Topic 3 e-commerce-and_e-business

MANAGEMENT INFORMATION SYSTEMS

Executive MBA PGSM

MBA program, Paris Graduate School of Management, Management Information System, Dr. Pham Van Tai 1

Management Information System

E-BUSINESS SYSTEMS


E-Business Systems

• Enable the electronic transmission of business transactions or otherrelated information between a buyer and seller

E-business systems

• A business that conducts business solely through their Web site(single channel)

Dot-com (pure-play)

• A company uses Internet sales as an additional channel to an offlinebusiness (multichannel)

Bricks-and-clicks (click-and-mortar)


Executive MBA PGSM


E-Business Systems

• Explosive growth in demand for e-businesssystems in the 1990s

• Forecasts predict continued growth in e-business systems


E-Business Systems• Metcalfe’s Law is a possible theoretical reason for e-business growth

• By this law, the network on the right has a value that is 15 times that ofthe network on the left.

• The value of a network to each of its members isproportional to the number of other users,expressed as (n2 - n)/2

Metcalfe’s Law


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E-Business Systems

• A worldwide network of networks, accessible to the public, that employsthe TCP/IP protocol

Internet

• A private network operating within an organization that employs theTCP/IP protocol, to provide information, applications, and other tools(such as collaboration tools), for use by the organization’s employees

Intranet

• A private network that is a portion of a company’s Intranet, which is madeaccessible (normally over the Internet) to business partners outside of thecompany (such as customers or suppliers)

Extranet


E-Business Framework• IT Applications and services are built upon two

types of pillars– Legal and Regulatory Pillar– Technology Pillar

Figure 8.1


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E-Business Technologies

Browser

Web content(withoutinteractivity)

SearchEngines,Agents

PushTechnology,Java Applets

Portal, CreditCardProcessing

1994 1995 1996 1997 1998



Customization,Tracking

XML, DigitalSignature, Peer-to-Peer

Broadband DSLand CableModems

WirelessApplications forHandhelds

1999 2000 2001 2002


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• Traditional B2B electronic commerce used EDI

• Proprietary applications forcommunicating with trading partnersbased on agreed-upon standards forbusiness document transmission

EDI (Electronic Data Interchange)



• XML provides the opportunity of lower-cost,flexible B2B transactions

• A standard in which additional information,such as structure, can be added to data todata through the use of customizableelements

XML (Extensible Markup Language)


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• While XML does provide some advantagesover traditional EDI, many large retailers arestill using EDI for business transactions– Wal-Mart still requires suppliers to use EDI



• Legal and Regulatory Environment– Limited legal intervention– Tax policies

• Sales taxes in US

– Privacy issues– Antitrust laws


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• Digital signatures can be used to authenticatethe message sender in digital transactions,much like an actual signature

• A type of asymmetric cryptography thatprovides message authentication by utilizinga public-private key pair

Digital Signature


Strategic E-Business Opportunities(and Threats)

• Porter’s Competitive Forces Model can beused to assess the opportunities and threatsdue to the influence of the Internet


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Figure 8.4



• Opportunities due to the Internet:– Procurement of supplies via Internet can increase

company’s power over suppliers– Size of potential market is expanded– Distribution channels between traditional

company and customer can be eliminated


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• Threats to traditional companies due to theInternet:– Migration to price competition – difficult to keep

offerings proprietary– Increased number of potential competitors– Internet reduces some traditional barriers (such as

in-person sales force)– Customers increase their bargaining power –

Internet reduces customer’s switching costs



• Since the “dot-com meltdown” e-business haschanged in many ways

Figure 8.5


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B2B Applications

• If buyers and sellers are fragmented,Independent Intermediaries are likely to besuccessful

Figure 8.6


B2B Applications

• If sellers are concentrated, sellers are likely todominate

Figure 8.6


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B2B Applications

• If buyers are concentrated, buyers are likely todominate

Figure 8.6


B2B Applications

• B2B Intermediaries– Converge– Virtual Chip Exchange– Alibaba.com


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B2B Applications

• Reverse Auctions– Sellers sequentially lower their bid to provide

goods to a single buyer Figure 8.3


Internet Statistics

Figure 8.7


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Internet Statistics

Figure 8.8


B2C Applications

• Dot-com retailers– Amazon.com– Netflix

• Traditional Catalog Retailers– Dell– Lands’ End

• Traditional Store Retailers– Staples– Blockbuster


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Dot-Com Retailers

• Amazon– Dot-com pioneer in online retailing of third-party products– Began as bookseller competitor– Now a multi-store, online mall– First profitable year 2003– Provides excellent online shopping experiences for millions

of customers


Dot-Com Retailers

• Netflix– Relatively late pure-play– Online movie rental business– Social recommendation system


Executive MBA PGSM


Catalog Retailers

• Dell– Traditional direct seller and market leader of

made-to-order PCs– Developed custom software to support “mass

customization” strategy– Took advantage of early penetration of Internet

market– Moved to multichannel (partnering with Wal-

Mart) after losing market share to HP


Catalog Retailers

• Lands’ End– Traditional catalog company– Developed capability for customers to make

orders for new custom clothing via its Web site


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Store Retailers

• Staples– Traditional office products retailer– Built separate Web sites for business procurement– Focuses on efficiency, not aesthetic appeal– By 2006, over 25% of revenues were e-business


Store Retailers

• Blockbuster– Traditional retail movie rental business– Added online rentals like Netflix– Late in adding multichannel– In 2007, purchased Movielink to add online

download service


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Dot-com Intermediaries

• eBay– A dot-com pioneer in electronic auctions– One of first dot-coms to achieve profitability– Purchased PayPal in 2003 for payment capability– Risks with transactions– Now is a C2C, B2B, and B2C intermediary



• Autobytel– A dot-com pioneer as intermediary between

automotive dealers and buyers– Provides leads to dealerships– Fills niche created by US state laws which prohibit

manufacturers to sell cars directly to consumers


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• Google– Leading online search engine– 99% of revenue from targeted advertising– Growing through innovation and acquisition


• What makes a good web site?Special Issue

• 7 C’s• Site’s layout and design—functionally vs. aesthetically dominant or

both (integrated)Context• Text, pictures, sound, and video that Web site contains, including

dominant “store types”Content• Site’s capabilities to enable commercial transactions—functional

tools and pricingCommerce• Ways that the site utilizes user-to-user communication to enable

feelings of membership and shared common interestsCommunity• Extent to which the site is linked to other sites—links out and inConnection• Site’s ability to tailor itself to different users or to allow users to

personalize the siteCustomization


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• What makes a good web site?Special Issue

• Designing for mobile devices– Smaller displays– Limited attention of users

Education

Topic 3 e-commerce-and_e-business