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© 2001 Business & Information Systems 2/e2 Chapter 12 Electronic Commerce and the Strategic Impact of Information Systems

© 2001 Business & Information Systems 2/e3 Our Agenda Providing a Strategic Impact Electronic Commerce Systems Interorganizational Information Systems Global Information Systems Strategic Information Systems

© 2001 Business & Information Systems 2/e4 Learning Objectives Describe how information systems can have a strategic impact on a business and give examples of information systems that create a competitive advantage for a business. Describe the main types of electronic commerce.

© 2001 Business & Information Systems 2/e5 Learning Objectives (cont’d.) List the functions provided by electronic commerce systems. Explain why interorganizational systems are used in business alliances. Describe several ways that a business can participate in an interorganizational system.

© 2001 Business & Information Systems 2/e6 Learning Objectives (cont’d.) Explain how an electronic data interchange system functions. Explain what global information systems are why international businesses need them.

© 2001 Business & Information Systems 2/e7 Learning Objectives (cont’d.) Describe different forms that global information systems can take and how each form relates to international business strategy. Explain what a strategic information system is an what types of information systems are strategic.

© 2001 Business & Information Systems 2/e8 Learning Objectives (cont’d.) Describe how strategic information system opportunities can be identified in business.

© 2001 Business & Information Systems 2/e9 Providing a Strategic Impact Electronic Commerce and the Strategic Impact of Information Systems

© 2001 Business & Information Systems 2/e10 Providing a Strategic Impact Information systems that have a strategic impact on a business help create a competitive advantage for the business.

© 2001 Business & Information Systems 2/e11 Main Approaches for Gaining a Competitive Advantage Cost leadership – having lower production and operating costs that the competitors. Differentiation – providing products or services that are unique so the customer wants to purchase from the business.

© 2001 Business & Information Systems 2/e12 Main Approaches for Gaining a Competitive Advantage (cont’d.) Focus – focusing on a niche to provides products or services designed for a specific segment of the market. Innovation – means developing new ways of operating or managing a business.

© 2001 Business & Information Systems 2/e13 Main Approaches for Gaining a Competitive Advantage (cont’d.) Growth – means expanding the products or services provided by the business. Business Alliances – means forming groups of businesses that work together.

© 2001 Business & Information Systems 2/e14 Electronic Commerce Systems Electronic Commerce and the Strategic Impact of Information Systems

© 2001 Business & Information Systems 2/e15 Electronic Commerce Systems An Electronic Commerce System is an information system that provides e-commerce capabilities for an organization.

© 2001 Business & Information Systems 2/e16 The Strategic Impact of Electronic Commerce Electronic commerce can have a strategic impact on business by: Providing an innovative approach for conducting business. Providing a reduction in the cost of transactions. Providing unique, customized products for its customers. Providing customer access 24 hours every day.

© 2001 Business & Information Systems 2/e17 Types of Electronic Commerce Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Intraorganizational

© 2001 Business & Information Systems 2/e18 Business-to-Consumer Business-to-consumer (B2C) involves a business selling its products or services electronically to the final consumer, which is usually an individual.

© 2001 Business & Information Systems 2/e19 Business-to-Consumer B2C companies operate in several ways: E-tailers Called direct marketers Using others to sell their products Called indirect marketers Sell their products electronically Called full cybermarketers

© 2001 Business & Information Systems 2/e20 Business-to-Consumer (cont’d.) Selling through traditional means as well as electronically Called partial cybermarketers Filling orders from their own stock Called electronic distributor Send orders they receive to manufacturers or wholesalers that fill the orders Called electronic brokers

© 2001 Business & Information Systems 2/e21 Business-to-Business Three main types of B2B e-commerce: Supplier-oriented marketplace – supplier company provides e-commerce capabilities for other businesses to order its products. Buyer-oriented marketplace – buyer requests quotations or bids from other companies electronically. Intermediary-oriented marketplace – acts as an intermediary between buyer and seller.

© 2001 Business & Information Systems 2/e22 Consumer-to-Consumer In consumer-to-consumer (C2C) electronic commerce, one consumer sells a product or service to another consumer usually through an intermediary e-commerce business.

© 2001 Business & Information Systems 2/e23 Intrabusiness Intrabusiness, or organizational, electronic commerce involves transactions between departments, regions, subsidiaries, or other units of a business.

© 2001 Business & Information Systems 2/e24 Characteristics of Electronic Commerce Systems Product presentation Electronic catalog Order entry Electronic shopping cart Payment Electronic payment Electronic Funds Transfer (EFT)

© 2001 Business & Information Systems 2/e25 Characteristics of Electronic Commerce Systems (cont’d.) Product distribution Customer service Product support Data acquisition

© 2001 Business & Information Systems 2/e26 Interorganizational Information Systems Electronic Commerce and the Strategic Impact of Information Systems

© 2001 Business & Information Systems 2/e27 Interorganizational Information Systems An InterOrganizational System (IOS) is an information system shared by one or more suppliers and customers. The most familiar example of IOSs are Electronic Data Interchange (EDI) systems which provide for the transfer of data between businesses. Electronic Funds Transfer (EFT) systems provide for the transfer of money between financial institutions.

