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Transcript of E.commerce
© Atif Hassan© Atif Hassan
20201010 DACBDACB
E-Commerce & E-Commerce & Computer Computer ApplicationsApplicationsBBA (Hons) 5BBA (Hons) 5thth Course Overview & Course Overview & IntroductionIntroductionLectures 1,2,3Lectures 1,2,3
Course Lecturer: Atif HassanCourse Lecturer: Atif Hassan
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Text & ReferencesText & References
Focus will be on topics rather Chapters of any textMany Text/books are available in market
Efraim Turban, Joe Lee, David King & Michael Chung. (2004). “Electronic Commerce: A Managerial Perspective”. Prentice Hall International
Mostly topics will be taught from the Text but students need to broaden their view and consult as many additional references as possible (Preferably available in local market and from the Internet)
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Overview of
Electronic Commerce & E-Business
© Atif Hassan© Atif Hassan
20201010 DACBDACB
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Learning ObjectivesLearning Objectives
Define electronic commerce (EC) and describe its various categories
Describe the content and frameworks of EC
Describe the major types of EC transactions
Discuss the benefits of EC to organizations, consumers, and society
Describe the limitations of EC
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Learning ObjectivesLearning Objectives
Describe the role of the digital revolution in EC and the economic impact of EC
Discuss the contribution of EC in helping organizations respond to business pressures
© Atif Hassan© Atif Hassan
20201010 DACBDACB
EC Definitions & ConceptsEC Definitions & Concepts
Electronic Commerce (EC) is the process of buying, selling, or exchanging products, services, and information via computer networks
© Atif Hassan© Atif Hassan
20201010 DACBDACB
E-Business Definitions & E-Business Definitions & ConceptsConcepts
E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but also
Servicing customers (Value Added Servicing customers (Value Added Information)Information)
Collaborating with business partnersCollaborating with business partners
Conducting electronic transactions Conducting electronic transactions within an organization (Intra-Business within an organization (Intra-Business Activities)Activities)
Non-Profit Activities (Community Non-Profit Activities (Community Building)Building)
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Basic Definition & Basic Definition & ConceptsConcepts
E-Business & E-Commerce defined from these perspectives
CommunicationsCommunications
Business processBusiness process
ServiceService
Online CollaborationsOnline Collaborations
CommunityCommunity
© Atif Hassan© Atif Hassan
20201010 DACBDACB
E-BusinessE-Business
Quote for Lou Gerstner, IBM’s CEO:
“E-Business is all about speed, globalization, enhanced productivity, reaching new customers, and sharing knowledge across institutions for competitive advantage.”
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Basic Concepts & Basic Concepts & DefinitionDefinitionSo what is E-Business?
Simple definition: Any business carried out in electronic form.
“The complex fusion of business processes, enterprise applications, and organizational structure to create a high-performance business model.” (Kalakota and Robinson)
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Examples of E-BusinessExamples of E-Business
Yahoo
eBay
Amazon
Priceline
Sears
Virtual University of Pakistan
ATM machines???
© Atif Hassan© Atif Hassan
20201010 DACBDACB
© Atif Hassan© Atif Hassan
20201010 DACBDACB
EC Definitions & ConceptsEC Definitions & Concepts
Traditional commerce: Traditional commerce: all dimensions are all dimensions are physicalphysical
Brick-and-mortar organizations
Old-economy Old-economy organizations organizations (corporations)(corporations)
Perform all Perform all business off-linebusiness off-line
Sell physical Sell physical products by means products by means of physical agentsof physical agents
© Atif Hassan© Atif Hassan
20201010 DACBDACB
EC Definitions & ConceptsEC Definitions & Concepts
Pure EC: all dimensions Pure EC: all dimensions are digitalare digital
Pure online (virtual) organizations
New-economy organization
Sell products or services only online
Partial EC: a mix of digital Partial EC: a mix of digital and physical dimensionsand physical dimensions
Click-and-mortar organizations
Conduct EC activities
Do their primary business in the physical world
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Dimensions of Electronic The Dimensions of Electronic CommerceCommerce
© Atif Hassan© Atif Hassan
20201010 DACBDACB
© Atif Hassan© Atif Hassan
20201010 DACBDACB
© Atif Hassan© Atif Hassan
20201010 DACBDACB
© Atif Hassan© Atif Hassan
20201010 DACBDACB
© Atif Hassan© Atif Hassan
20201010 DACBDACB
EC Definitions & ConceptsEC Definitions & Concepts
Internet vs. Non-Internet ECInternet ECInternet EC
Use of Websites to advertise, Buy & Sell
Much cheaper and highly accessible
Non-Internet ECNon-Internet EC
VANs—value-added networks
LANs—local area networks
Single computerized machines
Using a smart card in a vending Using a smart card in a vending machinemachine
Using a cell phone to make an online Using a cell phone to make an online purchasepurchase
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The EC Framework and The EC Framework and FieldField
An EC FrameworkEC applications supported by EC applications supported by infrastructure and 5 support areasinfrastructure and 5 support areas
PeoplePublic policyTechnical standards and protocolsBusiness partners (mutual collaboration)Support services
© Atif Hassan© Atif Hassan
20201010 DACBDACB
A Framework for ECA Framework for EC
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Classification of EC by the Classification of EC by the Nature of the TransactionNature of the Transaction
Business-to-business (B2B) : EC model in which all of the participants are businesses or other organizations
Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers
Business-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Examples!Examples!
