Foundation of e- commerce-basic introduction

1. Foundation of e-commerce-basic introduction Electronic commerce( e- commerce) is a relatively new area of business management and information technology and is continually changing with the technological advancement.  E-commerce has four driving factors- social, technological, economic, and political and impact upon a wide range of different areas.  “Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet” (Turban et al., 1999).  Originating from the electronic transmission of messages during the Berlin airlift in 1948, the next stage in the development of e- commerce was electronic data interchange (EDI). In the 1960s, the first attempt at common electronic data formats was made by cooperation between industry groups. However, the formats were only used for purchasing, transport and financial data and were mainly used in intra- industry transactions. It was not until the late 1970s that national standards for electronic data exchange (EDI) began to work, which developed well into the early 1990s. Reference: E. Turban, J. Lee, D. King and H.M. Chung, Electronic Commerce: A Managerial Perspective. Prentice Hall, 1999. According to Vladimir Zwass, editor- in- chief of the International Journal of Electronic Commerce, ‘electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks’.

3. Originating from the electronic transmission of messages during the Berlin airlift in 1948, the next stage in the development of e- commerce was electronic data interchange (EDI). In the 1960s, the first attempt at common electronic data formats was made by cooperation between industry groups. However, the formats were only used for purchasing, transport and financial data and were mainly used in intra- industry transactions. It was not until the late 1970s that national standards for electronic data exchange (EDI) began to work, which developed well into the early 1990s. With the advent of Internet, the term e- commerce has gained a broader concept that includes: • Electronic trade in physical goods and intangibles such as information. • All the steps involved in trade, such as on- line marketing, payment ordering and delivery support. • Electronic services, such as after- sales support or legal advice online.  • Electronic cooperation support for companies such as collaborative online design and engineering or virtual business consulting teams.

4. Key Drivers of e-commerce: These key drivers can be measured against a number of criteria that can highlight the progress of e- commerce in each of the countries concerned. Technological factors– The extent of advancement of telecommunications infrastructure that provides business and consumers with access to new technology. Social factors– Incorporate the level and progress of IT education and training that will enable potential buyers and employees to understand and utilize the new technology.  Economic factors– Include and contribute to factors, the nation’s general wealth and commercial health. Political factors– Include the role of the government in the development of government legislation, initiatives and funding to support the use and development of e- commerce and IT.  Impact of Electronic Commerce: E-commerce impacts on many business areas and business management studies disciplines.

5. Marketing– Online publicity issues, marketing strategies, consumer behavior and cultures. Direct marketing is one of the areas in which it has an impact. Computer sciences– development of different network and computer technologies and languages to support e- commerce and e- business, e.g. connecting front and back office legacy systems to web- based technology. Finance and accounting– online banking; transaction cost issues; accounting and auditing implications where' immaterial' assets and human capital need to be tangibly assessed in an increasingly knowledge- based economy. Economics– the impact on local and global economies of e- commerce; understanding the concepts of a digital and knowledge- based economy and how it fits into economic theory. Production and operations management– The effects of online processing have reduced cycle times. Production systems are integrated with the marketing of finance and other functional systems, business partners and customers. Reference: V. Zwass, ‘Structure and macro-level impacts of electronic commerce: from technological infrastructure to electronic marketplaces’, http://www.mhhe. com/business/mis/zwass/ecpaper.html.  Video link: https://www.youtube.com/watch?v=mZ7Vefzh2hU

6. Key Points 1. Key drivers of e-commerce • Technological factors • Social factors • Economic factors • Political factors 2. Major areas that e-commerce impacts- • Marketing • Computer sciences • Finance & accounting • Economics • Production and operations management • Management information systems • Human resource management

7. Business law and ethics  3. Benefits of e-commerce to organizations- • International marketplace • Operational cost savings • Mass customization • Reduced inventories • Lower telecommunication cost • Digitization of products and processes • 24-hour availability 4. Benefits of e-commerce to consumers- • 24/7 access • More choices • Price comparison

8. Competitive environment 5. Limitations of e-commerce- • Lack of adequate system safety, reliability, standards and protocols. • Ever-increasing competition • Problem of flexibility with older and newer technology  • Cost of access to Internet • Cost of computing equipment Published by Brainware University