TOPIC 1: E-COMMERCE FRAMEWORK, BUSINESS MODELS AND ENVIRONMENT
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1 TOPIC 1: E-COMMERCE FRAMEWORK, BUSINESS MODELS AND ENVIRONMENT 1.1 Define electronic commerce (EC) and describe its various categories.1.2 The EC framework, classification and content1.3 The digital revolution as a driver for EC.1.4 The business environment as a driver for EC EC contribution to organisations responding to environmental pressures.1.5 EC business models.1.6 Benefits of EC to organisations, consumers, and society.1.7 Limitations of EC.1.8 Networks for EC.
2 The Old Economy The New Economy 1.1: Taking PhotographsThe Old Economy The New Economy1. Buy film in a store2. Load your camera3. Take pictures4. Take roll of film to store for processing5. Pickup the film when ready6. Select specific photos for enlargement7. Mail to family and friends1st Gen. Digital PhotographyOld economy except 6 and 7 were replaced by using a scanner and ing2nd Gen.Digital PhotographyUse a Digital Camera, no film, no processing.3rd Gen.Digital PhotographyYour Digital Camera is now your mobile phone, in your binoculars or a palmtop computer.
3 1.1: The Brave New World Cisco Ariba Charles Schwab CommerceOne CovisintMicrosoftOracleDellNTT DoCoMoNokiaAmazoneBayGoogleYahooWal-MartSingaporePayPal
5 1.1: Competing with IT: Strategy and Structure Competing via strategyProduct leadership (Charles Schwab)Operational excellence (Federal Express)Customer intimacy (Home Depot)Competing via structureAlliances (Star Alliance)Value added partnerships (Amazon.com)Networked organisation (Cisco)
6 1.1: Competing via Structure: the Role of EC Wal-Mart provides suppliers with access to its internal databases.Dell Computer virtually-integrates its entire value chainAirline reservation systems facilitate the coordination of schedules and code-sharing arrangements.GM, Ford and DaimlerChrysler are creating an electronic market in the automobile industry (Covisint).Control no longer requires ownership.The Internet dramatically reduces transaction costs, facilitating thecreation and utilisation of electronic markets and value networks.
7 1.1: Electronic Commerce: Definitions and Concepts 1. Electronic Commerce (EC)The process of online buying, selling, or exchanging products, services, or information via computer networks within firms, between firms, between firms and their customers, and between consumers.ECE-Business
8 1.1: Electronic Commerce: Definitions and Concepts 2. E-BusinessA broader definition of EC.Automating all business processes and integrating them with E-Commerce (previous slide) applications to create one seamless, digital enterprise in orderto service customers,to collaborate with business partners,to conduct electronic transactions within an organisation
9 1.1: Electronic Commerce: Definitions and Concepts 3. Pure Versus Partial ECEC takes several forms depending on the degree of digitisation (the transformation from physical to digital).Companies utilising pure EC conduct all of their business online.Businesses utilising partial EC conduct a portion of their business online and a portion of their business off-line
10 Exhibit 1.1 The Dimensions of Electronic Commerce
11 1.1: Electronic Commerce: Definitions and Concepts 4. EC organisationsBrick-and-mortar organisationsOld-economy organisations (corporations) that perform most of their business off-line, selling physical products by means of physical agentsVirtual (pure-play) organisationsOrganisations that conduct their business activities solely onlineClick-and-mortar (click-and-brick) organisationsOrganisations that conduct some e-commerce activities, but do their primary business in the physical world
12 1.1: Electronic Commerce: Definitions and Concepts 5. Where EC is conductedElectronic market (e-marketplace)An online marketplace where buyers and sellers meet to exchange goods, services, money, or informationInterorganisational information systems (IOSs)Communications system that allows routine transaction processing and information flow between two or more organisationsIntraorganisational information systemsCommunication systems that enable e-commerce activities to go on within individual organisations
13 1.1: Electronic Commerce: Transmission Medium Most EC is done over the Internet. But EC can also be conducted on private networks, such asValue-added networks (VANs, networks that add communication services to existing common carriers),Local area networks (LANs) orWide area networks (WANs)IntranetAn internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocolsExtranetA network that uses the Internet to link multiple intranets
14 Exhibit 1.2 A Framework for Electronic Commerce An EC Framework: supports five policymaking support areasPeoplePublic policyMarketing & advertisementSupport servicesBusiness partnerships
15 1.2: The EC Framework, Classification and Content To execute these applications, companies need the right framework: information, infrastructure, and support servicesPeople: Sellers, buyers, intermediaries, information systems specialists and other employees, and any other participants.Public policy: Legal and other policy and regulating issues, such as privacy protection and taxation.Marketing and advertising: Like any other business, EC usually requires the support of marketing and advertising.Support services: Many services are needed to support EC. They range from payments to order delivery and content creation.Business partnerships: Joint ventures, e-marketplaces, and partnerships are some of frequently occurring relationships in e-business
16 1.2: The EC Framework, Classification and Content Classification by nature of the transactions or interactionsBusiness-to-Business (B2B)E-commerce model in which all of the participants are businesses or other organisationsBusiness-to-Consumer (B2C)E-commerce model in which businesses sell to individual shopperse-tailingOnline retailing, usually B2C
17 1.2: The EC Framework, Classification and Content Business-to-Business-to-Consumer (B2B2C)E-commerce model in which a business provides some product or service to a client business that maintains its own customersConsumer-to-Business (C2B)E-commerce model in which individuals use the Internet to sell products or services to organisations or individuals seek sellers to bid on products or services they needConsumer-to-Consumer (C2C)E-commerce model in which consumers sell directly to other consumers
18 1.2: The EC Framework, Classification and Content Peer-to-PeerTechnology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerceMobile commerce (M-Commerce)E-commerce transactions and activities conducted in a wireless environmentLocation-based commerce (L-Commerce)M-Commerce transactions targeted to individuals in specific locations, at specific times
19 1.2: The EC Framework, Classification and Content Intrabusiness ECE-commerce category that includes all internal organisational activities that involve the exchange of goods, services, or information among various units and individuals in an organisation.Business-to-Employees (B2E)E-commerce model in which an organisation delivers services, information, or products to its individual employeesCollaborative Commerce (C-Commerce)E-commerce model in which individuals or groups communicate or collaborate online
20 1.2: The EC Framework, Classification and Content E-LearningThe online delivery of information for purposes of training or educationExchange (electronic)A public electronic market with many buyers and sellersExchange-to-exchange (E2E)E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging informationE-GovernmentE-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens
21 1.2: The Future of ECIn 2004, total online shopping and B2B transactions in the USA was between $3 to $7 trillionBy 2008:Number of Internet users worldwide should reach 750 million50 percent of Internet users will shopEC growth will come from:B2CB2Be-governmente-learningB2Ec-commerce
22 1.3: The Digital Revolution Drives EC The major driver of EC is the digital revolution (1-23)A digital economy is an economy based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy.The characteristics of the digital economy includesA wide variety of digitised productsConsumers and firms conducting financial transactions digitallyMicroprocessors and network capabilities embedded in physical goods.