1. Online Business and Technology10
Online Business and Technology
Better Business
4th Edition
Solomon · Poatsy · Martin
chapter
© 2016 Pearson Education, Inc.

2. © 2016 Pearson Education, Inc.
Learning Objectives
What does the online environment offer to help market a business?
What are the types of business transactions that are supported by online commerce?
What are the functions of a company’s chief information officer (CIO) and information technology (IT) department?
How do businesses transform data into useful business intelligence?
What security challenges arise with the increase in technology?
How have new advances in social networking and mobile technologies impacted business?
In this chapter, we will study:
The opportunities created for business through online shopping, pay-per-click, advertising, and viral marketing
The types of online business transactions, which include business to business (B2B), business to consumer (B2C), and consumer to consumer (C2C)
The responsibilities of a company’s chief information officer (CIO) and information technology (IT) department.
How a business transforms data into useful information
Security issues such as adware, phishing, and hackers
The role of social networking and mobile technology in business
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Online Business
Growth of online shopping
Role in marketing
Online advertising
QR codes
Pay-per-click advertising
Contextual advertising
Learning Objective 1: What does the online environment offer to help market a business?
The online business model allows access to national and international consumers, but requires a new set of skills for managers.
By 2017, 60 percent of U.S. retail sales will involve the Web in some way, and $100 billion of those sales will be made on mobile devices.
In addition to completing sales transactions, the online environment supports broader marketing efforts. The Internet is a tool to collect marketing information about consumers as well a method for distributing information.
Online advertising refers to any form of advertising that uses the Internet to market its message to consumers.
QR codes redirect purchasers from magazine ads and from counter displays directly to a company’s website.
Through pay-per-click advertising, advertisers pay only for the number of times a Web surfer clicks on their ad.
Contextual advertising bases the online message on the content of page. For example, someone reading a snowboarding blog might see a Red Bull ad featuring snowboarder Shawn White.
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4. Pros and Cons of Online Advertising
There are many advantages of online advertising.
Online advertising can be very affordable, with costs directly linked to the number of times an advertisement is accessed.
Online advertising can be very effective at reaching the target market, especially using contextual advertising.
Companies can collect useful information about those who view online advertisements.
However, there are a number of disadvantages of online advertising:
Some users will be hesitant to click on an online ad because of concerns over receiving spam s.
Pop up and flashing ads can be perceived as annoyance rather than a source of useful information.
Competitors can artificially drive up the cost of pay-per-click advertising by repeatedly clicking through an advertisement.
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5. Online Business in a Global Marketplace
Internet technology allows every company with a website to advertise to anyone in the world with Internet access. This page markets Pearson Publishing products to a Japanese audience.
Companies should be sure that their site supports multiple languages and is sensitive to cultural norms in different countries.
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Viral Marketing
To get people to notice their advertisements, many marketers are turning to viral marketing. This practice involves social networks, , and websites to spread awareness of a particular brand. The 2011 movie Contagion, about a rampant virus, put a twist on viral marketing. Custom Petri dishes and specially colored bacteria were created that grew into a living billboard.
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7. Types of Online Business Transactions
Learning Objective 2: What are the types of business transactions that are supported by online commerce?
Online business transactions include:
Business-to-business transactions (B2B)
Business-to-consumer transactions (B2C)
Consumer-to-consumer transactions (C2C)
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8. Business to Business (B2B)
Company websites
Procurement exchanges
Specialized industry portals
Brokering sites
Information sites
Company websites are designed to sell goods and services to business clients, rather than household consumers. For example, UPS has a website used exclusively for business shipping.
Procurement exchanges are created when a group of companies act together to purchase goods or services at lower prices. They benefit both purchasers and suppliers.
Specialized industry portals are online gateways to major sources of information, discussion forums, and product listings.
Brokering sites are third-party sites that connect providers and potential buyers of goods and services.
Information sites, as the name implies, provide information about a particular industry.
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9. Business to Consumer (B2C)
Online intermediaries
Advertising-based models
Community-based models
Fee-based models
Business-to-consumer transactions often refer to e-commerce that takes place directly between businesses and consumers. There are a number of strategies that have accelerated business-to-consumer transactions:
Online intermediaries are businesses such as Travelocity and Amazon.com that resell the products of other companies.
Advertising-based models rely on banner ads on other websites to attract consumers.
Community-based models allow users with similar interests to interact online.
Fee-based models require users to pay a subscription to view their content. For example, Consumer Reports requires a one-time or annual fee to access its online content.
