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ISYS Chapter 8
Terms in this set (60)
encompasses all the activities a company performs in selling and buying products and services using computers and communication technologies
includes not only transactions that center on buying and selling goods and services to generate revenue but also transactions that generate demand for goods and services, offer sales support and customer service, and facilitate communication between business partners.
Examples of E-business
1) online shopping
2) sales force automation
3) supply chain management
4) electronic procurement (e-procurement)
5) electronic payment systems
6) Web advertising
7) order management
buying and selling goods and services over the Internet
builds on traditional commerce by adding the flexibility that networks offer and the availability of the Internet.
How are E-commerce and E-business related?
e-commerce is a part of e-business
How are E-commerce and E-business different?
E-business includes not only transactions that center on buying and selling goods and services to generate revenue but also transactions that:
- generate demand for goods and services
- offer sales support and customer service and
- facilitate communication between business partners
One way to examine e-commerce and its role in the business world.
Michael Porter introduced this concept in 1985.
It consists of a series of activities designed to meet business needs by adding value (or cost) in each phase of the e-commerce process.
This is really about understanding what aspects of an organization's business add value for customers and then maximizing those aspects
1) organizational infrastructure
2) human resource management
3) technological development
4) procurement (gathering input)
1) Inbound Logistics
3) Outbound Logistics
4) Marketing and Sales
Movement of materials and parts from suppliers and vendors to production or storage facilities
Includes tasks associated with receiving, storing, and disseminating incoming goods or materials.
Processing raw materials into finished goods and services.
Moving and storing products, from the end of the production line to end users or distribution centers.
Marketing and Sales
Activities for identifying customer needs and generating sales.
Activities to support customers after the sale of products and services.
Examples of The Value Chain
Dell Computer generates a large portion of its revenue through the Web and eliminates the middleman in the process.
Cisco Systems sells networking hardware and software over the Web, and customers can track packages on the Web with United Parcel Service (UPS) and FedEx.
Boloco, a burrito restaurant, posting a photo on twitter to promote a coupon.
Increases the speed and accuracy of communication between suppliers, distributers, and customers.
Low cost means companies of any size can participate in value chain integration.
What are the advantages of the internet?
It increases the speed and accuracy of communication.
Mixes traditional commerce and e-commerce.
It capitalizes on the advantages of online interaction with customers yet retains the benefits of having a physical store location.
Example of Traditional Commerce
all market participants can trade at the same price
Is Price Transparency an advantage or disadvantage of e-commerce?
Advantages of E-commerce
Creating better relationships with suppliers, customers, and business partners
Creating "price transparency," meaning all market participants can trade at the same price
Being able to operate around the clock and around the globe
Gathering more information about potential customers
Increasing customer involvement (e.g., offering a feedback section on the company Web site)
Improving customer service
Increasing flexibility and ease of shopping
Increasing the number of customers
Increasing opportunities for collaboration with business partners
Increasing return on investment because inventory needs are reduced
Offering personalized services and product customization
Reducing administrative and transaction costs
Disadvantages of E-commerce
Bandwidth capacity problems (in certain parts of the world)
Security and privacy issues*
Accessibility (not everybody is connected to the Web yet)
Acceptance (not everybody accepts this technology)
The most widely used business models in e-commerce
The Merchant Model
transfers the old retail model to the e-commerce world by using the medium of the Internet.
companies use Internet technologies and Web services to sell goods and services over the Web
Examples of the Merchant Model
The Brokerage Model
brings sellers and buyers together on the Web and collects commissions on transactions between these parties.
Examples of the Brokerage Model
Online Auction Sites
The Advertising Model
An extension of traditional advertising media, such as radio and television. Directories such as Yahoo! provide content (similar to radio and TV) to users for free. By creating more traffic with this free content, they can charge companies for placing banner ads or leasing spots on their sites.
Google, for example, generates revenue from AdWords, which offers pay-per-click (PPC) advertising and site-targeted advertising for both text and banner ads.
The Mixed Model
Refers to generating revenue from more than one source.
For example, ISPs such as AOL generate revenue from advertising and from subscription fees for Internet access. An auction site can also generate revenue from commissions collected from buyers and sellers and from advertising.
The Informediary Model
e-commerce sites collect information on consumers and businesses and then sell this information to other companies for marketing purposes.
For example, Bizrate (bizrate.com) collects information about the performance of other sites and sells this information to advertisers.
The Subscription Model
e-commerce sites sell digital products or services to customers.
For example, the Wall Street Journal and Consumer Reports offer online subscriptions, and antivirus vendors use this model to distribute their software and updates.
Netflix was discussed in class.
companies that used to have only physical stores
Examples of brick-and-morter companies
Companies sell directly to consumers.
Examples of B2C
Amazon (no physical store)
Barnes and Noble (click-and-brick)
involves electronic transactions between businesses.
Lowers production costs and improves accuracy by eliminating many labor-intensive tasks
- Electronic Data Interchange (EDI)
- Electronic Funds Transfer (EFT)
- Virtual private networks
-purchase orders, invoices, inventory status, shipping logistics, business contracts, and other operations
4 Major Models of B2B E-commerce
3) Third-Party Exchange
4) Trading Partner Agreements
Most popular B2B model
Sellers who cater to specialized markets come together to create a common marketplace for buyers
Ex. Oil, chemicals, electronics, and auto components
Popular application of a seller-side marketplace that enables employees in an organization to order and receive supplies and services directly from suppliers.
reduces costs, saves time, and improves relationships between suppliers and participating organizations.
The main objective of this is to avoid buying from suppliers not on the approved list of sellers and to eliminate the processing costs of purchases.
A buyer, or a group of buyers, opens an electronic marketplace and invites sellers to bid on announced products or make a request for quotation (RFQ).
Using this model buyers can:
- manage the procurement process more efficiently
- lower administrative costs and
- implement uniform pricing
Companies invest in this with the goal of establishing new sales channels that increase their market presence and lower the cost of each sale.
Third-Party Exchange Marketplace
This Marketplace model is not controlled by sellers or buyers. Instead, it is controlled by a third party, and the marketplace generates revenue from the fees charged for matching buyers and sellers.
1) Vertical Market
2) Horizontal Market
This model offers suppliers a direct channel of communication to buyers through online storefronts.
The interactive procedures in the marketplace have features such as:
- product catalogs
- requests for information (RFI)
- rebates and promotions
- broker contacts and
- product sample requests.
concentrates on a specific industry or market, such as the utilities industry, the beef and dairy industries, and the sale of medical products.
concentrates on a specific function or business process and automates this function or process for different industries.
Ex. Employee-benefits administration and media buying
Trading Partner Agreements
Automate negotiating processes and enforce contracts between participating businesses.
Business partners can send and receive bids, contracts, and other information needed when offering and purchasing products and services.
Enables customers to submit, via the Internet, electronic documents that previously required hard copies with signatures using ebXML.
Will become more common with the development of electronic business Extensible Markup Language (ebXML)
involves business transactions between users, such as consumers selling to other consumers via the Internet.
Online classified ads:
Online auction sites:
People can also advertise products and services on organizations' intranets and sell them to other employees.
Involves people selling products or services to businesses.
- Online surveys
- Search for sellers of a product or service
Ex. Priceline (name-your-own-price)
- Crowdsourcing (asking consumers to perform services—such as contributing to a Web site—for a fee)
- Government-to-citizen (G2C)
- Government-to-business (G2B)
- Government-to-government (G2G)
- Government-to-employee (G2E)
Tax filing and payments; completing, submitting, and downloading forms; requests for records; online voter registration
Sales of federal assets, license applications and renewals
Disaster assistance and crisis response
Transaction in which money or scrip is exchanged only electronically. This usually involves the use of the Internet, other computer networks, and digitally stored value systems.
- credit cards
- debit cards
- charge cards
- smart cards
This is about the size of a credit card and contains an embedded microprocessor chip for storing important financial and personal information. The chip can be loaded with information and updated periodically.
What is the difference in a Smart Card and Traditional Card?
Smart cards are new - credit card sized and contains an embedded microprocessor chip storing important financial and personal information.
A secure and convenient alternative to bills and coins, complements credit, debit, and charge cards and adds convenience and control to everyday cash transactions.
Usually works with a smart card, and the amount of cash stored on the chip can be "recharged" electronically.
The electronic version of a paper check, offers security, speed, and convenience for online transactions.
Many utility companies offer customers the opportunity to use these to make their payments, and most banks accept them for online bill paying.
These are a good solution when other electronic payment systems are too risky or otherwise not appropriate.
Available for most handheld devices, offer a secure, convenient, and portable tool for online shopping. They store personal and financial information, such as credit card numbers, passwords, and PINs.
Can be used for micropayments and online shoppers find them useful because personal and financial information does not have to be reentered each time they place an order.
Transactions on the Web involving very small amounts of money.
They began as a method for advertisers to pay for cost per view or cost per click.
Popular online payment system used for many online transactions. Users with valid e-mail addresses can set up accounts and make secure payments for online transactions using their credit cards or bank accounts.