Multinational E-business Chapter 9

E-business Business to business (B2B) transactions 70 – 85% of all e-commerce Online sales – customer can order a customized product. Product information can be provided via videos. Inventory can be checked at time of purchase Online purchasing Electronic payment Shipment tracking Easy to compare prices from different suppliers

E-business (2) Business to business (continued) Collaborative product design with suppliers Online technical support Online user training for software, equipment, etc. Downloads of software, training manuals, etc. – these "virtual products" eliminate shipping costs Automatic software upgrades

E-business (3) Business to consumer (B2C) transactions Online sales – customer can order a customized product. Sales experience can include virtual models, etc. Inventory can be checked at the time of purchase Online shipment tracking Electronic payment Online technical support and software help Downloads of software, music, etc. – virtual products eliminate shipping costs Automatic software upgrades

Exhibit 9.1: E-Commerce Value Chain

Globalizing Through the Internet A Web site gives the company immediate global access Managers must still decide whether they want to sell global or local products Business issues related to national contexts (e.g., currencies, local laws, etc.) have to be handled

Selecting Markets Select countries that are ready for e- commerce. Access to computers and the Internet Financial institutions that can process electronic payments Laws to protect these transactions from fraud If a country lacks some of these, go elsewhere.

Exhibit 9.3: Internet Users around the World

Exhibit 9.8: E-Readiness of Selected Countries

Selecting Markets (2) Countries with market inefficiencies are attractive target markets For example, post-Communist countries E-commerce can provide better quality and lower prices Another option is to target a trade bloc (the EU, NAFTA, ASEAN, Mercosur) High-income markets are attractive

Technical Capabilities for Multinational E-commerce Ability to process multiple currencies Ability to calculate/show purchase information on international shipping, duties, and local taxes such as VAT (value added tax, used in EU) Systems that check compliance with national and international laws Enterprise resource planning (ERP) systems provide many of these functions

Technical Capabilities for Multinational E-commerce (2) Ability to provide support in multilingual service centers Protect customers against fraud Credit cards should not be the only payment option.

To Build or Outsource Technical Capabilities? Two options Run all e-commerce functions internally or outsource to e-commerce enablers E-commerce enablers: fulfillment specialists that provide services such as Web site translation Provide services and software that translate Web sites, calculate shipping, value-added taxes, duties, and other charges unique to each country

“Mission-Critical” Factors to Communicate to Global Audience 1. Link all Web sites to corporate Web site 2. Web site should contain local contact information for feedback or comment 3. Provide a prominent list of languages used by the company’s Web site 4. Use different languages for downloads

“Mission-Critical” Factors to Communicate to Global Audience (2) 5. Localize by language the parts of the parent company Web site that receive the most access 6. Provide a site map 7. Provide the firm’s privacy statement in all local languages

“Mission-Critical” Factors to Communicate to Global Audience (3) 8. Guard against local piracy by putting your policies in local languages 9. Localize your graphics and written material 10. Localize content management