4.4.11

c h a p t e r

44THE DIGITAL FIRM:THE DIGITAL FIRM:

ELECTRONIC COMMERCE & ELECTRONIC COMMERCE &

ELECTRONIC BUSINESSELECTRONIC BUSINESS

4.4.22

LEARNING OBJECTIVESLEARNING OBJECTIVES

• EXPLAIN HOW THE INTERNET EXPLAIN HOW THE INTERNET TRANSFORMS ORGANIZATIONSTRANSFORMS ORGANIZATIONS

• COMPARE CATEGORIES OF COMPARE CATEGORIES OF ELECTRONIC COMMERCEELECTRONIC COMMERCE

• EVALUATE PRINCIPAL EVALUATE PRINCIPAL ELECTRONIC PAYMENTELECTRONIC PAYMENT SYSTEMSSYSTEMS

**

4.4.33

LEARNING OBJECTIVESLEARNING OBJECTIVES

• DEMONSTRATE HOW INTERNET DEMONSTRATE HOW INTERNET TECHNOLOGY SUPPORTS TECHNOLOGY SUPPORTS ELECTRONIC BUSINESS, SUPPLY ELECTRONIC BUSINESS, SUPPLY CHAIN MANAGEMENTCHAIN MANAGEMENT

• EXAMINE CHALLENGES OF EXAMINE CHALLENGES OF INTERNET TO BUSINESSINTERNET TO BUSINESS

& SOCIETY & SOCIETY

**

4.4.44

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

• EMERGING DIGITAL FIRMEMERGING DIGITAL FIRM

• ELECTRONIC COMMERCEELECTRONIC COMMERCE

• ELECTRONIC BUSINESSELECTRONIC BUSINESS

• CHALLENGES & OPPORTUNITIESCHALLENGES & OPPORTUNITIES

**

4.4.55

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

1.1. ELECTRONIC COMMERCE ELECTRONIC COMMERCE REQUIRES NEW MIND SETREQUIRES NEW MIND SET

2. FINDING SUCCESSFUL 2. FINDING SUCCESSFUL INTERNET BUSINESS MODELINTERNET BUSINESS MODEL

3. BEING THERE IS NOT ENOUGH3. BEING THERE IS NOT ENOUGH

**

4.4.66

INTERNET TECHNOLOGY & THE INTERNET TECHNOLOGY & THE DIGITAL FIRMDIGITAL FIRM

• INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY INFRASTRUCTURE:INFRASTRUCTURE: Information flows Information flows seamlessly throughoutseamlessly throughout

• DIRECT COMMUNICATION BETWEEN DIRECT COMMUNICATION BETWEEN TRADING PARTNERS:TRADING PARTNERS: DISINTERMEDIATIONDISINTERMEDIATION removes removes intermediate layers streamlines processintermediate layers streamlines process

**

4.4.77

INTERNET TECHNOLOGY & THE INTERNET TECHNOLOGY & THE DIGITAL FIRMDIGITAL FIRM

• VENDORS CAN PROVIDE VENDORS CAN PROVIDE INFORMATION 24 HOURS A DAYINFORMATION 24 HOURS A DAY

• CAN EXTEND DISTRIBUTION CAN EXTEND DISTRIBUTION CHANNELSCHANNELS

• CAN REDUCE TRANSACTION CAN REDUCE TRANSACTION COSTSCOSTS

**

4.4.88

INTERNET TECHNOLOGY & THE INTERNET TECHNOLOGY & THE DIGITAL FIRMDIGITAL FIRM

• REDUCES REDUCES INFORMATION ASYMMETRYINFORMATION ASYMMETRY:: Asymmetry exists when one party has Asymmetry exists when one party has more information than othermore information than other

• INCREASES INCREASES RICHNESSRICHNESS:: Depth & detail Depth & detail of informationof information

• INCREASES INCREASES REACHREACH:: Number of people Number of people contactedcontacted

**

4.4.99

INTERNET BUSINESS MODELSINTERNET BUSINESS MODELS

• VIRTUAL STOREFRONT:VIRTUAL STOREFRONT: Sells goods, Sells goods, services on-lineservices on-line

• MARKETPLACE CONCENTRATOR:MARKETPLACE CONCENTRATOR: Concentrates information from Concentrates information from several providersseveral providers

• ON-LINE EXCHANGE:ON-LINE EXCHANGE: Bid-ask Bid-ask system, multiple buyers, sellerssystem, multiple buyers, sellers

**

4.4.1010

• INFORMATION BROKER:INFORMATION BROKER: Provide info Provide info on products, pricing, etc.on products, pricing, etc.

