Using Information Using Information Technology in E-Technology in E-

commercecommerceBy,By,

IkhlaqIkhlaq

Chapter PreviewChapter Preview

In this chapter, we will study:In this chapter, we will study:Importance and advantages of e-Importance and advantages of e-

commerce.commerce.Understand integration of e-commerce Understand integration of e-commerce

in everyday businesses.in everyday businesses.Forms and uses of business-to-consumer Forms and uses of business-to-consumer

electronic commerceelectronic commerceTechnical and non-technical Technical and non-technical

requirements needed to make EC workrequirements needed to make EC work

History of e-commrceHistory of e-commrce

HistoryHistory Began in the early 1970s (long before the Internet was Began in the early 1970s (long before the Internet was

open to commercial use)open to commercial use) Limited to large businesses initiallyLimited to large businesses initially Electronic Fund Transfer (EFT) and Electronic Data Electronic Fund Transfer (EFT) and Electronic Data

Interchange (EDI)Interchange (EDI) Scope Today IncludesScope Today Includes

advertisingadvertising home bankinghome banking shopping in electronic stores and mallsshopping in electronic stores and malls buying stocksbuying stocks finding a jobfinding a job collaborating electronically with business partners collaborating electronically with business partners

around the globearound the globe providing customer serviceproviding customer service Virtual malls.Virtual malls.

Frame work of e-commerceFrame work of e-commerce

E-Commerce / E-BusinessE-Commerce / E-Business Electronic CommerceElectronic Commerce: Buying and selling : Buying and selling

of products, services and information via of products, services and information via computer networks, primarily the computer networks, primarily the InternetInternet Some people view this term of Some people view this term of

commerce as describing transactions commerce as describing transactions conducted between business partners.conducted between business partners.

Electronic BusinessElectronic Business: A broader definition : A broader definition that includesthat includes

buying and selling, plusbuying and selling, plus servicing customersservicing customers collaborating with business partnerscollaborating with business partners conducting electronic transactions within an conducting electronic transactions within an

organization organization

Types of E-CommerceTypes of E-Commerce Business-to-business EC (B2B)Business-to-business EC (B2B)

In which two or more businesses make In which two or more businesses make transactions or collaborate electronicallytransactions or collaborate electronically

Collaborative commerce (c-commerce)Collaborative commerce (c-commerce) In which business partners collaborate and In which business partners collaborate and

this collaboration frequently occurs between this collaboration frequently occurs between and among the business partners along the and among the business partners along the supply chain.supply chain.

Business-to-consumer EC (B2C)Business-to-consumer EC (B2C) In this case the sellers are organized, the In this case the sellers are organized, the

buyers are individual. buyers are individual.

Cont…..Cont….. Consumer-to-businesses (C2B)Consumer-to-businesses (C2B)

In which the consumers make known a In which the consumers make known a particular need for a product or service and particular need for a product or service and organizations compete to provide the product organizations compete to provide the product or service to consumers.or service to consumers.

For example priceline.com, where the customer name the For example priceline.com, where the customer name the price and suppliers try to fulfill it price and suppliers try to fulfill it

Consumer-to-consumer (C2C)Consumer-to-consumer (C2C) In which an individual sells the products In which an individual sells the products

(services) to other individuals(services) to other individuals Intrabusiness (intraorganizational) Intrabusiness (intraorganizational)

commercecommerce In which an organization uses EC internally to In which an organization uses EC internally to

improve its operations. An example known as improve its operations. An example known as business to employee ECbusiness to employee EC

Cont….Cont….

Government-to-citizens (G2C) and Government-to-citizens (G2C) and othersothersIn this case the govt. provides services to In this case the govt. provides services to

its citizens via EC technologies.its citizens via EC technologies.Govt. can do business with other Govt. can do business with other

governments as well as with businessgovernments as well as with businessMobile commerce (m-commerce)Mobile commerce (m-commerce)

When e-commerce is done in a wireless When e-commerce is done in a wireless environment, such as using cell phones to environment, such as using cell phones to access the internet, we call it m-commerceaccess the internet, we call it m-commerce

B2BB2B Business-to-business targets sales and services primarily to Business-to-business targets sales and services primarily to other businesses.other businesses.

B2CB2C Business-to-consumer targets sales and services primarily to Business-to-consumer targets sales and services primarily to consumers.consumers.

B2EB2E Business-to-employee provides services other companies can Business-to-employee provides services other companies can use to interface with employees (like retirement funds use to interface with employees (like retirement funds management, health care management, and other benefits management, health care management, and other benefits management).management).

B2GB2G Business-to-government involves companies who sell the bulk Business-to-government involves companies who sell the bulk of their goods and services to state, local, and national of their goods and services to state, local, and national governments.governments.

