Ch 4. The Digital Firm: E- Business and e

Transcript Ch 4. The Digital Firm: E- Business and e

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce 4.1

THE DIGITAL FIRM: ELECTRONIC BUSINESS AND ELECTRONIC COMMERCE

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce OBJECTIVES

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How has Internet technology changed business models?

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What are the principal payment systems for e commerce?

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How can Internet technology facilitate internal business processes and SCM?

4.2

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What are the major managerial challenges posed by e-commerce?

2005 Pearson Education Canada Inc.

4.3

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

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Business Model:

An abstraction of what an enterprise is Describes how the enterprise delivers a product or service eg: traditional bookstore vs Amazon.com

finding a successful one for e-commerce has been difficult

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE 4.4

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Business-to-Customer (B2C):

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Electronic retailing directly to individual customers Business-to-Business (B2B):

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Electronic sales among businesses Consumer-to-Consumer (C2C):

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Consumers selling electronically to other consumers Mobile Commerce (M-Commerce):

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use of handheld wireless devices for purchasing goods and services

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Used in B2B and B2C e-commerce transactions

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS 4.5

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Facilitates Dynamic Pricing:

Real-time interactions between buyers and sellers determine worth of items

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Facilitates Banner Ads

vs. Pop-up Ads (user must click to close)

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Makes ‘Disintermediation’ possible

removal of business process layers in a value chain

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS 4.6

2005 Pearson Education Canada Inc.

4.7

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

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Shrinks Information Asymmetry:

One party in a transaction has more information than the other

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Allows Web Personalization:

tailoring of web content directly to a specific user

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS 4.8

2005 Pearson Education Canada Inc.

4.9

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

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Reduces need to tradeoff

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Richness for Reach :

can now have both!

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Reduces Transaction Costs:

Reduces costs of finding buyers, collecting payments, and (perhaps) delivering product (eg?)

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce INFORMATION SYSTEMS IMPACT 4.10

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS 4.11

2005 Pearson Education Canada Inc.

4.12

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

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Makes possible new Business Models

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‘Virtual Storefront’: move from ‘bricks and mortar’ to ‘clicks and mortar’, or ‘pure play’ to sell product

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‘Net Marketplace’: Buyers and sellers meet - revenue from transaction fees. can serve either vertical or horizontal markets vs. Private Industrial Network

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS 4.13

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS 4.14

E.G.: Covisint to supply automobile ‘vertical market’

2005 Pearson Education Canada Inc.

4.15

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

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Makes possible new Business Models

‘Content Provider’:

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Provides digital content - customer pays for access

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Advertising can also provide revenue. ‘Portal’: initial point of entry to web specialized content and services

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce OBJECTIVES

•

How has Internet technology changed business models?

•

What are the principal payment systems for e commerce?

•

How can Internet technology facilitate internal business processes and SCM?

4.16

•

What are the major managerial challenges posed by e-commerce?

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE PAYMENT SYSTEMS Digital Credit Card Digital Wallet Secure services for credit card payments – see Chapter 11 for details Software that stores credit card info, address etc; e.g. Amazon.com’s 1-Click shopping Accumulated Balance Payment System Accumulates micropayments as a debit balance; e.g. Qpass Digital Cash (e-cash) A stored value digital account enabling instant payments; e.g. eCoin, Mondex smart cards Peer-to-Peer Payment Digital Chequing Electronic Billing 4.17

Digital currency for vendors who do not have pre-arranged payment options; e.g.PayPal

Electronic cheque with digital signature; e.g. CHEXpedite Supports electronic payment of monthly bills; e.g. epost.ca

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE PAYMENT SYSTEMS 4.18

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce OBJECTIVES

•

How has Internet technology changed business models?

•

What are the principal payment systems for e commerce?

•

How can Internet technology facilitate internal business processes and SCM?

4.19

•

What are the major managerial challenges posed by e-commerce?

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How Intranets Support Electronic Business 4.20

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How Intranets Support Electronic Business 4.21

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How Intranets Support Electronic 4.22

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce OBJECTIVES

•

How has Internet technology changed business models?

•

What are the principal payment systems for e commerce?

•

How can Internet technology facilitate internal business processes and SCM?

4.23

•

What are the major managerial challenges posed by e-commerce?

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce MANAGEMENT CHALLENGES & OPPORTUNITIES 4.24

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce MANAGEMENT CHALLENGES & OPPORTUNITIES 4.25

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Current status of E-Business in Canada:

Internet use per capita – higher than US E-commerce use per capita or per business – lower than US E-commerce sales

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up 27% in 2002 (down from 46% in 2001) .6% of total revenue 7 firms stopped using e-commerce in 2002 for every 10 that started What are the barriers?

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce MANAGEMENT CHALLENGES & OPPORTUNITIES 4.26

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Barriers Reported

(Cdn E-Business Roundtable): Products not suited to e-commerce (56%) Prefer current business model (36%)

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E.G. ‘channel conflicts’ Security concerns (14%) High costs (12%)

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HBC - $40M / yr to upgrade web site Lack of skills (10%) Customers not ready to purchase online (9.6%)

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce MANAGEMENT CHALLENGES & OPPORTUNITIES 4.27

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Other Barriers to consider:

Unproven business models Business process change requirements Legal issues Trust, security and privacy Lack of broadband access False sense of security in retail circles

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previously sheltered from US competition Investment decisions often based on ROI

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appropriate for e-commerce investment?

2005 Pearson Education Canada Inc.

4.28

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce MANAGEMENT CHALLENGES & OPPORTUNITIES

Roundtable Recommendations

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Put all government services online Canada already leads the world in e-government portal at http://www.gc.ca/

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Offer financial incentives to businesses Expand the e-business talent pool Build Canada’s e-business leadership profile internationally

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce 4.5 STATUS OF CANADIAN E-COMMERCE 4.29

Opportunities for Canadian Leadership: 1. Network Infrastructure 2. Multimedia North 3. Global Customer Care Centres 4. Remote Service Provider 5. Web Tools Developer

2005 Pearson Education Canada Inc.

Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce 4.30

THE DIGITAL FIRM: ELECTRONIC BUSINESS AND ELECTRONIC COMMERCE

2005 Pearson Education Canada Inc.