• TRANSACTION BROKER:TRANSACTION BROKER: Buyers Buyers view rates, terms from various sourcesview rates, terms from various sources

• AUCTION:AUCTION: Electronic clearinghouse Electronic clearinghouse products, prices, change in response to products, prices, change in response to demand demand

**

INTERNET BUSINESS MODELSINTERNET BUSINESS MODELS

4.4.1111

• REVERSE AUCTION:REVERSE AUCTION: Buyer sets Buyer sets price, submits to multiple sellersprice, submits to multiple sellers

• AGGREGATOR:AGGREGATOR: Group pools orders Group pools orders for volume discountfor volume discount

• DIGITAL PRODUCT DELIVERY:DIGITAL PRODUCT DELIVERY: Sell, download software, other Sell, download software, other digital productsdigital products

**

INTERNET BUSINESS MODELSINTERNET BUSINESS MODELS

4.4.1212

• CONTENT PROVIDER:CONTENT PROVIDER: Creates revenue Creates revenue through providing client for a fee, and through providing client for a fee, and advertisingadvertising

• ON-LINE SERVICE PROVIDER:ON-LINE SERVICE PROVIDER: Provides Provides service, support for hardware, software service, support for hardware, software productsproducts

• VIRTUAL COMMUNITY:VIRTUAL COMMUNITY: Chat room, online Chat room, online meeting placemeeting place

**

INTERNET BUSINESS MODELSINTERNET BUSINESS MODELS

4.4.1313

• PORTAL:PORTAL: Initial point of entry to Initial point of entry to Web, specialized content, servicesWeb, specialized content, services

• SYNDICATOR:SYNDICATOR: Aggregate Aggregate information from several sources information from several sources sold to other companiessold to other companies

**

INTERNET BUSINESS MODELSINTERNET BUSINESS MODELS

4.4.1414

ELECTRONIC COMMERCEELECTRONIC COMMERCE

• BUSINESS-TO-CONSUMER BUSINESS-TO-CONSUMER (B2C)(B2C)

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

• CONSUMER-TO-CONSUMERCONSUMER-TO-CONSUMER (C2C): (C2C): Individuals use Web for private sales Individuals use Web for private sales or exchangeor exchange

**

4.4.1515

BUSINESS-TO-CONSUMERBUSINESS-TO-CONSUMER

• WEB SITES:WEB SITES: Provide information on Provide information on products, services, prices, ordersproducts, services, prices, orders

• CUSTOMER-CENTERED RETAILING:CUSTOMER-CENTERED RETAILING: Closer, yet more cost-effective Closer, yet more cost-effective relationship with customersrelationship with customers

• INFORMATION BROKERS:INFORMATION BROKERS: Comparison Comparison shops to customer’s requirements, shops to customer’s requirements, reintermediationreintermediation

**

4.4.1616

BUSINESS-TO-BUSINESS BUSINESS-TO-BUSINESS ELECTRONIC COMMERCEELECTRONIC COMMERCE

AUTOMATION OF PURCHASE, SALE AUTOMATION OF PURCHASE, SALE TRANSACTIONS FROM BUSINESS TO TRANSACTIONS FROM BUSINESS TO BUSINESSBUSINESS

• PROVIDES ALTERNATIVE SOURCESPROVIDES ALTERNATIVE SOURCES• ELECTRONIC HUBS:ELECTRONIC HUBS: Online Online

marketplaces, point-to-point marketplaces, point-to-point connections, integrated informationconnections, integrated information

**

4.4.1717

BUSINESS-TO-BUSINESS BUSINESS-TO-BUSINESS ELECTRONIC COMMERCEELECTRONIC COMMERCE

EXCHANGES:EXCHANGES: Commercial on-line Commercial on-line market, many buyers, sellersmarket, many buyers, sellers

• POTENTIAL FOR INTEGRATING POTENTIAL FOR INTEGRATING PRODUCT INFORMATIONPRODUCT INFORMATION

• PROVIDES SERVICE, VALUEPROVIDES SERVICE, VALUE

**

4.4.1818

ELECTRONIC COMMERCE PAYMENT SYSTEMSELECTRONIC COMMERCE PAYMENT SYSTEMS

SYSTEM DESCRIPTION

CREDIT CARDS SECURE SITE PRESERVES INFORMATION

ELECTRONIC CASH DIGITAL CURRENCY USED FOR MICROPAYMENTS

PERSON-TO-PERSON SEND MONEY TO SITES UNABLE TO USE CREDIT CARDS

DIGITAL WALLET SOFTWARE STORES CREDIT CARD INFORMATION

ELECTRONIC CHECK CHECK WITH ENCRIPTED DIGITAL SIGNATURE

SMART CARD MICROCHIP STORES ELECTRONIC CASH

ELECTRONIC BILL PAYMENT ELECTRONIC FUNDS TRANSFER

4.4.1919

INTRANETS AND ELECTRONIC INTRANETS AND ELECTRONIC BUSINESSBUSINESS

• BENEFITSBENEFITS

• FUNCTIONAL APPLICATIONSFUNCTIONAL APPLICATIONS

• SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

**

4.4.2020

BENEFITS OF INTRANETS:BENEFITS OF INTRANETS:

• CONNECTIVITYCONNECTIVITY

• CAN BE TIED TO LEGACY SYSTEM & CAN BE TIED TO LEGACY SYSTEM & TRANSACTION PROCESSINGTRANSACTION PROCESSING

• INTERACTIVE APPLICATIONS INTERACTIVE APPLICATIONS WITH TEXT, AUDIO, VIDEOWITH TEXT, AUDIO, VIDEO

• SCALABLE TO LARGER OR SCALABLE TO LARGER OR SMALLER SYSTEMS AS REQUIREDSMALLER SYSTEMS AS REQUIRED

**

4.4.2121

BENEFITS OF INTRANETS:BENEFITS OF INTRANETS:

• EASY TO USE BROWSER INTERFACEEASY TO USE BROWSER INTERFACE

• LOW START-UP COSTSLOW START-UP COSTS

• RICH, RESPONSIVE INFORMATION RICH, RESPONSIVE INFORMATION ENVIRONMENTENVIRONMENT

• REDUCED INFORMATION REDUCED INFORMATION DISTRIBUTION COSTSDISTRIBUTION COSTS

**

4.4.2222

FUNCTIONAL APPLICATIONS:FUNCTIONAL APPLICATIONS:

• FINANCE & ACCOUNTINGFINANCE & ACCOUNTING

• HUMAN RESOURCESHUMAN RESOURCES

• SALES & MARKETINGSALES & MARKETING

• MANUFACTURING & PRODUCTIONMANUFACTURING & PRODUCTION

**

4.4.2323

FINANCE & ACCOUNTING:FINANCE & ACCOUNTING:

• GENERAL LEDGER REPORTINGGENERAL LEDGER REPORTING

• PROJECT COSTINGPROJECT COSTING

• ANNUAL REPORTSANNUAL REPORTS

• BUDGETINGBUDGETING

**

4.4.2424

HUMAN RESOURCES:HUMAN RESOURCES:

• CORPORATE POLICIESCORPORATE POLICIES

• EMPLOYEE SAVINGS PLANSEMPLOYEE SAVINGS PLANS

• BENEFITS ENROLLMENTBENEFITS ENROLLMENT

• ON-LINE TRAININGON-LINE TRAINING

• JOB POSTINGJOB POSTING

**

4.4.2525

SALES & MARKETING:SALES & MARKETING:

• COMPETITOR ANALYSISCOMPETITOR ANALYSIS

• PRICE UPDATESPRICE UPDATES

• PROMOTIONAL CAMPAIGNSPROMOTIONAL CAMPAIGNS

• SALES PRESENTATIONSSALES PRESENTATIONS

• SALES CONTRACTSSALES CONTRACTS

**

4.4.2626

MANUFACTURING & PRODUCTIONMANUFACTURING & PRODUCTION::

• QUALITY MEASUREMENTSQUALITY MEASUREMENTS

• MAINTENANCE SCHEDULESMAINTENANCE SCHEDULES

• DESIGN SPECIFICATIONSDESIGN SPECIFICATIONS

• MACHINE OUTPUTMACHINE OUTPUT

• ORDER TRACKINGORDER TRACKING

**

4.4.2727

SHIPPINGSHIPPING INVENTORYINVENTORY

PLANNING & PLANNING & FORECASTINGFORECASTING

ORDER ORDER PROCESSINGPROCESSING

PRODUCTIONPRODUCTION

PROCUREMENTPROCUREMENT

ACCOUNTINGACCOUNTING

SUPPLIERSSUPPLIERSCUSTOMERSCUSTOMERS

LOGISTICS LOGISTICS SERVICESSERVICES

DISTRIBUTORSDISTRIBUTORS

INTRANETINTRANETINTRANET

SUPPLY-CHAIN MANAGEMENTSUPPLY-CHAIN MANAGEMENT

4.4.2828

CHALLENGES & OPPORTUNITIESCHALLENGES & OPPORTUNITIES

• UNPROVEN BUSINESS MODELSUNPROVEN BUSINESS MODELS

• BUSINESS PROCESS CHANGE BUSINESS PROCESS CHANGE REQUIREMENTSREQUIREMENTS

• CHANNEL CONFLICTSCHANNEL CONFLICTS

• LEGAL ISSUESLEGAL ISSUES

• SECURITY & PRIVACYSECURITY & PRIVACY

**

4.4.2929

c h a p t e r

44THE DIGITAL FIRM:THE DIGITAL FIRM:

ELECTRONIC COMMERCE & ELECTRONIC COMMERCE &

ELECTRONIC BUSINESSELECTRONIC BUSINESS