C2CC2C Consumer-to-consumer sites primarily offer goods and services Consumer-to-consumer sites primarily offer goods and services to assist consumers to interact (e.g., auctions).to assist consumers to interact (e.g., auctions).

HybridHybrid Combines B2B and B2C models.Combines B2B and B2C models.

Forms of ECForms of EC

B2C Strategies for E-B2C Strategies for E-CommerceCommerce

DIGITAL PRODUCTS:DIGITAL PRODUCTS: The products and services that The products and services that can be delivered via internet. Eg songs, can be delivered via internet. Eg songs, software,movies,chat etc.software,movies,chat etc.

PHYSICAL PRODUCTS:PHYSICAL PRODUCTS: The products and services The products and services that can not be delivered via internet, instead they that can not be delivered via internet, instead they must be transported to the consumer by some must be transported to the consumer by some physical means. physical means.

VIRTUAL SALE Vs HYBRID SALE:VIRTUAL SALE Vs HYBRID SALE: Virtual stores do not operate with the physical store Virtual stores do not operate with the physical store

fronts, they completely operate with transections fronts, they completely operate with transections made online. Whereas Hybrid sale operate with the made online. Whereas Hybrid sale operate with the both web based and physical store fronts where both web based and physical store fronts where customer can enter and purchase the products.customer can enter and purchase the products.

EC Benefits to OrganizationsEC Benefits to Organizations Reduced costReduced cost of searching, purchasing and delivery. of searching, purchasing and delivery.

Broaden markets that helps small businesses Broaden markets that helps small businesses compete against large companiescompete against large companies

Enables more individualsEnables more individuals to work at home and to to work at home and to do less traveling and organizations have to bear less do less traveling and organizations have to bear less expenses.expenses.

ChoiceChoice Consumers can select from many vendors and many Consumers can select from many vendors and many

more products than they could locate otherwisemore products than they could locate otherwise Consumers can get customized products, from PCs Consumers can get customized products, from PCs

to cars, at competitive or bargain pricesto cars, at competitive or bargain prices Consumers can find unique products and collectors’ Consumers can find unique products and collectors’

items through virtual auctions that might otherwise items through virtual auctions that might otherwise require them to travel long distances to a particular require them to travel long distances to a particular auction place at a specific time.auction place at a specific time.

EC Benefits to Customers EC Benefits to Customers before ,during and after salebefore ,during and after sale

ConvenienceConvenience Consumers can conduct online quick Consumers can conduct online quick

comparisons to find less expensive products comparisons to find less expensive products and servicesand services

Customers can shop or make other Customers can shop or make other transactions 24 hours a day, year round, from transactions 24 hours a day, year round, from almost any locationalmost any location

Access Access to the Product information immediately to the Product information immediately available 24 hours a day, year round, from available 24 hours a day, year round, from almost any locationalmost any location

Relationships with the suppliers and financial Relationships with the suppliers and financial communitycommunity

Consumers can interact with other consumers Consumers can interact with other consumers in electronic communities and can exchange in electronic communities and can exchange ideas as well as compare experiencesideas as well as compare experiences

E-Commerce ConstraintsE-Commerce Constraints

High Cost for deploying EC setupHigh Cost for deploying EC setupSecurity concerns: Security concerns:

prevention,protection,detection and prevention,protection,detection and recovery.recovery.

Ethical issues: false order placing, Ethical issues: false order placing, hacking ,cracking, Web tracking, hacking ,cracking, Web tracking, privacy,privacy,

Immature or unavailable softwareImmature or unavailable softwareLegal issues like trade mark, Taxes and Legal issues like trade mark, Taxes and

fees, Copyright, IPR and licensingfees, Copyright, IPR and licensing

The InternetThe Internet

HistoryHistory ArchitectureArchitecture IntranetIntranet ExtranetExtranet Understanding URLUnderstanding URL Understanding IPUnderstanding IP What is web site, web page and Hyper textWhat is web site, web page and Hyper text ProtocolsProtocols

Figure 7.6 A sample journey of information from one Internet computer to another.

Internet ArchitectureInternet Architecture

InternetInternet The largest computer network in the world (a The largest computer network in the world (a

network of networks), More than 200,000 networks network of networks), More than 200,000 networks are connected.are connected.

The Internet is a global, interconnected network of The Internet is a global, interconnected network of millions of computers (hosts).millions of computers (hosts). Began in 1969 with the US DOD’s ARPANET.Began in 1969 with the US DOD’s ARPANET. In 1985 NSF built NSFNET.In 1985 NSF built NSFNET.