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10. Consumer to Consumer (C2C)
Exchange through intermediaries
Peer-to-peer exchanges
Transactions that take place between consumers are one of the newest forms of e-commerce. Through C2C, consumers sell goods and services to other consumers, often through a third party. C2C sites include eBay and Etsy. Peer-to-peer sites share music files as well as other digital assets.
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11. Challenges of E-Commerce
Most Internet sales are tax free, causing issues for states that are highly dependent upon sales taxes.
Additionally, there are issues of jurisdiction for online transactions. It is difficult to determine the state or states in which an online transaction has occurred, making enforcement and prosecution difficult.
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12. The Role of the Chief Information Officer
Learning Objective 3: What are the functions of a company’s chief information officer (CIO) and information technology (IT) department?
Information technology is the design and implementation of computer-based information systems.
In many organizational structures, the person responsible for such technology is the chief information officer, or CIO.
The CIO is in charge of information processing, including systems design and development and data center operations.
He or she is responsible for updating or replacing the computer systems and the software the company uses.
The CIO must also manage a budget that balances the benefits of technology against the ever-rising costs of upgrading to the latest systems.
In addition, CIOs are involved in creating business and e-business opportunities.
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IT Department Tasks
Security
Emergency recovery
Equipment
Networks and databases
Software
Training
Custom software
Mobile computing
Remote access
The IT department is responsible for everything from hardware components and software programs to networking strategies. It is also responsible for:
Providing security in response to computer virus attacks
Handling emergency recovery from power outages and system failures
Keeping equipment operational and current
Managing the design of networks and databases
Selecting appropriate software
Providing training to employees
Sometimes creating custom software to bridge the gaps between the products available and the needs of the firm
Maintaining and managing mobile computing throughout the company
Implementing remote access to computing resources
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14. Management Information Systems
Data versus information
Database management systems (DBMSs)
Data warehouses
Data marts
Data mining
Tools
Decision support systems (DSSs)
Executive information systems (EISs)
Online analysis package (OLAP)
Learning Objective 4: How do businesses transform data into useful business intelligence?
The main difference between information technology and management information systems is that MIS focuses on applying IT to solve business and economic problems. MIS professionals bridge the gap between purely technical knowledge and how it will impact a business.
In common usage the terms data and information are often used interchangeably, but they have different meanings. Data are the representations of a fact or idea. It may be a number, a word, an image, or a sound. Information, however, is data that have been organized in a way that make them useful.
Database management systems are collections of data that organize the data and allow simple analysis and reporting.
As companies begin to store vast amounts of data in database systems separate from their production databases, data warehouses are created. These can hold terabytes of transaction data.
Sometimes, subsets are created to isolate one product or department. These smaller data sets are called data marts.
The process of exploring and analyzing the data mart to uncover the relationships and patterns that will help a business is referred to as data mining.
The use of very large data sets and special software tools that can extract information from them is called Big Data analysis. Companies are using Big Data analysis to spot new trends, but some perceive a threat to privacy.
Businesses can easily collect and store large amounts of data, but turning them into useful information is a challenging task. A number of software systems help in this regard.
Decision support systems enable companies to analyze collected data so they can predict the impact of business decisions. These systems can also retrieve data from external sources and display results.
Executive information systems are specially designed for the needs of management. These systems can consolidate and summarize the transactions within an organization.
Online analysis packages are software applications that allows for quick analysis of combinations of different business factors. OLAP software can be used to report sales data as well as for budgeting and forecasting.
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15. Security Issues in Online Business
Adware
Spyware
Phishing
Hackers
Learning Objective 5: What security challenges arise with the increase in technology?
Although the online environment creates many opportunities for business, there are also a number of challenges.
Adware is any software application that displays banner ads or pop-up ads while a program is running. At a minimum, this can be a distraction.
However, at times, spyware is installed on your computer without your knowledge. This software tracks your personal information and passes it along to a third party. This information can be used to steal money, erase valuable information, or even crash a company’s computer system.
Many people have received a phishing . The appears to be legitimate and will ask you to follow a link and enter personal information such as a user ID and password or account number. However, the information is not collected legitimately and can be used to steal money or your identity.
One more threat that businesses face is hackers. Hackers are individuals who gain unauthorized access to a company’s computer system. Hackers can steal sensitive information or completely disable the site.
Each of these threats can be minimized by effective management.
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Impact on Employees
Decline in face-to-face communication
Electronic monitoring
The online environment creates many opportunities. However, the way that companies conduct business has fundamentally changed.
