1. Lecture 7 21/2/12

2. http://www.ted.com/talks/lang/en/simon_sinek_how_great_l eaders_inspire_action.html http://www.ted.com/talks/lang/en/simon_sinek_how_great_l eaders_inspire_action.html http://www.youtube.com/watch?v=OM6XIICm_qo

3. Virtual Value Chain Rayport and Sviokla (1999) suggest businesses operate in two worlds: A physical world (marketplace) A virtual world (marketspace)

4. Virtual Value Chain Example: A phone answering machine is in the marketplace (it’s physical) Electronic answering services are in (virtual) marketspace

5. Electronic Commerce and the Internet E-commerce Use of the Internet and Web to transact business Digitally enabled transactions History of e-commerce Began in 1995 and grew exponentially; still growing at an annual rate of 16 percent Rapid growth led to market bubble While many companies failed, many survived with soaring revenues E-commerce today the fastest growing form of retail trade in U.S., Europe, Asia

6. Figure 10-1 Retail e-commerce revenues have grown exponentially since 1995 and have only recently “slowed” to a very rapid 16 percent annual increase, which is projected to remain the same until 2010. The Growth of E-Commerce Electronic Commerce and the Internet

7. Eight unique features of e-commerce technology 1.Ubiquity Internet/Web technology available everywhere: work, home, etc., and anytime 2.Global reach The technology reaches across national boundaries, around Earth 3.Universal standards One set of technology standards: Internet standards 4.Richness Supports video, audio, and text messages Electronic Commerce and the Internet

8. 5.Interactivity The technology works through interaction with the user 6.Information density Vast increases in information density—the total amount and quality of information available to all market participants 7.Personalization/Customization: Technology permits modification of messages, goods 8.Social technology The technology promotes user content generation and social networking Electronic Commerce and the Internet

9. Figure 10-2 The typical distribution channel has several intermediary layers, each of which adds to the final cost of a product, such as a sweater. Removing layers lowers the final cost to the consumer. The Benefits of Disintermediation to the Consumer Electronic Commerce and the Internet

10. Key concepts in e-commerce (cont.) Digital goods Goods that can be delivered over a digital network Cost of producing first unit almost entire cost of product: marginal cost of producing 2 nd 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 Electronic Commerce and the Internet

11. Internet business models Pure-play models Clicks-and-mortar models Social Network Online meeting place Social shopping sites Can provide ways for corporate clients to target customers through banner ads and pop-up ads Online marketplace: Provides a digital environment where buyers and sellers can meet, search for products, display products, and establish prices for those products Electronic Commerce and the Internet

12. Content provider Providing digital content, such as digital news, music, photos, or video, over the Web Online syndicators: Aggregate content from multiple sources, package for distribution, and resell to third-party Web sites Service provider Provides Web 2.0 applications such as photo sharing and interactive maps, and services such as data storage Portal “Supersite” that provides comprehensive entry point for huge array of resources and services on the Internet Electronic Commerce and the Internet

13. Virtual storefront: Sells physical products directly to consumers or to individual businesses Information broker: Provides product, pricing, and availability information to individuals and businesses Transaction broker: Saves users money and time by processing online sales transactions and generating a fee for each transaction Electronic Commerce and the Internet

14. Types of Electronic Commerce Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Mobile commerce (m-commerce) Electronic Commerce

15. Interactive marketing and personalization Web sites are bountiful 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 Collaborative filtering: Compares customer data to other customers to make product recommendations Electronic Commerce

16. Figure 10-3 E-commerce Web sites have tools to track a shopper’s every step through an online store. Close examination of customer behavior at a Web site selling women’s clothing shows what the store might learn at each step and what actions it could take to increase sales. Web Site Visitor Tracking Electronic Commerce

17. Figure 10-4 Firms can create unique personalized Web pages that display content or ads for products or services of special interest to individual users, improving the customer experience and creating additional value. Web Site Personalization Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

18. Blogs 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 Blog analysis by marketers Customer self-service Web sites and e-mail to answer customer questions or to provide customers with product information Reduces need for human customer-support expert Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

19. B2B e-commerce: New efficiencies and relationships 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 Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

20. Figure 10-5 Companies use EDI to automate transactions for B2B e-commerce and continuous inventory replenishment. Suppliers can automatically send data about shipments to purchasing firms. The purchasing firms can use EDI to provide production and inventory requirements and payment data to suppliers. Electronic Data Interchange (EDI) Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

21. Private industrial networks (private exchanges) Large firm using extranet to link to its suppliers, distributors and other key business partners Owned by buyer Permits sharing of: Product design and development Marketing Production scheduling and inventory management Unstructured communication (graphics and e-mail) Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

22. Figure 10-6 A private industrial network, also known as a private exchange, links a firm to its suppliers, distributors, and other key business partners for efficient supply chain management and other collaborative commerce activities. A Private Industrial Network Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

23. Net marketplaces (e-hubs) Single market for many buyers and sellers Industry-owned or owned by independent intermediary Generate revenue from transaction fees, other services Use prices established through negotiation, auction, RFQs, or fixed prices May focus on direct or indirect goods May support long-term contract purchasing or short-term spot purchasing May serve vertical or horizontal marketplaces Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

24. Figure 10-7 Net marketplaces are online marketplaces where multiple buyers can purchase from multiple sellers. A Net Marketplace Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

