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Chapter 1
Introduction to e-business
and e-commerce
Page 1 | [email protected], 2013
and e-commerce
Arry Akhmad ArmanSchool of Electrical Engineering and Informatics
Modified from original ppt of “E-Business and E-Commerce Management” book.
• Define the meaning and scope of e-business and e-commerce and their different elements
• Summarize the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption
Learning Outcomes
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and barriers that may restrict adoption
• Use resources to define the extent of adoption of the Internet as a communications medium for consumers and businesses
• Outline the business challenges of introducing e-business and e-commerce to an organization.
Management Issues
• How do we explain the scope and implications of e-business and e-commerce to staff?
• What is the full range of benefits of introducing e-
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benefits of introducing e-business and what are the risks?
• How great will the impact of the Internet be on our business? What are the current and predicted adoption levels?
E-Business Opportunities
ReachReach• Over 1 billion users globally
• Connect to millions of products
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E-Business
E-Business
RichnessRichnessAffiliationAffiliation
• Detailed product information
on 20 billion + pages indexed
by Google. Blogs, videos, feeds…
• Personalised messages for users
• Partnerships are key
in the networked economy
The impact of the Internet
on business
• Andy Grove, Chairman of Intel, one of the early adopters of e-commerce, has made a meteorological analogy with the Internet.
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Internet.
• He says: The Internet is a typhoon force, a ten times force, or is it a bit of wind? Or is it a force that fundamentally alters our business? (Grove, 1996)
Andrew Stephen ("Andy")
Grove (born 2 September
1936), is a Hungarian-born
American businessman,
engineer, and author. He is a
science pioneer in the
semiconductor industry. He
escaped from Communist-
controlled Hungary at the age
of 20 and moved to the
United States where he
finished his education. He
later became CEO of Intel
Corporation and helped
transform the company into
the world's largest
manufacturer of
semiconductors.
Image source: wikipedia
E-business Risks
• Making wrong decision about e-
business investments
• Provide poor online customer
experience
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experience
Image source: www.infobarrel.com
Internet risks – what can go wrong
with a transactional site?
• Web sites that fail because of spike in visitor traffic
• Hacker penetrating the security of the system
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• A company emails customer without receiving their permission
• Problems with fulfilment
• E-mail customer-service enquiries from the web site don’t reach the right person
Image source: www.infobarrel.com
Different Perspectives of EC
• Communication
• Business Process
• Service
• Online
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• Online
Image source: inkvibe.com
Types of sell-side e-commerce
• Transactional e-commerce sites
– www.mph.com.my
• Services-oriented relationship-building web sites
– www.perodua.com.my
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– www.perodua.com.my
• Brand-building sites
– www.nokia.com
• Portal or media sites
– www.yahoo.com
Summary and examples of transaction alternatives
between businesses, consumers and governmental
organizations
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E-Business
• All electronically mediated information exchanges,
both within an organization and with external
stakeholders supporting the range of business
processes
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processes
• E-business concepts:
– Applied to strategy and operations
– An adjective to describe businesses that mainly operate
online
E-Business vs E-Commerce
• E-commerce: All electronically mediated
information exchanges between an organization
and its external stakeholder
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• Not solely restricted to the actual buying and
selling of products, but also includes pre-sale and
post-sale activities
E-Business vs E-Commerce
• E-commerce covers outward-facing processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating-expense items, such as office supplies.
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supplies.
• E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings.
http://www.computerworld.com/s/article/53015/The_difference_between_e_business_and_e_commerce?pageNumber=1
E-Government
• The application of e-business technologies
to government and public services for
citizens and businesses
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• Cover services for:
– Citizens
– Suppliers
– Internal communications
Image source: ec.europa.eu
Three definitions of the relationship
between e-commerce and e-business
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UK rate of adoption
of different digital media
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Source: MORI Technology Tracker, January 2006. See www.mori.com/technology/techtracker.shtml for latest details
Drivers of Consumer Internet Adoption
ContentContent
CustomizationCustomizationCost
reductionCost
reduction
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CommunityCommunity
ConvenienceConvenience
ChoiceChoice
Barriers of Consumer Internet
Adoption
• No perceived benefit
• Lack of trust
• Security problems
• Lack of skills
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• Lack of skills
• Cost
Image source: www.charlesstone.com
Drivers of Business Adoption
Increase RevenueIncrease Revenue
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Cost Reduction
Cost Reduction
DriversDrivers
Cost/efficiency and competitiveness
drivers
Cost/efficiency drivers
• Increasing speed with which supplies can be obtained
Competitiveness drivers
• Customer demand
• Improving the range and
quality of services offered
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obtained
• Increasing speed with which goods can be dispatched
• Reduced sales and purchasing costs
• Reduced operating costs
quality of services offered
• Avoid losing market share
to businesses already
using e-commerce.
Tangible and Intangible Benefits
Tangible benefits Intangible benefits
Increased sales from new sales leads giving rise to
increased revenue from:
– new customers, new markets
– existing customers (repeat-selling)
– existing customers (cross-selling).
Marketing cost reductions from:
– reduced time in customer service
Corporate image communication
Enhancement of brand
More rapid, more responsive marketing
communications including PR
Faster product development lifecycle enabling faster
response to market needs
Improved customer service
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– reduced time in customer service
– online sales
– reduced printing and distribution costs of
marketing communications.
Supply-chain cost reductions from:
– reduced levels of inventory
– increased competition from suppliers
– shorter cycle time in ordering.
Administrative cost reductions from more efficient
routine business processes such as recruitment, invoice
payment and holiday authorization.
Improved customer service
Learning for the future
Meeting customer expectations to have a web site
Identifying new partners, supporting existing
partners better
Better management of marketing information and
customer information
Feedback from customers on products
Adoption of Internet and e-business
Services across Europe
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Source: Eurostat, Community Survey on ICT usage in enterprises, eEurope (2005) Information Society Benchmarking Report, © European Communities 2005, http://europa.eu.int/information_society
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Key Categories of Internet Applications
in Indonesia vs Global
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Source: http://www.teknojurnal.com/2011/03/11/perkembangan-internet-di-indonesia-pada-tahun-2010/
The McKinsey 7S framework
• The McKinsey 7S Frameworkis a management model developed by well-known business consultants Robert H. Waterman, Jr. and Tom Peters (who also developed the MBWA-- "Management By
Page 37 | [email protected], 2013
Source: Adapted from Waterman et al. (1980)
the MBWA-- "Management By Walking Around" motif, and authored In Search of Excellence) in the 1980s.
• This was a strategic vision for groups, to include businesses, business units, and teams.
The McKinsey 7S framework
• The 7S are structure, strategy, systems,
skills, style, staff and shared values.
• The model is most often used as a tool to
assess and monitor changes in the
internal situation of an organization.
Usage
• Improve the performance of a company
• Examine the likely effects of future changes within a company
• Align departments and processes during a merger or acquisition
• Determine how best to implement a proposed strategy
The Seven Interdependent Elements
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• OBJECTIVE OF THE MODEL (To analyze
how well an organization is positioned to
achieve its intended objective)
The Seven Interdependent Elements
• The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful
• Hard Elements– Strategy– Structure– Systems
• Soft Elements– Shared Values– Skills– Style– Staff
Exercise
• Please identify one company for each the types of
e-commerce below:
– Transactional e-commerce sites
– Services-oriented relationship-building web sites
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– Brand-building sites
– Portal or media sites
• Refer to Figure 1.2 and identify a company for each
the category provided.