© Prentice Hall 2002 7.1 CHAPTER 7 Electronic Commerce Applications

7.1

© Prentice Hall 2002

CHAPTER 7CHAPTER 7

Electronic CommerceElectronic Commerce

ApplicationsApplications

7.2


ELECTRONIC COMMERCEELECTRONIC COMMERCE

• ELECTRONIC TRANSMISSIONELECTRONIC TRANSMISSION• BUYER/SELLER TRANSACTIONSBUYER/SELLER TRANSACTIONS• RELATED INFORMATIONRELATED INFORMATION• BETWEEN INDIVIDUALS & BETWEEN INDIVIDUALS &

BUSINESSES OR BETWEEN TWO BUSINESSES OR BETWEEN TWO OR MORE TRADING PARTNERSOR MORE TRADING PARTNERS

**

7.3


APPLICATIONS APPLICATIONS via via INTERNETINTERNET

• IT: IT: Internet TechnologyInternet Technology

• B2C: B2C: Business-to-customerBusiness-to-customer• B2B: B2B: Business-to businessBusiness-to business• EDI: EDI: Electronic Data InterchangeElectronic Data Interchange

**

7.4


ITIT REACH* REACH*

• INSIDE COMPANY:INSIDE COMPANY:– WITHIN SINGLE LOCATION– DOMESTIC LOCATIONS– GLOBAL LOCATIONS

• OUTSIDE COMPANY:OUTSIDE COMPANY:– CUSTOMERS, SUPPLIERS WITH SAME PLATFORM– CUSTOMERS, SUPPLIERS WITH ANY PLATFORM– ANYONE, ANYWHERE

**

*Adapted from Keen, 1991

7.5


STRATEGIC ADVANTAGESTRATEGIC ADVANTAGE

• COST: COST: Low cost producerLow cost producer

• DIFFERENTIATION: DIFFERENTIATION: Customer Customer perceives superior image, quality, perceives superior image, quality, serviceservice

• FOCUS: FOCUS: Competing on cost or Competing on cost or differentiation within market nichedifferentiation within market niche

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7.6


VALUE CHAIN MODELVALUE CHAIN MODEL

• MARKET STRATEGYMARKET STRATEGY• DEVELOPDEVELOP• SOURCESOURCE• MANUFACTUREMANUFACTURE• SELLSELL• FULFILLFULFILL

**

7.7


FIVE COMPETITIVE FORCES*FIVE COMPETITIVE FORCES*

*Adapted from Porter, 1985

INDUSTRYINDUSTRYCOMPETITORCOMPETITOR

SS

SUPPLIER SUPPLIER POWERPOWER

CUSTOMER CUSTOMER POWERPOWER

THREAT OF THREAT OF NEWNEW

ENTRANTSENTRANTS

THREAT OF THREAT OF

SUBSTITUTE SUBSTITUTE PRODUCTSPRODUCTS

7.8


INTERNET TECHNOLOGYINTERNET TECHNOLOGY

• TOOLS FOR WEB PAGE TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCEDEVELOPMENT & SITE MAINTENANCE

• SEARCH ENGINES FOR PORTALSSEARCH ENGINES FOR PORTALS• EXTENSIBLE MARKUP LANGUAGE EXTENSIBLE MARKUP LANGUAGE (XML)(XML): : Expected to become standard Expected to become standard language for e-businesslanguage for e-business

• COOKIES: COOKIES: User profiles stored on user’s User profiles stored on user’s computercomputer

**

7.9


TECHNOLOGY ENABLERSTECHNOLOGY ENABLERS

• BROWSERBROWSER• WEB PRESENCE WITH CONTENTWEB PRESENCE WITH CONTENT• SEARCH ENGINES, AGENTSSEARCH ENGINES, AGENTS• PUSH TECHNOLOGY, JAVA APPLETSPUSH TECHNOLOGY, JAVA APPLETS• PORTALS & CREDIT CARD PROCESSINGPORTALS & CREDIT CARD PROCESSING• CUSTOMIZATION & TRACKINGCUSTOMIZATION & TRACKING• PEER-TO-PEER DIGITAL SIGNATUREPEER-TO-PEER DIGITAL SIGNATURE

**

7.10


METCALFE’S LAWMETCALFE’S LAW

• VALUE OF NETWORK VALUE OF NETWORK PROPORTIONAL TO PROPORTIONAL TO nn, THE NUMBER , THE NUMBER OF USERS: OF USERS: (n(n22 - n)/2 - n)/2