Business-to-Consumer (B2C)Yahoo!Yahoo! (www.yahoo.com) - (aggregator) leading (www.yahoo.com) - (aggregator) leading portalportal and most visited e-space! and most visited e-space!
E-Trade (www.etrade.com) On-line investing E-Trade (www.etrade.com) On-line investing and banking; moving to click-and-mortar and banking; moving to click-and-mortar outposts. outposts.
McAfee (www.mcafee.com) Software McAfee (www.mcafee.com) Software subscription services for virus scanning.subscription services for virus scanning.
Software purchase, delivery and update, Software purchase, delivery and update, example is: Copernic (www.copernic.com)example is: Copernic (www.copernic.com)
Digital Content Services; example is: Sony Music Digital Content Services; example is: Sony Music (www.sony.com) (www.sony.com)
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Classification of EC by the Classification of EC by the Nature of the Transaction Nature of the Transaction 22
Consumer-to-business(C2B): individuals who use the Internet to sell products or services to organizations and /or seek sellers to bid on products or services they need
Consumer-to-consumer (C2C) : consumers sell directly to other consumers
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Examples!Examples!
Consumer-to-Consumer (C2C)EbayEbay (www.ebay.com) - (facilitator) electronic (www.ebay.com) - (facilitator) electronic auctions with consumers handling transaction auctions with consumers handling transaction and shipping.and shipping.
NapsterNapster (www.napster.com) - (facilitator) peer- (www.napster.com) - (facilitator) peer-to-peer music exchange; courts not happy.to-peer music exchange; courts not happy.
Groove NetworksGroove Networks (www.groove.com) (facilitator) (www.groove.com) (facilitator) secure peer-to-peer collaboration services. secure peer-to-peer collaboration services. Founded by Ray Ozzie, the creator of Lotus Founded by Ray Ozzie, the creator of Lotus Notes.Notes.
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Classification of EC by the Classification of EC by the Nature of the Transaction Nature of the Transaction 33
Mobile commerce (m-commerce)—EC transactions and activities conducted in a wireless environment
Location-commerce—(l-commerce)
m-commerce transactions targeted to individuals in specific locations, at specific times
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Classification of EC by the Classification of EC by the Nature of the Transaction Nature of the Transaction 44
Intrabusiness (organizational) EC: EC category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Classification of EC by the Classification of EC by the Nature of the Transaction Nature of the Transaction 55
Business-to-employee (B2E): EC model in which an organization delivers services, information, or products to its individual employees
Collaborative commerce (c-commerce): EC model in which individual or groups communicate or collaborate online
E-government: Government-to-citizens (G2C): EC model in which a government entity buys or provides good, services, or information to businesses or individual citizens
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Brief History of E-Brief History of E-CommerceCommerce
Some major shifts from 70s till Some major shifts from 70s till nownow
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Brief History of ECBrief History of EC
EC applications first developed in the early 1970s
Electronic funds Electronic funds transfer (EFT)transfer (EFT)
Limited to:Large corporationsLarge corporations
Financial institutionsFinancial institutions
A few other daring A few other daring businessesbusinesses
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Brief History of EC Brief History of EC 22
Electronic data interchange (EDI)—electronic transfer of documents:
Purchase ordersPurchase orders
InvoicesInvoices
E-payments E-payments between firms doing between firms doing businessbusiness
Enlarged pool of participants to include:
ManufacturersManufacturers
RetailersRetailers
Service providersService providers
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Brief History of EC Brief History of EC 33
Interorganizational systems (IOS)Stock tradingStock trading
Travel reservation systemsTravel reservation systems
Internet became more commercialized in the early 1990s
Almost all medium-and large-Almost all medium-and large-sized organization in the world sized organization in the world now has a Web sitenow has a Web site
Most large corporations have Most large corporations have comprehensive portalscomprehensive portals
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Brief History of EC Brief History of EC 44
EC SuccessesPure onlinePure online
eBay
VeriSign
AOL
Checkpoint
Click-and-mortarClick-and-mortar
GE
IBM
Intel
Schwab
EC FailuresE-tailors began to E-tailors began to fail in 1999fail in 1999
This does not mean This does not mean that EC’s days are that EC’s days are numberednumbered
