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Internet technology & the Digital Firm• Medium for electronic commerce – link to other businesses &

Individuals at a low cost• Provides universal & easy-to-use set of technologies that is

conformable to all organisations• Trading partners can directly communicate to each other bypassing

intermediaries & inefficient multilayered procedures• Handling transactions electronically can reduce transaction costs &

delivery time for some goods specially those that are purely digital –

distributed over Internet as electronic versions• Internet is providing the entire infrastructure to run the business –

it’s tech & tech stds can be used to make info flow seamlessly from one part of the org to the other

Electronic Business, Electronic Commerce, and the Emerging Digital FirmElectronic Business, Electronic Commerce, and the Emerging Digital Firm

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INTERNET BENEFITS

• GLOBAL CONNECTIVITY• REDUCED COMMUNICATIONS COST• LOWER TRANSACTION COSTS• REDUCED AGENCY COSTS• INTERACTIVITY, FLEXIBILITY, CUSTOMIZATION• ACCELERATED KNOWLEDGE

Electronic Business, Electronic Commerce, and the Emerging Digital FirmElectronic Business, Electronic Commerce, and the Emerging Digital Firm

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Emergence of the Digital Firm

• Digitally-enabled relationships with customers, suppliers, and employees

• Core business processes accomplished via digital networks• Digital management of key corporate assets• Rapid sensing and responding to environmental changes

Electronic Business, Electronic Commerce, and the Emerging Digital FirmElectronic Business, Electronic Commerce, and the Emerging Digital Firm

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• Electronic commerce

• Electronic business

• Electronic market: Information systems links, buyers and sellers to exchange information, products, services, payments

TOWARD THE DIGITAL FIRM

Electronic Business, Electronic Commerce, and the Emerging Digital FirmElectronic Business, Electronic Commerce, and the Emerging Digital Firm

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TOWARD THE DIGITAL FIRM

Electronic Business, Electronic Commerce, and the Emerging Digital FirmElectronic Business, Electronic Commerce, and the Emerging Digital Firm

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• Internet links buyers, sellers

• Lower transaction costs

• Goods and services advertised, bought, exchanged worldwide

• Business-to-business transactions increasing

Electronic Commerce

INTERNET & ELECTRONIC COMMERCE

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INTERNET & ELECTRONIC COMMERCE

• Easy to link with other businesses, customers• Can update product information, ordering, customer support• On-line storefronts• Enhanced business forms• Dynamic pricing

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INTERNET & ELECTRONIC COMMERCE

Categories of Electronic Commerce

• B2C electronic commerce: retailing product/service to individual shoppers

• B2B electronic commerce: sales of goods/services among businesses

• C2C electronic commerce: consumers selling directly to consumers

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INTERNET & ELECTRONIC COMMERCE

Customer-Centered Retailing

• removal of intermediate layers streamlines process

• Customer self-service

• REDUCED COST TO BUYER, SELLER

1. Direct Sales over the Web:

Bypassing intermediaries in the distribution channel can significantly

reduce costs. Operators of virtual storefronts(Amazon.com) don’t have

large expenditure for rent, sales staff etc

Other e.g – Airlines bypassing travel agents

Disintermediation – Bypassing intermediary steps in a value chain

Reintermediation – shifting the intermediary function in a value chain to

a new source

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INTERNET & ELECTRONIC COMMERCE

Customer-Centered Retailing

2. Interactive Marketing & Personalisation:• Web sites hold a huge amount of info about customer behaviour, needs, preferences & buying

patterns. Companies can use this info for

promotions, products, services & pricing.• Many companies are collecting customer info by using software tools

that track the activities of the Web visiotrs• They can analyse this info abt customer interests & behaviour to

develop more precise profiles of existing and potential customers

Web personalisation - Firms can create unique personalised Web pgs

that display content or ads for products or services of special interest to

each user, improving the customers experience & creating additional

value.

E.g Amazon.com retains personal info abt all its customers & proposes list

of new books depending on the person’s tastes when he/she vists the web

site.

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INTERNET & ELECTRONIC COMMERCE

Customer-Centered Retailing

Interactive Marketing & Personalisation:

BUT this still implies a threat to a person’s privacy specially if info is gathered without the person’s knwoledge

3. M-Commerce & Next Generation Marketing• Web will be accessible from almost anywhere as consumers turn more

towards the use of wireless devices like wireless tels, handheld digital appliances etc

• M-commerce will provide businesses with additional channels of reaching customers

• Location tracking software in some of these devices will enable businesses to track user’s movements & supply info, adverts & other services

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Customer-Centered Retailing

4. Customer Self Service

• The Web – medium through which customers can interact with the company at their own convenience & find info that previously required a human computer-support expert.

• These services cost only a fraction of using a live customer service representative on the phone

• E.g Airline systems which allows users to view arrival/departure times, seating charts etc

INTERNET & ELECTRONIC COMMERCE

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• Electronic Commerce Payment Systems• Ways of paying goods electronically on the Internet

Examples of Electronic payment systems for E-commerce• Digital Credit card payment• Digital Wallet• Accumulated balance payment system(For micropayment systems)• Stored value payment system• Digital cash• Peer-to-peer payment systems• Digital Checking• Electronic billing presentation & Payment

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Examples of Electronic payment systems for E-commerceDigital Credit card payment:• Safer & more convenient as it provides authentication facilities for the purchaser’s

credit card.• Protect info transmitted among users, merchant sites & processing banks

Digital Wallet :• S/w that stores credit card info to facilitate payment of goods on the

Web

Accumulated balance payment system:• Accumulates micropayment purchases as a debit balance balance that must be

paid periodically on credit card or telephone bills

Stored Value Payment systems:• Enables consumers to make instant payments to merchants based on value stored

in a digital account

INTERNET & ELECTRONIC COMMERCE

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Examples of Electronic payment systems for E-commerce

Digital cash:• Digital currency that can be used for micropayments or larger services

Peer-to-peer payment systems:• Sends money using the Web to individuals or vendors who are not setup

to accept credit card payments

Digital Checking:• Electronic check with a secure digital signature

Electronic billing presentation & Payment:• Supports Electronic payment for online ans physical store purchases of

goods or services after the purchase has taken place

INTERNET & ELECTRONIC COMMERCE