Section II and Final Papers 1. Fix problems with Section I and resubmit it with Section II as part of the final paper. 2. Make sure that you put a major emphasis on a business leader as part of Section II. 3. Complete the assignment on an individual basis.
Chapter 8 The Internet and Electronic Commerce
Internet and E-Commerce Two very hot topics. Two things that are having a huge impact on businesses in the US and around the world.
Chapter Objectives 1. Understand the significance of the Internet and its role in changing business strategies, structures and the business environment. 2. Understand the ways that Internet applications provide value to a company and more importantly its customers. 3. Appreciate the fact that business-to-business electronic commerce on the Internet is far more significant than business-to-consumer. 4. Appreciate both the strengths and the weaknesses of the Internet as a business resource.
Internet Perspective Roadmap • Making sense of the Internet as a business resource. • Understanding the value of information browsing and • search engines (business and personal use). • Appreciating the difference and relationship between • E-Business and E-Commerce. • Understanding the multiple roles of Internet • technologies: (1) Traditional Internet use, (2) Internal • business use (intranet), and (3)Business-to-business use • (extranet or B2B).
Internet Perspective Roadmap • Recognizing its impact on major industries. • Appreciating the significance of Internet laws and • public policies.
Jack Callon’s List of Important Business Issues How many of these factors are directly related to the Internet? • Direct Business Model • Extended Enterprise • Supply Chain Management • Outsourcing • Reengineering Business Processes • Managing Change
BUSINESS USE OF THE INTERNET - Businesses are broadening their use of the Internet from simple applications like E-mail and marketing themselves on the World Wide Web. Companies are deploying a range of applications that are intended to give them strategic capabilities. INTERACTIVE MARKETING - The Internet, along with intranets and extranets, is enabling marketing, development and customer support people within a business to collaborate interactively with customers to provide top quality, personalized service and support. Important Chapter Topics
BUSINESS VALUE OF THE INTERNET - Companies are deriving business value from the Internet. E-COMMERCE - Encompasses the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. E-COMMERCE APPLICATIONS - The Internet’s economic model encourages innovation and entrepreneurship. ELECTRONIC PAYMENT AND SECURITY - Presents a vital and complex challenge to business and financial institutions to develop efficient, flexible and secure payment systems for electronic funds transfers.
A New Competitive Environment Traditional brick-and-mortar (store front) companies competing with web-based retailers. What will prevail over time? Web-based retailers Brick-and-mortar retailers Brick-and-click retailers (combination of both)
Internet Search Engines and Browsers Do you understand the differences? Do you make the best use of browsers to help find the information that you need? Have you ever done an objective comparison of multiple browsers using the same compound search?
Amazon.com Is it realistic to conclude that Amazon.com is the standard by which other .com retailers are measured? If so, why? If not, then who is?
Possible Exam Questions 1. What ways can companies use the Internet as more than a communications network? 2. How can the Internet improve customer value?
The Internet What is it? What do you do with it? How do you join the Internet club? Who owns, runs and controls it? How big is it? How did it become what it is? What will it be like in the future?
Yahoo Softbank Priceline.com Morgan Stanley eBay Amazon.com 9/27/99
Dell Computer Michael Jordan Proxicom MicroStrategy Amazon.com Gateway Broadcast.com No Limit Yahoo! Trilogy Software 9/27/99
Speed Knowledge Culture Technology Great People 9/13/99
Creative Destruction dyb.com 9/24/99
Business Health Sex Family Politics 9/20/ 99
The Dawn of E-Life Once a novelty, the Internet is now transforming how Americans live, think, talk and love; how we go to school, make money, see the doctor and elect presidents. It is crucial to assess this, because the digital revolution is more profound than a mere change of tools.
Internet Truths 1. The acceptance of the Internet as a new technology based on reaching fifty million users happened faster than any other technology in the history of the world. 2. The Internet as a business resource is having a dramatic impact on organizations through its use as an intranet and extranet. 3. Within the US, the Internet has already fundamentally changed some industries 4. The Internet has greatly influenced venture capital funding evaluations. 5. The Internet redefines itself every two years.
Ways to Win on the Web • Selling to Businesses - Dell Computer • Selling to Businesses - Cisco Systems • A Corporate Intranet - Sun Microsystems • Streamlining the Supply Chain - Pitney Bowes • Recruiting Online - Lots of Companies • Winning and Keeping Web Surfers - Yahoo • Selling to Consumers - Amazon.com • Customer Service - Federal Express • Online Auction - eBay
How significant is all of this? • To you personally? • To you in terms of career opportunities? • To businesses and public sector institutions? • To the US and its role as a global citizen?
The Internet Is: Multidemensional -- It can be used one-to-one, one-to-many or many to many (community emphasis, bulletin boards). Multipurpose -- Can serve an organization in many different ways. There is no cookie cutter approach relative to the Internet. Multidisciplinary -- Talent, resources, control and responsibility within an organization.
