TOPIC 1: E-COMMERCE FRAMEWORK, BUSINESS MODELS AND ENVIRONMENT

1. TOPIC 1: E-COMMERCE FRAMEWORK, BUSINESS MODELS AND ENVIRONMENT • 1.1 Define electronic commerce (EC) and describe its various categories. • 1.2 The EC framework, classification and content • 1.3 The digital revolution as a driver for EC. • 1.4 The business environment as a driver for EC. EC contribution to organisations responding to environmental pressures. • 1.5 EC business models. • 1.6 Benefits of EC to organisations, consumers, and society. • 1.7 Limitations of EC. • 1.8 Networks for EC.

2. 1.1: Taking Photographs The Old Economy The New Economy • 1. Buy film in a store • 2. Load your camera • 3. Take pictures • 4. Take roll of film to store for processing • 5. Pickup the film when ready • 6. Select specific photos for enlargement • 7. Mail to family and friends • 1st Gen. Digital Photography • Old economy except 6 and 7 were replaced by using a scanner and emailing • 2nd Gen.Digital Photography • Use a Digital Camera, no film, no processing. • 3rd Gen.Digital Photography • Your Digital Camera is now your mobile phone, in your binoculars or a palmtop computer.

3. 1.1: The Brave New World • Cisco • Ariba • CommerceOne Charles Schwab • Covisint • Microsoft • Oracle Dell NTT DoCoMo Nokia Amazon eBay Google Yahoo • Wal-Mart • Singapore • PayPal

4. 1.1: Or Jurassic Park? Osborne Ashton-Tate Visicalc Ambra Drkoop.com • Beyond.com Chemdex People’s Express • Prodigy HomeGrocer ZapMail CONFIRM • Kmart • Pathfinder Railroads

5. 1.1: Competing with IT: Strategy and Structure • Competing via strategy • Product leadership (Charles Schwab) • Operational excellence (Federal Express) • Customer intimacy (Home Depot) • Competing via structure • Alliances (Star Alliance) • Value added partnerships (Amazon.com) • Networked organisation (Cisco)

6. 1.1: Competing via Structure: the Role of EC • Wal-Mart provides suppliers with access to its internal databases. • Dell Computer virtually-integrates its entire value chain • Airline reservation systems facilitate the coordination of schedules and code-sharing arrangements. • GM, Ford and DaimlerChrysler are creating an electronic market in the automobile industry (Covisint). • Control no longer requires ownership. The Internet dramatically reduces transaction costs, facilitating the creation and utilisation of electronic markets and value networks.

7. 1.1: Electronic Commerce: Definitions and Concepts • 1. Electronic Commerce (EC) • The process of online buying, selling, or exchanging products, services, or information via computer networks within firms, between firms,between firms and their customers, and between consumers. EC E-Business

8. 1.1: Electronic Commerce: Definitions and Concepts • 2. E-Business • A broader definition of EC. • Automating all business processes and integrating them with E-Commerce (previous slide) applications to create one seamless, digital enterprise in order • to service customers, • to collaborate with business partners, • to conduct electronic transactions within an organisation

9. 1.1: Electronic Commerce: Definitions and Concepts • 3. Pure Versus Partial EC • EC takes several forms depending on the degree of digitisation (the transformation from physical to digital). • Companies utilising pure EC conduct all of their business online. • Businesses utilising partial EC conduct a portion of their business online and a portion of their business off-line

10. Exhibit 1.1 The Dimensions of Electronic Commerce

11. 1.1: Electronic Commerce: Definitions and Concepts • 4. EC organisations • Brick-and-mortar organisations • Old-economy organisations (corporations) that perform most of their business off-line, selling physical products by means of physical agents • Virtual (pure-play) organisations • Organisations that conduct their business activities solely online • Click-and-mortar (click-and-brick) organisations • Organisations that conduct some e-commerce activities, but do their primary business in the physical world

12. 1.1: Electronic Commerce: Definitions and Concepts • 5. Where EC is conducted • Electronic market (e-marketplace) • An online marketplace where buyers and sellers meet to exchange goods, services, money, or information • Interorganisational information systems (IOSs) • Communications system that allows routine transaction processing and information flow between two or more organisations • Intraorganisational information systems • Communication systems that enable e-commerce activities to go on within individual organisations

13. 1.1: Electronic Commerce: Transmission Medium • Most EC is done over the Internet. But EC can also be conducted on private networks, such as • Value-added networks (VANs, networks that add communication services to existing common carriers), • Local area networks (LANs) or • Wide area networks (WANs) • Intranet • An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols • Extranet • A network that uses the Internet to link multiple intranets

14. Exhibit 1.2 A Framework for Electronic Commerce • An ECFramework: supports five policymaking support areas • People • Public policy • Marketing & advertisement • Support services • Business partnerships

15. 1.2: The EC Framework, Classification and Content • To execute these applications, companies need the right framework: information, infrastructure, and support services • People: Sellers, buyers, intermediaries, information systems specialists and other employees, and any other participants. • Public policy: Legal and other policy and regulating issues, such as privacy protection and taxation. • Marketing and advertising: Like any other business, EC usually requires the support of marketing and advertising. • Support services: Many services are needed to support EC. They range from payments to order delivery and content creation. • Business partnerships: Joint ventures, e-marketplaces, and partnerships are some of frequently occurring relationships in e-business

16. 1.2: The EC Framework, Classification and Content • Classification by nature of the transactions or interactions • Business-to-Business (B2B) • E-commerce model in which all of the participants are businesses or other organisations • Business-to-Consumer (B2C) • E-commerce model in which businesses sell to individual shoppers • e-tailing • Online retailing, usually B2C

17. 1.2: The EC Framework, Classification and Content • Business-to-Business-to-Consumer (B2B2C) • E-commerce model in which a business provides some product or service to a client business that maintains its own customers • Consumer-to-Business (C2B) • E-commerce model in which individuals use the Internet to sell products or services to organisations or individuals seek sellers to bid on products or services they need • Consumer-to-Consumer (C2C) • E-commerce model in which consumers sell directly to other consumers

18. 1.2: The EC Framework, Classification and Content • Peer-to-Peer • Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce • Mobile commerce (M-Commerce) • E-commerce transactions and activities conducted in a wireless environment • Location-based commerce (L-Commerce) • M-Commerce transactions targeted to individuals in specific locations, at specific times

19. 1.2: The EC Framework, Classification and Content • Intrabusiness EC • E-commerce category that includes all internal organisational activities that involve the exchange of goods, services, or information among various units and individuals in an organisation. • Business-to-Employees (B2E) • E-commerce model in which an organisation delivers services, information, or products to its individual employees • Collaborative Commerce (C-Commerce) • E-commerce model in which individuals or groups communicate or collaborate online

20. 1.2: The EC Framework, Classification and Content • E-Learning • The online delivery of information for purposes of training or education • Exchange (electronic) • A public electronic market with many buyers and sellers • Exchange-to-exchange (E2E) • E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information • E-Government • E-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens

21. 1.2: The Future of EC • In 2004, total online shopping and B2B transactions in the USA was between $3 to $7 trillion • By 2008: • Number of Internet users worldwide should reach 750 million • 50 percent of Internet users will shop • EC growth will come from: • B2C • B2B • e-government • e-learning • B2E • c-commerce

22. 1.3: The Digital Revolution Drives EC • The major driver of EC is the digital revolution(1-23) • A digital economy is an economy based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy. • The characteristics of the digital economy includes • A wide variety of digitised products • Consumers and firms conducting financial transactions digitally • Microprocessors and network capabilities embedded in physical goods.