Ch08_final - E-commerce Applications
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Transcript of Ch08_final - E-commerce Applications
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E. Wainright Martin Carol V. Brown Daniel W. DeHayesJeffrey A. Hoffer William C. Perkins
MANAGINGMANAGINGINFORMATIONINFORMATIONTECHNOLOGYTECHNOLOGY
FIFTH EDITION
CHAPTER 8
E-C OMMERCE APPLICATIONS
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2005 Pearson Prentice-Hall Chapter 8 - 2
E-C OMMERCE TECHNOLOGIES
Page 239
Electronic commerce the electronic transmission of buyer/seller transactions and related information betweenindividuals and businesses or between two or morebusinesses that are trading partners
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2005 Pearson Prentice-Hall Chapter 8 - 3
E-C OMMERCE TECHNOLOGIES
Will we see continued growth in e-commerce(Internet) applications?
Consider Metcalfes Law : The value of a network to each of its members is
proportional to the number of other users,
expressed as (n2 n) / 2 There are increasing returns to be gained as more
organizations and people use the Web
Page 240
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2005 Pearson Prentice-Hall Chapter 8 - 4 Page 241Figure 8.1 Internet Technology Innovationsfor E-Commerce
E-C OMMERCE TECHNOLOGIESCommercial History of the Internet
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2005 Pearson Prentice-Hall Chapter 8 - 5
E-C OMMERCE TECHNOLOGIES
Improvements for online sales or auctionbidding
New channels for customer service
Collection of clickstream metrics andpersonal data from Web site users
Acceptance of Web cookies stored on
users hard drive to enable customization of Web sites
Web browser improvements with multimedia
Page 240
Technologies for B2C Applications
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2005 Pearson Prentice-Hall Chapter 8 - 6
E-C OMMERCE TECHNOLOGIES
Page 242
Technologies for B2B Applications
Most important technological advance for B2B applications XML markup language
Now have accepted standards Can be used for a flexible, low-entry form of EDI
Electronic data interchange (EDI) proprietary applicationsfor communicating with trading partners based on agreed-upon standards for business document transmission
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2005 Pearson Prentice-Hall Chapter 8 - 7
E-C OMMERCE TECHNOLOGIES
Page 242-243
Technologies for B2B Applications
EDI Benefits: Reduced cycle times for doing business Cost savings for automated transaction handling
and elimination of paper documents Improved interfirm coordination and reducedinterfirm coordination costs
EDI Constraints: Start-up coordination challenges (EDI standardsagreement and legal issues) Start-up and ongoing IT costs
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2005 Pearson Prentice-Hall Chapter 8 - 8
E-C OMMERCE TECHNOLOGIES
Page 242-243
Technologies for B2B Applications
Prediction: Web forms using XML and extranet applications
will continue to grow!
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2005 Pearson Prentice-Hall Chapter 8 - 9
E-C OMMERCE TECHNOLOGIES
Potential constraint to e-commerce: lack of security for Internet transactions
Issues: How to control access to a computer that is
physically networked to the Internet How to ensure that security of a given
communication is not violated
Page 243
Technologies for IT Security
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2005 Pearson Prentice-Hall Chapter 8 - 10
E-C OMMERCE TECHNOLOGIES
How to control access to a computer that is physically networked to the Internet?
Use of a firewall devices that sit between the Internet
and an organizations internal network to blockintrusions from unauthorized users and hackers
How to ensure that security of a given communication is not violated?
Encryption based on two decoding keys andmathematical principles for factoring a product into itstwo prime numbers, where one key codes a messageand the other decodes it
Page 243-244
Technologies for IT Security
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2005 Pearson Prentice-Hall Chapter 8 - 11 Page 244Figure 8.2 E-Commerce Framework
(Adapted from Applegate, Holsapple, et al. 1996; Kalakota and Whinston, 1996)
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2005 Pearson Prentice-Hall Chapter 8 - 12 Page 244-246
LEGAL AND REGULATORYENVIRONMENT
Tax Policies
Copyright Lays
Antitrust Laws
Privacy Issues
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2005 Pearson Prentice-Hall Chapter 8 - 13 Page 246
S TRATEGIC OPPORTUNITIES AND THREATS
Porters Competitive Forces Model1. Supplier power
2. Customer power
3. Threat of new entrants
4. Threat of substitute products or services
5. Responses of competitors
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2005 Pearson Prentice-Hall Chapter 8 - 14 Page 246
S TRATEGIC OPPORTUNITIES AND THREATS
Opportunities due to the Internet:
1. Procurement of supplies via Internet canincrease companys power over suppliers
2. Size of potential market is expanded
3. Distribution channels between traditionalcompany and customer can be eliminated
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2005 Pearson Prentice-Hall Chapter 8 - 15 Page 246-247
S TRATEGIC OPPORTUNITIES AND THREATS
Threats to traditional companies due tothe Internet:
1.Migration to price competition difficult tokeep offerings proprietary
2. Increased number of potential competitors3. Internet reduces some traditional barriers
(such as in-person sales force)4. Customers increase their bargaining power
Internet reduces customers switching costs
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The four main areas where companiesconduct business online
1. Direct marketing,selling, andservices
2. Financial andinformationservices
3. Maintenance,
repair, andoperations (MRO)
4. Intermediaries
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Maintenance, Repair, & Operations(MRO)
MRO goods include office suppliers, officeequipment, furniture, computers, andreplacement parts
Internet transforms corporate purchasing froma labor-and paperwork-intensive process into
a self-service application
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Intermediaries
Content providers companies that use the Internetto distribute copyrighted content, including news,music, games, books, movies, and many other typesof information
Online brokers intermediaries between buyers andsellers of goods and services
Market makers intermediaries that aggregate three
services for market participants A place to trade Rules to govern trading An infrastructure to support trading
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Types of Intermediaries
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2005 Pearson Prentice-Hall Chapter 8 - 20
E-B USINESS MODELS
Figure 8.4 Potential Benefitsto Sellers and Buyers
Page 249
B2C Applications
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2005 Pearson Prentice-Hall Chapter 8 - 21
If Buyers and Sellers areFragmented, IndependentIntermediaries are likely to besuccessful.
