Lesson 1 E-COMMERCE MANAGEMENT

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SESSION OBJECTIVES INTERNET EVOLUTION COMMERCIAL POTENTIAL? ROLE OF INTERNET E-COMMERCE AND MANAGEMENT THEORIES STRATEGIC MANAGEMENT

ORIGINS PENTAGON’S FOR DATA SHARING EMERGENCE OF ARPANET PERMITTING DATA EXCHANGE IN “PACKETS” CERF AND KAHN DEVELOPED TCP/IP COMMUNICATIONS PROTOCOL TOMLINSON DEVELOPED

TECHNOLOGY INTERNET COMPRISED OF LANS (LOCAL AREA) AND WANS (WIDE AREA NETWORKS) LINKED INTO GLOBAL NETWORK INFRASTRUCTURE EACH INTERNET SITE HAS UNIQUE “DOMAIN NAME” STAGE HAS BEEN REACHED WHERE IMAGES, VIDEO CLIPS, GRAPHICS CAN ALL BE RAPIDLY TRANSMITTED

REAL OPPORTUNITY 1992 U.S. INTERNET GENERATED $332 BILLION REVENUE EQUIVALENT TO ENTIRE GDP OF SWITZERLAND 1999 EMERGENCE OF MIXED RETAILERS (INTERNET PLUS SHOP) GROWING FASTER THAN PURE ON-LINE OPERATIONS MIXED MODEL OFFERS LOWER COST PER CUSTOMER ATTRACTED

FORRESTER RESEARCH 2004 FORECASTS INTERNET RETAIL SALES $184 BILLION AND B2B $1.3 TRILLION IN MID-90s MANY OBSERVERS SCEPTICAL OF COMMERCIAL OPPORTUNITY LARGE OPERATIONS ONLY JUST BREAKING EVEN AND MANY STILL RUNNING AT LOSS VOLATILITY IN DOT.COM SHARE PRICES

BEYOND BROCHUREWARE EARLY SITES JUST PRESENTED STATIC ON-LINE BROCHURES SHOULD SEE INTERNET AS ONE OF NUMEROUS ELECTRONIC INFORMATION EXCHANGE SYSTEMS COMBINE PLATFORMS TO FORM ELECTRONIC OR E-COMMERCE

ARTHUR ANDERSEN STUDY OF “FIVE TRUTHS” – VERTICAL DISINTEGRATION OF SUPPLY CHAINS – KNOWLEDGE MORE VALUABLE THAN FIXED ASSETS – ZERO INVESTMENT COST TO EXPAND CAPACITY – OFFERS MARKETS OF “PERFECT INFORMATION” – CREATES INSTANT RESPONSE SUPPLY CHAINS

CHOICE OF “LOW” OR “HIGH” USE TO DELIVER INFORMATION CHOICE OF TRANSACTIONAL VERSUS RELATIONSHIP ORIENTATION RESULTS IN 4 ALTERNATIVE STRATEGIC POSITIONS HIGH INFORMATION/RELATIONSHIP ORIENTATION IN AMAZON.COM OPERATION

FIGURE 1:1 AN E-COMMERCE ALTERNATIVE ORIENTATION MATRIX Low High High Low Information focus orientation Integrated e-commerce orientation Low involvement orientation Transaction focus orientation Role of E- commerce in Information Provision Role of E-commerce in supporting the Purchase Transaction

INTERNET ECONOMICS INTERNET IS REDUCING OPERATING COSTS INCREASE IN ORGANISATIONAL PRODUCTIVITY PERFECT INFORMATION MARKET SCENARIOS COULD DRIVE DOWN PRICES QUESTION IS WHICH ECONOMIES, DEVELOPED OR DEVELOPING NATIONS, WILL BENEFIT

The current internal compentencies and ability to support E- commerce The Current Market and Role of E- commerce SWOT Future Objectives Incorporating E-commerce E-commerce Marketing Strategy E-commerce Marketing Plan Plan Implemen- tation Evaluation and Performance Control FIGURE 1:2 THE E-COMMERCE MARKETING STRATEGY PLANNING PROCESS Strengths and Weaknesses Opportunities and Threats EXTERNAL ANALYSIS INTERNAL ANALYSIS

STRATEGIC MODEL IS SIMILAR TO PRE- INTERNET MODEL ISSUE OF:WHERE ARE WE NOW? WHERE ARE WE GOING? HOW TO GET THERE? ENTREPRENEURIAL DOT COMS TEND NOT TO PLAN MORE APPLICABLE TO EXISTING FIRMS ENTERING E- COMMERCE

EARLY LESSONS DO NOT HAVE UNREALISTIC EXPECTATIONS OVER REVENUE NEED TO CONVERT “VISITS” INTO SALES NEED TRADITIONAL PROMOTIONAL TECHNIQUES TO BUILD WEB-SITE AWARENESS AFFILIATION WITH OTHER WEB-SITES CAN ASSIST SITE SHOULD BE MANAGED BY MARKETERS, NOT “TECHIES”

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