© 2001 Business & Information Systems 2/e28 Business Alliances Businesses coordinate some of their operations or link some of their resources to form business alliances, which serve the interests of all businesses in the alliance. Types of alliances Between a business and a competitive business Between a business and a noncompetitive business Between a business and its suppliers and customers

© 2001 Business & Information Systems 2/e29 The Strategic Impact of Interorganization Systems Interorganizational systems provide for the sharing of information and processing between businesses in a business alliance. Ordering products electronically with and EDI system is less expensive than ordering other ways.

© 2001 Business & Information Systems 2/e30 Characteristics of Interorganizational Systems Businesses are involved in InterOrganzational Systems (IOS) as either: Sponsors – a business that sets up and maintains an IOS Participant – a business that uses an IOS

© 2001 Business & Information Systems 2/e31 Characteristics of Interorganizational Systems (cont’d.) Business can participate in an IOS in several ways: A business simply enters input and receives output by using an IOS sponsored by another business. A business accesses data storage or processing capabilities of another business in the IOS. A business can participate in an IOS by using the capabilities of the IOS received from the sponsor for managing internal operations.

© 2001 Business & Information Systems 2/e32 Electronic Data Interchange Systems An Electronic Data Interchange (EDI) system provides for electronic communication of data between businesses. Types of data sent include Purchase order data Shipping data Invoice data Product description data Price list data Insurance data

© 2001 Business & Information Systems 2/e33 Traditional versus Internet EDI An EDI system, like all IOSs, requires a data communications link between businesses. Internet EDI systems require special software to send encrypted standardized data. EDI data is generally input directly into the system upon receipt.

© 2001 Business & Information Systems 2/e34 EDI Benefits and Problems Benefits of EDI Speed Data entry errors are reduced Problems with EDI Organizational participation Technical problems must be solved Can be expensive

© 2001 Business & Information Systems 2/e35 Global Information Systems Electronic Commerce and the Strategic Impact of Information Systems

© 2001 Business & Information Systems 2/e36 Global Information Systems Global (international) information systems provide communication between business locations around the world, transfer of data between international locations, and use of system functions at different locations worldwide.

© 2001 Business & Information Systems 2/e37 International Business Businesses engage in international activities for several reasons. International sales International production International product development

© 2001 Business & Information Systems 2/e38 International Business (cont’d.) International businesses generally follow one of several basic strategies. Multinational strategy – the business allows its foreign operations to function largely independently. Global strategy – the central headquarters coordinates the activities of the foreign operations closely.

© 2001 Business & Information Systems 2/e39 International Business (cont’d.) International strategy – involves transferring knowledge and skills from the central headquarters to the foreign operations. Transnational strategy – involves using knowledge and skills from both the central headquarters and the foreign operations.

© 2001 Business & Information Systems 2/e40 Characteristics of Global Information Systems Global information systems differ from domestic information systems in a number of ways. Data communications technology Cost of data communications Concern for cultural differences between countries Political and legal factors – Transborder Data Flow (TDF)

© 2001 Business & Information Systems 2/e41 Characteristics of Global Information Systems (cont’d.) Businesses that follow a multinational strategy tend to have decentralized, or independent, information systems for their central headquarters and different foreign operations. Businesses that follow a global strategy ten to have highly centralized GIS determined by the central headquarters.

© 2001 Business & Information Systems 2/e42 Characteristics of Global Information Systems (cont’d.) Businesses that follow an international strategy tend to have distributed GIS in which systems in the central headquarters are connected to those in the foreign operations. Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally.

© 2001 Business & Information Systems 2/e43 Global Electronic Commerce Global e-commerce systems should: Offer sites in several languages, with a feature that allows the user to select the preferred language. Allow customers to pay in several different currencies. Be sensitive to cultural differences in various countries.

© 2001 Business & Information Systems 2/e44 Strategic Information Systems Electronic Commerce and the Strategic Impact of Information Systems

© 2001 Business & Information Systems 2/e45 Strategic Information Systems A Strategic Information System (SIS) affects the way a business competes with other businesses, thus giving it an advantage over its competitors.

© 2001 Business & Information Systems 2/e46 Identifying Strategic Information Systems Opportunities Look at the business’s value chain. Primary activities Creating product Selling product Servicing product

© 2001 Business & Information Systems 2/e47 Identifying Strategic Information Systems Opportunities (cont’d.) Support Activities Inbound logistics Operations Outbound logistics Marketing and Sales Service Procurement Human resource management Technology development Firm Infrastructure

© 2001 Business & Information Systems 2/e48 Electronic Commerce and the Strategic Impact of Information Systems Key Terms

© 2001 Business & Information Systems 2/e49 Key Terms Business Alliance Business-to-Business (B2B) Electronic Commerce Business-to-Consumer (B2C) Electronic Commerce Competitive Advantage Consumer-to-Consumer (C2C) Electronic Commerce Electronic Auction Electronic Business (E- Business) Electronic Catalog Electronic Commerce (E-Commerce) Electronic Commerce (E-Commerce) System Electronic Payment

© 2001 Business & Information Systems 2/e50 Key Terms (cont’d.) Electronic Shopping Cart E-tailer Global (International) Information System Interorganizational Information System Intrabusiness (Organizational) Electronic Commerce Strategic Information System (SIS) Transborder Data Flow (TDF) Value Chain

© 2001 Business & Information Systems 2/e51 Summary Providing a Strategic Impact Electronic Commerce Systems Interorganizational Information Systems Global Information Systems Strategic Information Systems

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