• INCREASING RETURNS TO INTERNET INCREASING RETURNS TO INTERNET USERS AS MORE JOIN NETWORKUSERS AS MORE JOIN NETWORK

**

7.11


ELECTRONIC COMMERCE ELECTRONIC COMMERCE FRAMEWORKFRAMEWORK

COMPONENTS ARE SUPPORTED BY TWO COMPONENTS ARE SUPPORTED BY TWO PILLARSPILLARS

• COMPONENTS: COMPONENTS: Applications, common Applications, common business services, messaging & knowledge business services, messaging & knowledge distribution, electronic publication, electronic distribution, electronic publication, electronic highwayhighway

• PILLAR 1: PILLAR 1: Public policy, legal environment, Public policy, legal environment, privacy issuesprivacy issues

• PILLAR 2:PILLAR 2: Technological standards, Technological standards, communications protocols, security technologycommunications protocols, security technology

**

7.12


LEGAL & REGULATORY LEGAL & REGULATORY ENVIRONMENTENVIRONMENT

• TAX POLICIES: TAX POLICIES: Initially sales tax Initially sales tax enforcement was low to encourage enforcement was low to encourage growth. Currently this is changinggrowth. Currently this is changing

• COPYRIGHT & PATENT LAWS: COPYRIGHT & PATENT LAWS: Difficult to enforce at international Difficult to enforce at international levellevel

• ANTITRUST LAWS: ANTITRUST LAWS: Market share and Market share and mergers could lead to monopoliesmergers could lead to monopolies

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7.13


ORGANIZATIONAL ORGANIZATIONAL CONCERNSCONCERNS

• SECURITY: SECURITY: Must safeguard Must safeguard proprietary and customer data. proprietary and customer data. Primary control is FIREWALL, a Primary control is FIREWALL, a barrier between organization’s barrier between organization’s network and Internetnetwork and Internet

• ENCRYPTION: ENCRYPTION: Uses encryption code Uses encryption code to secure communication; uses to secure communication; uses decryption code to unscramble itdecryption code to unscramble it

**

7.14


ORGANIZATIONAL ORGANIZATIONAL CONCERNSCONCERNS

• ANTIVIRUS PROTECTION:ANTIVIRUS PROTECTION: Use Use software to detect and negate virusessoftware to detect and negate viruses

• PRIVACY: PRIVACY: Legal requirements to Legal requirements to maintain employee & customer maintain employee & customer confidentiality. A major concern is the confidentiality. A major concern is the ability for profiling habits, selling ability for profiling habits, selling profiles to others. A related concern profiles to others. A related concern is protecting freedom of expression.is protecting freedom of expression.

**

7.15


REQUIREMENTS FOR SUCCESSFUL REQUIREMENTS FOR SUCCESSFUL ONLINE MERCHANTSONLINE MERCHANTS

• INSTALL FIREWALLINSTALL FIREWALL• KEEP SECURITY PATCHES UP-TO-DATEKEEP SECURITY PATCHES UP-TO-DATE• ENCRYPT STORED AND TRANSMITTED ENCRYPT STORED AND TRANSMITTED

DATADATA• USE & UPDATE ANTIVIRUS SOFTWAREUSE & UPDATE ANTIVIRUS SOFTWARE• RESTRICT EMPLOYEE ACCESS TO RESTRICT EMPLOYEE ACCESS TO

SENSITIVE DATASENSITIVE DATA

**

7.16


BUSINESS TO CONSUMER BUSINESS TO CONSUMER B2CB2C

B2C E-COMMERCE IS B2C E-COMMERCE IS ELECTRONIC TRANSMISSION ELECTRONIC TRANSMISSION OF BUYER-SELLER OF BUYER-SELLER TRANSACTIONS, RELATED TRANSACTIONS, RELATED INFORMATION BETWEEN END-INFORMATION BETWEEN END-CONSUMERS AND ONE OR CONSUMERS AND ONE OR MORE COMPANIESMORE COMPANIES

**

7.17


B2C BENEFITS B2C BENEFITS SELLER:SELLER:

• LOWER COSTSLOWER COSTS• GLOBAL REACHGLOBAL REACH• MULTIMEDIA MARKETING MULTIMEDIA MARKETING

OPPORTUNITIESOPPORTUNITIES• 24x7 SALES & CUSTOMER SUPPORT 24x7 SALES & CUSTOMER SUPPORT

CHANNELCHANNEL• DIGITIZED DISTRIBUTION CHANNELDIGITIZED DISTRIBUTION CHANNEL

**

7.18


B2C BENEFITS B2C BENEFITS BUYER:BUYER:

