MIS 648 Lecture 81 MIS 648 Presentation Notes: Lecture 8 Global Aspects of E-Commerce

MIS 648 Lecture 82 AGENDA  Goal of the Lecture  Global Aspects of E-Commerce  Global Economies of Style  Cultural Influences

MIS 648 Lecture 83 Goals of the Lecture  Understand E-commerce as a global phenomenon, with global impact and driving forces  Describe the networked economy as the platform for global e-commerce  Understand the impact of differential infrastructure availability on the networked economy and hence on global e-commerce  Speculate about the future of e-commerce and properties of marginalization and hollowing out.

MIS 648 Lecture 84 Global Aspects of E-Commerce  Any business can now transact globally  This is enabled through the ubiquitous and non-proprietary idea of a web browser.  HTML (and its successors) have empowered individuals to access information worldwide without proprietary networks and software.  Competitive advantage is now in the ability to capitalize on the capabilities of the ubiquitous browser.

MIS 648 Lecture 85 Global Aspects of E-Commerce II  The “new economy” is the economy enabled by the Internet and the browser with open standards.  All new economy businesses are global  Each business can be intermediated and disintermediated almost at will.  Hence business models must be agile and businesses must be flexible.

MIS 648 Lecture 86 Global Economies of Style  Licker, 2005; Presented at the 6 th Global Information Technology Management World Conference, Anchorage, June.  Major Thesis: Global Networked infrastructure enables value networks and a new way to compete.  Competing on style means managing a network of values delivered through relationships.

MIS 648 Lecture 87 Value Networks Achieving Economies of Style and Extracting Profit through Agility in a Value Network GITMA Anchorage, June 2005

MIS 648 Lecture 88 Agenda  Supply Chain  Value Chain  Value Chain  Value Network  Economies of Style  Moving around the Value Network  Profit: Avoiding commoditization  Extracting Profit from the Value Network

MIS 648 Lecture 89 The Supply CHAIN Supplier Producer (focal firm) Supplies Products Logistical Support

MIS 648 Lecture 810 The Value CHAIN Supplier Producer (focal firm Supplies Products Logistical Support Value is added by bringing together supplies Value is added by creating a product via processes Value is added by distributing the product where needed or desired G=g(S 1, S 2, …S n ) P V=G*P

MIS 648 Lecture 811 The Value NETWORK Supplier-1 Producer Supplier-2 Supplier-3 Supplier-4 Buyer-5 Buyer-3 Buyer-2 Buyer-4 Buyer-1 Buyer/ Supplier

MIS 648 Lecture 812 Putting the “Value” in the Value Network Supplier-1 Producer Supplier-2 Supplier-3 Supplier-4 Buyer-3 Buyer-2 Buyer-4 Buyer-1 Buyer/ Supplier At any point in this network, value can be added

MIS 648 Lecture 813 Multiple, Volatile Relationships X A C D B E F G H p

MIS 648 Lecture 814 Relationship Management X A C D B E F G H p VALUE NETWORK V 1 ax bx da ca ed fdgf fh

MIS 648 Lecture 815 Economies of Style  Economy of Scale: Reducing variable cost of production of product.  Economy of Scope: Reducing variable cost of variation in product.  Economy of Style: Reducing variable cost of relationship.

MIS 648 Lecture 816 Avoiding Commoditization Supplier Producer (focal firm SuppliesProducts Buyer 1.Compete on price (economy of scale) 2.Compete on design/differentiation (economy of scope) 3.Compete on relationship (economy of style)

MIS 648 Lecture 817 Moving Around the Value Network At each, value is added and profit can be extracted in return for this value. “Moving around the value network” can be very profitable for the agile firm

MIS 648 Lecture 818 Extracting Profit Around the Value Network Profit comes from locating supplier for producer Profit comes from facilitating supplier alliance Profit comes from finding buyer for reseller Profit comes from turning buyer into low risk producer

MIS 648 Lecture 819 Extracting Profit through Economies of Style XEDAB C F First-order Second-order Third-order G

MIS 648 Lecture 820 General Principle  Value network integration means firms can play more roles more quickly  Finding out where value is added and how to manage that value-adding process is important  The more information content to the physical product, the more likely it is that agility holds the key to increased profit

MIS 648 Lecture 821 Cultural Influences  Globalization is not automatic, however  Although the browser is ubiquitous, websites may be tuned locally.  Each culture has its own preferences for style, layout, language, symbols, pace, emphasis, and especially content.  There are far too many examples  These cultural influences might not be fixed.

MIS 648 Lecture 822 Culture Clash and Influences Presumed “World Culture” National Culture “IT” Culture Business Culture Specialized Culture Seller Culture Nat’l Culture Consumer Culture Nat’l Culture Designer Culture Prof’l Culture Provider Culture Busines sCulture Infrastructure Culture

MIS 648 Lecture 823 Major Battleground  Cultural symbols  Language (English?)  Literacy requirements  Gender taboos  IT “culture” symbols, rites, practices  Consumerism/western culture