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Fundamentals of EC

Fundamentals of EC. Chapter Contents. Definitions Frameworks Classifications Referenced disciplines Brief history Benefits Business Drivers Organizational responses. Definitions of EC (1). Turban, Lee, King, Chung

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Fundamentals of EC

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  1. Fundamentals of EC

  2. Chapter Contents • Definitions • Frameworks • Classifications • Referenced disciplines • Brief history • Benefits • Business Drivers • Organizational responses

  3. Definitions of EC (1) • Turban, Lee, King, Chung • An emerging concept that describes the process of buying and selling or exchanging of products, services and information via computer networks including Internet • Zwass • the sharing of business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks; includes not only the buying and selling of goods, but also the various processes within individual organizations which support that goal

  4. Definitions of EC (2) • Applegate et. al. • More than simply buying and selling goods electronically, EC involves using network communications technology to engage in a wide range of activities up and down the value-added chain both within and outside the organization • Kalakota and Whinston • A modern business methodology that addresses the needs of organizations, merchants, and consumers to cut costs while improving the quality of goods and services and increasing the speed of service delivery • The use of computer networks to search and retrieve information in support of human and corporate decision making

  5. Definitions of EC (3) • Huffman and Novak • Something that guides us toward consideration of the strategic importance of electronic commerce technologies to the business • A strategy to support the total delivery of products and services to the customer, rather than just another set of tools and technologies • The strategic deployment of computer-mediated business tools and information technologies to satisfy business objectives • electronic commerce offers fundamentally new ways of doing business, rather than mere extensions of existing business practices

  6. Four perspectives of EC(Kalakota and Whinston) • From a communication perspective, EC is the delivery of information, products/services, or payments over telephone lines, computer networks, or any other electronic means • From a business process perspective, EC is the application of technology toward the automation of business transactions and work flow • From a service perspective, EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery • From an online perspective, EC provides the capability of buying and selling products and information on the Internet and other online services

  7. Pure Vs. Partial Electronic Commerce Choi, Stahl and Whinston • Three dimensions • The product(service) sold [physical/digital] • The process [physical/digital] • The delivery agent (or intermediary) [physical/digital] • Traditional commerce • All dimensions are physical • Pure EC • All dimensions are digital • Partial EC • All other possibilities including a mix of physical and digital dimensions

  8. EC Frameworks • Kalakota and Whinston • Turban, Lee, King, and Chung

  9. Generic Framework for ECKalakota & Whinston • E-commerce applications are built on existing technology infrastructure • Four building blocks in the infrastructure • Two pillars supports all e-commerce are indispensable

  10. Electronic Commerce Applications • Supply chain management • Video-on-demand • Remote banking • Procurement and purchasing • On-line marketing and advertising • Home shopping

  11. Four Building Blocks • Common business services, for facilitating the buying and selling process • Messaging and information distribution, as a means of sending and retrieving information • Multimedia content and network publishing, for creating a product and a means to communicate about it • The information superhighway for providing the highway system along which all e-commerce must travel

  12. Two supporting pillar • Public policy, to govern such issues as universal access, privacy, and information pricing • Technical standards, to dictate the nature of information of information publishing, user interfaces, and transport in the interest of compatibility across the entire network

  13. The framework of ECTurban, Lee, King, and Chung • The following figure shows that the EC applications are supported by infrastructures, and their implementation is dependent on four major areas (shown as supporting pillars) people, public policy, technical standards and protocols, and other organizations. • The EC management coordinates the applications, infrastructures, and pillars. It also includes Internet marketing and advertisement.

  14. Electronic Commerce Applications • Stocks Jobs • On-line banking • Procurement and purchasing• Malls • On-line marketing and advertising • Home shopping • Auctions • Travel • On-line publishing Public policy, legal, and privacy issues People: Buyers, sellers, intermediaries, services, IS people, and management Technical standards for documents, security, and network protocols payment Organizations: Partners, competitors, associations, government services (1) Common business services infrastructure (security smart cards/authentication electronic payment, directories/catalogs) (2) Messaging and information distribution infrastructure (EDI, e-mail, Hyper Text Transfer Protocol) (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) (5) Interfacing infrastructure (The databases, customers, and applications) Management Infrastructure A Framework for Electronic Commerce

  15. Classification of EC by the Nature of Transaction • Business-to-business (B2B) • Business-to-consumer (B2C) • Consumer-to-consumer (C2C) • Consumer-to-business (C2B) • Nonbusiness EC • Intrabusiness (organizational) EC

  16. Electronic Commerce is Interdisciplinary • Marketing • Computer sciences • Consumer behavior and psychology • Finance • Economic • Production/Logistic • Management information systems • Accounting and auditing • Management • Business law and ethics

  17. A brief History of EC • EFT (Electronic Fund Transfer) • EC applications started in the early 1970s • EDI • Expand from financial transactions to other transaction processing • EC • With the commercialization of the Internet in the early 1990s and its rapid growth to millions of potential customers

  18. EC Benefits to Organizations (1) • Benefits to organizations • Expands the marketplace to national and international markets • Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information • Allows reduced inventories and overhead by facilitating “pull” type supply chain management • The pull type processing allows for customization of products and services which provides competitive advantage to its implementers

  19. EC Benefits to Organizations (2) • Reduces the time between the outlay of capital and the receipt of products and services • Supports business processes reengineering (BPR) efforts • Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)

  20. EC Benefits to Customers (1) • Enables customers to shop or do other transactions 24 hours a day, all year round from almost any location • Provides customers with more choices • Provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons • Allows quick delivery of products and services in some cases, especially with digitized products

  21. EC Benefits to Customers (2) • Customers can receive relevant and detailed information in seconds, rather than in days or weeks • Makes it possible to participate in virtual auctions • Allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences • Electronic commerce facilitates competition, which results in substantial discounts.

  22. EC Benefits to Society • Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution • Allows some merchandise to be sold at lower prices benefiting the poor ones • Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them • Facilitates delivery of public services at a reduced cost,increases effectiveness, and/or improves quality

  23. The Driving Forces of EC • Business pressures • Organizational responses • The potential role of IT in general and EC in Particular

  24. New World of Business • Market, economical, social, and technological factors are creating a highly competitive business environment in which customers are the focus point • These factors can change quickly, sometimes in an unpredictable manner • Companies need to react frequently and quickly to both the problems and the opportunities resulting from this new business world • Boyett and Boyett describe it with a set of business pressures or dirvers

  25. Major Business Pressures Strong competition Global economy Regional trade agreements (e.g. NAFTA) Extremely low labor cost in some countries Frequent and significant changes in markets Increased power of consumers Market and economic pressures Changing nature of workforce Government deregulation of banking and other services Shrinking government budgets subsides Increased importance of ethical and legal issues Increased social responsibility of organizations Rapid political changes Societal and environmental pressures Rapid technological obsolescence Increase innovations and new technologies Information overload Rapid decline in technology cost Vs. performance ratio Technological pressures

  26. Organizational Responses

  27. Organizational Responses in five categories • Strategic systems for competitive advantage • Continuous improvement efforts • Business process reengineering • Business alliances • Electronic commerce

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