Large EC companies Large EC companies like Amazon.com like Amazon.com are expanding but are expanding but success or failure is success or failure is not certainnot certain
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Benefits of ECThe Benefits of EC
Benefits to OrganizationsExpands the marketplace to national Expands the marketplace to national and international marketsand international markets
Decreases the cost of creating, Decreases the cost of creating, processing, distributing, storing and processing, distributing, storing and retrieving paper-based informationretrieving paper-based information
Allows reduced inventories and Allows reduced inventories and overhead by facilitating pull-type overhead by facilitating pull-type supply chain managementsupply chain management
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Benefits of ECBenefits of EC
The pull-type processing allows for The pull-type processing allows for customization of products and customization of products and services which provides services which provides competitive advantage to its competitive advantage to its implementersimplementers
Supports business processes Supports business processes reengineering (BPR) effortsreengineering (BPR) efforts
Lowers telecommunications cost - Lowers telecommunications cost - the Internet is much cheaper than the Internet is much cheaper than value added networks (VANs) value added networks (VANs)
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Benefits of EC Benefits of EC
Benefits to consumersEnables consumers to shop or do Enables consumers to shop or do other transactions 24 hours a other transactions 24 hours a day, all year round from almost day, all year round from almost any locationany location
Provides consumers with more Provides consumers with more choiceschoices
Provides consumers with less Provides consumers with less expensive products and services expensive products and services by allowing them to shop in many by allowing them to shop in many places and conduct quick places and conduct quick comparisonscomparisons
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Benefits of ECBenefits of EC Allows quick delivery of products and Allows quick delivery of products and services (in some cases) especially services (in some cases) especially with digitized productswith digitized products
Consumers can receive relevant and Consumers can receive relevant and detailed information in seconds, detailed information in seconds, rather than in days or weeksrather than in days or weeks
Makes it possible to participate in Makes it possible to participate in virtual auctionsvirtual auctions
Allows consumers to interact with Allows consumers to interact with other consumers in electronic other consumers in electronic communities and exchange ideas as communities and exchange ideas as well as compare experienceswell as compare experiences
Facilitates competition, which results Facilitates competition, which results in substantial discountsin substantial discounts
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Benefits of EC Benefits of EC
Benefits to societyEnables more individuals to work at Enables more individuals to work at home, and to do less traveling for home, and to do less traveling for shopping, resulting in less traffic on shopping, resulting in less traffic on the roads, and lower air pollutionthe roads, and lower air pollution
Allows some merchandise to be sold Allows some merchandise to be sold at lower prices, benefiting less at lower prices, benefiting less affluent peopleaffluent people
Enables people in Third World Enables people in Third World countries and rural areas to enjoy countries and rural areas to enjoy products and services which products and services which otherwise are not available to themotherwise are not available to them
Facilitates delivery of public services Facilitates delivery of public services at a reduced cost, increases at a reduced cost, increases effectiveness, and/or improves qualityeffectiveness, and/or improves quality
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Limitations of ECThe Limitations of ECTechnical limitations
There is a lack of universally accepted There is a lack of universally accepted standards for quality, security, and reliabilitystandards for quality, security, and reliability
The telecommunications bandwidth is The telecommunications bandwidth is insufficientinsufficient
Software development tools are still evolvingSoftware development tools are still evolving
There are difficulties in integrating the There are difficulties in integrating the Internet and EC software with some existing Internet and EC software with some existing (especially legacy) applications and (especially legacy) applications and databases.databases.
Special Web servers in addition to the Special Web servers in addition to the network servers are needed (added cost).network servers are needed (added cost).
