Ch08_final - E-commerce Applications

7/31/2019 Ch08_final - E-commerce Applications

1/42

E. Wainright Martin Carol V. Brown Daniel W. DeHayesJeffrey A. Hoffer William C. Perkins

MANAGINGMANAGINGINFORMATIONINFORMATIONTECHNOLOGYTECHNOLOGY

FIFTH EDITION

CHAPTER 8

E-C OMMERCE APPLICATIONS


2/42

2005 Pearson Prentice-Hall Chapter 8 - 2

E-C OMMERCE TECHNOLOGIES

Page 239

Electronic commerce the electronic transmission of buyer/seller transactions and related information betweenindividuals and businesses or between two or morebusinesses that are trading partners


3/42



Will we see continued growth in e-commerce(Internet) applications?

Consider Metcalfes Law : The value of a network to each of its members is

proportional to the number of other users,

expressed as (n2 n) / 2 There are increasing returns to be gained as more

organizations and people use the Web

Page 240


4/42

2005 Pearson Prentice-Hall Chapter 8 - 4 Page 241Figure 8.1 Internet Technology Innovationsfor E-Commerce

E-C OMMERCE TECHNOLOGIESCommercial History of the Internet


5/42



Improvements for online sales or auctionbidding

New channels for customer service

Collection of clickstream metrics andpersonal data from Web site users

Acceptance of Web cookies stored on

users hard drive to enable customization of Web sites

Web browser improvements with multimedia

Page 240

Technologies for B2C Applications


6/42



Page 242

Technologies for B2B Applications

Most important technological advance for B2B applications XML markup language

Now have accepted standards Can be used for a flexible, low-entry form of EDI

Electronic data interchange (EDI) proprietary applicationsfor communicating with trading partners based on agreed-upon standards for business document transmission


7/42



Page 242-243


EDI Benefits: Reduced cycle times for doing business Cost savings for automated transaction handling

and elimination of paper documents Improved interfirm coordination and reducedinterfirm coordination costs

EDI Constraints: Start-up coordination challenges (EDI standardsagreement and legal issues) Start-up and ongoing IT costs


8/42



Page 242-243


Prediction: Web forms using XML and extranet applications

will continue to grow!


9/42



Potential constraint to e-commerce: lack of security for Internet transactions

Issues: How to control access to a computer that is

physically networked to the Internet How to ensure that security of a given

communication is not violated

Page 243

Technologies for IT Security


10/42



How to control access to a computer that is physically networked to the Internet?

Use of a firewall devices that sit between the Internet

and an organizations internal network to blockintrusions from unauthorized users and hackers

How to ensure that security of a given communication is not violated?

Encryption based on two decoding keys andmathematical principles for factoring a product into itstwo prime numbers, where one key codes a messageand the other decodes it

Page 243-244

Technologies for IT Security


11/42

2005 Pearson Prentice-Hall Chapter 8 - 11 Page 244Figure 8.2 E-Commerce Framework

(Adapted from Applegate, Holsapple, et al. 1996; Kalakota and Whinston, 1996)


12/42

2005 Pearson Prentice-Hall Chapter 8 - 12 Page 244-246

LEGAL AND REGULATORYENVIRONMENT

Tax Policies

Copyright Lays

Antitrust Laws

Privacy Issues


13/42

2005 Pearson Prentice-Hall Chapter 8 - 13 Page 246

S TRATEGIC OPPORTUNITIES AND THREATS

Porters Competitive Forces Model1. Supplier power

2. Customer power

3. Threat of new entrants

4. Threat of substitute products or services

5. Responses of competitors


14/42

2005 Pearson Prentice-Hall Chapter 8 - 14 Page 246


Opportunities due to the Internet:

1. Procurement of supplies via Internet canincrease companys power over suppliers

2. Size of potential market is expanded

3. Distribution channels between traditionalcompany and customer can be eliminated


15/42

2005 Pearson Prentice-Hall Chapter 8 - 15 Page 246-247


Threats to traditional companies due tothe Internet:

1.Migration to price competition difficult tokeep offerings proprietary

2. Increased number of potential competitors3. Internet reduces some traditional barriers

(such as in-person sales force)4. Customers increase their bargaining power

Internet reduces customers switching costs


16/42

The four main areas where companiesconduct business online

1. Direct marketing,selling, andservices

2. Financial andinformationservices

3. Maintenance,

repair, andoperations (MRO)

4. Intermediaries


17/42

Maintenance, Repair, & Operations(MRO)

MRO goods include office suppliers, officeequipment, furniture, computers, andreplacement parts

Internet transforms corporate purchasing froma labor-and paperwork-intensive process into

a self-service application


18/42

Intermediaries

Content providers companies that use the Internetto distribute copyrighted content, including news,music, games, books, movies, and many other typesof information

Online brokers intermediaries between buyers andsellers of goods and services

Market makers intermediaries that aggregate three

services for market participants A place to trade Rules to govern trading An infrastructure to support trading


19/42

Types of Intermediaries


20/42


E-B USINESS MODELS

Figure 8.4 Potential Benefitsto Sellers and Buyers

Page 249

B2C Applications


21/42


If Buyers and Sellers areFragmented, IndependentIntermediaries are likely to besuccessful.

If Sellers are Concentrated,Sellers are likely to dominate.

If Buyers are Concentrated,Buyers are likely to dominate.

Figure 8.5 Opportunities for B2B Marketplace Page 250

B2B Applications


22/42


E-B USINESS MODELS

Weill and Vitale proposition: The valuepropositions of eight business models differ according to the degree to which the following e-business assets are captured online: Customer transaction to capture revenue Customer data to capture data about

customers purchasing needs Customer relationship ability to influence

customers behaviors

Page 251

Atomic Business Models


23/42


E-B USINESS MODELS

Figure 8.6 Business Models and Their E-Business Assets

Page 251


(Based on Weill and Vitale 2001, Straub 2004)


24/42

2005 Pearson Prentice-Hall Chapter 8 - 24 Figure 8.6 Business Models and Their E-Business Assets

Page 251


(Based on Weill and Vitale 2001, Straub 2004)

E-B USINESS MODELS


25/42


DIRECT-TO- CUSTOMER EXAMPLES

Dot-com pioneer in online retailing of third-partyproducts

Began as bookseller competitor

Now a multi-store, online mall

First profitable year 2003Provides excellent online shopping experiencesfor millions of customers

Page 252

Amazon.com


26/42

2005 Pearson Prentice-Hall Chapter 8 - 26 Figure 8.7 Amazon.com Home Page Page 253

( 2004 Amazon.com, Inc. All right reserved.)


27/42



Page 254

Dell.com

Traditional direct seller and market leader of made-to-order microcomputers

Developed custom software to support masscustomization strategy

Took advantage of early penetration of Internetmarket


28/42

2005 Pearson Prentice-Hall Chapter 8 - 28 Figure 8.8 Dell.com Home Page Page 254

(Used with permission of Dell Corporation.)


29/42



Page 255

Landsend.com

Traditional catalog company that developedcapability to give online tools to customers sothey could make orders for new custom clothingvia its Web site


30/42

2005 Pearson Prentice-Hall Chapter 8 - 30 Figure 8.9 Landsend.com Home Page Page 256

( 2004 Lands End, Inc. Used with permission.)


31/42



Amazon.comDell

Lands End

All developed B2CWeb sites that useadvancedtechnologies tosupport customized

interactions withcustomers

Page 256

Successful Online Models


32/42



Figure 8.10 Common Online Activitiesby U.S. Consumers Page 257

Successful Online Models

Source: Pew Internet & American Life Project Surveys, 2002


33/42


INTERMEDIARY EXAMPLES

Page 257Figure 8.11 Key Characteristics of SixTypes of Intermediaries

(Based on Weill and Vitale, 2001)


34/42



Page 258

eBay

A dot-com pioneer in electronic auctions

One of first to achieve profitabilityNow is a C2C, B2B, and B2C intermediary


35/42

2005 Pearson Prentice-Hall Chapter 8 - 35 Figure 8.12 eBay.com Home Page Page 259

These materials have been reproduced with the permission of eBay, Inc. Copyright eBay, Inc. All rights reserved.


36/42



Page 259-260

Yahoo!

Early dot-com intermediary

Has recently leveraged IT innovations and

business acquisitions to become a leading portal As a portal, site owns only the customer relationship

Primary source of revenue is advertisementsThrough acquisition, now offers online jobsearches


37/42

2005 Pearson Prentice-Hall Chapter 8 - 37 Figure 8.13 Yahoo.com Home Page Page 260

(Reproduced with permission of Yahoo! Inc. Copyright 2004 by Yahoo! Inc. YAHOO! And the YAHOO! Logo are trademarks of Yahoo! Inc.)


38/42



Page 260-261

Manheim

Traditional B2B intermediary for sale of usedcars

Has leveraged the Internet to reduce purchasingand sales costs

Provides remote, real-time bidding duringphysical auctions


39/42

2005 Pearson Prentice-Hall Chapter 8 - 39 Figure 8.14 Manheim.com Home Page Page 261

(Used with permission of Manheim.)


40/42

Types of Intermediaries


41/42


S PECIAL ISSUE: WHATM AKES A GOOD WEB S ITE?

Page 262

Why is Web page design important?

For e-commerce applications, thecompanys Web site is the company


42/42

(Based on Rayport and Jaworski, 2004)

Documents

Ch08_final - E-commerce Applications