• EASY ACCESS TO PRODUCT EASY ACCESS TO PRODUCT INFORMATIONINFORMATION

• ANYTIME, ANYWHEREANYTIME, ANYWHERE• AGENTS HELP FIND THINGS, AGENTS HELP FIND THINGS,

COMPARE COSTSCOMPARE COSTS• ONLINE DISTRIBUTION OF ONLINE DISTRIBUTION OF

DIGITIZED PRODUCT/SERVICEDIGITIZED PRODUCT/SERVICE

**

7.19


B2CB2C APPLICATIONS APPLICATIONS

FORECAST TO GROW AS MORE FORECAST TO GROW AS MORE CUSTOMERS HAVE INTERNET ACCESSCUSTOMERS HAVE INTERNET ACCESS

• PRODUCT RETAILERS: PRODUCT RETAILERS: Site allows Site allows customers to browse available wares, select, customers to browse available wares, select, order, arrange for paymentorder, arrange for payment

• SERVICE RETAILERS: SERVICE RETAILERS: Information intensive. Information intensive. Buyer may download materials for feeBuyer may download materials for fee

• RETAILING INTERMEDIARIES:RETAILING INTERMEDIARIES: Allows client Allows client to compare models and prices of many vendorsto compare models and prices of many vendors

**

7.20


B2CB2C STRATEGIES* STRATEGIES*

ONLINE OFFLINEONLINE OFFLINE

CUSTOMER CUSTOMER INTERFACEINTERFACE

FULFILLMENT FULFILLMENT SYSTEMSSYSTEMS

*RAYPORT & JAWORSKI, 2000

EG

GH

EA

EG

GH

EA

DDYAHOO!YAHOO!

BN.COMBN.COM

AMAZON.COMAMAZON.COM

Mc DONALD’SMc DONALD’S

7.21


BUSINESS-TO-BUSINESS BUSINESS-TO-BUSINESS (B2B)(B2B)

B2B E-COMMERCE IS B2B E-COMMERCE IS ELECTRONIC TRANSMISSION OF ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS & BUYER-SELLER TRANSACTIONS & INFORMATION BETWEEN TWO OR INFORMATION BETWEEN TWO OR MORE BUSINESSESMORE BUSINESSES

• PREDECESSOR WAS PREDECESSOR WAS INTERORGANIZATIONAL SYSTEM INTERORGANIZATIONAL SYSTEM (IOS)(IOS)

**

7.22


ELECTRONIC DATA ELECTRONIC DATA INTERCHANGE INTERCHANGE (EDI)(EDI)

• COMPUTER-TO-COMPUTER COMPUTER-TO-COMPUTER COMMUNICATION BETWEEN COMMUNICATION BETWEEN TRADING PARTNERS: TRADING PARTNERS: Hub Hub organization and spoke customers & organization and spoke customers & suppliers use structured formatssuppliers use structured formats

• EXAMPLES: EXAMPLES: Purchase orders, invoices, Purchase orders, invoices, shipping notices, price listingsshipping notices, price listings

**

7.23


EDIEDI BENEFITS BENEFITS

• REDUCED CYCLE TIMESREDUCED CYCLE TIMES• COST SAVINGS: COST SAVINGS: Automated Automated

transactions, reduced papertransactions, reduced paper

• IMPROVED INTER-FIRM IMPROVED INTER-FIRM COORDINATION: COORDINATION: Reduced Reduced coordination costscoordination costs

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7.24


CHANNELS FOR INTERNET CHANNELS FOR INTERNET EDIEDI**

• WEB EDI: WEB EDI: Use Use EDIEDI templates templates designed by Web serverdesigned by Web server

• FTP EDI: FTP EDI: EDIEDI transactions stored at transactions stored at spoke company. Periodically spoke company. Periodically transmitted as batch to hub companytransmitted as batch to hub company

• E-MAIL EDI: E-MAIL EDI: EDIEDI transactions sent transactions sent as e-mail over Internetas e-mail over Internet

***Senn, 2000

7.25


EXTRANETEXTRANET

B2BB2B APPLICATIONS BASED ON APPLICATIONS BASED ON WEB TECHNOLOGY: WEB TECHNOLOGY: Business Business partners use Web browser on client partners use Web browser on client machine to gain access to another machine to gain access to another company’s intranetcompany’s intranet

**

7.26


CHAPTER 7CHAPTER 7

Electronic CommerceElectronic Commerce

ApplicationsApplications

Documents

© Prentice Hall 2002 7.1 CHAPTER 7 Electronic Commerce Applications