Began as one net work called ARPANET (Advance Began as one net work called ARPANET (Advance research projects agency) using packet switchingresearch projects agency) using packet switching

ARPA was the department of DARPA.ARPA was the department of DARPA. Which was composed of govt, military, academics Which was composed of govt, military, academics

and scientists.and scientists. Milnet was also military based network.Milnet was also military based network. Goals of internetGoals of internet

World Wide WebWorld Wide Web An increasingly popular method of An increasingly popular method of

accessing the Internet.accessing the Internet. Documents transmitted over the “web” are Documents transmitted over the “web” are

in HTML format (Hypertext Markup in HTML format (Hypertext Markup Language), or in any number of other Language), or in any number of other compatible languages.compatible languages.

HTML was created in 1989 by Tim Berners-HTML was created in 1989 by Tim Berners-Lee at CERN.Lee at CERN.

Web browsers (Internet Explorer and Web browsers (Internet Explorer and Netscape,mozzila,opera,firefox) are Netscape,mozzila,opera,firefox) are commonly used tools for accessing the web.commonly used tools for accessing the web.

The Operation of the Internet The Operation of the Internet (continued)(continued)

New top-level domain zones: In New top-level domain zones: In November 2000, the first addition of a November 2000, the first addition of a global top-level domains to the Internet global top-level domains to the Internet since the 1980s occurred.since the 1980s occurred. .aero (for the air-transport industry).aero (for the air-transport industry) .biz (for businesses).biz (for businesses) .coop (for cooperatives).coop (for cooperatives) . Com. Com .mil.mil .edu.edu .net.net .org.org .info.info

Understanding URLUnderstanding URL

http//:www.software.ibm.com/home/http//:www.software.ibm.com/home/index.htmindex.htm

Consists of multiple parts separated by dots.Consists of multiple parts separated by dots. Translated from right to leftTranslated from right to left http:// = indicates protocol used or how http:// = indicates protocol used or how

document is transmitteddocument is transmitted www = world wide web servicewww = world wide web service Com=top-level specification or zone, domain Com=top-level specification or zone, domain

name (not used for US based and name (not used for US based and international organizationsinternational organizations

Ibm = name of companyIbm = name of companySoftware = name of particular Software = name of particular

machinemachineHome = directory nameHome = directory name Index = file name of web documentIndex = file name of web document.html =indicates that document has .html =indicates that document has

been prepared in hyper text markup been prepared in hyper text markup languagelanguage

More NetsMore Nets Intranets, extranets, and virtual Intranets, extranets, and virtual

private networks (VPN’s) are other private networks (VPN’s) are other networks that use web technology.networks that use web technology.Intranet looks like the Internet but is Intranet looks like the Internet but is

used only internally by an organization used only internally by an organization (university, business, etc.).(university, business, etc.).

Extranet is similar to an intranet but Extranet is similar to an intranet but includes access available to partners, or includes access available to partners, or customers.customers.

VPN’s are used to connect private data VPN’s are used to connect private data using the public telecommunications using the public telecommunications system. VPN’s use tunneling.system. VPN’s use tunneling.

Includes email, instant messaging, Includes email, instant messaging, Voice over IP (VoIP), point-to-point Voice over IP (VoIP), point-to-point file transfers (FTP), and groupware.file transfers (FTP), and groupware.

E-mail is still largest use in this area.E-mail is still largest use in this area.ISP (Internet Service Provider) connects ISP (Internet Service Provider) connects

the user to the Internet.the user to the Internet.

Business IntelligenceBusiness Intelligence

Business intelligence refers to the analysis Business intelligence refers to the analysis performed by DSS, ES, EIS, data mining performed by DSS, ES, EIS, data mining and intelligent systems.and intelligent systems.

BI describes a verity of activities to pull BI describes a verity of activities to pull together all the data required to make a together all the data required to make a sound business decision, regardless of sound business decision, regardless of where the data originate.where the data originate.

External databases: Commercial External databases: Commercial databases that provide information on databases that provide information on virtually any subject.virtually any subject.

www.lexisnexis.com,www.dialog.com,aaa.www.lexisnexis.com,www.dialog.com,aaa.dowjones.comdowjones.com and and www.gxs.comwww.gxs.com are the examples. are the examples.

Search EnginesSearch Engines Search engines are used to index the contents of the Search engines are used to index the contents of the

Internet so that information about a specific topic can be Internet so that information about a specific topic can be located.located.

They are special computer programs having large They are special computer programs having large databases that ask a user for a key word or a group of databases that ask a user for a key word or a group of words to launch a search strategy to reach a web content words to launch a search strategy to reach a web content in cyberspace.in cyberspace.

