Post on 20-Dec-2015
4.1 © 2006 by Prentice Hall
10Chapter
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
4.2 © 2006 by Prentice Hall
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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.3 © 2006 by Prentice Hall
• 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)
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.4 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Corrugated Supplies Case
4.5 © 2006 by Prentice Hall
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.
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.6 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Internet Technology and the Digital Firm (Continued)
4.7 © 2006 by Prentice Hall
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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.8 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.9 © 2006 by Prentice Hall
The Changing Economics of Information
Figure 4-1
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.10 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.11 © 2006 by Prentice Hall
• 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)
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Internet Business Models (Continued)
4.12 © 2006 by Prentice Hall
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 )
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.13 © 2006 by Prentice Hall
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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.14 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Business-To-Consumer
Advantages of E-Commerce: (Continued)
4.15 © 2006 by Prentice Hall
The Benefits of Disintermediation to the Consumer
Figure 4-2
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.16 © 2006 by Prentice Hall
Clickstream tracking tools:
• Collect data on customer activities at Web sites and store them in a log
Interactive Marketing and Personalization
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.17 © 2006 by Prentice Hall
Web Site Visitor Tracking
Figure 4-3
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.18 © 2006 by Prentice Hall
• 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
Web Personalization
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.19 © 2006 by Prentice Hall
Web Site Personalization
Figure 4-4
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.20 © 2006 by Prentice Hall
• 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.
Collaborative filtering:
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.21 © 2006 by Prentice Hall
• 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
Customer self-service:
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.22 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.23 © 2006 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.24 © 2006 by Prentice Hall
• 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)
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Net Marketplaces
Four different types of Net Marketplaces: (Continued)
4.25 © 2006 by Prentice Hall
Electronic Data Interchange (EDI)
Figure 4-5
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.26 © 2006 by Prentice Hall
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.
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.27 © 2006 by Prentice Hall
A Private Industrial Network
Figure 4-6
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.28 © 2006 by Prentice Hall
A Net Marketplace
Figure 4-7
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.29 © 2006 by Prentice Hall
Electronic Commerce Payment Systems
Digital wallets Electronic storage of I.D. and digital cash. Not widely used.
Accumulated balance Used for micro payments. Similar to monthly telephone bills.
Stored value Used for micro payments. Pre-payment of funds, debited on use.
Smart Cards I.D. and credit information stored on a chip attached to a card. Used in Europe.
Digital cash Electronic currency that can be transferred over the Web.
Peer-to-Peer payment Interpersonal transfer of funds such as PayPal.
Digital checking Electronic checks with digital signatures, used most often in B2B commerce.
Electronic billing presentmentand payment
Used by consumers to pay bills online, provided by many banks.
Credit cards The most common form of payment. $50 Limited customer liability.
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.30 © 2006 by Prentice Hall
• Benefits
• Functional applications
• Good examples: CARE and Mitre Corporation
How Intranets Support Electronic Business
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.31 © 2006 by Prentice Hall
• Connectivity: Accessible from most computing platforms
• Can be tied to internal corporate systems and core transaction databases
• Platforms for interactive applications
• Scalable to larger or smaller computing platforms
Benefits of Intranets
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.32 © 2006 by Prentice Hall
• Easy to use, universal standard Web interface
• Low start-up costs
• Richer, more responsive information environment than corporate manuals
• Reduced information distribution costs
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Benefits of Intranets (Continued)
4.33 © 2006 by Prentice Hall
• Finance and accounting
• Human resources
• Sales and marketing
• Manufacturing and production
Functional Applications of Intranets
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.34 © 2006 by Prentice Hall
Functional Applications of Intranets
Figure 4-8
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.35 © 2006 by Prentice Hall
• General ledger reporting
• Project costing
• Annual reports
• Budgeting
Finance & Accounting
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.36 © 2006 by Prentice Hall
Company:
• Online publishing of corporate policy
• Job postings and internal job transfers
• Company telephone directories, training
Human Resources
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.37 © 2006 by Prentice Hall
• Healthcare
• Employee savings
• Competency tests
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Employees:
Human Resources (Continued)
4.38 © 2006 by Prentice Hall
• Competitor analysis
• Price updates
• Promotional campaigns
• Sales presentations
• Sales contracts
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Sales and Marketing
4.39 © 2006 by Prentice Hall
• Quality measurements
• Maintenance schedules
• Design specifications
• Machine outputs
• Order tracking
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Manufacturing and Production
4.40 © 2006 by Prentice Hall
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
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.41 © 2006 by Prentice Hall
Collaborative Commerce
Figure 4-9
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
4.42 © 2006 by Prentice Hall
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.
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Management Opportunities:
4.43 © 2006 by Prentice Hall
• Finding a successful Internet business model
• Organizational change challenges
• Trust, Security, and Privacy
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce
Management Challenges:
4.44 © 2006 by Prentice Hall
• Determining how Internet technology can provide value for the business
• Managing business process changes
• Safeguarding security and privacy
Solution Guidelines:
Management Information SystemsManagement Information SystemsChapter 10 Chapter 10
The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce