Creating a Winning E-Business Second Edition Chapter 5

Creating a Winning E-BusinessSecond Edition

Chapter 5

Review of

Creating a Winning E-Business Second Edition, Chapter 5

3

Learning Objectives

Describe operational challenges for a startup

e-business

Define legal, office space, and human resources

issues

Discuss electronic payment methods

Explain front-end and back-end e-business

systems


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Learning Objectives(continued)

Identify e-business technologies and technology

providers

Discuss the benefits of outsourcing e-business

operations


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Startup and Operational Challenges

Identifying and solving legal issues Planning for and acquiring commercial office

space Hiring employees Selecting and managing electronic payment

methods Selecting e-business technologies and

technology providers


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Legal Issues

Establish a relationship with an attorney experienced in startups– Helps to develop business plan

– Establishes company valuation for investors

– Provides leads to investors

– Participates in negotiations

– Reviews all legal documents

– Advises on copyright, trademark, employee benefits, personnel policies


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Legal Issues (continued)

Copyright– Form of legal protection for original work

– Takes effect the moment the work is created

– Need copyright notice on Web site as a best practice

– U.S. Copyright Office good source of information on copyright law


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Trademark and service mark– Distinctive symbol, word, or phrase used to

identify a business

– Make it easy for consumers to identify source of products and services

– U.S. Patent and Trademark Office good source of information on trademarks and service marks


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Content liability– Exposure to potential liabilities based on Web

content

– Need appropriately worded disclaimer of liability at Web site


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Customer information privacy– Customers may hesitate to provide information

– Must have clear policy on how customer information is handled, secured, and used

– Consider voluntary programs such as TRUSTe• Non-profit organization• Advocates disclosure of information privacy

programs• Members post TRUSTe seal at Web site


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An e-business is subject to same property and income taxes as any brick-and-mortar business

Collection of sales taxes remains problematic– Collection of sales taxes from online customers

not required unless e-business has presence in state

– Rules are changing Need tax advice from professional (attorney or

accountant)


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Commercial Office Space

Startup e-business often begins in converted space in entrepreneur’s home

Factors requiring a move to commercial office space– Cramped quarters

– Hiring new employees

– Need for professional meeting areas


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Commercial Office Space (continued)

Create a facilities plan before looking for space– How much space is required?

– How will the space be divided?

– What are electrical and telecommunication needs?

– Is there access to parking, major roads, public transportation, qualified job applications?

– What are the security requirements?

– What is the budget?


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Hiring Employees

Knowing whom to hire first can be confusing First hires should be key management and

operations staff Startup often must offer key employees

– Pleasant working environment

– Competitive salaries and benefits

– Ownership equity


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Hiring Employees (continued)

Leads on finding qualified and talented employees– Investors and advisors

– Family and friends

– Professional recruiters


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Electronic Payment Methods

Make selection based on type of products and services offered and type of customer

Payment cards– Credit, debit, and charge cards

• Require a merchant account to accept payment card receipts

• Require access to a payment gateway to process payments


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Electronic Payment Methods (continued)


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Cost of accepting payment cards– Merchant account fees

• Setup• Per transaction• Statement• Discount rate (percentage of each transaction)


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Must provide secure transmission of data– Use Secure Sockets Layer (SSL) protocol to

encrypt transaction data• Relies on digital certificates for authentication• https://


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Risks of accepting payment cards– Cardholder not present risk

– Chargeback risk when fraud occurs or when customer returns products

E-businesses must also be on the alert for corporate identity theft– Theft of business names, logos, addresses, and

Web site information

– Used to defraud customers


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Other electronic payment methods– Stored value cards, such as gift cards and smart

cards

– Electronic checks – Electronic equivalent of paper checks

– Electronic cash (micropayments)

– P2P payment systems


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E-Business Technologies

Technology decisions– Processing sales and payment transactions

– Monitoring inventory

– Accounting and internal recordkeeping

– Connecting to the Internet

– Hosting a Web site


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E-Business Technologies (continued)

Front-end systems– Customer interaction and control

– Web site and related processes Back-end systems

– Not directly accessed by customers• Accounting and budgeting• Manufacturing, warehousing, distribution• Order tracking and customer support• Marketing


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Integration of front-end and back-end systems – Requires technologies to tie disparate systems

together

– Reduces costs by sharing the same transaction data across systems

– Issues to consider when integrating systems• Need for real-time or batch processing• System security• Compatibility


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Outsourcing Operations

Wide array of outsourced technology solutions are available– Internet service providers

– Web hosting companies

– Application service providers

– Fulfillment houses Major advantage is reduced cost Major disadvantage is loss of control


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Outsourcing Operations (continued)


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Chapter Summary

Establish relationships with an attorney and accountant or other professionals

Post appropriately worded liability disclaimer and privacy policy at Web site

Create a facilities plan before securing new office space

First hires should be key management personnel


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Chapter Summary(continued)

Electronic payment methods– Payment cards and stored value cards

– Electronic checks and electronic cash

– Micropayments and P2P payment systems Merchant account and payment gateway

– Necessary to accept payment cards

– Risks include cardholder not present risk and chargeback risk


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E-businesses technologies– Integrate front-end and back-end systems

– Storefront software

– Content management systems (CMS)

– Enterprise resource planning (ERP)

– Customer relationship management (CRM)


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Outsourcing technology requirements– ISPs and Web hosting companies

– Application service providers (ASPs)

– Order fulfillment houses

Documents

Creating a Winning E-Business Second Edition Chapter 5