Transcript Document 7197889
Chapter 4
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The Digital Firm: Electronic Business and Electronic Commerce
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2005 by Prentice Hall
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce OBJECTIVES
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Analyze how Internet technology has changed value propositions and business models
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Define electronic commerce and describe how it has changed consumer retailing and business-to business transactions ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce OBJECTIVES
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Compare the principal payment systems for electronic commerce
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Evaluate the role of Internet technology in facilitating management and coordination of internal and inter organizational business processes 4.3
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Assess the challenges posed by electronic business and electronic commerce and management solutions ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce Corrugated Supplies Case
• Challenge:
lead times, many competitors
• Solution:
trillions of product configurations, short Web extranet for order entry, customization, inventory, change orders, and shipping • Demonstrates how IT and the Web coordinate the flow of information about orders, production, inventory and shipment • Illustrates how systems in the digital firm connect demand, supply, and fulfillment to achieve operational excellence
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Internet Technology and the Digital Firm
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Information technology infrastructure: The Internet provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations
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Direct communication between trading partners: Disintermediation removes intermediate layers and streamlines process ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
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Round the clock-service: Web sites available to consumers 24 hours
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Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize a firm
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Reduced transaction costs: Costs of searching for buyers declines ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM New Business Models and Value Propositions Business Model:
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Defines an enterprise
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Describes how the enterprise delivers a product or service
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Shows how the enterprise creates wealth ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM The Changing Economies of Information
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Information asymmetry: One party in a transaction has more information than the other. The Internet decreases information asymmetry 4.8
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Increases richness: The Internet increases the depth, detail, and scope of information
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Increases reach: The Internet increases the number of people who can be contacted efficiently ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM The Changing Economics of Information 4.9
Figure 4-1 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM Internet Business Models
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Virtual storefront: Sells goods or services on-line (Amazon.com)
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Information broker: Provides information on products or services (Edmunds.com)
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Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com) 4.10
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Online marketplace: Provides a trading platform for individuals and firms (eBay.com) ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
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Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com)
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On-line service provider: Provides online services, including search services. (Google.com, Xdrive.com)
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Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com)
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Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com) ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Categories of Electronic Commerce
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Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com)
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Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com)
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Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com ) ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Business-To-Consumer Advantages of E-commerce:
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Customer-centered retailing: Closer and more personalized relationship with customers is possible
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Web sites: Provide a corporate-centered portal for the consumer to quickly find information on products, services, prices, orders ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE
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Disintermediation: The elimination of organizations or business process layers responsible for certain intermediary steps in a value chain, reducing costs to the consumer
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Reintermediation: The shifting of the intermediary role in a value chain to a new source, adding additional value to the consumer ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE The Benefits of Disintermediation to the Consumer 4.15
Figure 4-2 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Interactive Marketing and Personalization Clickstream tracking tools:
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Collect data on customer activities at Web sites and store them in a log ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Web Site Visitor Tracking 4.17
Figure 4-3 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Web Personalization
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Create unique personalized Web pages for each customer
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Increased closeness to customer increases value to the customer, while reducing costs of interacting with the customer ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Web Site Personalization 4.19
Figure 4-4 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Collaborative filtering:
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Compares information gathered about a specific user’s behavior at a Web site to data about other customers with similar interests to predict what the user would like to see next. The software then makes recommendations to users based on their assumed interests .
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Customer self-service:
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The use of Web sites to provide customers with access to information and answers to questions
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Replacing human call center operators and clerks
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UPS.com: Customer tracking of packages
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Orbitz.com: Customer self-help for organizing and managing a trip 4.21
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Dell.com: “My Order Status” facility ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Business-to-Business Electronic Commerce: New Efficiencies and Relationships
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Electronic Data Interchange (EDI): Enables the computer to-computer exchange between two organizations of standard transactions. Currently 80% of B2B e-commerce uses this system.
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EDI is being replaced by more powerful Web based alternatives ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Net Marketplaces Four different types of Net Marketplaces: 4.23
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Distributors: B2B online catalogs providing buyers with access to thousands of parts and other goods (Grainger.com)
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Procurement platforms: Platforms for purchasing goods and materials and also sourcing, negotiating with suppliers, paying for goods, and making delivery arrangements (Ariba.com) ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE
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Independent exchanges: Third-party Net marketplace that is primarily transaction oriented and that connects many buyers and suppliers for spot purchasing (Freemarkets.com, GEPolymerland.com)
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Industry consortia: Industry owned Net marketplaces used primarily for long-term sourcing of direct inputs to production (ChemConnect.com) ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Electronic Data Interchange (EDI) 4.25
Figure 4-5 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Private Industrial Networks
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The largest Web-based form of B2B commerce
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Private B2B extranets that focus on continuous business process coordination between a small group of companies for collaboration and supply chain management. Wal-Mart uses its own private network to coordinate more than 15,000 suppliers to its stores ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE A Private Industrial Network 4.27
Figure 4-6 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE A Net Marketplace 4.28
Figure 4-7 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Credit cards Electronic Commerce Payment Systems The most common form of payment. $50 Limited customer liability.
Digital wallets Electronic storage of I.D. and digital cash. Not widely used Accumulated balance Used for micro payments. Similar to monthly telephone bills Stored value Smart Cards Digital cash Peer-to-Peer payment Digital checking Electronic billing presentment and payment Used for micro payments. Pre-payment of funds, debited on use I.D. and credit information stored on a chip attached to a card. Used in Europe Electronic currency that can be transferred over the Web Interpersonal transfer of funds such as PayPal Electronic checks with digital signatures, used most often in B2B commerce Used by consumers to pay bills on line, provided by many banks.
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM How Intranets Support Electronic Business
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Benefits
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Functional applications
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Good examples: CARE and Mitre Corporation ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Benefits of Intranets
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Connectivity: Accessible from most computing platforms
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Can be tied to internal corporate systems and core transaction databases
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Platforms for interactive applications
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Scalable to larger or smaller computing platforms ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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Easy to use, universal standard Web interface
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Low start-up costs
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Richer, more responsive information environment than corporate manuals
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Reduced information distribution costs ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Functional Applications of Intranets
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Finance and accounting
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Human resources
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Sales and marketing
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Manufacturing and production ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Functional Applications of Intranets 4.34
Figure 4-8 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Finance & Accounting
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General ledger reporting
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Project costing
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Annual reports
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Budgeting ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Human Resources Company:
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On-line publishing of corporate policy
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Job postings and internal job transfers
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Company telephone directories, training ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Employees
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Healthcare
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Employee savings
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Competency tests ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Sales & Marketing
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Competitor analysis
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Price updates
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Promotional campaigns
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Sales presentations
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Sales contracts ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Manufacturing & Production
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Quality measurements
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Maintenance schedules
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Design specifications
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Machine outputs
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Order tracking ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Business Process Integration The Internet and collaborative commerce:
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Collaborative commerce: When firms use the Internet to cooperate closely in the development, production, and distribution of products and services
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GE Plastics maintains an Intranet where its customers (selected fabricators) can find information on product design and new developments ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC BUSINESS AND THE DIGITAL FIRM Collaborative Commerce 4.41
Figure 4-9 ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Opportunities: The Internet provides firms with extraordinary opportunities to develop new products and services, new distribution channels, new avenues for marketing and sales, and even entirely new business models ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Challenges: Finding a successful internet business model
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Organizational change challenges
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Trust, Security, and Privacy ©
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Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Solution Guidelines:
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Determining how internet technology can provide value for the business
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Managing business process changes
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Safeguarding security and privacy ©
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