CIS 826 Course Review

8/3/2019 CIS 826 Course Review

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Professor Joan Donovan

Electronic CommerceConcepts

CIS 826

Suffolk University

Sawyer School of Management

MBA Program

Cape Cod Campus


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Course Description CIS 826

Elements of course:

The framework for understanding of e-commerce

Strategy formulation and execution process

Four key infrastructures

1. Technology

2.

Capital3. Media

4. Public Policy


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Grading Criteria:

Final grades will be determined with the following approximate weights:

Individual Points

Research Report 20

Research Presentation 10

Final 20

Class participation & Attendance 10

Group

In class exercises (8 @ 5 pts each) 40

Total 100


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How Do We Define e-Commerce?

Technology-mediated exchanges betweenparties as well as electronically-based intra- orinter-organizational activities that facilitate suchexchanges


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1

Table 1- 1: Four Categories of e-Commerce

B2B

B2B C2B

C2B

B2C

B2CC2C

C2C

Business Consumers

Business originating from . . .

Business

Consumers

And selling to . . .


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3

Exhibit 1- 2: Classical Framework for Strategic Management

Implementation

Implementation

Internal

(Company)

Analysis

Internal

(Company)Analysis

ExternalAnalysis

ExternalAnalysis

Control

and

Monitoring

Control

and

Monitoring

Strategy

Formulation

Strategy

Formulation

Corporate

Business

Unit

Functional

Operating

Objectives

Objectives

Mission

Mission


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Three Approaches to Strategy

Position approach:

Where should we be vs. our competition?

Resources approach:

What resources should we possess?

Simple rules approach:

What processes should we follow?


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Factors of Consumer Behavior

in the Online Environment

The 2 key factors that are of paramount importance in theonline environment are:

Customization:This refers to the personalization

of communications betweenusers and a website.

Interactivity:This is defined as the users ability

to conduct two-way communications.

This includes use to user and firm

to user communication.


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The Strategy Formulation Process

There are six interrelated, sequential decisionsto strategy:

1. Market opportunity analysis

2. Business Model

3. Customer interface

4. Market communications and branding

5. Implementation and

6. Evaluation


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The Context of Strategy Formulation:

The Four Infrastructures

Technology Infrastructure:This is both an enabler and driver of change.The

hardware backbone of computers, routers, servers, fiber

optics, cables, modems, etc. provide half of thetechnology equation.The other half includes the software

and communication standards including the core

protocols for the www.

Capital Infrastructure: Deals with getting the money tolaunch new businesses and finding the right people to

build the business plan and seek funding sources.


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The Context of Strategy Formulation:

The Four Infrastructures(contd)

Media Infrastructure:The e-commerce managers mustmake choices about the types ofmedia employed(e.g., print, audio ,video), the nature of the media andeditorial policy(including style, content,look and feel).

PublicPolicy Infrastructure:

All the decisions related to strategy, technology, capitaland media are influenced by laws and regulation, i.e.,public policy decisions. It not only affects specificbusiness but also direct and indirect competitors.


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What Are the Roles and Responsibilities

of a Senior e-Commerce Manager?

Senior managers need to have the basic business skillset of traditional managers but must also incorporate newknowledge, skills and capabilities.

RequiredSkills:

Cross Discipline, Integrative

Entrepreneurial

A strategic decision maker.

Trained in a variety of disciplines including marketing, logistics,

accounting finance, tech. sophistication and media knowledge.


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7

Exhibit 1- 5: Relevant Disciplines for a Senior e-Commerce Executive

EntrepreneurshipEntrepreneurship

Strategic

Management

Strategic

Management

TechnologyTechnology New MediaNew Media

AccountingAccountingOperations

and Logistics

Operations

and Logistics

FinanceFinance MarketingMarketing

Note: Shaded boxes reflect new capabilities


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Exhibit 1-6: A Flow Diagram of the Strategic Responsibilities

Set VisionSet Vision

EstablishGoalsEstablish Goals

Formulate StrategyFormulate Strategy

Drive

Implementation

DriveImplementation

Be Accountable

for Performance

Be Accountable

for Performance


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What Are the Roles and Responsibilities

of a Senior e-Commerce Manager?(contd)

Drive implementation:

Strategy implementation is about

making the right choices related to

people, structure, systems and processesto execute the strategy.

Accountable for performance:

The senior manager is responsible for theperformance of the organization.


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Networking Software

The two most well-known pieces of internetworking software are

the TCP and IP

IP

software set rules of data transfer over the network

TCP software ensures the safe and reliable transfer of data

With open system nature of TCP/IP development, software

development and computer companies could more easily build

TCP/IP compliant software and hardware

TCP/IP standard network protocol laid the groundwork that

enabled the deep internetworking that made internet possible


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How the Internet Works(contd)

Packet SwitchingTo remedy delays associated with unequally sizeddata transfers, instead of transferring files in theirentirety, whole files are broken up into data

packets before being transferred over the network.

Routing

Routers are dedicated, special-purpose computerswhich serve as an intermediary between networks.They route packets efficiently through networks.Routers are building blocks of the internet.


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How the Internet Works (contd)

Reliability and Transmission control Protocol

IPsoftware handles packet deliveries and TCP

handles safe delivery of packages.

Standardization

Without the TCP/IPstandardization, there would

have been many negative tradeoffs, such asinflexibility and increased functional and switching

costs.


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TCP Standardization

Networking technologies are not inherently compatible.

Before the development of internetworking technology anorganization with networks had two options:

One Alternative- allow groups to have networktechnology best suited to them, which was not flexible

Other alternative have a standard


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Functions of TCP/IP

Prevents loss of data

Checks packets

Eliminates duplicate packets

Sends confirmation when the packet is received

If confirmation is not received, then the packet isretransmitted

Enables reliable and error-free communication over

the net


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What Web Pages Are Made Of

The entire Web is built upon three concepts:

Web pages (documents seen on the browser)

Links (connecting one web page to another)

Servers (storing and transmitting the informationto the browsers for display)

No special software is required to create a web page

Majority of pages are created using Hyper TextMarkUp Language(HTML)


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1

0

Exhibit 2-10

Components of a URL

http://www.monitor.com/cgi-bin/templates/index.html

Indicates browser should use

HyperText TransferProtocol

for server access

Indicates browser should use

HyperText TransferProtocol

for server access

The directorythat contains the file you want

to view

The directorythat contains the file you want

to view

The name of the computer

being accessed (could also usethis computers IP address

which is 208.178.40.89)

The name of the computer

being accessed (could also usethis computers IP address

which is 208.178.40.89)

The name of thefile you want to view

The name of thefile you want to view

Adapted from Comer fig. 22.7, p. 203


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Factors Behind the Growth of the Net

Ease of content consumption

Browser versatility and convenience

Speed

Easy to download

Platform independence

Ease of content creation

Standards


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Framework for Diagnosing Market Opportunity

Seed Opportunity in Existing or New ValueSystem

Uncover Opportunity Nucleus:

Identify Unmet and Underserved Needs

Identify Target Segments

Declare Companys Resource-Based

Opportunity for Advantage

Assess Competitive, Technical and Financial

Opportunity Attractiveness

Make Go / No Go Assessment


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Requirements of an Effective Segmentation

Meaningful

Actionable

Substantial

Measurable

Customers must demonstrate needs, aspirations or behavioral patterns that are similar withina segment and different across segments

A distinction between a price sensitive and a quality seeking segment is meaningful,since the two segments demonstrate distinguishable sets of needs

A company must be able to reach customers within each segment through effective andtargeted marketing programs

A customer segment consisting of customers with blue eyes is not actionable, since it isvery hard to identify and reach only customers with blue eyes

Segments must be large and profitable enough to make the investment in serving themworthwhile

myCFO.com is targeted towards high net worth individuals, helping them manage theirportfolios. Even though the number of those individuals is small, the $ amount managedis sizeable, thus constituting a substantial segment

Key characteristics of the segments (e.g. size and spending patterns) must be easy tomeasure

Source: Philip Kotler,MarketingManagement, 1997(Chapter9, page 269)

In order for a customer segmentation to be effective, it must be meaningful, actionable,measurable and substantial


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Exhibit 31: Components of a Business Model

Value ClusterValue Cluster

Marketspace OfferingMarketspace Offering

Resource SystemResource System

Financial ModelFinancial Model

Developing a business model in the networked economy requires four key choices on the part

of the senior management:

Specify the value proposition orthe value cluster for the business

Articulate the online product,service and information offer

Define how the company needs toalign its resources to deliver thevalue proposition

Define and select the mostappropriate revenue model topursue


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Exhibit 36: Scope of the Offering

The scope of the offering refers to the number of categories of products and services offered

on the site:

Category-Specific DominanceFocus on one product category

Secondspin.com (used CDs)

PremiumOrchids.com (orchids)

Peapod (online grocery)

Continuum of Scope

Cross-Category DominanceFocus on a large number of categories

Dealtime (electronics and other goods)

1-800-Flowers (flowers)

Streamline* (online grocery, drycleaning service, etc.)

