Information Technology and E-Commerce © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Essentials of Management

Chapter 14Information

Technology and E-Commerce


Increased Demands Placed on Managers (by IT)Perform many of own clerical (support) tasks

using information technology.Must build transformed organization because

IT increases competition. Must adapt to many changes in IT, and help

others adapt to the changes.Importance of innovation has increased.IT facilitates globalization, creating more

demands on manager.


The Wireless Environment Including WiFiManagers use wireless communication to

conduct work from remote locations.Mobile phones and laptops are standard.WiFi makes Internet more accessible.Working in miniature mode is required, but

quite natural for young and old managers in present environment.


Positive Consequences of Information Technology for Manager1. Increased productivity and teamwork2. Increased competitive advantage (or

avoiding competitive disadvantage)3. Enhanced business models (such as multiple

distribution methods)4. Improved customer service and supplier

relationships (for example, extranet.)5. Enhanced communication and coordination,

including the virtual office


Positive Consequences of Information Technology for Manager, continued

6. Quick access to vast information 7. Enhanced analysis of data and decision

making (e.g., wiki gathers wide input)8. Greater empowerment and flatter

organizations (wider access to data) 9. Time saving through employee self-service10. Monitoring of work and employee

surveillance


The Negative Consequences of Information Technology1. Wasting time on computer (including

problem of online dependence)2. Repetitive motion disorders3. Deterioration of customer service (such as

long voicemail menus)4. Dealing with baffled customers (some

electronic devices difficult to use)5. Wired managerial workers (linked to the

office most of the time)


The Negative Consequences of Information Technology, continued6. The encouragement of nonproductive

multitasking (ability to concentrate may be impaired from using two or more electronic devices at same time)

7. Excessive requirements to learn and adapt to new communication technologies at the same time (can be difficult to concentrate on regular work)


Impact of Internet on Customers and Other External RelationshipsOutline of TopicsMarketing Side of E-CommerceSocial Media and Customer RelationshipsPurchasing Side of E-CommerceChanging of IntermediariesEnhancement of GlobalizationIntegrating New and Old EconomyLiving with Increased Visibility


Marketing Side of E-CommerceBiggest impact is online sales.75% of online sales are business to business

(B2B) rather than by consumers.Manager needs e-commerce knowledge.Sales managers have few subordinates.E-commerce products can decrease demand

for other product or service.Wide input possible via crowdsourcing.


The Social Media and Customer RelationshipsMajor change has been to managing many

customer relationships via social media.Managers must learn how to squeeze

marketing advantage from social media.Social networking can help build connection

to company’s brand. Most essential component of online branding

is the human touch.


Purchasing Side of E-CommerceEnables companies to purchase more

efficiently than by traditional methods.Companies encourage customers and

suppliers to conduct business online.Online purchasing may reduce transaction

costs such as discussions with sales representatives.

E-commerce has not eliminated human touch in business.


Changing of IntermediariesDecreased number of intermediaries between

buyers and sellers, such as travel agents and supply companies.

Example is that MySpace members can sell their music directly rather than through publishers.

Some new intermediaries have been created such as online auctioneers and travel sites offering the best buys.


Enhancement of GlobalizationMajor factor is that e-mail facilitates

communication across countries.Development of telecommunication structures

across the world has facilitated globalization of business.

China now has more Internet users than the United States, although percentage of U.S. Internet users is much higher.


Integrating New Economy with Old EconomyMajor challenge is to integrate traditional way

of doing business with e-business.Referred to as “bricks versus clicks”With first surge of e-business, traditional

businesses were considered obsolete.Biggest beneficiaries of Internet revolution

have been companies that integrated e-commerce into marketing and operations.


Living with Increased VisibilityLike or dislike of organization is rapidly

disseminated over the Internet, especially social media Websites and YouTube.

Several Websites exist for consumers to voice their complaints.

Company employees sometimes post negative comments about employer.

Managers must create fans, deal openly with issues that might create dislike.


Effects of Internet on Internal Company OperationsOutline of TopicsMore Effective Work ProcessesSqueeze on Profits and Pressures Toward Cost

ControlData MiningCloud Computing


More Effective Work Processes Internet has changed methods of

distributing goods, internal collaboration, and dealing with suppliers, such as:

a. Ordering and production of PCs (see Exhibit 14-3, text)

b. Streamlining work at a winemaker with elimination of much low-value work and concentration on work that adds value for customer.


Squeeze on Profits and Pressures Toward Cost ControlInformation flow of Internet has tipped

balance of power from sellers to buyers.Industrial buyers and consumers can use Web

to find out about costs putting them on same level as professionals.

Sellers must offer products with lower profit margins than in past.

Lower prices leads to more cost control.


Data MiningLinked to Internet because of databases

accessed on Internet.Data mining extracts useful analysis from

mass of business transactions.Insurance companies use data mining to help

price auto policies.Data mining provides automated (a)

prediction of trends and behavior, (b) discovery of previously unknown patterns.


Cloud ComputingRefers to moving data and software from

computer hard drive to Internet storage.Also refers to interconnected machines that

replace company desktops.External organization takes over vital

computer and IT activities. Manager must have confidence in external IT

operations to use cloud computing.


Success Factors in E-Commerce1. Develop an excellent call center to allow for

the human touch.2. Keep customers informed about their order

progress.3. Constantly monitor and update the e-

business system (ease of completing transactions).

4. Mix bricks and clicks (customers can purchase multiple ways).


Success Factors in E-Commerce, continued5. Develop a global presence (e.g., obtain a

local domain name).6. Protect customers against fraud (rampant

problem on the Internet). Conclusion to chapter: Internet revolution is

fabulous but traditional forms of business and personal contacts still dominate high-level business.

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Information Technology and E-Commerce © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible