MBA Lecture 6b
Transcript of MBA Lecture 6b
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6Chapter
EE--Commerce: DigitalCommerce: DigitalMarkets, Digital GoodsMarkets, Digital GoodsEE--Commerce: DigitalCommerce: Digital
Markets, Digital GoodsMarkets, Digital Goods
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LEARNING OBJECTIVES
Identify the unique features of e-commerce, digital
markets, and digital goods.
Describe how Internet technology has changed
business models. Identify the various types of e-commerce and
explain how e-commerce has changed consumer
retailing and business-to-business transactions.
Identify the principal payment systems for
electronic commerce.
Management Information SystemsManagement Information SystemsChapter 10 EChapter 10 E--Commerce: Digital Markets, Digital GoodsCommerce: Digital Markets, Digital Goods
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Technology is no longer an afterthought in forming business
strategy, but the actual cause and driver.
The ability to streamline the structure, influence, and control
of the flow of information is dramatically more powerful and
cost-effective than moving and manufacturing physicalproducts.
Inability to overthrow the dominant, outdated business design
often leads to business failure.
The goal of new business designs is to create flexibleoutsourcing alliances between companies that not only off-
load costs, but also make customers ecstatic.
Why study this course
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E-commerce is enabling companies to listen to their customers
and become either the cheapest, the most familiar, or the
best.
Dont use technology just to create the product. Usetechnology to innovate, entertain, and enhance the entire
experience surrounding the product, from selection and
ordering to receiving and service.
The business design of the future increasingly uses
reconfigurable e-business community models to best meetcustomers needs.
The tough task for management is to align business strategies,
processes, and applications fast, right, and all at once. Strong
leadership is imperative.
Why study this course
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Electronic Commerce (E-commerce) is an
emerging concept that describes the process
buying and selling or exchanging of products
and services and information via computernetworks including the internet.
E-business is a broader definition of EC, including
buying and selling of goods and services, andalso servicing customers, collaborating with
partners, conducting e-learning and conducting
electronic transactions within an organization.
Definition of E-commerce
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Figure 10-1
Retail e-commerce revenues have grown
exponentially since 1995 and have only recently
slowed to a very rapid 16 percent annual
increase, which is projected to remain the same
until 2010.
The Growth of EThe Growth of E--CommerceCommerce
Management Information SystemsManagement Information SystemsChapter 10 EChapter 10 E--Commerce: Digital Markets, Digital GoodsCommerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Eight unique features of e-commerce technology
1. Ubiquity
Internet/Web technology available everywhere: work, home,
etc., and anytime2. Global reach
The technology reaches across national boundaries, around
Earth
3. Universal standards One set of technology standards: Internet standards
4. Richness
Supports video, audio, and text messages
Management Information SystemsManagement Information SystemsChapter 10 EChapter 10 E--Commerce: Digital Markets, Digital GoodsCommerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Eight unique features (cont.)
5. Interactivity
The technology works through interaction with the user
6. Information density
Vast increases in information densitythe total amount and
quality of information available to all market participants
7. Personalization/Customization:
Technology permits modification of messages, goods
8. Social technology
The technology promotes user content generation and social
networking
Management Information SystemsManagement Information SystemsChapter 10 EChapter 10 E--Commerce: Digital Markets, Digital GoodsCommerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Key concepts in e-commerce
Digital markets reduce
Information asymmetry
Search costs
Transaction costs
Menu costs
Digital markets enable
Price discrimination
Dynamic pricing
Disintermediation
Management Information SystemsManagement Information SystemsChapter 10 EChapter 10 E--Commerce: Digital Markets, Digital GoodsCommerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Figure 10-2
The typical distribution channel has several intermediary layers, each of which adds to the final
cost of a product, such as a sweater. Removing layers lowers the final cost to the consumer.
The Benefits of Disintermediation to the ConsumerThe Benefits of Disintermediation to the Consumer
Management Information SystemsManagement Information SystemsChapter 10 EChapter 10 E--Commerce: Digital Markets, Digital GoodsCommerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Dimensions of E-commerce
Digital Agent
Digital Product
Digital
Process
Physical
Product
Physical
Agent
Physical
Process
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Dimensions of E-commerce
Traditional Commerce:
All dimensions are physical in nature
Perform all transactions off-line
Buy and sell all products and services through
physical agents and representatives
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Dimensions of E-commerce
Pure E-commerce:
All the dimensions are digital in nature
Pure online (virtual) organisations
Buy and sell all products and services online
Hybrid approach:
A combination of digital and physical dimensions
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Electronic Commerce:
ConceptsWhere EC is conductedelectronic market (e-marketplace)
An online marketplace where buyers and sellers meet
to exchange goods, services, money, or informationinterorganizational information systems (IOSs)
Communications system that allows routinetransaction processing and information flow between
two or more organizationsintraorganizational information systems
Communication systems that enable e-commerceactivities to go on within individual organizations
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Classifications of E-commerce
Business-to-business (B2B)
Business-to-consumers (B2C)
Consumer-to-consumer (C2C)
Consumer-to-Business-(C2B) Mobile commerce (m-commerce)
Location base e-commerce
Intra-business (organizational) EC Non-business EC
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Classifications of E-commerce
business-to-business (B2B)E-commerce model in which all of the participants arebusinesses or other organizations
business-to-consumer (B2C)
E-commerce model in which businesses sell to individualshoppersconsumer-to-business (C2B)
E-commerce model in which individuals use the Internetto sell products or services to organizations or individuals
seek sellers to bid on products or services they need
consumer-to-consumer (C2C)E-commerce model in which consumers sell directly toother consumers
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Classifications of E-commerce
mobile commerce (m-commerce)E-commerce transactions and activities conducted in a wirelessenvironment
location-based commerce (l-commerce)M-commerce transactions targeted to individuals in specificlocations, at specific times
intrabusiness EC
E-commerce category that includes all internal organizationalactivities that involve the exchange of goods, services, orinformation among various units and individuals in anorganization
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Classifications of E-commerce
business-to-employees (B2E)E-commerce model in which an organizationdelivers services, information, or products to itsindividual employees
collaborative commerce (c-
commerce)E-commerce model in which individuals orgroups communicate or collaborate online
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Benefits E-Commerce
To Consumers
Open 24 hours a day
More choices
Better prices
Quick delivery
Product information in seconds
Interact with other consumers
Facilitates competition
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Benefits E-Commerce
To Organizations
Expands the marketplace
Decreases the cost (less paper)
Pull-type supply chain management
Customisation = competitive advantage
Less time between outlay of capital and receipt of
products and services Supports BPR efforts
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Benefits E-Commerce
To Society
Work at home less traveling less trafficand pollution
Lower prices benefit less affluent people
Third world and rural areas access productsotherwise unavailable
Public services at a reduced cost andimproved quality
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Limitations E-Commerce