1. Next Back MAP MAP 5-1 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Chapter 5 Electronic Commerce Strategies for the New Economy

2. Next Back MAP MAP 5-2 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Introduction The new economy introduced by the www has been interesting. The new economy introduced by the www has been interesting. Fortunes have been made and lost. Fortunes have been made and lost. Dot-com millionaires have been created. Dot-com millionaires have been created. Others have seen their company turn into a dot-bomb. Others have seen their company turn into a dot-bomb. The revolution of ebusiness promised by the internet has just began. The revolution of ebusiness promised by the internet has just began. We are still learning what works and what does not work. We are still learning what works and what does not work. There is still a lot of uncharted territory ahead. There is still a lot of uncharted territory ahead.

3. Next Back MAP MAP 5-3 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Growth of E-Commerce Figure 5.1 Four Categories of E-Commerce page 178

4. Next Back MAP MAP 5-4 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved E-commerce E-commerce  Enables customers, consumers and companies to form powerful new relationships that would not be possible without the enabling technologies The internet facilitates commerce by its ability to move digital information at low cost. The internet facilitates commerce by its ability to move digital information at low cost. The Growth of E-Commerce

5. Next Back MAP MAP 5-5 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Growth of E-Commerce The Digital Divide Digital divide Expresses the fact that different peoples, cultures, and areas of the world or within a nation do not have the same access to information and telecommunications technologies.

6. Next Back MAP MAP 5-6 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce Retailers increasingly view the internet as simply another channel by which to reach their customers Retailers increasingly view the internet as simply another channel by which to reach their customers The internet is a channel that pocesses some unique and powerful advantages over traditional channels when used effectively The internet is a channel that pocesses some unique and powerful advantages over traditional channels when used effectively Know Know  When to use it  How to use it effectively and  When to use it in combination with other channels Is key.

7. Next Back MAP MAP 5-7 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce The internet has several current and potential advantages over the traditional ‘brick-and-mortar’ stores: The internet has several current and potential advantages over the traditional ‘brick-and-mortar’ stores:  Shopping can be faster and more convenient  Offerings and prices can change instantaneously  Call centers can be integrated with the web site  Broadband telecommunications will enhance the buying experience

8. Next Back MAP MAP 5-8 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce Shopping Can Be Faster and More Convenient Figure 5.3 Alternative Channels for Selling to Customers page 182

9. Next Back MAP MAP 5-9 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce Offerings and Prices Can Change Instantaneously E-tailers can change product offerings and prices instantaneously in response to changes in customer demand. E-tailers can change product offerings and prices instantaneously in response to changes in customer demand. On Your Own B2C Services (p. 183)

10. Next Back MAP MAP 5-10 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce Call Centers Can Be Integrated With the Web Site The web technology has created innovative adaptations in e-tailing such as: The web technology has created innovative adaptations in e-tailing such as:  Interactive chat  Internet telephony

11. Next Back MAP MAP 5-11 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce Call Centers Can Be Integrated With the Web Site Internet telephony A combination of hardware and software that uses the Internet as the medium for transmission of telephone calls in place of traditional telephone networks.

12. Next Back MAP MAP 5-12 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Advantages of Business To Consumer E- Commerce Broadband Telecommunications Will Enhance The Buying Experience Today, high-speed Internet is not widely available to everybody. Today, high-speed Internet is not widely available to everybody. When broadband telecommunications become widely available the buying experience will also be greatly enhanced. When broadband telecommunications become widely available the buying experience will also be greatly enhanced.

13. Next Back MAP MAP 5-13 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Keys To Success In Business To Consumer E- Commerce It is important to reflect on what have we learned so far so that new B2C entrepreneurs can increase their chances of being successful

14. Next Back MAP MAP 5-14 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Keys To Success In Business To Consumer E- Commerce Important lessons include: Important lessons include:  Commodity like items work best.  Digital products are the best of all.  Attracting and retaining customers.  Remember the importance of merchandising.  You must execute well.  Watch the competition.

15. Next Back MAP MAP 5-15 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Keys To Success In Business To Consumer E- Commerce Attracting and Retaining Customers Designing an attractive web site that is easy to use is one of the key factors in the success of a B2C venture. Designing an attractive web site that is easy to use is one of the key factors in the success of a B2C venture. Once a potential customer has found your site it is important Once a potential customer has found your site it is important  to keep them there until they purchase something and  once they purchased something you need to give them incentive to return.

