Lead Black Slide. © 2001 Business & Information Systems 2/e2 Chapter 12 Electronic Commerce and the...

Lead Black Slide

© 2001 Business & Information Systems 2/e

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Chapter 12

Electronic Commerce and the Strategic Impact of

Information Systems


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Our Agenda Providing a Strategic Impact Electronic Commerce Systems Interorganizational Information

Systems Global Information Systems Strategic Information Systems

4© 2001 Business & Information Systems 2/e

Learning Objectives Describe how information systems

can have a strategic impact on a business and give examples of information systems that create a competitive advantage for a business.

Describe the main types of electronic commerce.


Learning Objectives (cont’d.) List the functions provided by

electronic commerce systems. Explain why interorganizational

systems are used in business alliances.

Describe several ways that a business can participate in an interorganizational system.


Learning Objectives (cont’d.) Explain how an electronic data

interchange system functions. Explain what global information

systems are why international businesses need them.


Learning Objectives (cont’d.) Describe different forms that

global information systems can take and how each form relates to international business strategy.

Explain what a strategic information system is an what types of information systems are strategic.


Learning Objectives (cont’d.) Describe how strategic information

system opportunities can be identified in business.


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Providing a Strategic Impact


Information Systems


Providing a Strategic Impact Information systems that have a

strategic impact on a business help create a competitive advantage for the business.


Main Approaches for Gaining a Competitive Advantage Cost leadership – having lower

production and operating costs that the competitors.

Differentiation – providing products or services that are unique so the customer wants to purchase from the business.


Main Approaches for Gaining a Competitive Advantage (cont’d.)

Focus – focusing on a niche to provides products or services designed for a specific segment of the market.

Innovation – means developing new ways of operating or managing a business.


Main Approaches for Gaining a Competitive Advantage (cont’d.)

Growth – means expanding the products or services provided by the business.

Business Alliances – means forming groups of businesses that work together.


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Electronic Commerce Systems


Information Systems


Electronic Commerce Systems An Electronic Commerce System is

an information system that provides e-commerce capabilities for an organization.


The Strategic Impact of Electronic Commerce

Electronic commerce can have a strategic impact on business by: Providing an innovative approach for

conducting business. Providing a reduction in the cost of

transactions. Providing unique, customized products for its

customers. Providing customer access 24 hours every day.


Types of Electronic Commerce Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Intraorganizational


Business-to-Consumer Business-to-consumer (B2C)

involves a business selling its products or services electronically to the final consumer, which is usually an individual.


Business-to-Consumer B2C companies operate in several

ways: E-tailers

Called direct marketers Using others to sell their products

Called indirect marketers Sell their products electronically

Called full cybermarketers


Business-to-Consumer (cont’d.)

Selling through traditional means as well as electronically

Called partial cybermarketers Filling orders from their own stock

Called electronic distributor Send orders they receive to

manufacturers or wholesalers that fill the orders

Called electronic brokers


Business-to-Business Three main types of B2B e-commerce:

Supplier-oriented marketplace – supplier company provides e-commerce capabilities for other businesses to order its products.

Buyer-oriented marketplace – buyer requests quotations or bids from other companies electronically.

Intermediary-oriented marketplace – acts as an intermediary between buyer and seller.


Consumer-to-Consumer In consumer-to-consumer (C2C)

electronic commerce, one consumer sells a product or service to another consumer usually through an intermediary e-commerce business.


Intrabusiness Intrabusiness, or organizational,

electronic commerce involves transactions between departments, regions, subsidiaries, or other units of a business.


Characteristics of Electronic Commerce Systems Product presentation

Electronic catalog Order entry

Electronic shopping cart Payment

Electronic payment Electronic Funds Transfer (EFT)


Characteristics of Electronic Commerce Systems (cont’d.) Product distribution Customer service Product support Data acquisition


Interorganizational Information Systems


Information Systems


Interorganizational Information Systems

An InterOrganizational System (IOS) is an information system shared by one or more suppliers and customers.

The most familiar example of IOSs are Electronic Data Interchange (EDI) systems which provide for the transfer of data between businesses.

Electronic Funds Transfer (EFT) systems provide for the transfer of money between financial institutions.


Business Alliances Businesses coordinate some of their operations

or link some of their resources to form business alliances, which serve the interests of all businesses in the alliance.

