Chapter 12 : Economics, Global EC, and Other EC Issues

7/30/2019 Chapter 12 : Economics, Global EC, and Other EC Issues

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Chapter 12

Economics, Global EC, and

Other EC Issues

www.prestonians.webnode.com


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The Components of Digital

Electronics

Digital Products

The Consumers

The Sellers

The Infrastructure companies

The Intermediaries

The Support services

Content creaters



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Competition in Marketspace

Lower buyers search cost.Speedy comparisons.Differentiation.

Lower prices.Customer services.

Other competitive factors to consider are:The size of the firm may not be a significantcompetitive advantage.Geographical distance from consumer may play aninsignificant role.Some language barriers may be easily removed.Digital products lack normal wear and tear.



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Some Issues in Digital Economy and

Success Factors

The need for a critical mass of buyer



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Virtual Communities

The Internet Virtual Communities

The Web is being transformed into a socialWeb of communities. Four major types:

Communities of transactions

Communities of interest

Communities of relations (practice)Communities of fantasy



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Virtual Communities (cont.)

Communities oftransactions

Facilitate buyingand selling

Evineyard.com

Sells wine

Provides expert

information onwines

Provides chat room

Communities ofinterest

Place for people tointeract with eachother on a specifictopic

Motley fool

(fool.Com)Forum forindividualinvestors



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Communities ofrelations (practice)

Be organized aroundcertain lifeexperiences

Plasticsnet.com usedby thousands of

engineers in theplastics industry

Communities offantasy

Place for participantsto create imaginaryenvironments

ESPNet participantscreate competing

teams and play withMichael Jordan



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Ways to transform a community site into acommerce site:

Understand a particular niche industryIts information needs

Use a step-by-step process by which itdoes the research needed to do business

Build a site that provides valuable informationThrough partnerships with existingpublishers and information providers

By gathering it independently



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Set up the site to mirror the steps a user goesthrough in the information-gathering and

decision-making processBuild a community that relies on the site fordecision support

Start selling products and services, such assample chips to engineers, that fit into thedecision-support process



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The Expected Payback

Customer loyalty increases

Increased sales

Customer participation and feedbackincreases

Increased repeat traffic to site

Drive new traffic to the site



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Creating economic valueMembers input useful information in the form

of comments, feedback, elaborating theirattitudes and beliefs, and information needsof the community

The community brings together consumers of

specific demographic and interestCommunities charge members content feesfor downloading certain articles, music, orpictures



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Financial viability of communitiesBased on sponsorship and advertisement

Expenses are very high because of the need toprovide:

Fresh content

Free services

Free membership

This model did not work well, many companiessustained heavy losses in 2000-2001; too fewmembers, too few purchases



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Global Electronic Commerce

While geographical market boundaries may befalling, global interest-based communities willspring up

Mainly in support of business-to-businessfinancial and other repetitive, standardtransactions, e.g. EFT & EDI

The emergence of the Internet and theextranets resulted in an inexpensive andflexible infrastructure that can greatly facilitateglobal trade



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Barriers to Global Electronic Commerce

Legal Issues

Uncoordinated actions must be avoided and an

international policy of cooperation should beencouraged

Market Access Issues

Companies starting e-commerce need to evaluatebandwidth needs by analyzing the data required,time constraints, access demands, and usertechnology limitations



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Barriers to Global

Electronic Commerce (cont.)

Financial Issues

Customs and taxation

Electronic payment systems

Other Issues

Identification of buyers and sellers

Trust

Security (for example, viruses)



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Barriers to Global


Other Issues (cont.)Cultural diversity

International agreements (multi-lateralagreements)

Role of government

Purchasing in local currencies

Language and translation

Purchasing in different currencies



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The U.S. Policy Regarding

Global Electronic Commerce

The private sector should lead

Governments should avoid undue restrictionson electronic commerce

Where government involvement is needed,its aim should be to support and enforce a

predictable minimalistic, consistent andsimple legal environment for commerce



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The U.S. Policy Regarding

Global Electronic Commerce (cont.)

Governments should recognize the uniquequalities of the Internet

Electronic commerce on the Internet shouldbe facilitated on a global basis

Global marketspace erases national borders

and gives small companies worldwide reach



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The Opportunities for

Small Businesses

Inexpensive

Source of information

Way of advertising

Way of conducting market research

Way to build (or rent) a storefront

Way of providing catalogs

Way to reach worldwide customers



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The Opportunities for

Small Businesses (cont.)