Because of the use of , instant messaging, and other technologies, there has been a decline in face to-face communication. At times, this creates efficiency. At other times, however, it results in a lack of understanding and limits creativity.
Additionally, many employees are concerned about electronic monitoring. Electronic monitoring can be used to track s, browsing histories, and cell phone usage. These tools, when used appropriately, can help a company improve efficiency. However, there is the potential for a company to create distrust and dissatisfaction if not employed in a transparent fashion.
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17. Social Media in Business
Enterprise social networking
Social media monitoring
Impacts on business
New jobs
More information
Crowdsourcing
Technical support
Crowdsourced funding
Learning Objective 6: How have new advances in social networking and mobile technologies impacted business?
Enterprise social networking refers to the application of products such as Facebook in a corporate setting. These social media can be used for collaboration and can speed decision making.
Because of the widespread use of social media, many companies have realized that it is important to monitor social media for negative comments about their products. Without careful monitoring, negative messages will quickly overpower the company’s traditional promotional efforts.
Social media have had a number of impacts on business:
As companies have come to understand the impact and power of social media, new jobs for social media managers and social media marketing specialists are being created. These employees monitor and engage in social networks to generate positive buzz about the company and its products.
Social media can also generate information for the company and consumers. Companies can quickly find out what is important to consumers and can quickly disseminate information about their products.
Crowdsourcing refers to the practice of using information solicited on social media to make decisions. For example, Dell uses crowdsourcing to develop ideas for new products.
Social media can also be used to provide technical support and to connect customers with company resources.
Crowdsourced funding allows a great number of people who believe in a company or product to contribute a small amount of money. In most cases, they get something in return, such as a free copy of the product or access to private content.
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Mobile Devices
Choosing the right device
Deciding on the right apps
Leveraging cloud computing
Mobile technology creates opportunities for business by giving 24/7 access to , calendars, and contacts.
It is essential that a manager takes the time to select the right mobile device. Factors to consider include scaling issues and integration with existing systems. The company should also consider data security and encryption.
With more than 1 million apps available for the iPhone alone, one function for the IT department is to decide which apps are right for their organization. For example, the WebEx app allows users to conduct a virtual conference including a slideshow, file transfer, and audio and video feeds.
Finally, companies must consider how cloud computing can assist in sharing information and resources. Through cloud computing, online backup systems can work through a “cloud” so that files are automatically backed up and made available to appropriate users.
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Chapter Summary
What does the online environment offer to help market a business?
What are the types of business transactions that are supported by online commerce?
What are the functions of a company’s chief information officer (CIO) and information technology (IT) department?
How do businesses transform data into useful business intelligence?
What security challenges arise with the increase in technology?
How have new advances in social networking and mobile technologies impacted business?
Chapter Summary
What does the online environment offer to help market a business? Online shopping is experiencing rapid growth and online advertising and mass marketing through campaigns are critical. Pay-per-click advertising and viral marketing are two important tools in a company’s marketing campaign.
What are the types of business transactions that are supported by online commerce? There are three common types of transactions—business to business, business to consumer, and consumer to consumer. Business-to- business (B2B) sites support communication between businesses and their business clients by encouraging purchases and exchanging information. Business-to-consumer (B2C) sites target consumers directly for online distribution, networking, and advertising. Consumer-to-consumer (C2C) sites connect consumers directly for sales and file sharing.
What are the functions of a company’s chief information officer (CIO) and information technology (IT) department? A company’s CIO is in charge of information processing, including systems design and development and data center operations. The IT department consists of a number of professionals responsible for everything from hardware components to software programs to networking strategies.
How do businesses transform data into useful business intelligence? Information technology is the design and implementation of computer-based information systems. Information systems focus on applying IT to the solution of business and economic problems using purely technical knowledge and determining how it will impact business. Raw data must be organized and arranged into useful information.
What security challenges arise with the increase in technology? With the growth of the online environment, managers need to be aware of a number of challenges, including adware, spyware, phishing, and hackers. Adware and spyware can be an annoyance and can even become a security risk for online consumers. Phishing occurs when s imitating a legitimate vendor solicit confidential information for the purposes of fraud. Other security threats include hackers who gain unauthorized access to a company’s computer system.
How have new advances in social networking and mobile technologies impacted business? Social networking and mobile technologies have created many opportunities for businesses. To keep in touch with consumers, businesses use social media monitoring. This has created new jobs for social media managers who direct marketing campaigns online. The power of social media can be harnessed to solicit funding, a technique referred to as crowdsourced funding. Using cloud computing, users can access information from any location and files can be uploaded from a mobile device to the “cloud” for access on any device.
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