E LECTRONIC B USINESS, I NTRANETS & E XTRANETS

5-2 E LECTRONIC C OMMERCE The online exchange of goods, services, and money among firms, and between firms and their customers

5-3 T YPES OF E LECTRONIC C OMMERCE

4 R EVENUE P ARADIGMS Sales - Cost of goods sold Gross margin - Expenses Net income How do we make a buck? Margin * Volume (SP – cost) * Volume

5 B USINESS ADVANTAGES OF B2B INCLUDE : Sales - Cost of goods sold Gross margin - Expenses Net income Managing inventory more efficiently Adjusting more quickly to customer demand Getting products to market faster Obtaining lower prices on supplies

6 B USINESS ADVANTAGES OF B2C INCLUDE : Access to a wider selection of products and services Access to products at lower costs Convenience for transactions or for obtaining information Sales - Cost of goods sold Gross margin - Expenses Net income Ebake.com How do we make a buck? Margin * Volume (SP – cost) * Volume

5-7 I NTERNET &W ORLD W IDE W EB C APABILITIES World Wide Web Collaboration Interactive Communication Interactive Communication Integration Transaction Support Transaction Support Mass Customization Mass Customization Information Dissemination Information Dissemination

5-8 I MPACT OF THE W EB : D ISINTERMEDIATION Manufacturer or Service Provider Manufacturer or Service Provider Intermediary (Middleman) Intermediary (Middleman) Customer (Consumer or Business) Customer (Consumer or Business) Disintermediation Removal of the intermediary (middleman) in a sale. Companies can sell directly to customers (retail or wholesale) without assistance using the Internet Disintermediation Removal of the intermediary (middleman) in a sale. Companies can sell directly to customers (retail or wholesale) without assistance using the Internet 6%

Are there any downsides to disintermediation for a manufacturer or primary creator of services? If yes, what are the disadvantages? If no, why don’t all “manufacturers disintermediate their distribution channel?

E LECTRONIC C OMMERCE B USINESS S TRATEGIES Business Strategies come in one of the following three types. All require a sound business model to be successful chaptersAmazon

5-11 K EY I NGREDIENTS OF A B USINESS M ODEL

5-12 C LICK -O NLY S TRATEGY

5-13 S TAGES OF B USINESS - TO -C ONSUMER T RANSACTIONS (e.g. Electronic Brochure) (e.g. displaying a bank balance) (e.g. buying a book)

14 M OBILE C OMMERCE Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business Issues confronting m-commerce User-friendliness of the wireless device Network speed Security Quality of life Working 24//7

5-15 M-C OMMERCE AND THE K EY D RIVERS FOR G ROWTH Driver One: Interest in the Internet Any electronic transaction or information interaction conducted using a wireless, mobile device, and mobile networks, that leads to transfer of real or perceived value in exchange for information, service, or goods Driver Two: Deployment of High Speed Networks Driver Three: Growth in Mobile Devices

5-16 H OW M-C OMMERCE DIFFERS FROM GENERAL EB

5-17 I NTRANETS Intranets An internal, private network using Web technologies to securely transmit information within the organization. This private internal Web limits viewing access to authorized users within the organization Intranets An internal, private network using Web technologies to securely transmit information within the organization. This private internal Web limits viewing access to authorized users within the organization Intranet Benefits Improved information access to authorized user Improved timeliness and accuracy of information Global reach allowing employees access from anywhere Cross-platform integration Low cost deployment Positive return on investment Intranet Benefits Improved information access to authorized user Improved timeliness and accuracy of information Global reach allowing employees access from anywhere Cross-platform integration Low cost deployment Positive return on investment

5-18 I NTRANET A PPLICATIONS Intranet Hub Online Entry of Information Online Entry of Information Application Integration Application Integration Training Collaboration Real-time Access To Information Real-time Access To Information

5-19 E XTRANETS – B USINESS TO B USINESS E COMMERCE Extranets enable two or more firms to use the Internet to do business together

5-20 E LECTRONIC D ATA I NTERCHANGE (EDI) Electronic Data Interchange The transmission of electronic business forms between business partners (e.g. purchase order) Typically used by large organizations…very expensive The internet has opened this technology to smaller firms Electronic Data Interchange The transmission of electronic business forms between business partners (e.g. purchase order) Typically used by large organizations…very expensive The internet has opened this technology to smaller firms How it works EDI transactions are system generated by the sender and then transmitted to the receiver by a VAN VAN (Value Added Network) providers are private network operators that provide guaranteed delivery How it works EDI transactions are system generated by the sender and then transmitted to the receiver by a VAN VAN (Value Added Network) providers are private network operators that provide guaranteed delivery Standards Document types and formats are universally standardized Two standards exist: ANSI X.12 and UN/EDIFACT Standards Document types and formats are universally standardized Two standards exist: ANSI X.12 and UN/EDIFACT

5-21 E LECTRONIC D ATA I NTERCHANGE (EDI) E XAMPLE

5-22 E XTRANETS Extranets secure networks that provide customers, suppliers, and employees with access to internal systems replaced EDI for smaller firms Extranet Benefits timeliness &accuracy of communications, reducing errors & misunderstandings Allows central management of documents allowing single updates Uses standard web protocols Easy to use, requires little training Used to automate transactions, reducing cost and cycle time

23 Virtual private network (VPN): a secure connection between two points across the Internet Tunneling: the process by which VPNs transfer information by encapsulating traffic in IP packets over the Internet

5-24 E XTRANET A PPLICATIONS Exchanges Distribution Portals Distribution Portals Collaboration Real-Time Info Access Real-Time Info Access Procurement Portals Procurement Portals Enterprise Portals Enterprise Portals Supply Chain Management Supply Chain Management

5-25 E XTRANET A PPLICATIONS : E XCHANGES AND P ORTALS e.g. SciQuest.come.g. Premier.Dell.come.g. Ford Supplier Portal)

5-26 N EW T ECHNOLOGIES FOR B2B E LECTRONIC C OMMERCE XML - Extensible Markup Language EBRL - Extensible Business Reporting Language

5-27 N EW T ECHNOLOGIES FOR B2B E LECTRONIC C OMMERCE RFID - Radio Frequency Identification Used for tagging and tracking physical items RFID system uses a transceiver and antenna to transfer information to a processing device from an RFID tag RFID Benefits RFID is more powerful than bar-code technology because it does not require visual line-of-sight reading RFID tags can be placed anywhere (e.g. clothes, pets, cars, parts, store items, etc.) RFID Issues Deployment is growing rapidly but it is still expensive There is no clear set of data standards Global radio frequencies differ between countries

RFID L IBRARY EXAMPLE