Lower transaction cost

Niche market, specialty products (cigars,wines, sauces) are the best place to be

Image and public recognition can be

accumulated fast



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Risks and Disadvantages

for Small Businesses

Inability to use EDI, unless it is EDI/Internet

Lack of resources to fully exploit the Web

Lack of expertise in legal issues,advertisement

Less risk tolerance than a large company



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Risks and Disadvantages

for Small Businesses (cont.)

Disadvantage when a commodity is the

product (for example, CDs)No more personal contact, which is a strongpoint of a small business

No advantage to being in a local community



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Success Factors for Small Businesses

Niche productsLow volume

Not carried by

regular retail stores

Small volumeE.g., special books

Old

technical

International productsNot easily available tooff-line customers

InformationGartnerGroup providesaccess to onlineresearch material bysubscription

Smaller companiesmay providespecialized information(home and gardening)



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Success Factors for


Capital investment must be small

Inventory should be minimal or non-existentElectronic payments schema exist

Payment methods must be flexible

Logistical services must be quick and reliable



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Success Factors for


The Web site should be submitted to

directory-based search engine services likeYahoo, in a correct way

Join an online service or mall and do bannerexchange

Design a Web site that is functional andprovides all needed services to consumers



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Success Factors for


Monitor your:

Competition

TechnologyMarketplace changes

Keep growth slow and steady

DelegateDevelop good internal communications



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Research in EC

Behavioral IssuesConsumer behaviorBuilding consumers behavioral profiles and

identify ways to utilize themSellers behavior and motivationIssue-oriented research (e.g., trust,intermediaries)

Internet usage pattern and willingness to buyMental model of consumer product searchprocess, comparison process, and negotiationHow to build trust in the e-marketspace



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Research in EC (cont.)

Technical Issues

Methods that help customers find what they want

Models for extranet design and management

Natural language processing and automatic languagetranslation

Matching smart card technology with paymentmechanisms



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Research in EC (cont.)

Technical Issues (cont.)

Integrating EC with existing corporate information

systems, databases, etc.Retrieval of information from an electronic industrydirectory

Establishing standards for international trade

Building a mobile Internet distribution commandsystem



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Managerial Research Issues

Advertisement

Measuring the effectiveness, integration andcoordination

Applications

Creating a methodology of finding EC business

applications



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Managerial Research Issues (cont.)

Strategy

Designing strategic advantage strategy for EC

Initiating where to market strategyFinding way to integrate EC into organizations

Impacts

Identify the necessary organization structure andculture

Integration with ERP and SCM



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The Future of Electronic Commerce

Opportunities for buying

Increase rapidly

Internet usageIncrease exponentially

Access via cell phones!

M-commerceNo need for a computer brings more people to

the web



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The Future of


Purchasing incentives

Increase buyers advantages

Increased security and trustSignificant improvement is expected

Efficient information handing

Accessible from anywhereInnovative organizations

Restructured and reengineered



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The Future of


Virtual Communities

Spreading rapidly

Payment systems

Ability to use e-cash cards and makemicropayments is getting close to reality

Business-to-businessContinues to grow rapidly



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The Future of


B2B exchanges

Provide infrastructureAuctions

Increasing rapidly

Going global

Most appealing benefit of EC



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The Future of


E-government--comprehensive

Government-to-consumers (G2C)

Government-to-government (G2G)

Government-to-business (G2B)

Government-to-employees (G2E)

Intrabusiness EC

Improving internal supply chain


Th F t f


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The Future of


Technology trends

Clients

Thin client and embedded client

Servers

Windows NT

NetworksXDSL and wireless communication


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The Future of


Technology Trends

EC software and services

Availability of all types of EC softwareCompanies support auctions and multipletypes of certifications

EC knowledge

The quantity and quality of ECknowledge is increasing rapidly

Networked economy



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Managerial Issues

Finding a community that matches your

businessGoing global

Threatsdifficult to accomplish, especially on largescale

Opportunitiescreate collaborative projects withpartners in other countries (last a long time)



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Managerial Issues (cont.)

Small can be beautiful

Competing on commodities with the big guys isvery difficult (especially in cyberspace)

Finding niche markets is advisable

More opportunities in providing support servicesthan in trading

Restructuring is likely; should be investigatedThe future of EC is very bright, but planningis a must

Chapter 12 : Economics, Global EC, and Other EC Issues

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