* Streamline closed down in 2000


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Exhibit 38: Customer Decision Process

Flowers Example

DisposalDisposal

LoyaltyLoyalty

SatisfactionSatisfaction

Purchase DecisionPurchase Decision

Evaluation of AlternativesEvaluation of Alternatives

Information SearchInformation Search

Problem RecognitionProblem Recognition

Prepurchase

Purchase

Postpurchase

Need recognition, potentially triggered by aholiday, anniversary or everyday events

Search for ideas and offerings, including:

Available online and offline stores Gift ideas and recommendations Advice on selection style and match

Evaluation of alternatives along a number ofdimensions, such as price, appeal, availability, etc.

Purchase decision Message selection (medium and content)

Post-sales support Order tracking Customer service

Education on flowers and decoration Post-sale perks

The second step in the construction of the online offering is the articulation of the customer

decision process for the various product categories:


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Flower / Gift

Decision Process

NeedRecognition

Search for

Ideas andOfferings

Purchase

Decision

MessageSelection

Post-SaleSupport and

Perks

Education onF

lowers andDecoration

Exhibit 310: Egg Diagram for 1-800-Flowers.com

Gift reminder service Holiday specials

Everyday celebrationssuggestions

Special occasion suggestions

Gift guru F

avorite gifts Gift frequency Gift impossible Gift baskets Corporate gift services

Ideas and Information

Post-Sale Support

Product price

Product picture

Product description Delivery information

Delivery availability

Gizmo fully-animated

greeting cards

Physical cards in gifts

Order receipt e-mail

eQ&A online customer

service

FAQ

Customer service

inquiry form

Perks

Miles earned withflower purchases

Free gifts

Discounts at AOL &

BN.com with flowerpurchases

Member specials

Care and handling Do it yourself Special events and

educational

workshops held atstores

Floral ideas Garden ideas Home ideas Gift ideas Gourmet ideas Store locator Recommendations by budget Bestsellers

Evaluation ofAlternatives

Gift Recommendations

Shopping basket

E-commerce transaction

Special shopping features Delivery outside US

1-800-lasfloras.com

Product

Offering


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Exhibit 328: Rayport, Jaworski and Siegal Model

Key concepts:

Introduces a 2x2 table to categorize businesses based on the Source of ContentOrigination and the Focus of Strategy

The matrix categorizes fourpure-play approaches, and a number ofhybrid

approaches

Forward-Integrated

Producer

(Walmart.com)

Supply-Side

Aggregator

(Surplusdirect.com)

Backward-Integrated

User

(Dellonline.com)

Demand-Side

Aggregator

(Accompany.com)

Single Brand Multiple Brand

Source of Content Origination

FocusofS

trategy

Supply-Side

Demand

-Side

Hybrid Integrator

(Cisco.com)

Hybrid Aggregator

(Amazon.com)


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The 7Cs of the Customer Interface

Context

Sites layout and design

Commerce

Sites capabilities to enable

commercial transactions

Connection

Degree site is linked to othersites

Communication

The ways sites enable site-to-

user communication or two-waycommunication

Customization

Sites ability to self-tailor todifferent users or to allow users

to personalize the site

Community

The ways sites enable user-to-

user communication

Content

Text, pictures, sound and video

that web pages contain


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Building Fit and Reinforcement

Fit extent each of7Cs individually support the

business model

Reinforcement aesthetic context of the site


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Aesthetic and Tips

Aesthetic

Color scheme

Visual themes

Usability Tips and Tricks

Quick

Easy

Search capability

Get outside opinion

Clear categories Clear product names


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Context archetypes

Broad, generic approaches to context design

New technologies introduce new techniques,

introduce new aesthetics

Aesthetically dominant look-and-feel, high

form, low function

Functionally dominant low form, high function

Integrated - balance of form and function


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Five Content Archetypes

Content

Dimensions to Content

Offering mix product, information, and/or

servicesAppeal mix promotional and communication

messaging

Multimedia mix text, audio, image, video, and

graphics choices

Content type time-sensitivity


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A Community

Community

A feeling of membership

Strong sense of involvement User-to-user communication


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Elements of a community

Cohesion

Effectiveness

Help

Relationship

Language

Self-regulation


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Types of communities

Just friends

Enthusiasts

Friends in need

Players Traders


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Customization Types

Personalization by user

Consciously articulated

Acted upon preferences

Tailoring by site Reconfigure past behavior

Reconfigure by other users

of similar profiles


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Types ofCommunication a Firm Can