The Internet Obliterates Traditional Barriers Geographic barriers: Online businesses can reach every corner of the globe without building physical facilities. Time barriers: People can research and buy 24 hours a day. Information barriers: Comparison shopping is a breeze, even for things that are tough to compare in the real world. Switching barriers: No longer are customers locked in by the time and hassle of finding another supplier, the competition is just a click away.
The Internet Has Created New Models: • Business Strategies and Organization • Consumer Shopping and Purchasing • Advertising • Government Policies and Legislation • Educating K-12 and University Students • Entertaining Children and Adults • Investing and/or Gambling • Information Sources • Communication
Jack Callon’s List of Important Business Issues • Direct Business Model • Extended Enterprise • Supply Chain Management • Outsourcing • Reengineering Business Processes • Managing Change
Gather Information Collaborate with Others Broad Base of Business Uses of the World Wide Web Cross-Functional Applications Vendor Support & Communications Marketing, Sales & Customer Service Research Competitors Sell Products or Services Communicate Internally Purchase Products or Services Customer Support & Service Publish Information Business and the Internet
Intel Internet Definition The Internet is a global web of networks and servers. It connects people to people, businesses to people and businesses to businesses.
A Composite Internet Profile • A network of networks. • Uses standards out of necessity. • A surprising architecture for its time. • It is relatively easy to link to it. • It is a classic example of decentralization and • independence since no one really owns or controls it. • Growth was initially driven by email. • Has become commercialized.
Communications and Collaboration Electronic Commerce Major Application Categories for Business Use of the Internet Interactive Marketing Strategic Alliances Business Use of the Internet
Objective To effectively define E-Commerce and E-Business, to understand the differences and appreciate how one relates to and enhances the possibility of success of the other.
What is E-Commerce? Formal definition: The buying and selling, marketing and servicing, and delivery and payment of products, services, and information over the Internet, intranets, extranets, and other networks, between an inter-networked enterprise and its prospects, customers, suppliers, and other business partners. What it really means: It is the way companies do business with customers and other businesses by using computer-based (web-based in most cases) systems.
What is E-Business? E-Business enables businesses and organizations to realize the potential of E-Commerce through the creation of business processes and strategies geared to this objective. In other words… it helps position organizations with better business processes and strategies to successfully realize E-Commerce potential through web-based systems.
E-Commerce Elements I II III Success with I and II can depend greatly on effectively doing III.
Barriers to entry are low. Marketing niches abound. Revenue sources are many. No dominance in the market. Everyone utilizes the same technology. Access is becoming universal. There is room for teams of successful players. E-Commerce Characteristics
Business to Consumer Commerce This segment is the retail businesses on the Internet. The major factors that optimizes a successful retailing website: • Performance and service • Personalization • Socialization • Visual presentation of website • Incentives • Security and reliability
Business to Business Commerce Enables businesses to seek, find, buy and pay for raw materials, products and services from vendors by using E-Commerce. Example: Electronic data interchange (EDI) Many companies rely on this form of transaction from other businesses to effectively manipulate and process each data into information that is relevant to their business needs.
Supply Chain Management • Supplier management • Inventory management • Distribution management • Channel management • Payment management • Financial management • Sales force management The goal is to systematize and integrate as many of these processes as possible as web-based applications.
Internal Business Processes By using intranets, companies regulate and monitor online information about customers, clients, suppliers, and competitors from websites and discussion groups This information is vital to a company since it helps it shape and improve products and services with customer input.
Secure Payments on the Internet Vendors want safe and secure transactions on the Internet through the use of encryption (code and scramble). Examples: Secure Socket Layer (SSL) by Netscape Communications Secure Electronic Transaction (SET) Backed by companies such as Visa, MasterCard, IBM, etc.
Conclusion Many businesses and vendors find E-Business and E-Commerce the best choice to help make their strategic business models competitive and effective. The Internet’s Web browser and networks of hypermedia databases on the World Wide Web is the backbone of electronic commerce that keeps businesses and customers internetworked.
Two Possible Exam Questions 1. Describe a company’s business model approach with E-Commerce using the Internet, intranet, and extranet terms. 2. Describe how E-Business and E-Commerce relate to each other and the important elements of each approach.
Internet Fraud Credit card fraud on the Internet is 12 times higher than at conventional stores. This translates into higher merchant fees to credit card companies and costs to resolve disputes. These are high enough to hurt the profitability of an E-Business.
Transition to E-Commerce • E-Commerce has huge potential but probably needs the foundation of an E-Business approach to be truly successful. • Business-to-business E-Commerce continues to be the largest segment of this approach and this is expected to continue.
For Instance • It was much easier for Dell Computer to use a web-based • direct marketing approach since it had emphasized such an • approach with an earlier Electronic Data Interchange system. • Dell’s advantage was that it had a significant amount • of experience with a similar approach. It internal processes, • employee knowledge and experience and even its corporate • culture was geared to a direct marketing business model. • A similar case can be made for Charles Schwab.
Making Money Via the Internet 1. Sales Transactions 2. Advertising Revenue 3. Subscription Fees 4. Sales Transaction Partnership “Linkage Finder Fees.”