16. Next Back MAP MAP 5-16 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Keys To Success In Business To Consumer E- Commerce Attracting and Retaining Customers Additional techniques for attracting Internet customers include: Additional techniques for attracting Internet customers include: 1.Registering with search engines 2.Online ads 3.E-Mail and viral marketing 4.Affiliate programs 5.Selling to existing customers

17. Next Back MAP MAP 5-17 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Keys To Success In Business To Consumer E- Commerce Remember the Importance of Merchandising Figure 5.3 Dos and Don’ts of Web Site Design page 188

18. Next Back MAP MAP 5-18 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Keys To Success In Business To Consumer E- Commerce You must execute well Simply means that when a customer places an order on your web site, you have to follow through and execute the necessary business processes to get the right item to the customer in a timely fashion Simply means that when a customer places an order on your web site, you have to follow through and execute the necessary business processes to get the right item to the customer in a timely fashion

19. Next Back MAP MAP 5-19 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce B2B e-commerce is e-commerce that takes place between organization. B2B e-commerce is e-commerce that takes place between organization. Companies do business with other companies all over the world. Companies do business with other companies all over the world. Example: an airline needs to buy Example: an airline needs to buy  Aircraft fuel  Spare parts  Food  Other From other companies

20. Next Back MAP MAP 5-20 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Relationships in B2B take different forms in the e-commerce environment: Relationships in B2B take different forms in the e-commerce environment:  Value networks  Corporate purchasing segments  Next-generation solutions  B2B marketplaces  Intranets and extranets

21. Next Back MAP MAP 5-21 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Value Networks More and more in e-commerce involves a complex network of relationships to operate between More and more in e-commerce involves a complex network of relationships to operate between  the enterprise,  its customers,  intermediaries,  complemetors and  suppliers

22. Next Back MAP MAP 5-22 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Value Networks Figure 5.6 The Value Network page 194

23. Next Back MAP MAP 5-23 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Corporate Purchasing Segments In B2B, most attention has been given to the ways that e-commerce could streamline the purchasing of materials In B2B, most attention has been given to the ways that e-commerce could streamline the purchasing of materials

24. Next Back MAP MAP 5-24 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Corporate Purchasing Segments Purchasing applications are usually divided into three segments: Purchasing applications are usually divided into three segments: 1. Purchasing of direct materials 2. Purchasing of indirect materials (MRO) 3. Purchasing of services

25. Next Back MAP MAP 5-25 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The most important form of B2B e- commerce today is electronic data interchange or EDI The most important form of B2B e- commerce today is electronic data interchange or EDI Business to Business E-Commerce Corporate Purchasing Segments

26. Next Back MAP MAP 5-26 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Figure 5.7 An EDI Hub-and- Spoke Arrangement page 196 Business to Business E-Commerce Corporate Purchasing Segments

27. Next Back MAP MAP 5-27 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Corporate Purchasing Segments Figure 5.8 How Value-Added Networks (VANs) Facilitate EDI page 197

28. Next Back MAP MAP 5-28 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Next Generation Solutions Efforts are underway to create a new generation of EDI for the B2B transactions that would be Efforts are underway to create a new generation of EDI for the B2B transactions that would be  Easier to setup and use  More attractive to small businesses

29. Next Back MAP MAP 5-29 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce B2B Marketplaces B2B marketplaces - Internet-based services that bring together buyers and sellers. B2B marketplaces - Internet-based services that bring together buyers and sellers.  They give the potential to bring together large numbers of buyers and sellers giving buyers more choices and giving buyers more choices and aggregating demand for the sellers aggregating demand for the sellers  Transaction costs can be reduced

30. Next Back MAP MAP 5-30 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Intranets and Extranets Figure 5.10 Intranet Structure page 201

31. Next Back MAP MAP 5-31 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved Business to Business E-Commerce Intranets and Extranets Figure 5.11 Extranet Structure page 202

32. Next Back MAP MAP 5-32 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved The Role OF E-Government E-Government - describes the application of e-commerce technologies in governmental agencies. E-Government - describes the application of e-commerce technologies in governmental agencies. In many countries the government is the largest hub to use EDI for ecommerce activities. In many countries the government is the largest hub to use EDI for ecommerce activities.

33. Next Back MAP MAP 5-33 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved E-Commerce Payment Systems Just as there are traditional EDI transactions for purchase orders and other standard business documents, there are EDI transactions for payments. Just as there are traditional EDI transactions for purchase orders and other standard business documents, there are EDI transactions for payments. Financial EDI (FEDI) - the use of EDI for payments. Financial EDI (FEDI) - the use of EDI for payments.

34. Next Back MAP MAP 5-34 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved E-Commerce Payment Systems E-payments would solve traditional timing problems such that: E-payments would solve traditional timing problems such that:  Epayments would clear faster and  The payer would lose the use of that money for those extra few day it would have taken for the check to clear.

35. Next Back MAP MAP 5-35 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved E-Commerce Payment Systems Credit Cards and Smart Cards Smart cards - plastic cards the size of a credit card that contain an embedded chip on which digital information can be stored. Smart cards - plastic cards the size of a credit card that contain an embedded chip on which digital information can be stored.

36. Next Back MAP MAP 5-36 Management Information Systems for the Information Age Second Canadian Edition Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved E-Commerce Payment Systems Financial Cybermediaries Figure 5.12 The PayPal Web Site page 204