lecture1 eb 2014

8/11/2019 Lecture1 Eb 2014

1/64

8/11/2019 Lecture1 Eb 2014

2/64

Marks & SpencerA New Way

Compete

The Problem UK-based, upscale, global retailer of

high-quality, high-priced merchandisefaces stiff competition, since economic

slowdown that started in 1999 Critical success factors

Customer service

Appropriate store inventory system

Efficient supply chain activities

8/11/2019 Lecture1 Eb 2014

3/64

Marks & Spencer (cont.)

The Solution M&S realized that digital era survival

depends on the use of informationtechnology in general and electroniccommerce in particular

Electronic commerce (EC, e-commerce)a process of buying, selling, transferringor exchanging products, services, and/oinformation via electronic networks andcomputers

8/11/2019 Lecture1 Eb 2014

4/64


M & S initiated several EC initiatives, including:

Security

Warehouse management

Merchandise receiving

Inventory control

Speeding up the supply of fashion garments

Collaborative commerce

Prentice Hall2004

8/11/2019 Lecture1 Eb 2014

5/64


The Results

- a turnaround is underway

M & S has become a leader and exampl

setter in retailing, resulting in increasedprofitability and growth

8/11/2019 Lecture1 Eb 2014

6/64


It was a good year online in fiscal 201

for Marks & For the fiscal 2011 year ended April 2

Marks & Spencer, No. 22 in theInternet Retailer Top 300 Europe,

Total sales grew year over year 2.1%to 9.70 billion pounds ($15.90 billion)from 9.50 billion pounds
http://www.internetretailer.com/europe300/http://www.internetretailer.com/europe300/

8/11/2019 Lecture1 Eb 2014

7/64


What can we learn Traditional brick-and-mortar companies face

increasing pressures in a competitive marketingenvironment

A possible response is to introduce a variety of

commerce initiatives that can improve supply chain operation

information

money from raw materials through factories

increase customer service

open up markets to more customers

8/11/2019 Lecture1 Eb 2014

8/64

Electronic Commerce:Definitions and Concepts

electronic commerce (EC)

The process of buying, selling, or exchanging producservices, or information via computer

e-business

A broader definition of EC that includes not just the b

selling of goods and services, but also servicing custocollaborating with business partners, and conducting transactions within an organization

1-8Copyright 2012 Pearson Education,Inc. Publishing as Prentice Hall

8/11/2019 Lecture1 Eb 2014

9/64


MAJOR EC CONCEPTS

Pure Versus Partial EC

EC Organizations brick-and-mortar (old economy) organizations

Old-economy organizations (corporations) that perform thebusiness offline, selling physical products by means of phy

virtual (pure-play) organizationsOrganizations that conduct their business activities solely o

click-and-mortar (click-and-brick) organizationsOrganizations that conduct some e-commerce activities, usually as an addmarketing channel


8/11/2019 Lecture1 Eb 2014

10/64

1-Copyright 2012 Pearson Education,Inc. Publishing as Prentice Hall

8/11/2019 Lecture1 Eb 2014

11/64


ELECTRONIC MARKETS AND NETWORKS

electronic market (e-marketplace)

An online marketplace where buyers and sellers meeexchange goods, services, money, or information

intranet

An internal corporate or government network that usetools, such as Web browsers, and Internet protocols

extranet

A network that uses the Internet to link multiple intranets


8/11/2019 Lecture1 Eb 2014

12/64


8/11/2019 Lecture1 Eb 2014

13/64

The Electronic Commerce Field: ClassificaContent, and a Brief History

AN EC FRAMEWORK

EC applications are supported by infrastructure and bfollowing five support areas:

1. People

2. Public policy

3. Marketing and advertising4. Support services

5. Business partnerships


8/11/2019 Lecture1 Eb 2014

14/64


CLASSIFICATION OF EC BY THE NATURE OF TH

TRANSACTIONS AND THE RELATIONSHIPS AMOPARTICIPANTS

business-to-business (B2B)

E-commerce model in which all of the participants are busother organizations

business-to-consumer (B2C)E-commerce model in which businesses sell to individual

e-tailing

Online retailing, usually B2C


8/11/2019 Lecture1 Eb 2014

15/64

Copyright 2012 Pearson Education,Inc. Publishing as Prentice Hall

1-15

8/11/2019 Lecture1 Eb 2014

16/64


business-to-business-to-consumer (B2B2C)

E-commerce model in which a business provides somor service to a client business that maintains its own

consumer-to-business (C2B)

E-commerce model in which individuals use the Inter

products or services to organizations or individuals wsellers to bid on products or services they need


