SESSION 4 THE DIGITAL FIRM: ELECTRONIC COMMERCE AND ELECTRONIC BUSINESS

Internet Technology and The Digital Firm 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, streamlines process ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Round-the-clock service: Web sites available to consumers 24 hours a day Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize Reduced transaction costs: Costs of searching for buyers, sellers, etc. reduced Internet Technology and the Digital Firm ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Business Model: Defines an enterprise Describes how the enterprise delivers a product or service Shows how the enterprise creates wealth New Business Models and Value Propositions ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Information asymmetry: One party in a transaction has more information than the other Increases richness: Depth and detail of information Increases reach: Number of people contacted The Changing Economies of Information ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Richness New levels of richness and reach attainable Reach ENABLERS Explosion of connectivity Dissemination of standards Figure 4-1 The Changing Economics of Information ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Internet Business Models Virtual storefront: Sells goods, services on-lineVirtual storefront: Sells goods, services on-line Information broker: Provide info on products, pricing, etc.Information broker: Provide info on products, pricing, etc. Transaction broker: Buyers view rates, terms from various sourcesTransaction broker: Buyers view rates, terms from various sources ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Online Marketplace: Concentrates information from several providersOnline Marketplace: Concentrates information from several providers Content provider: Creates revenue through providing digital contentContent provider: Creates revenue through providing digital content On-line service provider: Provides service, support for hardware, software productsOn-line service provider: Provides service, support for hardware, software products Internet Business Models ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Virtual community: Chat room, on-line meeting placeVirtual community: Chat room, on-line meeting place Portal: Initial point of entry to Web, specialized content, servicesPortal: Initial point of entry to Web, specialized content, services Syndicator: Aggregate information from several sources sold to other companiesSyndicator: Aggregate information from several sources sold to other companies Internet Business Models ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Dynamic pricing: real-time interactions between buyers and sellers determine worth of itemsDynamic pricing: real-time interactions between buyers and sellers determine worth of items Banner ad: Graphic display used for advertising, linked to the advertiser’s Web siteBanner ad: Graphic display used for advertising, linked to the advertiser’s Web site Internet Business Models ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Categories of Electronic Commerce Business-to-customer (B2C): Retailing of products and services directly to individual customersBusiness-to-customer (B2C): Retailing of products and services directly to individual customers Business-to-business (B2B): Sales of goods and services among businessesBusiness-to-business (B2B): Sales of goods and services among businesses Consumer-to-consumer (C2C): Individuals use Web for private sales or exchangeConsumer-to-consumer (C2C): Individuals use Web for private sales or exchange ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Business-To-Consumer Electronic Commerce Customer-centered retailing: Closer, yet more cost-effective relationship with customersCustomer-centered retailing: Closer, yet more cost-effective relationship with customers Disintermediation: The removal of organizations or business process layers responsible for certain intermediary steps in a value chainDisintermediation: The removal of organizations or business process layers responsible for certain intermediary steps in a value chain Reintermediation: The shifting of the intermediary role in a value chain to a new sourceReintermediation: The shifting of the intermediary role in a value chain to a new source ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Benefits of Disintermediation to the Consumer Figure 4-2 Manufacturer DistributorRetailer Customer Cost/ Sweate r $48.50 $40.34 $20.45 ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Interactive Marketing and Personalization Web personalization: The tailoring of web content directly to a specific userThe tailoring of web content directly to a specific user Benefits of using individual sales people at dramatically lower costsBenefits of using individual sales people at dramatically lower costs ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Web Site Personalization ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

M-Commerce and Next Generation Marketing Mobile commerce (m-commerce): Wireless devices used to conduct both business-to-consumer and business-to- business e-commerce transactions over the InternetWireless devices used to conduct both business-to-consumer and business-to- business e-commerce transactions over the Internet Extend personalization by delivering new value-added services directly to customers at any time and placeExtend personalization by delivering new value-added services directly to customers at any time and place ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Customer Personalization Figure 4-4 ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Automation of purchase, sale transactions from business to business Private industrial networks: focus on coordination between companies for efficient supply chain management and collaborative activitiesPrivate industrial networks: focus on coordination between companies for efficient supply chain management and collaborative activities Electronic hubs: On-line marketplaces, point-to-point connections, integrated informationElectronic hubs: On-line marketplaces, point-to-point connections, integrated information ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

A Private Industrial Network Figure 4-5 ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

A Net Marketplace Figure 4-6 ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Electronic Commerce Payment Systems ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Factors that make a retail web site success Performance and service Personalization Socialization Look and feel Incentives Security and reliability ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM

Unproven business models Business process change requirements Channel conflicts Legal issues Security and privacy MANGEMENT CHALLENGES & OPPORTUNITIES ELECTRONIC COMMERCE, ELECTRONIC BUSINESS, AND THE EMERGING DIGITAL FIRM