1. Management Information Systems
Lecturer: Gareth Jones

2. Learning Objectives
What are the unique features of e-commerce, digital markets, and digital goods?
How has Internet technology changed business models?
What are the various types of e-commerce, and how has e- commerce changed consumer retailing and business-to-business transactions?
What are ethics?
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

3. photobucket
Problem: Building a business model that serves the emerging market for social networking sites.
Solutions: Set up a simple, easy to use photo storage site usable at any social networking site.
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

4. Sharing media
Photobucket pioneered the concept of linking media from one Web Site to multiple online sites.
Demonstrates IT’s role in generating new business models.
Illustrates digital technology’s importance in reducing the costs of storing photos and video online.
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

5. photobucket IS Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

6. E-Commerce today
E-commerce: Use of the Internet and Web to do business; digitally enabled transactions
Began in 1995 and grew exponentially; still growing at an annual rate of 25 percent
Companies that survived the dot-com bubble burst (around year 2000) and now thrive
E-commerce revolution is still in its early stages
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

7. Massive revenue increase!
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

8. E-Commerce features 1. New global reach 2. Standards 3. Richness
4. Interactivity
5. Information Density
6. Social Technology
7. Digital Markets
8. Disintermediation
9. Digital Goods
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

9. New Global Reach Global reach
The technology reaches across national boundaries, around Earth
Effect:
Commerce enabled across cultural and national boundaries seamlessly and without modification
Marketspace includes, potentially, billions of consumers and millions of businesses worldwide
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

10. Standards Universal standards
One set of technology standards: Internet standards
Effect:
Different computer systems easily communicate with each other (Windows, linux, Mac on IE, Firefox, Safari)
Lower market entry costs—costs merchants must pay to bring goods to market
Lower consumers’ search costs—effort required to find suitable products
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

11. Richness Richness (means lots of different types of media)
Supports video, audio, and text messages
Effect:
Possible to deliver rich messages with text, audio, and video simultaneously to large numbers of people
Video, audio, and text marketing messages can be integrated into single marketing message and consumer experience
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

12. Interactivity Interactivity (two- way-communication)
The technology works through interaction with the user
Effect:
Consumers engaged in dialog that dynamically adjusts experience to the individual
Consumer becomes co-participant in process of delivering goods to market
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

13. Information Density
Information density (a lot of information in a small space)
Large increases in information density—the total amount and quality of information available to all market participants
Effect:
Greater price transparency
Greater cost transparency
Enables merchants to engage in price discrimination
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

14. Personalisation Personalisation/Customisation
Technology permits modification of messages, goods (DELL, Apple, Amazon)
Effect
Personalized messages can be sent to individuals as well as groups
Products and services can be customized to individual preferences
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

15. Social technology Social technology
The technology promotes user content generation (Wikis, knowledge sharing) and social networking (MySpace, Facebook, 开心网)
Effect
New Internet social and business models enable user content creation and distribution, and support social networks
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

16. Digital Markets Digital markets reduce Digital markets enable
Search costs (looking for information)
Transaction costs (actual sales etc.)
Digital markets enable
Price discrimination (easy to tell the price difference in two products)
Dynamic pricing (easy to respond to market changes)
Disintermediation (taking the ‘middle man’ out)
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

17. Disintermediation Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

18. Digital Goods Digital goods
Goods that can be delivered over a digital network
E.g. Music tracks, video, software, newspapers, books
Cost of producing first unit almost entire cost of product: marginal cost of producing 2nd unit is about zero
Costs of delivery over the Internet very low
Marketing costs remain the same; pricing highly variable
Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc.)
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

19. Internet Business Models
Pure-play models: Internet only businesses (Amazon)
Clicks-and-mortar models: Extensions of bricks-and- mortar businesses (online shops that have actual shops like Nike)
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

20. Internet Business Models (II)
Digital content, entertainment, and services
Ability to deliver digital goods and content has created new alternatives to traditional print and broadcast media
Online games (WoW), radio channels (KryKey), films and television (ppv, sopcast), music downloads, and podcasts
Communication and Social Networking
Some new business models take advantage of Internet’s rich communication capabilities
Social networking sites (lots of users, new advertising target audience)
Can provide ways for corporate clients to target customers through banner ads and pop-up ads
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

21. Internet Business Models (III)
Virtual storefront:
Sells physical products directly to consumers or to individual businesses
Information broker:
Provides product, pricing, and availability information to individuals and businesses (become.com)
Transaction broker:
Saves users money and time by processing online sales transactions and generating a fee for each transaction (WorldPay, PayPal)
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

22. Internet business models (IV)
Online marketplace:
Provides a digital environment where buyers and sellers can meet, search for products, display products, and establish prices for those products (Taobao, eBay)
Content provider:
Creates revenue by providing digital content, such as digital news, music, photos, or video, over the Web (BBC news, CCTV news)
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

23. Discussion
What is eBay’s/taobao’s business model and business strategy?
What is MySpaces’ strategy- is it useful to businesses?
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

24. Types of e-commerce Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)
Mobile (mobile phone) commerce (m-commerce)
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

25. Interactive Marketing
Web sites are huge source of details about customer behavior, preferences, buying patterns used to tailor promotions, products, services, and pricing
Clickstream tracking tools: Collect data on customer activities at Web sites
Used to create personalized Web pages
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

26. Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

27. Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

28. Blogging Blogs Customer self-service
Personal web pages that contain series of chronological entries by author and links to related Web pages
Has increasing influence in politics, news
Corporate blogs: New channels for reaching customers, introducing new products and services
Customer self-service
Web sites and to answer customer questions or to provide customers with product information
Reduces need for human customer-support expert
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

29. EDI Electronic data interchange (EDI)
Computer-to-computer exchange of standard transactions such as invoices, purchase orders
Major industries have EDI standards that define structure and information fields of electronic documents for that industry
More companies increasingly moving away from private networks to Internet for linking to other firms
E.g. Procurement: Businesses can now use Internet to locate most low-cost supplier, search online catalogs of supplier products, negotiate with suppliers, place orders, etc.
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

30. EDI Diagram Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

31. Ethics
Principles of right and wrong that individuals use to make choices to guide their behavior
Intellectual Property (Copyright)
Data collection
Privacy
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

32. Key Points E-commerce features E-commerce business models EDI
Understanding that you need to think about ethics in IS
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009

33. Case Study Part 3
How can e-commerce be used by our Chinese Traditional Medicine Company?
Management Information Systems (BUS-141 MIS)
Thursday, 19 March 2009