MANAGEMENT INFORMATION SYSTEMS CHAPTER E- BUSINESS SYSTEMS Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-1 SOME DEFINITIONS E-Business Systems Enable the electronic transmission of business transactions or other related information between a buyer and seller Dot-Com (pure-play) A business that conducts business solely through their Web site (single channel) Bricks and Clicks (click-and-mortar) A company that uses Internet sales as an additional channel to an offline business (multichannel) Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-2 SOME DEFINITIONS 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 for use by the organization’s employees Extranet A portion of a company’s private intranet that is accessible via the internet to authorized organizations that are business partners (such as customers or suppliers) Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-3 E-BUSINESS GROWTH • Metcalfe’s Law is a theoretical explanation for continued e-business growth • Metcalfe’s Law: The value of a network to each of its members is proportional to the number of other connected users in the network • By this law, the network on the right has a value that is 15 times that of the network on the left Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-4 E-BUSINESS FRAMEWORK Internet Applications and Services are built upon two types of pillars TECHNOLOGY LEGAL AND REGULATORY PILLAR PILLAR Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-5 LEGAL AND REGULATORY ENVIRONMENT Environmental influences on Internet growth: • Sales tax policies - For example: Sales taxes in U.S at State level, but “location” of purchase not clear via Internet and federal government chose not to implement an Internet sales tax • Laws to protect Individual Privacy • Antitrust laws Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-6 E-BUSINESS TECHNOLOGIES: FIRST DECADE Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-7 E-BUSINESS TECHNOLOGIES • Pre-Internet B2B electronic commerce used EDI EDI (Electronic Data Interchange): Proprietary applications for communicating with trading partners based on agreed-upon standards for business document transmission Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-8 E-BUSINESS TECHNOLOGIES • XML enables B2B electronic commerce via the Internet XML (Extensible Markup Language): A markup language standard to facilitate data interchange across applications on the Web XML specification: Tags to convey the meaning of data Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-9 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 other tools (such as protocol, to provide information, applications, and collaboration tools), for use by the organization’s employees Intranet A private network that is a portion of a company’s Intranet, which is made outside of the company accessible (normally over the Internet) to business partners (such as customers or suppliers) Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-10 B2B APPLICATIONS- • Reverse Auctions Suppliers bid online in real time for a customer contract They lower their prices to out bid their competitors Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-20 INTERNET USAGE ACROSS THE GLOBE Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-21 B2C APPLICATIONS • Benefits to Sellers Seller Benefits: • • • • • • 24/7 access to customer for sales and support Lower costs from online channel Multimedia opportunities for marketing New ways to research potential markets New ways to distribute (if product/service can be digitized) Global reach to buyers Fig 7.9: Potential B2C benefits to Sellers Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-22 B2C APPLICATIONS FOR RETAILERS • Dot-com - Amazon.com - Netflix.com • Traditional Catalog - Dell - Lands’ End • Traditional Store - Staples - Tesco Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-23 DOT-COM RETAILERS • AMAZON • • • • • • • Dot-com pioneer in online retailing of third-party products Began as bookseller Superior online shopping experiences for millions of customers By 1999: Competitor to Wal-Mart 2003: First year profitable 2007: Proprietary E-Book reader (Kindle) 2008: Most popular shopping site worldwide AMAZON Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-24 DOT-COM RETAILERS • NETFLIX - Established in 1998 DVD rentals mailed to members - 2007: Proprietary video streaming - 2010: Greater market share than Blockbuster Netflix Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-25 CATALOG RETAILERS • DELL - Traditional direct seller Early market leader of made-to-order PCs - Developed custom software to support “mass customization” strategy - Took advantage of early Internet-savvy users - By 2010: Increased focus on Business customers DELL Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-26 CATALOG RETAILERS • LANDS’ END - Traditional catalog seller - Developed capability for online sales of custom–crafted clothing - Acquired by Sears in 2002 Landsend.com Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-27 STORE RETAILERS • STAPLES - Superstore retailer of office products - Launched online site in 1998 - Web site designed for online order efficiency - By 2006: 25% of revenues from online sales; world’s largest office products company Staples Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-28 STORE RETAILERS • TESCO - Grocery supermarket, based in England - Launched online site after Y2K - Delivery challenges due to perishable goods - By 2009: One of four successful multichannel grocery retailers in the world TESCO Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-29 DOT-COM INTERMEDIARIES • eBay - Launched in 1995 Pioneer in electronic auctions (C2C) Evolved to also be B2C and B2B intermediary One of first dot-com’s to achieve profitability - By 2000: 80% of online auctions worldwide - 2003: purchased PayPal for payment capability eBay Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-30 DOT-COM INTERMEDIARIES • Google - Founded in 1998 by Stanford University students - Leading online search engine - Current world leader in online advertising revenues - 2010: Renewed compromise agreement with China for censorship compliance Google Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-31 DOT-COM INTERMEDIARIES • Facebook - Founded in 2004 by Harvard students - - Social Networking site Major challenge: User privacy versus revenue By 2010: 70% of users were outside of the U.S In 2010: Somewhat fictional account of startup days became award-winning movie Facebook Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-32 WHAT MAKES A GOOD WEBSITE FOR CONSUMERS Context: Site layout and design - functionally vs aesthetically dominant or both (integrated) C Content: Text, pictures, sound, and video that Web site contains, including dominant “store types” Commerce: Site’s capabilities to enable commercial transactions - functional tools and pricing Community: Ways that the site utilizes user-to-user communication to enable feelings of membership and shared common interests Connection: Extent to which the site is linked to other sites Customization: Site’s ability to tailor itself to different users or to allow users to personalize the site Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall 7-33 WHAT MAKES A GOOD B2C SOCIAL MEDIA PLATFORM • Capabilities to: Brand the company or its products/services Support for sales and customer services Leverage consumers for product development and • Usage goals aligned with business strategy • Providing users control over their privacy settings Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall marketing 7-34