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Transcript of I ch12

  • CHAPTER 12 ELECTRONIC COMEMRCE
  • Learning Objectives
    • Describe electronic commerce, its dimensions, benefits, limitations, and process
    • Describe the major applications of electronic commerce, both business-to-customer and business-to-business
    • Discuss the importance and activities of market research and customer service
    • Describe the electronic commerce infrastructure and support services
    • Compare the various payment systems and describe the role of smart cards
    • Discuss legal and other implementation issues
  • Case : Intel Corporation Embracing the Web
    • The Business Problem
      • Intense competition in the ICs market
    • The Solution
      • E-customer service
      • E-selling
      • E-purchasing
      • E-business programs using extranet and EDI
      • Orders from thousands of customers,
    distributors and business partners worldwide were received by fax and phone; errors, delays, high cost
    • The Results
    Case (continued)
      • Enhances competitive advantage by giving customers better tools for managing transactions
      • The system brings substantial saving to Intel
    • What have we learned from this case??
      • Demonstrates that electronic commerce involves not just selling electronically, but also providing customer service and improving organizations internal business processes
      • Illustrates a new and effective way for conducting business
  • Definitions
    • Business-to-business EC
      • two (or more) businesses make transactions electronically
      • major benefits include: reduced cost, reduced cycle time, increased customer base and sales, and improved customer service
    • Business-to-consumer EC
      • companies sell directly to consumers over the Internet
      • major benefits include increased revenues, the creation of new sources of revenues, and the elimination of costly intermediaries
    • Intrabusiness
      • transactions take place within an organization
      • major benefits include increased productivity, speed, and quality and reduced cost
  • Definitions (continued)
    • Electronic Business (E-business)
      • a broad definition of EC, not just buying and selling, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization
      • all about time cycle, speed, globalization, enhanced productivity, reaching new customers, and sharing knowledge across institutions for competitive advantage
      • a very diverse and interdisciplinary topic, with issues ranging form technology, addressed by computer experts, to consumer behavior, addressed by behavioral scientists and marketing research experts
  • History and Scope
    • History
      • Began in the early 1970s
        • innovations such as electronic transfer of funds (EFT)
        • were limited to large corporations and a few daring small businesses
      • Electronic Data Interchange (EDI)
        • added other kinds of transaction processing and extended the types of participating companies
      • Over the last five years
        • innovative applications, from advertisement to auctions and procurement
    • Scope
      • home banking, shopping in electronic stores and malls, buying stocks, finding a job, conducting an auction, collaborating electronically with business partners around the globe, and providing customer service
  • A Framework for EC Electronic Commerce Applications Direct Marketing Stocks, Jobs On-line banking Procurement and purchasing Malls Procurement Auctions Travel On-line publishing Customer Services Intrabusiness Transactions People : Buyers, Sellers, Intermediaries, Services, IS People and Management Public Policy : Taxes, Legal, Privacy Issues, Regulations, and Technical Standards Marketing and Advertisement: Market Research, Promotions, and Web content Supply Chain: Logistics and Business Partners Infrastructure (1) Common business services infrastructure (security, smart cards/authentication electronic payments, directories/catalogs (2) Messaging and information distribution infrastructure (EDI, e-mail, Hyper Text Transfer Protocol, Chat Rooms) (3) Multimedia content and network publishing infrastructure (HTML, JAVA, World Wide Web, VRML) (4) Network infrastructure (Telecom, cable TV wireless, Internet) (VAN, WAN, LAN, Intranet, Extranet) Access (cell phones) (5) Interfacing infrastructure (The databases, logistics, customers, and applications) Management
  • Benefits of EC to Organizations
      • Expands a companys marketplace to national and international markets
      • Allows a vendor to reach a large number of customers, anywhere around the globe, at a very low cost
      • Enable companies to procure material and services from other companies, rapidly and at less cost
      • Shortens or even eliminates marketing distribution channels; marketing products cheaper and vendors profits are higher
      • Decrease the cost of creating, processing, distributing ,storing, and retrieving paper-based information
      • Allows lower inventories by facilitating pull-type supply chain management, which starts from customer orders and uses just-in-time production and delivery processing
      • Reduces the time between the outlay of capital and the receipt of products and services
      • Lowers telecommunications costs because the Internet is much chapter than value-added networks (VANs)
      • Helps small businesses compete against large companies
      • Enables very specialized markets (e.g. www. dogtoys .com )
  • Benefits of EC to Consumers
      • Frequently provides less expensive products and services by allowing consumers to shop in many places and conduct online quick comparisons
      • Gives consumers more choices - they can select from many vendors and many more products than they could locate otherwise
      • Enables customers to shop or make other transactions 24 hours a day, year round, from almost any location
      • Delivers relevant and detailed information in seconds, rather than in days or weeks
      • Enables consumers to get customized products, from PCs to cars, at competitive or bargain prices
      • Makes possible virtual auctions, in which consumers can find unique products and collectors items that might otherwise require them to travel long distances to a particular auction place at a specific time
      • Allows consumers to interact with other consumers in electronic communities and to exchange ideas as well as compare experiences
  • Benefits of EC to Society
      • Enables more individuals to work at home and to do less traveling, resulting in less traffic on the roads and lower air pollution
      • Allows some merchandise to be sold at lower prices, so less affluent people can buy more and increase their standard of living
      • Enables people in less developed countries and rural areas to enjoy products and services that otherwise are not available to them
      • Facilitates delivery of public services, such as government entitlements, reducing the cost of distribution and fraud, and increasing the quality of the social services, police work, health care and education
  • Technical Limitations of EC
      • Lack of universally accepted standards for quality, security, and reliability
      • Insufficient telecommunications bandwidth
      • Still-evolving software development tools
      • Difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases
      • There is a need for special Web servers in addition to the network servers (added cost)
      • In