8/11/2019 Lecture1 Eb 2014

17/64


intrabusiness EC

E-commerce category that includes all internal organactivities that involve the exchange of goods, serviceinformation among various units and individuals in anorganization

business-to-employees (B2E)E-commerce model in which an organization deliversinformation, or products to its individual employees


8/11/2019 Lecture1 Eb 2014

18/64


consumer-to-consumer (C2C)

E-commerce model in which consumers sell directly consumers

collaborative commerce (c-commerce)

E-commerce model in which individuals or groups

communicate or collaborate online e-government

E-commerce model in which a government entity buyprovides goods, services, or information from or to buor individual citizens


8/11/2019 Lecture1 Eb 2014

19/64


8/11/2019 Lecture1 Eb 2014

20/64

A Brief History of EC

1970s: innovations like electronic funds transfer (EFT)fun

electronically from one organization to another (limited to lacorporations) electronic data interchange (EDI)electronically transfer ro

documents (application enlarged pool of participating compainclude manufacturers, retailers, services)

interorganizational system (IOS)travel reservation systemtrading

8/11/2019 Lecture1 Eb 2014

21/64

A Brief History of EC (cont.)

1969 U.S. government experimentthe Internet came i

initially used by technical audience of government agenacademic researchers, and scientists

1990s the Internet commercialized and users flocked toparticipate in the form of dot-coms, or Internet start-ups

Innovative applications ranging from online direct sales learning experiences

8/11/2019 Lecture1 Eb 2014

22/64


Most medium- and large-sized organizations haa Web site

Most large U.S. corporations have comprehensportals

1999 the emphasis of EC shifted from B2C to B

2001 the emphasis shifted from B2B to B2E,

c-commerce, e-government, e-learning, and

m-commerce

EC will undoubtedly continue to shift and chang

8/11/2019 Lecture1 Eb 2014

23/64


EC successes Virtual EC companies

eBay

VeriSign

AOL

Checkpoint

Click-and-mortar

Cisco

General Electric

IBM

Intel

Schwab

EC failures 1999, a large number ofdedicated companies bto fail

ECs days are notnumb

dot-com failure rate isdeclining sharply

EC field is experienci

consolidation most pure EC compaare expanding operatand generating increasales (Amazon.com)

8/11/2019 Lecture1 Eb 2014

24/64

E-Commerce 2.0:From Social Commerce to Virtual Worl

social computing

An approach aimed at making the humancomputer interface more natural. Social com

computing that is concerned with the intersection of social behavior and information syperformed with a set of tools that includes blogs, mashups, instant messaging, social nwikis, social bookmarking and other social software, and marketplaces. Bottom up Strindividuals in communities become a major organizational power.(e.g. travel decisions feedback)

Web 2.0

The second generation of Internet-based services that lets people collaborate and shaonline in new ways, such as social networking sites, wikis, communication tools, and fo


8/11/2019 Lecture1 Eb 2014

25/64


social network

A category of Internet applications that help connfriends, business partners, or individuals with speinterests by providing free services such as photopresentation, e-mail, blogging, and so on using a

of tools. Social networkers chat using ins tant mand twitter etc and tag photos with their own keywwhich makescontent easily searchable and facilitpeople to people interactions and transactions.


E C 2 0

8/11/2019 Lecture1 Eb 2014

26/64


social networking service (SNS)

A service that builds online communities by providingspace for people to build free homepages and that prbasic communication and support tools for conductinactivities in the social network

social networking

The creation or sponsoring of a social network service and any acblogging, done in a social network (external or internal)facebook,yo


E C 2 0

8/11/2019 Lecture1 Eb 2014

27/64


ENTERPRISE SOCIAL NETWORKS

social commerce

The e-commerce activities conducted in social neand/or by using social software (i.e., Web 2.0 too


E C 2 0

8/11/2019 Lecture1 Eb 2014

28/64


VIRTUAL WORLDS AND SECOND LIFE

virtual worldA user-defined world in which people can interact, pdo business; the most publicized virtual world is Sec

THE MAJOR TOOLS OF WEB 2.0

Wikis

RSS feeds

Blogs

Microblogs (e.g.,Twitter)


The Digital World:

8/11/2019 Lecture1 Eb 2014

29/64

The Digital World:Economy, Enterprises, and Societ

digital economy

An economy that is based on digital technologiesincluding digital communication networks, compusoftware, and other related information technologcalled the Internet economy, the new economy, o

Web economy


8/11/2019 Lecture1 Eb 2014

30/64

The Digital Revolution (cont.)