Types of alliances Between a business and a competitive business Between a business and a noncompetitive business Between a business and its suppliers and customers


The Strategic Impact of Interorganization Systems Interorganizational systems provide

for the sharing of information and processing between businesses in a business alliance.

Ordering products electronically with and EDI system is less expensive than ordering other ways.


Characteristics of Interorganizational Systems Businesses are involved in

InterOrganzational Systems (IOS) as either: Sponsors – a business that sets up

and maintains an IOS Participant – a business that uses an

IOS


Characteristics of Interorganizational Systems (cont’d.)

Business can participate in an IOS in several ways: A business simply enters input and receives

output by using an IOS sponsored by another business.

A business accesses data storage or processing capabilities of another business in the IOS.

A business can participate in an IOS by using the capabilities of the IOS received from the sponsor for managing internal operations.


Electronic Data Interchange Systems An Electronic Data Interchange (EDI)

system provides for electronic communication of data between businesses.

Types of data sent include Purchase order data Shipping data Invoice data Product description data Price list data Insurance data


Traditional versusInternet EDI An EDI system, like all IOSs,

requires a data communications link between businesses.

Internet EDI systems require special software to send encrypted standardized data.

EDI data is generally input directly into the system upon receipt.


EDI Benefits and Problems Benefits of EDI

Speed Data entry errors are reduced

Problems with EDI Organizational participation Technical problems must be solved Can be expensive


Global Information Systems Electronic Commerce and the

Strategic Impact of Information Systems


Global Information Systems Global (international) information

systems provide communication between business locations around the world, transfer of data between international locations, and use of system functions at different locations worldwide.


International Business Businesses engage in international

activities for several reasons. International sales International production International product development


International Business (cont’d.) International businesses generally

follow one of several basic strategies. Multinational strategy – the business

allows its foreign operations to function largely independently.

Global strategy – the central headquarters coordinates the activities of the foreign operations closely.


International Business (cont’d.)

International strategy – involves transferring knowledge and skills from the central headquarters to the foreign operations.

Transnational strategy – involves using knowledge and skills from both the central headquarters and the foreign operations.


Characteristics of Global Information Systems Global information systems differ

from domestic information systems in a number of ways. Data communications technology Cost of data communications Concern for cultural differences

between countries Political and legal factors –

Transborder Data Flow (TDF)


Characteristics of Global Information Systems (cont’d.)

Businesses that follow a multinational strategy tend to have decentralized, or independent, information systems for their central headquarters and different foreign operations.

Businesses that follow a global strategy ten to have highly centralized GIS determined by the central headquarters.


Characteristics of Global Information Systems (cont’d.)

Businesses that follow an international strategy tend to have distributed GIS in which systems in the central headquarters are connected to those in the foreign operations.

Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally.


Global Electronic Commerce Global e-commerce systems should:

Offer sites in several languages, with a feature that allows the user to select the preferred language.

Allow customers to pay in several different currencies.

Be sensitive to cultural differences in various countries.


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Strategic Information Systems


Information Systems


Strategic Information Systems A Strategic Information System

(SIS) affects the way a business competes with other businesses, thus giving it an advantage over its competitors.


Identifying Strategic Information Systems Opportunities

Look at the business’s value chain. Primary activities

Creating product Selling product Servicing product


Identifying Strategic Information Systems Opportunities (cont’d.)

Support Activities Inbound logistics Operations Outbound logistics Marketing and Sales Service Procurement Human resource management Technology development Firm Infrastructure


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Electronic Commerce and the Strategic Impact ofInformation Systems

Key Terms


Key Terms Business Alliance Business-to-Business

(B2B) Electronic Commerce

Business-to-Consumer (B2C) Electronic Commerce

Competitive Advantage

Consumer-to-Consumer (C2C) Electronic Commerce

Electronic Auction Electronic Business

(E-Business) Electronic Catalog Electronic Commerce

(E-Commerce) Electronic Commerce

(E-Commerce) System

Electronic Payment


Key Terms (cont’d.) Electronic Shopping

Cart E-tailer Global (International)

Information System Interorganizational

Information System Intrabusiness

(Organizational) Electronic Commerce

Strategic Information System (SIS)

Transborder Data Flow (TDF)

Value Chain


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Summary Providing a Strategic Impact Electronic Commerce Systems Interorganizational Information

Systems Global Information Systems Strategic Information Systems

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