4.1 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE DIGITAL FIRM: ELECTRONIC BUSINESS AND ELECTRONIC COMMERCE

4.2 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How has Internet technology changed business models?How has Internet technology changed business models? What are the principal payment systems for e- commerce?What are the principal payment systems for e- commerce? How can Internet technology facilitate internal business processes and SCM?How can Internet technology facilitate internal business processes and SCM? What are the major managerial challenges posed by e-commerce?What are the major managerial challenges posed by e-commerce? OBJECTIVES

4.3 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Business Model: An abstraction of what an enterprise isAn abstraction of what an enterprise is Describes how the enterprise delivers a product or serviceDescribes how the enterprise delivers a product or service eg: traditional bookstore vs Amazon.comeg: traditional bookstore vs Amazon.com finding a successful one for e-commerce has been difficultfinding a successful one for e-commerce has been difficult THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.4 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Business-to-Customer (B2C):Business-to-Customer (B2C): –Electronic retailing directly to individual customers Business-to-Business (B2B):Business-to-Business (B2B): –Electronic sales among businesses Consumer-to-Consumer (C2C):Consumer-to-Consumer (C2C): –Consumers selling electronically to other consumers Mobile Commerce (M-Commerce):Mobile Commerce (M-Commerce): –use of handheld wireless devices for purchasing goods and services –Used in B2B and B2C e-commerce transactions ELECTRONIC COMMERCE

4.5 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Facilitates Dynamic Pricing:Facilitates Dynamic Pricing: –Real-time interactions between buyers and sellers determine worth of items Facilitates Banner AdsFacilitates Banner Ads –vs. Pop-up Ads (user must click to close) Makes ‘Disintermediation’ possibleMakes ‘Disintermediation’ possible –removal of business process layers in a value chain THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.6 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.7 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Shrinks Information Asymmetry:Shrinks Information Asymmetry: –One party in a transaction has more information than the other Allows Web Personalization:Allows Web Personalization: –tailoring of web content directly to a specific user THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.8 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.9 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Reduces need to tradeoff Richness for Reach :Reduces need to tradeoff Richness for Reach : –can now have both! Reduces Transaction Costs:Reduces Transaction Costs: –Reduces costs of finding buyers, collecting payments, and (perhaps) delivering product (eg?) THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.10 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce INFORMATION SYSTEMS IMPACT

4.11 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.12 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Makes possible new Business ModelsMakes possible new Business Models –‘Virtual Storefront’: move from ‘bricks and mortar’ to ‘clicks and mortar’, or ‘pure play’ to sell product –‘Net Marketplace’: Buyers and sellers meet - revenue from transaction fees. can serve either vertical or horizontal markets vs. Private Industrial Network THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.13 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.14 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE EFFECT OF THE INTERNET ON BUSINESS MODELS E.G.: Covisint to supply automobile ‘vertical market’

4.15 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Makes possible new Business ModelsMakes possible new Business Models –‘Content Provider’: Provides digital content - customer pays for access Advertising can also provide revenue. –‘Portal’: initial point of entry to web specialized content and services THE EFFECT OF THE INTERNET ON BUSINESS MODELS

4.16 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How has Internet technology changed business models?How has Internet technology changed business models? What are the principal payment systems for e- commerce?What are the principal payment systems for e- commerce? How can Internet technology facilitate internal business processes and SCM?How can Internet technology facilitate internal business processes and SCM? What are the major managerial challenges posed by e-commerce?What are the major managerial challenges posed by e-commerce? OBJECTIVES

4.17 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE PAYMENT SYSTEMS Digital Credit CardSecure services for credit card payments – see Chapter 11 for details Digital WalletSoftware that stores credit card info, address etc; e.g. Amazon.com’s 1-Click shopping Accumulated Balance Payment System Accumulates micropayments as a debit balance; e.g. Qpass Digital Cash (e-cash)A stored value digital account enabling instant payments; e.g. eCoin, Mondex smart cards Peer-to-Peer PaymentDigital currency for vendors who do not have pre-arranged payment options; e.g.PayPal Digital ChequingElectronic cheque with digital signature; e.g. CHEXpedite Electronic BillingSupports electronic payment of monthly bills; e.g. epost.ca

4.18 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE PAYMENT SYSTEMS

4.19 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How has Internet technology changed business models?How has Internet technology changed business models? What are the principal payment systems for e- commerce?What are the principal payment systems for e- commerce? How can Internet technology facilitate internal business processes and SCM?How can Internet technology facilitate internal business processes and SCM? What are the major managerial challenges posed by e-commerce?What are the major managerial challenges posed by e-commerce? OBJECTIVES

4.20 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How Intranets Support Electronic Business

4.21 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How Intranets Support Electronic Business

4.22 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Supply Chain Management needs more than an Intranet! How Intranets Support Electronic Business

4.23 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce How has Internet technology changed business models?How has Internet technology changed business models? What are the principal payment systems for e- commerce?What are the principal payment systems for e- commerce? How can Internet technology facilitate internal business processes and SCM?How can Internet technology facilitate internal business processes and SCM? What are the major managerial challenges posed by e-commerce?What are the major managerial challenges posed by e-commerce? OBJECTIVES

4.24 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce MANAGEMENT CHALLENGES & OPPORTUNITIES

4.25 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Current status of E-Business in Canada: Internet use per capita – higher than USInternet use per capita – higher than US E-commerce use per capita or per business – lower than USE-commerce use per capita or per business – lower than US E-commerce salesE-commerce sales –up 27% in 2002 (down from 46% in 2001) –.6% of total revenue –7 firms stopped using e-commerce in 2002 for every 10 that started What are the barriers?What are the barriers? MANAGEMENT CHALLENGES & OPPORTUNITIES

4.26 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Barriers Reported Barriers Reported (Cdn E-Business Roundtable): Products not suited to e-commerce (56%)Products not suited to e-commerce (56%) Prefer current business model (36%)Prefer current business model (36%) –E.G. ‘channel conflicts’ Security concerns (14%)Security concerns (14%) High costs (12%)High costs (12%) –HBC - $40M / yr to upgrade web site Lack of skills (10%)Lack of skills (10%) Customers not ready to purchase online (9.6%)Customers not ready to purchase online (9.6%) MANAGEMENT CHALLENGES & OPPORTUNITIES

4.27 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Other Barriers to consider: Unproven business modelsUnproven business models Business process change requirementsBusiness process change requirements Legal issuesLegal issues Trust, security and privacyTrust, security and privacy Lack of broadband accessLack of broadband access False sense of security in retail circlesFalse sense of security in retail circles –previously sheltered from US competition Investment decisions often based on ROIInvestment decisions often based on ROI –appropriate for e-commerce investment? MANAGEMENT CHALLENGES & OPPORTUNITIES

4.28 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Roundtable Recommendations –Put all government services online Canada already leads the world in e-government portal at –Offer financial incentives to businesses –Expand the e-business talent pool –Build Canada’s e-business leadership profile internationally MANAGEMENT CHALLENGES & OPPORTUNITIES

4.29 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce Opportunities for Canadian Leadership: 1.Network Infrastructure 2.Multimedia North 3.Global Customer Care Centres 4.Remote Service Provider 5.Web Tools Developer 4.5 STATUS OF CANADIAN E-COMMERCE

4.30 Copyright © 2005 Pearson Education Canada Inc. Management Information Systems, Second Canadian Edition Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce THE DIGITAL FIRM: ELECTRONIC BUSINESS AND ELECTRONIC COMMERCE