A global platform over which people and organizations i

communicate, collaborate, and search for information Includes the following characteristics:

A vast array of digitizable products

Consumers and firms conducting financial transactions digital

Microprocessors and networking capabilities embedded in phy

The Digital World:

8/11/2019 Lecture1 Eb 2014

31/64

The Digital World:Economy, Enterprises, and Societ

digital enterprise

A new business model that uses IT in a fundamentaaccomplish one or more of three basic objectives: reengage customers more effectively, boost employeeproductivity, and improve operating efficiency; uses ccommunication and computing technology in a way timproves business processes corporate portalA major gateway through which employees, business partthe public can enter a corporate website.

THE DIGITAL SOCIETY:physical vs digital


8/11/2019 Lecture1 Eb 2014

32/64

New Business Environment

Customers are becoming more powerful

Created due to advances in science occurring ataccelerated rate

Results in more and more technology

Rapid growth in technology results in a large var

more complex systems

The Changing Business Environment

8/11/2019 Lecture1 Eb 2014

33/64

The Changing Business EnvironmentOrganizations Response, and EC Supp

THE CHANGING BUSINESS ENVIRONMENT

PERFORMANCE, BUSINESS PRESSURES, AN

ORGANIZATIONAL RESPONSES AND EC SU

The Business Environment and Performance Imp

Business Pressures

Organizational Response Strategies The support of EC

The Major Capabilities of E-Commerce

1-3


8/11/2019 Lecture1 Eb 2014

34/64

1-3


New Business

8/11/2019 Lecture1 Eb 2014

35/64

New BusinessEnvironment (cont.)

Characteristics in the business environmen A more turbulent environment with more busine

problems and opportunities

Stronger competition

Need for organizations to make decisions more

frequently A larger scope for decisions because more

factors

More information and/or knowledge needed formaking decisions

8/11/2019 Lecture1 Eb 2014

36/64

Environment-Response-Support M

Critical response activities

traditional actions such as lowering cost and closingunprofitable facilities

introduce innovative actions such as customizing or cnew products or providing superb customer service

Exhibit 1 6: Major Business Pressures a

8/11/2019 Lecture1 Eb 2014

37/64

Exhibit 1.6: Major Business Pressures aRole of EC

Major Business Pressures

8/11/2019 Lecture1 Eb 2014

38/64


Market and Economic Pressures

Strong competition

Global economy

Exteremly low labour costs in some countries

Frequent and significant changes in market

Increased power of consumer

Political and government


8/11/2019 Lecture1 Eb 2014

39/64


Societal Pressures

Changing nature of workforce

Govt deregulation leading to more competition

Compliance (Sarbanes oxley act e.g;)

Shrinking govt subsidies

Increased importance of ethical and legal issues

Rapid political change

Terrorism


8/11/2019 Lecture1 Eb 2014

40/64


Technological Pressures

Increasing innovations and new technologies

Information overload

Rapid decline in technology costs vs labor costs becomes more attractive)

Innovative Organisational Respon

8/11/2019 Lecture1 Eb 2014

41/64

Innovative Organisational Respon

S.N

o

Response strategy Description

1

Agile Systems

Increase ability to adapt to changes

2 Business process management Using EMS to improve business processes(eg;

e procurement)

3 CRM Through internet and internet models

4 Business alliances and PRM E collaboration,virtual corpn,joint ventures etc

5 Electronic markets Both public and private to increase effectiveness

6 Cycle time reduction Increase speed of operation .reduce time to

market

7 Empowering employees Provide computerized decision aids especially in

the front line

8 Mass custonisation in a build to

order system

Produce customized products rapidly at

reasonable cost to many (eg;Dell)

9

Intra business use of automation

Eg sales force automation, inventory mgmt.

through e commerce

10 Knowledge mgmt Increase productivity, agility ,competitiveness

11 Customer selection,loyalty Identify customers with greatest profit potential

12 Product and service quality Detect problems early and minimize them

13 Social networking In crowdnovative marketing advertising

collaboration using the power of the

14 Financial performance Better understanding of drivers of financial

performance and the effects of non financial

factors

O i ti l R

8/11/2019 Lecture1 Eb 2014

42/64

Organizational Responses

Strategic systems

Continuous improvement efforts and business processreengineeringincluding business process reengineeri

Customer relationship management (CRM)divided intfollowing areas Operational CRM

Analytical CRM Collaborative CRM

8/11/2019 Lecture1 Eb 2014

43/64

Organizational Responses (co

Business alliances

Electronic markets

Reductions in cycle time and time-to-market

Cycle time reduction:Shortening the time it takes for business to complete a productive activity from its be

end

8/11/2019 Lecture1 Eb 2014

44/64


Empowerment of employees

Supply chain improvements

Mass customization: make-to-order in large quanan efficient manner

Mass customization:Production of large quantities of

customized items

8/11/2019 Lecture1 Eb 2014

45/64


Intrabusiness: from sales force automation to inv

Knowledge managementKnowledge management (KM):The process of creatcapturing knowledge, storing and protecting it, updatmaintaining it, and using it

