1. Creating a Winning E-Business Second Edition
Chapter 5

2. Review of

3. Learning Objectives
Describe operational challenges for a startup e-business
Define legal, office space, and human resources issues
Discuss electronic payment methods
Explain front-end and back-end e-business systems
Creating a Winning E-Business Second Edition, Chapter 5

4. Learning Objectives (continued)
Identify e-business technologies and technology providers
Discuss the benefits of outsourcing e-business operations
Creating a Winning E-Business Second Edition, Chapter 5

5. Startup and Operational Challenges
Identifying and solving legal issues
Planning for and acquiring commercial office space
Hiring employees
Selecting and managing electronic payment methods
Selecting e-business technologies and technology providers
Creating a Winning E-Business Second Edition, Chapter 5

6. Legal Issues
Establish a relationship with an attorney experienced in startups
Helps to develop business plan
Establishes company valuation for investors
Provides leads to investors
Participates in negotiations
Reviews all legal documents
Advises on copyright, trademark, employee benefits, personnel policies
Creating a Winning E-Business Second Edition, Chapter 5

7. Legal Issues (continued)
Copyright
Form of legal protection for original work
Takes effect the moment the work is created
Need copyright notice on Web site as a best practice
U.S. Copyright Office good source of information on copyright law
Creating a Winning E-Business Second Edition, Chapter 5

8. Legal Issues (continued)
Creating a Winning E-Business Second Edition, Chapter 5

9. Legal Issues (continued)
Trademark and service mark
Distinctive symbol, word, or phrase used to identify a business
Make it easy for consumers to identify source of products and services
U.S. Patent and Trademark Office good source of information on trademarks and service marks
Creating a Winning E-Business Second Edition, Chapter 5

10. Legal Issues (continued)
Creating a Winning E-Business Second Edition, Chapter 5

11. Legal Issues (continued)
Content liability
Exposure to potential liabilities based on Web content
Need appropriately worded disclaimer of liability at Web site
Creating a Winning E-Business Second Edition, Chapter 5

12. Legal Issues (continued)
Customer information privacy
Customers may hesitate to provide information
Must have clear policy on how customer information is handled, secured, and used
Consider voluntary programs such as TRUSTe
Non-profit organization
Advocates disclosure of information privacy programs
Members post TRUSTe seal at Web site
Creating a Winning E-Business Second Edition, Chapter 5

13. Legal Issues (continued)
Creating a Winning E-Business Second Edition, Chapter 5

14. Legal Issues (continued)
An e-business is subject to same property and income taxes as any brick-and-mortar business
Collection of sales taxes remains problematic
Collection of sales taxes from online customers not required unless e-business has presence in state
Rules are changing
Need tax advice from professional (attorney or accountant)
Creating a Winning E-Business Second Edition, Chapter 5

15. Commercial Office Space
Startup e-business often begins in converted space in entrepreneur’s home
Factors requiring a move to commercial office space
Cramped quarters
Hiring new employees
Need for professional meeting areas
Creating a Winning E-Business Second Edition, Chapter 5

16. Commercial Office Space (continued)
Create a facilities plan before looking for space
How much space is required?
How will the space be divided?
What are electrical and telecommunication needs?
Is there access to parking, major roads, public transportation, qualified job applications?
What are the security requirements?
What is the budget?
Creating a Winning E-Business Second Edition, Chapter 5

17. Hiring Employees Knowing whom to hire first can be confusing
First hires should be key management and operations staff
Startup often must offer key employees
Pleasant working environment
Competitive salaries and benefits
Ownership equity
Creating a Winning E-Business Second Edition, Chapter 5

18. Hiring Employees (continued)
Leads on finding qualified and talented employees
Investors and advisors
Family and friends
Professional recruiters
Creating a Winning E-Business Second Edition, Chapter 5

19. Hiring Employees (continued)
Creating a Winning E-Business Second Edition, Chapter 5

20. Hiring Employees (continued)
Creating a Winning E-Business Second Edition, Chapter 5

21. Electronic Payment Methods
Make selection based on type of products and services offered and type of customer
Payment cards
Credit, debit, and charge cards
Require a merchant account to accept payment card receipts
Require access to a payment gateway to process payments
Creating a Winning E-Business Second Edition, Chapter 5

22. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

23. Electronic Payment Methods (continued)
Cost of accepting payment cards
Merchant account fees
Setup
Per transaction
Statement
Discount rate (percentage of each transaction)
Creating a Winning E-Business Second Edition, Chapter 5

24. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

25. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

26. Electronic Payment Methods (continued)
Must provide secure transmission of data
Use Secure Sockets Layer (SSL) protocol to encrypt transaction data
Relies on digital certificates for authentication
Creating a Winning E-Business Second Edition, Chapter 5

27. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

28. Electronic Payment Methods (continued)
Risks of accepting payment cards
Cardholder not present risk
Chargeback risk when fraud occurs or when customer returns products
E-businesses must also be on the alert for corporate identity theft
Theft of business names, logos, addresses, and Web site information
Used to defraud customers
Creating a Winning E-Business Second Edition, Chapter 5

29. Electronic Payment Methods (continued)
Other electronic payment methods
Stored value cards, such as gift cards and smart cards
Electronic checks – Electronic equivalent of paper checks
Electronic cash (micropayments)
P2P payment systems
Creating a Winning E-Business Second Edition, Chapter 5

30. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

31. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

32. Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5

33. E-Business Technologies
Technology decisions
Processing sales and payment transactions
Monitoring inventory
Accounting and internal recordkeeping
Connecting to the Internet
Hosting a Web site
Creating a Winning E-Business Second Edition, Chapter 5

34. E-Business Technologies (continued)
Front-end systems
Customer interaction and control
Web site and related processes
Back-end systems
Not directly accessed by customers
Accounting and budgeting
Manufacturing, warehousing, distribution
Order tracking and customer support
Marketing
Creating a Winning E-Business Second Edition, Chapter 5

35. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

36. E-Business Technologies (continued)
Integration of front-end and back-end systems
Requires technologies to tie disparate systems together
Reduces costs by sharing the same transaction data across systems
Issues to consider when integrating systems
Need for real-time or batch processing
System security
Compatibility
Creating a Winning E-Business Second Edition, Chapter 5

37. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

38. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

39. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

40. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

41. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

42. E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5

43. Outsourcing Operations
Wide array of outsourced technology solutions are available
Internet service providers
Web hosting companies
Application service providers
Fulfillment houses
Major advantage is reduced cost
Major disadvantage is loss of control
Creating a Winning E-Business Second Edition, Chapter 5

44. Outsourcing Operations (continued)
Creating a Winning E-Business Second Edition, Chapter 5

45. Chapter Summary
Establish relationships with an attorney and accountant or other professionals
Post appropriately worded liability disclaimer and privacy policy at Web site
Create a facilities plan before securing new office space
First hires should be key management personnel
Creating a Winning E-Business Second Edition, Chapter 5

46. Chapter Summary (continued)
Electronic payment methods
Payment cards and stored value cards
Electronic checks and electronic cash
Micropayments and P2P payment systems
Merchant account and payment gateway
Necessary to accept payment cards
Risks include cardholder not present risk and chargeback risk
Creating a Winning E-Business Second Edition, Chapter 5

47. Chapter Summary (continued)
E-businesses technologies
Integrate front-end and back-end systems
Storefront software
Content management systems (CMS)
Enterprise resource planning (ERP)
Customer relationship management (CRM)
Creating a Winning E-Business Second Edition, Chapter 5

48. Chapter Summary (continued)
Outsourcing technology requirements
ISPs and Web hosting companies
Application service providers (ASPs)
Order fulfillment houses
Creating a Winning E-Business Second Edition, Chapter 5