Maintain with its Customer Base

Communication

Dimensions of

communication

Broadcast Mass mailings

FAQ

E-mail newsletters

Content-update reminders Broadcast events


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A Firms Connection with Other Businesses

Connection

Degree site is able to link to other sites

Embedded, links maybe on serve or

another server

Dimensions of connection

Links to sites

Home site background

Outsourced content

Percent of home site content

Pathway of connection Pathway of

connection


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Connection archetypes

Destination site

site generated with few links

Hub site

combination of site-generated and links to

selective sites Portal site

absolute links to large numbers of other sites

Affiliate program

direct users through links or site banners or

other ads Outsourced content

generated by third parties

Meta-software

utility and plug-in software application creation


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Commerce Archetypes

Catalog pricing

preset by the seller

Auction pricing

highest bidder wins

Reverse auction pricing

sellers bid against each other

Demand aggregation pricing

buyer demand is aggregated to

achieve economies of scale

Haggle pricing

users and site negotiate over

price


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Four Categories of Market Communication

Offline communications

Television

Advertising

Promotions

Sales calls

Types

General on-line

Personalized online Traditional mass media

Direct communications


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FourCategories ofCommunications

General Online Approaches

Banner ads

Impressions gross exposures or ad views

Leads viewer takes action

Sales commissions to host


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The Four Categories of Communications

Direct

Traditional Mass Marketing

Television

Radio Print

Billboards

SuperiorCustomer Service

Personalized

Permission Marketing

Personalized Recommendations

Personalized Advertisements

Personalized Web Pages

Personalized Upsell

Personalized E-commerce

General Approaches

Banner Ads

E-Mail Viral Marketing

Portal Sponsorship/Exclusive Agreements

Associate Programs

On-line and Off-line Partnerships

Provide Information to Entice Customer

Purchases /Leverage Customer Base

Sales force

Retail sales

Customer service reps

Th b i


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Three basic parts

BrandCustomer responses awareness and

associations

Benefits firm and target customers

T I t l C t f I l t ti


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Two Integral Components of Implementation

Objectives

Deliver the promisedcustomer experience

Turn strategic intent /

concepts into results

Objectives

Maintain fit between

Marketspace

evolution and thecompanys delivery

system and product

offering

Build the

infrastructure to

deliver on the

brand promise

Innovate / Renew

the customer

experience

Source: Monitor Analysis

Introd cing the Performance Dashboard


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Introducing the Performance Dashboard

Financial

Steps of Strategy:

Customer InterfaceImplementation

and Branding

Performance

Dashboard:

Areas

Addressed:Size of market

opportunity

Attractiveness of

target segments

Competitive

landscape

Customer

acquisition

Changes in

customer

behavior

Site experience

and usability

Branding

Technology

infrastructure

Internal

organization

Relationship with

suppliers and

partners

Fulfillmentca abilit

Revenue

Profit

Cost

Balance sheet

Market Opportunity Business Model

Implementation

& BrandingCustomerBusiness ModelMarket Opportunity

Uniqueness of

value proposition

Attractiveness of

offering

Firm capabilities

relative to

competition

Sustainability of

competitiveposition

Evaluation

C t f th P f D hb d


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Components of the Performance Dashboard

Opportunity Metrics

Ability to discern unfulfilled needs in the market place is

critical

Market-opportunity metrics asses the degree to which

the firm can accurately gauge the market opportunity

Business-model Metrics

Capture subcomponents of the business model: egg

diagram, resource systems, financial metrics

Value Proposition orCluster Benefits Metrics

target segments, benefits offered, capabiliti4s that

drive benefits

focus on customers perceptions

performance relative to the competitors benefits

Lif C l f C


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Life Cycle of a Company

Four stages of development of the life cycle of acompany

Startup/Beta emphasis on market

opportunity metrics

Customer accusation emphasis on

customer acquisition and financial

Monetization

Maturity customer retention and cost control

Wh t th th f t i i f ti


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What are the three sources of metrics information

that firms can use to chart their progress?

