TOPIC 1: E-COMMERCE FRAMEWORK, BUSINESS MODELS AND ENVIRONMENT 1.1 Define electronic commerce (EC) and describe its various categories. 1.2 The EC framework, classification and content 1.3 The digital revolution as a driver for EC. 1.4 The business environment as a driver for EC. EC contribution to organisations responding to environmental pressures. 1.5 EC business models. 1.6 Benefits of EC to organisations, consumers, and society. 1.7 Limitations of EC. 1.8 Networks for EC.

The Old Economy The New Economy 1.1: Taking Photographs The Old Economy The New Economy 1. Buy film in a store 2. Load your camera 3. Take pictures 4. Take roll of film to store for processing 5. Pickup the film when ready 6. Select specific photos for enlargement 7. Mail to family and friends 1st Gen. Digital Photography Old economy except 6 and 7 were replaced by using a scanner and emailing 2nd Gen.Digital Photography Use a Digital Camera, no film, no processing. 3rd Gen.Digital Photography Your Digital Camera is now your mobile phone, in your binoculars or a palmtop computer.

1.1: The Brave New World Cisco Ariba Charles Schwab CommerceOne Covisint Microsoft Oracle Dell NTT DoCoMo Nokia Amazon eBay Google Yahoo Wal-Mart Singapore PayPal

1.1: Or Jurassic Park? Osborne Ashton-Tate Drkoop.com Visicalc Ambra Chemdex Beyond.com People’s Express Prodigy HomeGrocer ZapMail CONFIRM Kmart Pathfinder Railroads

1.1: Competing with IT: Strategy and Structure Competing via strategy Product leadership (Charles Schwab) Operational excellence (Federal Express) Customer intimacy (Home Depot) Competing via structure Alliances (Star Alliance) Value added partnerships (Amazon.com) Networked organisation (Cisco)

1.1: Competing via Structure: the Role of EC Wal-Mart provides suppliers with access to its internal databases. Dell Computer virtually-integrates its entire value chain Airline reservation systems facilitate the coordination of schedules and code-sharing arrangements. GM, Ford and DaimlerChrysler are creating an electronic market in the automobile industry (Covisint). Control no longer requires ownership. The Internet dramatically reduces transaction costs, facilitating the creation and utilisation of electronic markets and value networks.

1.1: Electronic Commerce: Definitions and Concepts 1. Electronic Commerce (EC) The process of online buying, selling, or exchanging products, services, or information via computer networks within firms, between firms, between firms and their customers, and between consumers. EC E-Business

1.1: Electronic Commerce: Definitions and Concepts 2. E-Business A broader definition of EC. Automating all business processes and integrating them with E-Commerce (previous slide) applications to create one seamless, digital enterprise in order to service customers, to collaborate with business partners, to conduct electronic transactions within an organisation

1.1: Electronic Commerce: Definitions and Concepts 3. Pure Versus Partial EC EC takes several forms depending on the degree of digitisation (the transformation from physical to digital). Companies utilising pure EC conduct all of their business online. Businesses utilising partial EC conduct a portion of their business online and a portion of their business off-line

Exhibit 1.1 The Dimensions of Electronic Commerce

1.1: Electronic Commerce: Definitions and Concepts 4. EC organisations Brick-and-mortar organisations Old-economy organisations (corporations) that perform most of their business off-line, selling physical products by means of physical agents Virtual (pure-play) organisations Organisations that conduct their business activities solely online Click-and-mortar (click-and-brick) organisations Organisations that conduct some e-commerce activities, but do their primary business in the physical world

1.1: Electronic Commerce: Definitions and Concepts 5. Where EC is conducted Electronic market (e-marketplace) An online marketplace where buyers and sellers meet to exchange goods, services, money, or information Interorganisational information systems (IOSs) Communications system that allows routine transaction processing and information flow between two or more organisations Intraorganisational information systems Communication systems that enable e-commerce activities to go on within individual organisations

1.1: Electronic Commerce: Transmission Medium Most EC is done over the Internet. But EC can also be conducted on private networks, such as Value-added networks (VANs, networks that add communication services to existing common carriers), Local area networks (LANs) or Wide area networks (WANs) Intranet An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols Extranet A network that uses the Internet to link multiple intranets

Exhibit 1.2 A Framework for Electronic Commerce An EC Framework: supports five policymaking support areas People Public policy Marketing & advertisement Support services Business partnerships

1.2: The EC Framework, Classification and Content To execute these applications, companies need the right framework: information, infrastructure, and support services People: Sellers, buyers, intermediaries, information systems specialists and other employees, and any other participants. Public policy: Legal and other policy and regulating issues, such as privacy protection and taxation. Marketing and advertising: Like any other business, EC usually requires the support of marketing and advertising. Support services: Many services are needed to support EC. They range from payments to order delivery and content creation. Business partnerships: Joint ventures, e-marketplaces, and partnerships are some of frequently occurring relationships in e-business

1.2: The EC Framework, Classification and Content Classification by nature of the transactions or interactions Business-to-Business (B2B) E-commerce model in which all of the participants are businesses or other organisations Business-to-Consumer (B2C) E-commerce model in which businesses sell to individual shoppers e-tailing Online retailing, usually B2C

1.2: The EC Framework, Classification and Content Business-to-Business-to-Consumer (B2B2C) E-commerce model in which a business provides some product or service to a client business that maintains its own customers Consumer-to-Business (C2B) E-commerce model in which individuals use the Internet to sell products or services to organisations or individuals seek sellers to bid on products or services they need Consumer-to-Consumer (C2C) E-commerce model in which consumers sell directly to other consumers

1.2: The EC Framework, Classification and Content Peer-to-Peer Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce Mobile commerce (M-Commerce) E-commerce transactions and activities conducted in a wireless environment Location-based commerce (L-Commerce) M-Commerce transactions targeted to individuals in specific locations, at specific times

1.2: The EC Framework, Classification and Content Intrabusiness EC E-commerce category that includes all internal organisational activities that involve the exchange of goods, services, or information among various units and individuals in an organisation. Business-to-Employees (B2E) E-commerce model in which an organisation delivers services, information, or products to its individual employees Collaborative Commerce (C-Commerce) E-commerce model in which individuals or groups communicate or collaborate online

1.2: The EC Framework, Classification and Content E-Learning The online delivery of information for purposes of training or education Exchange (electronic) A public electronic market with many buyers and sellers Exchange-to-exchange (E2E) E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information E-Government E-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens

1.2: The Future of EC In 2004, total online shopping and B2B transactions in the USA was between $3 to $7 trillion By 2008: Number of Internet users worldwide should reach 750 million 50 percent of Internet users will shop EC growth will come from: B2C B2B e-government e-learning B2E c-commerce

1.3: The Digital Revolution Drives EC The major driver of EC is the digital revolution (1-23) A digital economy is an economy based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy. The characteristics of the digital economy includes A wide variety of digitised products Consumers and firms conducting financial transactions digitally Microprocessors and network capabilities embedded in physical goods.