Internet accessibility is still expensive and/or Internet accessibility is still expensive and/or inconvenientinconvenient
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Concept of Digital The Concept of Digital EconomyEconomy
An IntroductionAn Introduction
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Digital Revolution and The Digital Revolution and
the Economic Impact of the Economic Impact of ECEC
In the Digital Revolution the economy is based on digital technologies including:
Digital communication networksDigital communication networks
ComputersComputers
SoftwareSoftware
Other related information Other related information technologiestechnologies
Also called:Internet economyInternet economy
New economyNew economy
Web economyWeb economy
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Digital Revolution and The Digital Revolution and
the Economic Impact of the Economic Impact of EC EC The term digital economy also
refers to the convergence of computing and communication technologies on the Internet and other networks and the resulting flow of information and technology that is stimulating e-commerce and vast organizational changes
© Atif Hassan© Atif Hassan
20201010 DACBDACB
The Digital Revolution and The Digital Revolution and
the Economic Impact of the Economic Impact of EC EC
This convergence enables all types of information (data, audio, video, etc.) to be stored, processed, and transmitted over networks to many destinations worldwideWeb-based EC systems are accelerating the digital revolution by providing competitive advantage to organizations
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Contributions of EC Contributions of EC towards modern towards modern OrganizationsOrganizations
Types of Pressures and EC as a Types of Pressures and EC as a solutionsolution
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Business PressuresBusiness Pressures
The term business environment refers to the social, economic, legal, technological, and political actions that affect business activities
Business pressures are divided into the following categories:
Market (economic)Market (economic)
SocietalSocietal
TechnologicalTechnological
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Major Business Pressures & Major Business Pressures & the Role of ECthe Role of EC
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Organizational ResponsesOrganizational Responses
Strategic Planning and SystemsProvide organizations with Provide organizations with strategic advantages, enabling strategic advantages, enabling them to:them to:
Increase their market shareBetter negotiate with their suppliersPrevent competitors from entering into their territory
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Organizational Responses Organizational Responses 22
Continuous improvement effortsMany companies continuously Many companies continuously conduct programs to improve:conduct programs to improve:
Productivity
Quality
Customer service
Business process reengineering (BPR)Strong business pressures may Strong business pressures may require a radical changerequire a radical change
Such an effort is referred to as Such an effort is referred to as business process reengineering business process reengineering (BPR)(BPR)
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Organizational Responses Organizational Responses 33
Business alliancesAlliances with other companies, even Alliances with other companies, even competitors, can be beneficialcompetitors, can be beneficial
Virtual corporation—Virtual corporation—electronically supported electronically supported temporary joint venturetemporary joint venture
Special organization for a specific time-limited mission
Electronic marketsOptimize trading efficiencyOptimize trading efficiency
Enable their members to compete globallyEnable their members to compete globally
Require the collaboration of the different Require the collaboration of the different companies and competitorscompanies and competitors
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Organizational Responses Organizational Responses 44
Reduction in cycle time and time to market
Cycle time reduction—shortening the Cycle time reduction—shortening the time it takes for a business to time it takes for a business to complete a productive activity from complete a productive activity from its beginning to endits beginning to end
Extremely important for increasing Extremely important for increasing productivity and competitivenessproductivity and competitiveness
Extranet-based applications Extranet-based applications expedite steps in the process of expedite steps in the process of product or service development, product or service development, testing, and implementationtesting, and implementation
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Organizational Responses Organizational Responses 55
Empowerment of employees and collaborative work
Employees given the authority to Employees given the authority to act and make decisions on their own act and make decisions on their own improves improves
Productivity Customer relationship management (CRM)
Empowered sales people and Empowered sales people and customer service employees:customer service employees:
Make customers happy quicklyHelp increase customer loyalty
© Atif Hassan© Atif Hassan
20201010 DACBDACB
Organizational Responses Organizational Responses 66
Supply chain improvementsHelp reduce supply chain delays, Help reduce supply chain delays, inventories and eliminate other inventories and eliminate other inefficienciesinefficiencies
Mass customization—production of large quantities of customized items
Business problem is how to Business problem is how to efficiently provide customizationefficiently provide customization
EC is an ideal facilitator of mass EC is an ideal facilitator of mass customization by enabling customization by enabling electronic ordering to reach the electronic ordering to reach the production facility in minutesproduction facility in minutes