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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 1
Managing Information Technology
6th Edition
CHAPTER 8
E-BUSINESS SYSTEMS
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E-Business Systems
Enable the electronic transmission of business transactions or otherrelated information between a buyer and seller
E-business systems
A business that conducts business solely through their Web site(single channel)
Dot-com (pure-play)
A company uses Internet sales as an additional channel to an offlinebusiness (multichannel)
Bricks-and-clicks (click-and-mortar)
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E-Business Systems
Explosive growth in demand for e-business
systems in the 1990s
Forecasts predict continued growth in e-business systems
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E-Business Systems Metcalfes Law is a possible theoretical reason for e-business growth
By this law, the network on the right has a value that is 15 times that of
the network on the left.
The value of a network to each of its members is
proportional to the number of other users,expressed as (n2 - n)/2
Metcalfes Law
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E-Business Systems
A worldwide network of networks, accessible to the public, that employsthe TCP/IP protocol
Internet
A private network operating within an organization that employs theTCP/IP protocol, to provide information, applications, and other tools(such as collaboration tools), for use by the organizations employees
Intranet
A private network that is a portion of a companys Intranet, which is madeaccessible (normally over the Internet) to business partners outside of thecompany (such as customers or suppliers)
Extranet
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E-Business Framework
IT Applications and services are built upon two
types of pillars
Legal and Regulatory Pillar
Technology Pillar Figure 8.1
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E-Business Technologies
Browser
Web content(without
interactivity)
SearchEngines,Agents
PushTechnology,Java Applets
Portal, Credit
CardProcessing
1994 1995 1996 1997 1998
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E-Business Technologies
Customization,Tracking
XML, DigitalSignature, Peer-to-Peer
Broadband DSLand CableModems
WirelessApplications forHandhelds
1999 2000 2001 2002
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E-Business Technologies
Traditional B2B electronic commerce used EDI
Proprietary applications forcommunicating with trading partners
based on agreed-upon standards forbusiness document transmission
EDI (Electronic Data Interchange)
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E-Business Technologies
XML provides the opportunity of lower-cost,
flexible B2B transactions
standard in which additional infor ation,
such as structure, can be added to data todata through the use of custo izableele ents
XML (Extensible Markup Language)
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XML Example
Internet
A worldwide network of networks, accessible to the public,
that employs the TCP/IP protocol
Intranet
A private network operating within an organization that employs the TCP/IP
protocol, to provide information, applications, and other tools (such as
collaboration tools), for use by the organizations employees
Intranet
A private network that is a portion of a companys Intranet, which is made
accessible (normally over the Internet) to business partners outside of the company
(such as customers or suppliers)
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E-Business Technologies
While XML does provide some advantages
over traditional EDI, many large retailers are
still using EDI for business transactions
Wal-Mart still requires suppliers to use EDI
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E-Business Technologies
Legal and Regulatory Environment
Limited legal intervention
Tax policies Sales taxes in US
Privacy issues
Antitrust laws
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E-Business Technologies
Digital signatures can be used to authenticate
the message sender in digital transactions,
much like an actual signature
A type of asymmetric cryptography thatprovides message authentication by utilizinga public-private key pair
Digital Signature
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Strategic E-Business Opportunities
(and Threats)
Porters Competitive Forces Model can be
used to assess the opportunities and threats
due to the influence of the Internet
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Figure 8.4
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Strategic E-Business Opportunities
(and Threats)
Opportunities due to the Internet:
Procurement of supplies via Internet can increase
companys power over suppliers
Size of potential market is expanded
Distribution channels between traditional
company and customer can be eliminated
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Strategic E-Business Opportunities
(and Threats)
Threats to traditional companies due to the
Internet:
Migration to price competition difficult to keep
offerings proprietary
Increased number of potential competitors
Internet reduces some traditional barriers (such as
in-person sales force) Customers increase their bargaining power
Internet reduces customers switching costs
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Strategic E-Business Opportunities
(and Threats)
Since the dot-com meltdown e-business has
changed in many ways
Figure 8.5
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B2B Applications
If buyers and sellers are fragmented,
Independent Intermediaries are likely to be
successful
Figure 8.6
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B2B Applications
If sellers are concentrated, sellers are likely to
dominate
Figure 8.6
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B2B Applications
If buyers are concentrated, buyers are likely to
dominate
Figure 8.6
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B2B Applications
B2B Intermediaries
Converge
Virtual Chip Exchange
Alibaba.com
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B2B Applications
Reverse Auctions
Sellers sequentially lower their bid to provide
goods to a single buyer Figure 8.3
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Internet Statistics
Figure 8.7
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Internet Statistics
Figure 8.8
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B2C Applications
Dot-com retailers
Amazon.com
Netflix
Traditional Catalog Retailers
Dell
Lands End
Traditional Store Retailers Staples
Blockbuster
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Dot-Com Retailers
Amazon Dot-com pioneer in online retailing of third-party products
Began as bookseller competitor
Now a multi-store, online mall
First profitable year 2003
Provides excellent online shopping experiences for millions
of customers
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Dot-Com Retailers
Netflix
Relatively late pure-play
Online movie rental business
Social recommendation system
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Catalog Retailers
Dell
Traditional direct seller and market leader of
made-to-order PCs
Developed custom software to support mass
customization strategy
Took advantage of early penetration of Internet
market Moved to multichannel (partnering with Wal-
Mart) after losing market share to HP
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Catalog Retailers
Lands End
Traditional catalog company
Developed capability for customers to make
orders for new custom clothing via its Web site
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Store Retailers
Staples
Traditional office products retailer
Built separate Web sites for business procurement
Focuses on efficiency, not aesthetic appeal
By 2006, over 25% of revenues were e-business
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Store Retailers
Blockbuster
Traditional retail movie rental business
Added online rentals like Netflix
Late in adding multichannel
In 2007, purchased Movielink to add online
download service
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Dot-com Intermediaries
eBay
A dot-com pioneer in electronic auctions
One of first dot-coms to achieve profitability
Purchased PayPal in 2003 for payment capability
Risks with transactions
Now is a C2C, B2B, and B2C intermediary
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Dot-com Intermediaries
Autobytel
A dot-com pioneer as intermediary between
automotive dealers and buyers
Provides leads to dealerships
Fills niche created by US state laws which prohibit
manufacturers to sell cars directly to consumers
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Dot-com Intermediaries
Leading online search engine
99% of revenue from targeted advertising
Growing through innovation and acquisition
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What makes a good web site?Special Issue
7 Cs
Sites layout and designfunctionally vs. aesthetically dominant orboth (integrated)Context
Text, pictures, sound, and video that Web site contains, includingdominant store typesContent
Sites capabilities to enable commercial transactionsfunctionaltools and pricingCommerce
Ways that the site utilizes user-to-user communication to enablefeelings of membership and shared common interestsCommunity
Extent to which the site is linked to other siteslinks out and inConnection
Sites ability to tailor itself to different users or to allow users topersonalize the siteCustomization
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What makes a good web site?Special Issue
Designing for mobile devices
Smaller displays
Limited attention of users
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Copyright 2009 Pearson Education, Inc.Publishing as Prentice Hall