If Sellers are Concentrated,Sellers are likely to dominate.
If Buyers are Concentrated,Buyers are likely to dominate.
Figure 8.5 Opportunities for B2B Marketplace Page 250
B2B Applications
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2005 Pearson Prentice-Hall Chapter 8 - 22
E-B USINESS MODELS
Weill and Vitale proposition: The valuepropositions of eight business models differ according to the degree to which the following e-business assets are captured online: Customer transaction to capture revenue Customer data to capture data about
customers purchasing needs Customer relationship ability to influence
customers behaviors
Page 251
Atomic Business Models
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2005 Pearson Prentice-Hall Chapter 8 - 23
E-B USINESS MODELS
Figure 8.6 Business Models and Their E-Business Assets
Page 251
Atomic Business Models
(Based on Weill and Vitale 2001, Straub 2004)
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2005 Pearson Prentice-Hall Chapter 8 - 24 Figure 8.6 Business Models and Their E-Business Assets
Page 251
Atomic Business Models
(Based on Weill and Vitale 2001, Straub 2004)
E-B USINESS MODELS
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2005 Pearson Prentice-Hall Chapter 8 - 25
DIRECT-TO- CUSTOMER EXAMPLES
Dot-com pioneer in online retailing of third-partyproducts
Began as bookseller competitor
Now a multi-store, online mall
First profitable year 2003Provides excellent online shopping experiencesfor millions of customers
Page 252
Amazon.com
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2005 Pearson Prentice-Hall Chapter 8 - 26 Figure 8.7 Amazon.com Home Page Page 253
( 2004 Amazon.com, Inc. All right reserved.)
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2005 Pearson Prentice-Hall Chapter 8 - 27
DIRECT-TO- CUSTOMER EXAMPLES
Page 254
Dell.com
Traditional direct seller and market leader of made-to-order microcomputers
Developed custom software to support masscustomization strategy
Took advantage of early penetration of Internetmarket
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2005 Pearson Prentice-Hall Chapter 8 - 28 Figure 8.8 Dell.com Home Page Page 254
(Used with permission of Dell Corporation.)
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2005 Pearson Prentice-Hall Chapter 8 - 29
DIRECT-TO- CUSTOMER EXAMPLES
Page 255
Landsend.com
Traditional catalog company that developedcapability to give online tools to customers sothey could make orders for new custom clothingvia its Web site
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2005 Pearson Prentice-Hall Chapter 8 - 30 Figure 8.9 Landsend.com Home Page Page 256
( 2004 Lands End, Inc. Used with permission.)
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2005 Pearson Prentice-Hall Chapter 8 - 31
DIRECT-TO- CUSTOMER EXAMPLES
Amazon.comDell
Lands End
All developed B2CWeb sites that useadvancedtechnologies tosupport customized
interactions withcustomers
Page 256
Successful Online Models
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2005 Pearson Prentice-Hall Chapter 8 - 32
DIRECT-TO- CUSTOMER EXAMPLES
Figure 8.10 Common Online Activitiesby U.S. Consumers Page 257
Successful Online Models
Source: Pew Internet & American Life Project Surveys, 2002
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2005 Pearson Prentice-Hall Chapter 8 - 33
INTERMEDIARY EXAMPLES
Page 257Figure 8.11 Key Characteristics of SixTypes of Intermediaries
(Based on Weill and Vitale, 2001)
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2005 Pearson Prentice-Hall Chapter 8 - 34
INTERMEDIARY EXAMPLES
Page 258
eBay
A dot-com pioneer in electronic auctions
One of first to achieve profitabilityNow is a C2C, B2B, and B2C intermediary
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2005 Pearson Prentice-Hall Chapter 8 - 35 Figure 8.12 eBay.com Home Page Page 259
These materials have been reproduced with the permission of eBay, Inc. Copyright eBay, Inc. All rights reserved.
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2005 Pearson Prentice-Hall Chapter 8 - 36
INTERMEDIARY EXAMPLES
Page 259-260
Yahoo!
Early dot-com intermediary
Has recently leveraged IT innovations and
business acquisitions to become a leading portal As a portal, site owns only the customer relationship
Primary source of revenue is advertisementsThrough acquisition, now offers online jobsearches
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2005 Pearson Prentice-Hall Chapter 8 - 37 Figure 8.13 Yahoo.com Home Page Page 260
(Reproduced with permission of Yahoo! Inc. Copyright 2004 by Yahoo! Inc. YAHOO! And the YAHOO! Logo are trademarks of Yahoo! Inc.)
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2005 Pearson Prentice-Hall Chapter 8 - 38
INTERMEDIARY EXAMPLES
Page 260-261
Manheim
Traditional B2B intermediary for sale of usedcars
Has leveraged the Internet to reduce purchasingand sales costs
Provides remote, real-time bidding duringphysical auctions
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2005 Pearson Prentice-Hall Chapter 8 - 39 Figure 8.14 Manheim.com Home Page Page 261
(Used with permission of Manheim.)
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Types of Intermediaries
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2005 Pearson Prentice-Hall Chapter 8 - 41
S PECIAL ISSUE: WHATM AKES A GOOD WEB S ITE?
Page 262
Why is Web page design important?
For e-commerce applications, thecompanys Web site is the company
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(Based on Rayport and Jaworski, 2004)