25. Exchanges Independently owned third-party Net marketplaces Connect thousands of suppliers and buyers for spot purchasing Typically provide vertical markets for direct goods for single industry (food, electronics) Proliferated during early years of e-commerce; many have failed Competitive bidding drove prices down and did not offer long-term relationships with buyers or services to make lowering prices worthwhile Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce

26. M-Commerce M-commerce services and applications Although m-commerce represents small fraction of total e-commerce transactions, revenue has been steadily growing Location-based services Banking and financial services Wireless Advertising Games and entertainment Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods

27. Figure 10-8 M-commerce sales represent a small fraction of total e- commerce sales, but that percentage is steadily growing. Global M-commerce Revenue 2000-2012 Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-Commerce

28. Limitations in mobile’s access of Web information Data limitations Small display screens Wireless portals (mobile portals) Feature content and services optimized for mobile devices to steer users to information they are most likely to need Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-Commerce

29. Types of electronic payment systems Digital wallet Stores credit card and owner identification information and enters the shopper’s name, credit card number, and shipping information automatically when invoked to complete a purchase Accumulated balance digital payment systems Used for micropayments ($10 or less) Accumulating debit balance that is paid periodically on credit card or telephone bills Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce Payment Systems

30. Digital payments systems for m-commerce Three types of mobile payment systems in use in Japan Stored value system charged by credit cards or bank accounts Mobile debit cards Mobile credit cards In the U.S., the cell phone has not yet evolved into a mobile payment system Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce Payment Systems

31. M-Commerce M-commerce services and applications Although m-commerce represents small fraction of total e-commerce transactions, revenue has been steadily growing Location-based services Banking and financial services Wireless Advertising Games and entertainment Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods

32. The World Wide Web HTML (Hypertext Markup Language): Formats documents for display on Web Hypertext Transfer Protocol (HTTP): Communications standard used for transferring Web pages Uniform resource locators (URLs): Addresses of Web pages E.g., http://www.megacorp.com/content/features/082602.html Web servers Software for locating and managing Web pages The Global Internet

33. Search engines Started in early 1990s as relatively simple software programs using keyword indexes Today, major source of Internet advertising revenue via search engine marketing, using complex algorithms and page ranking techniques to locate results Sponsored links vs. organic search results Shopping bots Use intelligent agent software for searching Internet for shopping information The Global Internet

34. How Google Works Figure 7-13 The Google search engine is continuously crawling the Web, indexing the content of each page, calculating its popularity, and storing the pages so that it can respond quickly to user requests to see a page. The entire process takes about one-half second. The Global Internet

35. Major Web Search Engines Figure 7-14 Google is the most popular search engine on the Web, handling 56 percent of all Web searches. The Global Internet

36. Web 2.0 Second-generation interactive Internet-based services enabling people to collaborate, share information, and create new services online Cloud computing Software mashups and widgets Blogs: Chronological, informal Web sites created by individuals using easy-to-use weblog publishing tools RSS (Really Simple Syndication): Syndicates Web content so aggregator software can pull content for use in another setting or viewing later Wikis: Collaborative Web sites where visitors can add, delete, or modify content on the site The Global Internet

37. Web 3.0 Current efforts to make using Web more productive Inefficiency of current search engines: Of 330 million search engine queries daily, how many are fruitful? Semantic Web Collaborative effort to add layer of meaning on top of Web, to reduce the amount of human involvement in searching for and processing Web information Other, more modest views of future Web Increase in cloud computing, SaaS Ubiquitous connectivity between mobile and other access devices Make Web a more seamless experience The Global Internet

38. Intranets Use existing network infrastructure with Internet connectivity standards software developed for the Web Create networked applications that can run on many types of computers Protected by firewalls Extranets Allow authorized vendors and customers access to an internal intranet Used for collaboration Also subject to firewall protection The Global Internet

39. Functions of the Modem Figure 7-5 A modem is a device that translates digital signals from a computer into analog form so that they can be transmitted over analog telephone lines. The modem also translates analog signals back into digital form for the receiving computer. Communications Networks

40. Wireless devices PDAs, BlackBerry, smart phones Cellular systems Competing standards for cellular service United States: CDMA Most of rest of world: GSM Third-generation (3G) networks Higher transmission speeds suitable for broadband Internet access The Wireless Revolution

41. Wireless computer networks and Internet access Bluetooth Links up to 8 devices in 10-m area using low-power, radio-based communication Useful for personal networking (PANs) Wi-Fi Used for wireless LAN and wireless Internet access Use access points: Device with radio receiver/transmitter for connecting wireless devices to a wired LAN The Wireless Revolution

42. A Bluetooth Network (PAN) Figure 7-15 Bluetooth enables a variety of devices, including cell phones, PDAs, wireless keyboards and mice, PCs, and printers, to interact wirelessly with each other within a small 30-foot (10- meter) area. In addition to the links shown, Bluetooth can be used to network similar devices to send data from one PC to another, for example. The Wireless Revolution

43. Figure 7-16 Mobile laptop computers equipped with wireless network interface cards link to the wired LAN by communicating with the access point. The access point uses radio waves to transmit network signals from the wired network to the client adapters, which convert them into data that the mobile device can understand. The client adapter then transmits the data from the mobile device back to the access point, which forwards the data to the wired network. The Wireless Revolution

44. Wireless computer networks and Internet access Wi-Fi Hotspots: One or more access points in public place to provide maximum wireless coverage for a specific area Weak security features WiMax Wireless access range of 31 miles Require WiMax antennas Sprint Nextel building WiMax network The Wireless Revolution