E-Commerce Management 46-870 Summer 2002 Tridas Mukhopadhyay [email protected].
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Transcript of E-Commerce Management 46-870 Summer 2002 Tridas Mukhopadhyay [email protected].
Course Goals
Primary Goal:
• Develop a managerial foundation for
Electronic Commerce
• Secondary Goals:
• Study E-Commerce Applications
• Impact of the Internet on Management
What’s a Business Model?
Major Components Key Question
Value Proposition Why would customers buy from you?
Revenue Model How do you make money?
Market Opportunity What is your marketspace?
Competitive Environment Who are the competitors?
Competitive Advantage How do you absorb value?
Market Strategy How do you attract customers?
Organizational Development What type of organizational structure?
Management Team What type of leaders?
Topics• Strategy Fundamentals
• Strategic Analysis
• Re-engineering; Change Management
• Economics of Digital Products
• e-Retailing
• e-Service
• Business-to-Business E-C
• Supply Chain Management
• Strategies for E-Commerce
Grading
• 2 Exercises
• Class Participation
• 3 Case Reports
• 1 Case Report
• Team Presentation
• Final Exam
• 20 (Individual)
• 10 (Individual)
• 30 (Team)
• 10 (Individual)
• 10 (Team)
• 20 (Individual)
Pedagogy
Professor / TA Students
Lecture & Discussion Participation
Case Analysis (4) Report & Discuss
Exercise (2) Solve & Submit
Team Project Study & Present
Final Exam Solve & Submit
Team PresentationAnalyze an on-line business
• Business model
• Competitive structure
• Value chain / creation
• Strengths/Weaknesses/Opportunities/Threats
• IT Use
1. Business Model. What are the products/services of the chosen business? Which markets? What are the sources and magnitudes of revenue? What are the major cost categories?2. Competitive Structure. Who are the competitors? Which competitors tend to dominate the marketplace? Are new entrants or substitute products/services likely in the competitive arena? What are the powers of buyers and suppliers?3. Value Chain. What are the primary and secondary activities of this business? Which of them are critical? How does it create value for its customers? What role does the Internet play? 4. SWOT. What are the critical success factors for this business? What are its strengths? What are its weaknesses? What are the future opportunities and threats?5. IT. How does it use IT today? What is distinctive about its IT use? How can it use IT as a strategic lever? What would be the possible risks and benefits?
Team Presentation
What is Electronic Commerce?
•
•
•
Use the Internet, Web or any electronic means to do the following
E-Commerce: Alternate Perspectives
Is eCommerce = eBusiness?
Is eCommerce = dot-coms?
Is eCommerce = e-tailing?
Is eCommerce = B2B exchanges?
Does Southwest Airline fit this mold?
• Search and reserve flights
• Click ‘N Save Internet specials
• Special Double Credit for Internet buyers
• Transport passenger reliably
• Receive itinerary and specials by e-mail
Direct Selling
Has the Web affected the value chain?
Has the Web changed industry structure?
• Web revenue 40%, over $2.1 billion
• Web tickets costs $1, traditional ticket $10
• Over 3 million customers have signed up
• Online competitors began the web selling method
• Web accounts for $26 billion of industry sales!
• Customers have changed their expectations
How about edmunds.com?
edmunds.com
• Online catalog of new and used cars
• Specs and invoice prices
Transfer to autobytel.com
• Fill in your choice
• A near-by dealer offers you a deal
Intermediaries
Has the Web affected the value chain?
• New intermediaries (edmunds, autobytel, …)
• On-line info, ordering, financing, insurance, warranty
• Auto exchange Covisint to redefine supply chain
Has the Web changed industry structure?
• Majority of new car buyer first go to Web, save $400
• FordDirect.com to include Ford products, 4200 dealers
• GM to include all brands
Business-to-Business +
Business-to-Government
Business-to-Consumer +
Consumer-to-Consumer
Intra-Organizational
Types of Electronic Commerce
P2P Commerce?
M-Commerce?
Business Customers vs. Consumers
Electronic efficiency
Number of customers
Volatility of relationship
Rational
Price sensitivity
Transaction value
Percentage on-line
ConsumerBusinessCharacteristic
Why Electronic Commerce?
• World Wide Web (Ease, ubiquity, platform independence)
• Internet Explosion (Commercial and residential)
• Huge Market (Retail, commercial, providers)
• Competitive Pressure (Lower entry barrier)
World Wide Internet Users by Regions (in millions)
0
100
200
300
400
500
600
700
800
900
1998 2000 2001 2002 2003 2004 2005
source: eMarketer 2001
Middle East/Africa
Latin America
Asia Pacific
Europe
North America
How are Internet users different from general population?
• Household Income (Mean $52k vs. $42k)
• Education (College grad 30.5% vs. 27%)
• Gender (Female 51.3% vs.Male 48.7%)
• High Growth Rate
Source:e Marketer 2002
US B2C revenues (in Billions)
1841 62
95135
185
255
050
100150200250300
1999 2000 2001 2002 2003 2004 2005
source:IDC 2001
revenues
US B2B e-Commerce Revenues (in Billions)
43 80 110200
375
610
1000
1550
0
200
400
600
800
1000
1200
1400
1600
1800
1998 1999 2000 2001 2002 2003 2004 2005
source: IDC 2001
revenues
World B2B e-Commerce Revenues (in Billions)
149226
448
841
1541
0
200
400
600
800
1000
1200
1400
1600
1800
1999 2000 2001 2002 2003
source: eMarketer 2001
revenues
Possible Benefits of E-Commerce
Business-to-Business• Lower Sales and Marketing
Costs
• Lower Purchasing Cost
• Better Customer Service
• Reduced Inventory
• Lower Cycle Times
• New Sales Opportunities
Business-to-Consumer• Lower Sales and
Marketing Costs
• Lower Purchasing Cost
• Lower Operating Costs
• Lower Capital and Distribution Cost
• New Services
• One-to-one Marketing
Internet Milestones
• 1970: ARPANET established
• 1974: TCP/IP introduced
• 1980: US Dept of Defense adopts TCP/IP
• 1984: TCP/IP diffuses abroad
• 1988: Internet opened to commercial world
• 1991: WWW introduced
• 1993: Mosaic introduced
Evolution of E-Commerce
• Inter-Organizational Systems (American Hospital Supply)
• Airline Reservation Systems (Sabre and Apollo)
• Electronic Data Interchange (Fortune 1000 companies)
• The Web and the Internet (Universal)
Business,
Public
policy,
legal &
privacy
issues
Technicalstandards
for documents,
security,and
networkprotocols
Applications
• Supply Chain / Procurement
• Online Marketing / Home Shopping
Infrastructure
Security, Authentication, Directories /
catalogs, Electronic Payment
Message Transfer
EDI, e-mail, HTTP
Content & Publishing
HTML, XML, JAVA, Web
Networking
Telecom, Cable, Wireless, Internet, VAN
A Framework for Electronic Commerce
E-Commerce: Business Requirements• Security
• Reliability
• Electronic Payment
• Ubiquity
• Speed
• Ease of Use