Industry standard

Metrics

Benchmark values

Metrics for Seamless On line / Off line Customer Purchase Process


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Metrics for Seamless On-line / Off-line Customer Purchase Process

Awareness of off-line offer vs awareness of on-line offer

Perceived benefits of web vs off-line offer

InformationAvailable offering information on-line vs off-lineC

urrency of information on-line vs off-line

Security and privacy associated with purchasing

Customer service

Response time on-line vs off-line

Customer loyalty incentive programs on-line vs

off-line

Exchange policies on-line vs off-line

AWARENESS

KNOWLEDGE

EVALUATION OF

ALTERNATIVES

PURCHASE

SATISFACTION

LOYALTY

DISPOSAL

Pre-Purchase

Post-Purchase

Purchas

e

Metrics for Seamless Internal Business Processes and Operations


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Metrics for Seamless Internal Business Processes and Operations

Ability to open accounts on-line and off-line

Ability to access accounts on-line andoff-line

Integrated customer databases

Information

Sharing

Fulfillment

Systems

Seamless order processing

Seamless order trackingIntegrated inventory keeping


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BroadcastFrom the organization to the customer

InteractInformation flows both ways (Example..CRM)

TransactTake, manage and support customer

transactions

CollaborateProvide inter-enterprise functionality for the

organization and trading partners

Four Stages to the Evolution of B2B Capabilities


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Exhibit 10-1: The B2B Sell-Side Solutions Activities

Provided buyers with product and service information and to place orders.

B2B Sell-Side Solution


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Exhibit 10-2: Indirect e-Procurement Activities

Provided Web enabled buying with e-procurement capabilities.

Indirect E-Procurement


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Exhibit 10-3: Net Marketplace and Net Exchange Activities

Provide Web-based capabilities to facilitate he interaction and exchange ofcommerce transactions among buyers, sellers and other trading partners


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Exhibit 10-4: The Evolved Sell-Side Solutions Activities

Any organization can begin at any of the four stages


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Exhibit 10-5: Indirect or MRO e-Procurement

Designed to facilitate the catalog management andtransaction processing functions of the purchasing process


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Privacy

Overview

The Code ofFair Information Practices,

drafted by the Nixon administration, was

never enacted

The government originally expected the

industry to regulate itself, but dot-coms are

using their customer databases as tradableassets


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Intellectual Property

Current Status

Three main aspects of copyright laws affect theInternet:

The Copyright Act of1976 - Gives owner ofthe copyright the ability to replicate &distribute the work

The Fair Use Doctrine - Gives the public theright to fair use of the work

The Digital MillenniumC

opyright ActProhibits the circumvention of copyright

protection system

Protects ISPs from being liable if

subscribers infringe copyright laws


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Taxation

Current Status

The Internet TaxFreedom Act(enacted in1998) restricts changes to current laws andlimits new taxes from being imposed on e-commerce purchases

Offline stores have begun to protest thattheir online competitors do not have tocharge sales tax as they do

Governments are generally againstextending the tax moratorium because ofthe lost tax revenue


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Taxation (Contd)

Proposed Legislation The House Committee studying the problem recommended

that the Internet TaxFreedom Act be extended until 2005

Whether or not that occurs remains to be seen

Impact

Preliminary evidence suggests that the Internet sales taxwould have minimal impact on consumption

The biggest impact would be felt by those States who stand

to loose considerable amounts of money if sales tax law isnot passed


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Gambling (Contd)

Proposed Legislation

The Internet GamblingProhibition Act,which would have made it a crime tooperate a website that accepts wages fromAmericans, was defeated in the House inJuly 2000.

Chances are there will be more bills to

follow


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Gambling (Contd)

Impact

Gambling is currently the fourth largestoffline leisure activity

Gambling laws will have a significantimpact on revenue distribution betweencasinos and online gambling sites

If government continues to be

noncommittal about online gambling,casinos will loose their revenues to foreign-run gambling sites


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Free Speech

Overview

Free speech is one of the most protected

rights is the U.S.

Individuals must face the consequences of

how their opinions are received by others The lack of borders makes it difficult to

determine whose free speech rules to use

Documents

CIS 826 Course Review