16.1 Price lower in store 14.7 Eliminate using credit card on internet 14.4 Pay by cash or check 12.6 Photo on web not sufficient 10.0 McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Providing Information on the Web Virtually every public company and thousands of privately held companies now have company websites. These websites provide information: Annual reports Company history FAQs Advertisements about their product lines McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Electronic Commerce Electronic Commerce (E-commerce): The buying or selling of products on the Web. Consumer-to-Consumer Commerce: The selling of a product by one consumer to another typically through an intermediary called a hub. Click below to view a video from a standard modem (56k) Click below to view a video from a high-speed modem (250k) McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Consumer-to-Consumer E-Commerce Hub (or electronic market) S B S B S B Information Cash Products McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Business to Consumer Business-to-Consumer E-commerce (B2C or BtoC): Selling by a business to a consumer on the internet; also called electronic retailing, e-tailing or e-retailing. Online Retailer Bank or Credit Card Buyer Buyer Buyer Orders & Cash Products McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Business-to-Business Business-to-Business (B to B) E-commerce: The uses of the Internet to conduct transactions between businesses. Two Types of B2B Relationships: Direct link transactions between two businesses. Typically, these are supplier-manufacturer links or manufacturer-retail links. Through the use of a hub, vortex, electronic market, or net marketmaker. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Business-to-Business Direct Business-to-Business E-commerce: Interaction between two companies primarily through computer contact. Extranet: A private website accessible only by a company and its partners. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Direct Business-to-Business Relationships Products Seller (supplier) Buyer Order McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Hub-Based Business-to-Business E-Commerce Electronic hub or net market makers: The intermediary in business-to-business e-commerce Hub-based B2B is expected to grow significantly as companies find ways to reduce their costs of inputs and increase efficiency. Prediction: Expenditures on B2B net market maker infrastructure (equipment and software) will increase from $2.1 billion in 2000 to $80.9 in 2005. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Hub-Based Business-to-Business E-Commerce Supplier Supplier Supplier Hub or Electronic Market Buyer Buyer Buyer Buyer Order Shipment McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Using Technology to Enhance Internal Operations Intranet: A computer communications network within a single company. Intranets: Solve many company communication problems. Allows communication even if different kinds of computers are used. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Using Technology to Enhance Internal Operations Companies are finding that databases can be accessed by users across the company, thereby substantially reducing the need for paper while providing the opportunity for continuous updating of information. Intranets are secure from outsiders and insiders who should not have access to confidential information. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Impact of Technology on Internal Operations Just-in-Time (JIT) Production Flexible Manufacturing: Manufacturing with highly automated machinery that can be changed quickly and can perform multiple tasks. Enterprise Resource Planning (ERP): A company wide application software that provides a centralized repository of information. Mass Customization: The design of products and processes in order to deliver highly customized products to different customers around the world. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Impact of Technology on Internal Operations Computer Integrated Manufacturing: Numerically controlled machines Robots Computer Aided Design (CAD) Computer Integrated Manufacturing Enterprise Resource Planning (ERP): Integrates all departments and functions across a company onto a single computer system. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.