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1
The Business and Operations
Value Chain and How EC impact the conventional Value Chain
2
Activity 2
Puzzle Challenge
Electronic Commerce is Interdisciplinary Management
information systems Accounting and
auditing Management Business law and
ethics Marketing
Computer sciences Consumer behavior
and psychology Finance Economic Production/Logistic
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Competitive AdvantageDerives from the value a company
creates for its buyers: Low cost
Selling equivalent product at below-competitor prices
Differentiation In a unique way relative to its competitors
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Value Chain Concept An instrument to analyze a firm’s competitive
advantages Provides a systematic means of displaying and categorizing
activities
Primary
Activities
Support A
ctivities
InboundLogistics
ServicesOperations OutboundLogistics
MarketingAnd Sales
Corporate Infrastructure
Human Resources Management
Technology Development
Procurement
Margin
Margin
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The Value Chain Primary activities
Inbound logistics Operations Outbound logistics Marketing & sales Service
Supporting Activities
Corporate infrastructure
Human resource management
Technology development
Procurement
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Primary Activities Inbound logistics
Materials receiving, storing, and distribution to manufacturing premise.
Operations Transforming inputs into finished products.
Outbound logistics Storing and distributing products.
Marketing and Sales Promotion and sales force.
Service Service to maintain or enhance product value.
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Supporting Activities Corporate infrastructure
Support of entire value chain, such as general management, planning, finance, accounting, legal services, government affairs, and quality management.
Human resource management Recruiting, hiring, training, and development.
Technology development Improving product and manufacturing process.
Procurement Function or purchasing input.
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Application and benefits of electronic commerce Inbound logistic
A large department store chain is linked directly to several of its textile suppliers.This hookup has not only improved delivery and permitted inventory reduction; it has also provided the chain the flexibility to meet changing demand almost immediately.
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ExampleExample
Application and benefits of electronic commerceOperations and product structure
A major insurance company thought of its business as a provider of diversified financial services and as a bit-moving company. It improved its services to policyholders by allowing them immediate on-line checking of status for claims processing.
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ExampleExample
Application and benefits of electronic commerceOutbound logistic
An international delivery company offering free, state-of-the-art program download and shipment tracking application program for e-business integration. These empowered businesses to serve existing and emerging markets more effectively and more responsively.
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ExampleExample
Application and benefits of electronic commerceMarketing and sales
A large pharmaceutical company offers on-line order-entry services to pharmacies for itself and a consortium of allied, non-competing companies. This service has increased its market share and derived sizable added revenues from its consortium partners.
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ExampleExample
Application and benefits of electronic commerceService
A large manufacturer of industrial machinery has installed an expect maintenance system in its home-office computer. When a machine failure occurs on a customer’s premises, the machine is connected over a telephone lint to the manufacturer’s computer, which performs a fault analysis and issues instructions to the machine operator.
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ExampleExample
Application and benefits of electronic commerceCorporate infrastructure
In some instances IT has dramatically enhanced coordination through fairy simple by but powerful tools such as voice mail, e-mail. These tools have dramatically accelerated the depth and breadth of communication
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ExampleExample
Application and benefits of electronic commerce Human resources
The corporate management committee members of an oil company has full-on-line access to the detailed personnel files of the 400 most senior members in the corporation, compete with such data as five-year performance appraisals, photographs, and lists of positions each person is backing up. The company believes this capability has facilitated its important personal decisions.
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ExampleExample
Application and benefits of electronic commerceTechnology development
CAD/CAM (computer-aided design and manufacturing) technology has fundamentally changed the quality and speed up the manufacturing process.
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ExampleExample
Application and benefits of electronic commerceProcurement
A retailer, by virtue of its large size, has succeeded in its demand for on-line access to the inventory files and production schedules of it suppliers. This access has permitted the company to mange its inventories more tightly than before and to pressure suppliers on price and product availability.
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ExampleExample
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Can you think of other examples?
Sourcing Upstream focuses in B2B activities Downstream focuses in B2C activities
Upstream Internal Downstream
Assembly/Manufacturing and
Packaging
DistributionCenters
Retailers
Customers
Supply Chain Model
1st TierSupplier
2nd TierSupplier
2nd TierSupplier
2nd TierSupplier
1st TierSupplier
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What Business PurchaseManufacturing Inputs
Manufacturing inputs are the raw material and components that go directly into a product or a process. Spot sourcing
Operating Inputs (MRO) Operating Inputs tend not to be industry
specific
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Systematic Sourcing Involves Negotiation Tend to be long term Static Price
Spot Sourcing Fulfil an immediate need Lowest possible cost
How Business Purchase
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Traditional Sourcing Issues Insufficient Supplier / Buyer Information
Geographical Restriction Buyers/ Suppliers connection and
experience Fragmented Market
Continuously changing parts and suppliers
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Traditional Sourcing IssuesSpot Sourcing
Short time frame Lower Buyer’s bargaining power
Manual Process Inefficient and information duplication Purchased from non-approved suppliers Ordering rules difficult to enforce Slow ordering process
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Definition of E-SourcingUsing the Internet/www and related
tools to buy goods and services
Using the Internet/www to support processes to buy goods and services
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E-marketplaceBuyers and sellers could be brought
together in cyberspaceReducing NxN interactions to Nx1
interactions among the players
P6P6
P2P2
P5P5
P1P1
P4P4
P3P3 P6P6
P2P2
P5P5
P1P1
P4P4
P3P3E-MarketsE-Markets
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Examples of E-marketplace (1)Power.National.com
Designer’s web bench Output-oriented site
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Examples of E-marketplace (2)Chemweb.com
Chemistry, biology, lab supplies and reagents
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Examples of E-marketplace (3)TradeWeb.com
Bond market
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Examples of E-marketplace (4)PlasticsNet.com
Market place for industry professionals
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Examples of E-marketplace (5)Seafax.com
All you need for Food Industry
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Example of e-marketplace (6)www.hktaiga.com The Global Apparel
Trade Gateway
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