Putting It All Together

8/11/2019 Lecture1 Eb 2014

46/64

Putting It All Together

Task facing each organization is how to put together the

components that will enable the organization to transforthe digital economy and gain competitive advantage by

Many employ corporate portals

A major gateway through which employees, business partnerspublic can enter a corporate Web site

8/11/2019 Lecture1 Eb 2014

47/64

1-4Copyright 2012 Pearson Education,

Inc. Publishing as Prentice Hall

Electronic Commerce Business Mod

8/11/2019 Lecture1 Eb 2014

48/64


business model

A method of doing business by which a companygenerate revenue to sustain itself




8/11/2019 Lecture1 Eb 2014

49/64


business model

A method of doing business by which a companygenerate revenue to sustain itself




8/11/2019 Lecture1 Eb 2014

50/64


THE STRUCTURE AND PROPERTIES OF BUS

MODELS Revenue Models

value proposition

The benefits a company can derive from using EC

Functions of a Business Model



8/11/2019 Lecture1 Eb 2014

51/64

Structure of

8/11/2019 Lecture1 Eb 2014

52/64

Business Models (cont.) Value proposition:The benefits a company can d

from using EC search and transaction cost efficiency

complementarities

lock-in

novelty aggregation and interfirm collaboration

8/11/2019 Lecture1 Eb 2014

53/64



Typical Business Models

8/11/2019 Lecture1 Eb 2014

54/64

in EC

1. Online direct marketing2. Electronic tendering systems

tendering (reverse auction):model in whia buyer requests would-be sellers to submbids, and the lowest bidder wins

3. Name your own price: a model in which abuyer sets the price he or she is willing topay and invites sellers to supply the goodservice at that price

Typical Business

8/11/2019 Lecture1 Eb 2014

55/64

Models in EC (cont.)4. Affiliate marketing: an arrangement whereby a market

(a business, an organization, or even an individual) refconsumers to the selling companys Web site

5. Viral marketing:word-of-mouth marketing in which cuspromote a product or service to friends or other people

Typical Business

8/11/2019 Lecture1 Eb 2014

56/64

Models in EC (cont.)6. Group purchasing: quantity purchasing that ena

groups of purchasers to obtain a discount priceproducts purchased

7. SMEs:small to medium enterprises

8. Online auctions

Typical Business

8/11/2019 Lecture1 Eb 2014

57/64

Models in EC (cont.)8. Product and service customization

customization:creation of a product or service ato the buyers specifications

8. Electronic marketplaces and exchanges

9. Value-chain integrators

10.Value-chain service providers

Typical Business

8/11/2019 Lecture1 Eb 2014

58/64

Models in EC (cont.)12. Information brokers

13.Bartering14.Deep discounting

15.Membership

16.Supply chain improvers

Business models can be independent or they can be camongst themselves or with traditional business mode

Benefits of EC

8/11/2019 Lecture1 Eb 2014

59/64

Benefits of EC

Global reach

Cost reduction

Supply chainimprovements

Extended hours: 24/7/365

Customization New business models

Vendors specialization

Rapid time-to-market

Lower communicationcosts

Efficient procurement

Improved customerrelations

Up-to-date companymaterial

No city business permand fees

Other benefits

Benefits to organizations

Benefits of EC (cont )

8/11/2019 Lecture1 Eb 2014

60/64

Benefits of EC (cont.)

Ubiquity

More products andservices

Cheaper productsand services

Instant delivery

Informationavailability

Participation inauctions

Electroniccommunities

Get it your way No sales tax

Benefits to consumers

Benefits of EC (cont )

8/11/2019 Lecture1 Eb 2014

61/64

Benefits of EC (cont.)

Benefits to society Telecommuting

Higher standard ofliving

Hope for the poor

Availability ofpublic services

Limitations of EC

8/11/2019 Lecture1 Eb 2014

62/64

Limitations of EC

Barriers of EC

8/11/2019 Lecture1 Eb 2014

63/64

a e s o C

Security

Trust and risk Lack of qualified personnel

Lack of business models

Culture

User authentication

of public key infrastr Organization

Fraud

Slow navigation on Internet

Legal issues

The Digital Revolution

8/11/2019 Lecture1 Eb 2014

64/64

g

Digital economy:An economy that is based on d

technologies, including digital communication necomputers, software, and other related informatiotechnologies; also called the Internet economy, teconomy, or the Web economy

lecture1 eb 2014

Documents