Managers should pay attention to search engines for two Managers should pay attention to search engines for two reasons:reasons: They provide useful and extensive access to information.They provide useful and extensive access to information. And, they can provide the visibility that becoming listed with And, they can provide the visibility that becoming listed with

them provides.them provides. Google, founded in 1991 by two Stanford Ph.D. students, is Google, founded in 1991 by two Stanford Ph.D. students, is

the most popular search engine.the most popular search engine. Other types of search engines include yahoo.com, Other types of search engines include yahoo.com,

excite.com, altavista.com, msn.com and askjeevs.comexcite.com, altavista.com, msn.com and askjeevs.com

What is IOSWhat is IOS An IOS is a system in which all firms establish electronic An IOS is a system in which all firms establish electronic

linkage ,so that all of the firms work together as a coordinated linkage ,so that all of the firms work together as a coordinated unit, achieving benefits that each could not achieve alone.unit, achieving benefits that each could not achieve alone.

The participating firms are called trading partners, business The participating firms are called trading partners, business partners or business alliances.partners or business alliances.

Proactive (Usually this approach is taken by IOS sponsors) and Proactive (Usually this approach is taken by IOS sponsors) and reactive business partners (Participant responds are using reactive reactive business partners (Participant responds are using reactive approach):approach):

A frequently used term with IOS is EDI.A frequently used term with IOS is EDI. EDI (Electronic Data Interchange) is one of the oldest forms of e-EDI (Electronic Data Interchange) is one of the oldest forms of e-

business.business. EDI is the direct computer to computer transfer of business EDI is the direct computer to computer transfer of business

information, using a standard format.information, using a standard format. Software programs on different systems can exchange information Software programs on different systems can exchange information

without human intervention.without human intervention. Quote requests, order forms, etc.Quote requests, order forms, etc.

The communication lines, communication hardware and support The communication lines, communication hardware and support services are generally provided by the telecommunication companies services are generally provided by the telecommunication companies eg AT&T.eg AT&T.

Benefits of IOSBenefits of IOS

Comparative efficiencyComparative efficiency: By joining IOS : By joining IOS firms can produce services and goods with firms can produce services and goods with greater efficiency than of other firms.greater efficiency than of other firms.

Comparative efficiency may be in the Comparative efficiency may be in the terms of internal efficiency and inter-terms of internal efficiency and inter-organizational efficiency.organizational efficiency.

Bargaining powerBargaining power: The ability of the firm to : The ability of the firm to resolve disagreements with the suppliers resolve disagreements with the suppliers and the customers to its own advantage is and the customers to its own advantage is known as bargaining power.known as bargaining power.

This power is derived from the following This power is derived from the following bacis areas.bacis areas.

Cont….Cont…. Unique product feature:Unique product feature: IOS enables firms to offer a IOS enables firms to offer a

USP to take competitive advantage.USP to take competitive advantage. Reduced search–related cost:Reduced search–related cost: Belonging to IOS firm Belonging to IOS firm

can reduce cost for searching supplier, searching the can reduce cost for searching supplier, searching the product at low price.product at low price.

Increased Switching cost:Increased Switching cost: By using IOS firm deters its By using IOS firm deters its customers to switch to a competitor. An IOS achieves customers to switch to a competitor. An IOS achieves this benefit by providing customer with such an this benefit by providing customer with such an information, hardware, software and data information, hardware, software and data communication channels that would have to replaced communication channels that would have to replaced if the product were purchased from another firm.if the product were purchased from another firm.

Vendor stock replenishment:Vendor stock replenishment: A special IOS in that the A special IOS in that the customer trusts the supplier enough to allow the customer trusts the supplier enough to allow the supplier to access its computer–based inventory supplier to access its computer–based inventory system. system.

Cont…..Cont…..

Increased operational efficiency “both Increased operational efficiency “both internal and inter-organizational”internal and inter-organizational”

Increased ability to compete. In terms Increased ability to compete. In terms of reduces cost of product of reduces cost of product manufacture manufacture

Improved relationships with the Improved relationships with the trading partners.trading partners.

Improved customer services.Improved customer services.

Mobile CommerceMobile Commerce

As PDAs, cell phones, and tablet computers converge; people will ultimately be able to connect to any business every place they go.

Cyberspace and information Cyberspace and information super highwaysuper highway

A lucid /imaginary space that exists A lucid /imaginary space that exists behind the computer screen where behind the computer screen where mind absorbed sensory experiences mind absorbed sensory experiences take place and people interact with take place and people interact with this space while using different this space while using different physical means.physical means.

Information super highway is used in Information super highway is used in the same context, but there is no the same context, but there is no complete agreement concerning its complete agreement concerning its eventual impact on society.eventual impact on society.