Electronic Commerce Applications

Electronic Commerce
Is the electronic transmission of buyer/seller transactions and other related information between individuals and businesses or between two or more businesseSs who are trading partner


ELECTRONIC COMMERCE
ELECTRONIC TRANSMISSION
BUYER/SELLER TRANSACTIONS
RELATED INFORMATION
BETWEEN INDIVIDUALS & BUSINESSES OR BETWEEN TWO OR MORE TRADING PARTNERS
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APPLICATIONS via INTERNET
IT: Internet Technology
B2C: Business-to-customer
B2B: Business-to business
EDI: Electronic Data Interchange
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IT REACH*
1. INSIDE COMPANY :
WITHIN SINGLE LOCATION
DOMESTIC LOCATIONS
GLOBAL LOCATIONS
2. OUTSIDE COMPANY :
CUSTOMERS, SUPPLIERS WITH SAME PLATFORM
CUSTOMERS, SUPPLIERS WITH ANY PLATFORM
ANYONE, ANYWHERE
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STRATEGIC ADVANTAGE
COST: Low cost producer
DIFFERENTIATION: Customer perceives superior image, quality, service
FOCUS: Competing on cost or differentiation within market niche
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1. VALUE CHAIN MODEL
MARKET STRATEGY
DEVELOP
SOURCE
MANUFACTURE
SELL
FULFILL
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Value Chain For a Manufacturing Firm

FIVE COMPETITIVE FORCES*

INTERNET TECHNOLOGY
TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCE
SEARCH ENGINES FOR PORTALS
EXTENSIBLE MARKUP LANGUAGE (XML): Expected to become standard language for e-business
COOKIES: User profiles stored on user’s computer
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TECHNOLOGY ENABLERS
BROWSER
WEB PRESENCE WITH CONTENT
SEARCH ENGINES, AGENTS
PUSH TECHNOLOGY, JAVA APPLETS
PORTALS & CREDIT CARD PROCESSING
CUSTOMIZATION & TRACKING
PEER-TO-PEER DIGITAL SIGNATURE
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METCALFE’S LAW
VALUE OF NETWORK PROPORTIONAL TO n, THE NUMBER OF USERS: (n2 - n)/2
INCREASING RETURNS TO INTERNET USERS AS MORE JOIN NETWORK
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ELECTRONIC COMMERCE FRAMEWORK
    COMPONENTS ARE SUPPORTED BY TWO PILLARS
COMPONENTS: Applications, common business services, messaging & knowledge distribution, electronic publication, electronic highway
PILLAR 1: Public policy, legal environment, privacy issues
PILLAR 2:  Technological standards, communications protocols, security technology
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LEGAL & REGULATORY ENVIRONMENT
TAX POLICIES: Initially sales tax enforcement was low to encourage growth. Currently this is changing
COPYRIGHT & PATENT LAWS: Difficult to enforce at international level
ANTITRUST LAWS: Market share and mergers could lead to monopolies
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ORGANIZATIONAL CONCERNS
SECURITY: Must safeguard proprietary and customer data. Primary control is FIREWALL, a barrier between organization’s network and Internet
ENCRYPTION: Uses encryption code to secure communication;  uses decryption code to unscramble it
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ORGANIZATIONAL CONCERNS
ANTIVIRUS PROTECTION: Use software to detect and negate viruses
PRIVACY: Legal requirements to maintain employee & customer confidentiality. A major concern is the ability for profiling habits, selling profiles to others. A related concern is protecting freedom of expression.
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REQUIREMENTS FOR SUCCESSFUL ONLINE MERCHANTS
INSTALL FIREWALL
KEEP SECURITY PATCHES UP-TO-DATE
ENCRYPT STORED AND TRANSMITTED DATA
USE & UPDATE ANTIVIRUS SOFTWARE
RESTRICT EMPLOYEE ACCESS TO SENSITIVE DATA
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BUSINESS TO CONSUMER B2C
B2C E-COMMERCE IS ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS, RELATED INFORMATION BETWEEN END-CONSUMERS AND ONE OR MORE COMPANIES
B2C e-Commerce *

B2C BENEFITS SELLER:
LOWER COSTS
GLOBAL REACH
MULTIMEDIA MARKETING OPPORTUNITIES
24x7 SALES & CUSTOMER SUPPORT CHANNEL
DIGITIZED DISTRIBUTION CHANNEL
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B2C BENEFITS BUYER:
EASY ACCESS TO PRODUCT INFORMATION
ANYTIME, ANYWHERE
AGENTS HELP FIND THINGS, COMPARE COSTS
ONLINE DISTRIBUTION OF DIGITIZED  PRODUCT/SERVICE
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B2C APPLICATIONS
    FORECAST TO GROW AS MORE CUSTOMERS HAVE INTERNET ACCESS
PRODUCT RETAILERS: Site allows customers to browse available wares, select, order, arrange for payment
SERVICE RETAILERS: Information intensive. Buyer may download materials for fee
RETAILING INTERMEDIARIES: Allows client to compare models and prices of many vendors
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B2C STRATEGIES*
BUSINESS-TO-BUSINESS (B2B)
   B2B E-COMMERCE IS ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS & INFORMATION BETWEEN TWO OR MORE BUSINESSES
PREDECESSOR WAS INTERORGANIZATIONAL SYSTEM (IOS)
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ELECTRONIC DATA INTERCHANGE (EDI)
COMPUTER-TO-COMPUTER COMMUNICATION BETWEEN TRADING PARTNERS: Hub organization and spoke customers & suppliers use structured formats
EXAMPLES: Purchase orders, invoices, shipping notices, price listings
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EDI BENEFITS
REDUCED CYCLE TIMES
COST SAVINGS: Automated transactions, reduced paper
IMPROVED INTER-FIRM COORDINATION: Reduced coordination costs
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CHANNELS FOR INTERNET EDI*
WEB EDI: Use EDI templates designed by Web server
FTP EDI: EDI transactions stored at spoke company. Periodically transmitted as batch to hub company
E-MAIL EDI: EDI transactions sent as e-mail over Internet
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EXTRANET
   B2B APPLICATIONS BASED ON WEB TECHNOLOGY: Business partners use Web browser on client machine to gain access to another company’s intranet
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