4 Lecture Electronic Business and Electronic Commerce

OBJECTIVES Analyze how Internet technology has changed business value and models Define electronic commerce and describe how it has changed consumer retailing and business-to- business transactions Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Internet Technology and the Digital Firm Information technology infrastructure: The Internet provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations. Direct communication between trading partners: Disintermediation removes intermediate layers. Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Round the clock service: Web sites available to consumers 24 hours Reduced transaction costs: Costs of searching for buyers, declines Management Information Systems Lecture 4 Electronic Business and Electronic Commerce Internet Technology and the Digital Firm (Continued)

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Business Model: Defines an enterprise – offer the scope of business. Describes how the enterprise delivers a product or service Shows how the enterprise creates wealth New Business Models and Value Propositions Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Information asymmetry: One party in a transaction has more information than the other. The Internet decreases information asymmetry. Increases richness: The Internet increases the depth, detail, and scope of information. Increases reach: The Internet increases the number of people who can be contacted efficiently. The Changing Economies of Information Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM The Changing Economics of Information Figure 4-1 Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Virtual storefront: Sells goods or services online (Amazon.com) Information broker: Provides information on products or services (Edmunds.com) Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com) Online marketplace: Provides a trading platform for individuals and firms (eBay.com) Internet Business Models Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC COMMERCE Categories of Electronic Commerce Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com) Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com) Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com ) Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

Business-To-Consumer Advantages of E-commerce: Customer-centered retailing: Closer and more personalized relationship with customers is possible Web sites: Provide a corporate-centered portal for the consumer to quickly find information on products, services, prices, orders ELECTRONIC COMMERCE Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

Disintermediation: The elimination of organizations or business process, responsible for certain intermediary steps in a value chain, reducing costs to the consumer ELECTRONIC COMMERCE Management Information Systems Lecture 4 Electronic Business and Electronic Commerce Business-To-Consumer Advantages of E-Commerce: (Continued)

The Benefits of Disintermediation to the Consumer Figure 4-2 ELECTRONIC COMMERCE Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

Clickstream tracking tools: Collect data on customer activities at Web sites and store them in a log Predict what the user would like to see next. The software then makes recommendations to users based on their assumed interests ELECTRONIC COMMERCE Interactive Marketing and Personalization Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

Create unique personalized Web pages for each customer Increased closeness to customer, while reducing costs of interacting with the customer ELECTRONIC COMMERCE Web Personalization Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

Electronic Data Interchange (EDI): Enables the computer-to-computer exchange between two organizations of standard transactions. Currently 80% of B2B e-commerce uses this system. EDI is being replaced by more powerful Web- based alternatives. Business-to-Business Electronic Commerce: New Efficiencies and Relationships ELECTRONIC COMMERCE Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC COMMERCE Distributors: B2B online catalogs provide buyers with access to thousands of parts and other goods (Grainger.com) Procurement platforms: Platforms for purchasing goods and materials, negotiating with suppliers, paying for goods, and making delivery arrangements (Ariba.com) Two different types of Net Marketplaces: Net Marketplaces Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS AND THE DIGITAL FIRM Connectivity: Accessible from most computing platforms Can be tied to internal corporate systems and core transaction databases Platforms for interactive applications Scalable to larger or smaller computing platforms Benefits of Intranets Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS AND THE DIGITAL FIRM Finance and accounting Human resources Sales and marketing Manufacturing and production Functional Applications of Intranets Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

ELECTRONIC BUSINESS AND THE DIGITAL FIRM Functional Applications of Intranets Figure 4-8 Management Information Systems Lecture 4 Electronic Business and Electronic Commerce

MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS The Internet provides firms with extraordinary opportunities to develop: 1.new products and services 2.new distribution channels 3.new avenues for marketing and sales 4.new business models. Management Information Systems Lecture 4 Electronic Business and Electronic Commerce Management Opportunities: