Laudon MIS 9th Edition Chapter 04.ppt
Transcript of Laudon MIS 9th Edition Chapter 04.ppt
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4Chapter
The Digital Firm: The Digital Firm: Electronic Business Electronic Business
and Electronic and Electronic CommerceCommerce
The Digital Firm: The Digital Firm: Electronic Business Electronic Business
and Electronic and Electronic CommerceCommerce
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OBJECTIVES
• Analyze how Internet technology has changed value propositions and business models
• Define electronic commerce and describe how it has changed consumer retailing and business-to-business transactions
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• Compare the principal payment systems for electronic commerce
• Evaluate the role of Internet technology in facilitating management and coordination of internal and interorganizational business processes
• Assess the challenges posed by electronic business and electronic commerce and management solutions
OBJECTIVES (Continued)
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• Challenge: trillions of product configurations, short lead times, many competitors
• Solution: 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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Corrugated Supplies Case
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
Internet Technology and the Digital Firm
• 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.
• Direct communication between trading partners: Disintermediation removes intermediate layers and streamlines processes.
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
• Round the clock service: Web sites available to consumers 24 hours
• Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize a firm
• Reduced transaction costs: Costs of searching for buyers declines
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Internet Technology and the Digital Firm (Continued)
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
Business Model:
• Defines an enterprise
• Describes how the enterprise delivers a product or service
• Shows how the enterprise creates wealth
New Business Models and Value Propositions
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
• Information asymmetry: One party in a transaction has more information than the other. The Internet decreases information asymmetry.
• Increases richness: The Internet increases the depth, detail, and scope of information.
• Increases reach: The Internet increases the number of people who can be contacted efficiently.
The Changing Economies of Information
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
The Changing Economics of Information
Figure 4-1
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
• Virtual storefront: Sells goods or services online (Amazon.com)
• Information broker: Provides information on products or services (Edmunds.com)
• Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com)
• Online marketplace: Provides a trading platform for individuals and firms (eBay.com)
Internet Business Models
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ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM
• Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com)
• Online service provider: Provides online services, including search service. (Google.com, Xdrive.com)
• Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com)
• Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)
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Internet Business Models (Continued)
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ELECTRONIC COMMERCE
Categories of Electronic Commerce
• Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com)
• Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com)
• Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com )
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Business-To-Consumer
Advantages of E-commerce:
• Customer-centered retailing: Closer and more personalized relationship with customers is possible
• Web sites: Provide a corporate-centered portal for the consumer to quickly find information on products, services, prices, orders
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
• Reintermediation: The shifting of the intermediary role in a value chain to a new source, adding additional value to the consumer
ELECTRONIC COMMERCE
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Business-To-Consumer
Advantages of E-Commerce: (Continued)
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The Benefits of Disintermediation to the Consumer
Figure 4-2
ELECTRONIC COMMERCE
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Clickstream tracking tools:
• Collect data on customer activities at Web sites and store them in a log
ELECTRONIC COMMERCE
Interactive Marketing and Personalization
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Web Site Visitor Tracking
Figure 4-3
ELECTRONIC COMMERCE
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• Create unique personalized Web pages for each customer
• Increased closeness to customer increases value to the customer, while reducing costs of interacting with the customer
ELECTRONIC COMMERCE
Web Personalization
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Web Site Personalization
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ELECTRONIC COMMERCE
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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.
ELECTRONIC COMMERCE
Collaborative filtering:
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• The use of Web sites to provide customers with access to information and answers to questions
• Replacing human call center operators and clerks
• UPS.com: Customer tracking of packages
• Orbitz.com: Customer self-help for organizing and managing a trip
• Dell.com: “My Order Status” facility
ELECTRONIC COMMERCE
Customer self-service:
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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.
• EDI is being replaced by more powerful Web-based alternatives.
Business-to-Business Electronic Commerce: New Efficiencies and Relationships
ELECTRONIC COMMERCE
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ELECTRONIC COMMERCE
• Distributors: B2B online catalogs provide buyers with access to thousands of parts and other goods (Grainger.com)
• Procurement platforms: Platforms for purchasing goods and materials and also sourcing, negotiating with suppliers, paying for goods, and making delivery arrangements (Ariba.com)
Four different types of Net Marketplaces:
Net Marketplaces
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ELECTRONIC COMMERCE
• 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)
• Industry consortia: Industry-owned Net marketplaces
used primarily for long-term sourcing of direct inputs
to production (ChemConnect.com)
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Net Marketplaces
Four different types of Net Marketplaces: (Continued)
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ELECTRONIC COMMERCE
Electronic Data Interchange (EDI)
Figure 4-5
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ELECTRONIC COMMERCE
Private Industrial Networks
• The largest Web-based form of B2B commerce
• 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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ELECTRONIC COMMERCE
A Private Industrial Network
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ELECTRONIC COMMERCE
A Net Marketplace
Figure 4-7
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The Internet and collaborative commerce:
• Collaborative commerce: When firms use the Internet to cooperate closely in the development, production, and distribution of products and services
• GE Plastics maintains an Intranet where its customers (selected fabricators) can find information on product design and new developments.
Business Process Integration
ELECTRONIC BUSINESS AND THE DIGITAL FIRM
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ELECTRONIC BUSINESS AND THE DIGITAL FIRM
Collaborative Commerce
Figure 4-9
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MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
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 Opportunities:
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• Finding a successful Internet business model
• Organizational change challenges
• Trust, Security, and Privacy
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MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
Management Challenges:
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• Determining how Internet technology can provide value for the business
• Managing business process changes
• Safeguarding security and privacy
Solution Guidelines:
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MANGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS