1. © Prentice Hall 2002 7.1 CHAPTER 7 Electronic Commerce Applications

2. © Prentice Hall 2002 7.2 ELECTRONIC COMMERCE ELECTRONIC TRANSMISSION ELECTRONIC TRANSMISSION BUYER/SELLER TRANSACTIONS BUYER/SELLER TRANSACTIONS RELATED INFORMATION RELATED INFORMATION BETWEEN INDIVIDUALS & BUSINESSES OR BETWEEN TWO OR MORE TRADING PARTNERS BETWEEN INDIVIDUALS & BUSINESSES OR BETWEEN TWO OR MORE TRADING PARTNERS*

3. © Prentice Hall 2002 7.3 APPLICATIONS via INTERNET IT: Internet Technology IT: Internet Technology B2C: Business-to-customer B2C: Business-to-customer B2B: Business-to business B2B: Business-to business EDI: Electronic Data Interchange EDI: Electronic Data Interchange*

4. © Prentice Hall 2002 7.4 IT REACH* INSIDE COMPANY: INSIDE COMPANY: –WITHIN SINGLE LOCATION –DOMESTIC LOCATIONS –GLOBAL LOCATIONS OUTSIDE COMPANY: OUTSIDE COMPANY: –CUSTOMERS, SUPPLIERS WITH SAME PLATFORM –CUSTOMERS, SUPPLIERS WITH ANY PLATFORM –ANYONE, ANYWHERE* *Adapted from Keen, 1991

5. © Prentice Hall 2002 7.5 STRATEGIC ADVANTAGE COST: Low cost producer COST: Low cost producer DIFFERENTIATION: Customer perceives superior image, quality, service DIFFERENTIATION: Customer perceives superior image, quality, service FOCUS: Competing on cost or differentiation within market niche FOCUS: Competing on cost or differentiation within market niche*

6. © Prentice Hall 2002 7.6 VALUE CHAIN MODEL MARKET STRATEGY MARKET STRATEGY DEVELOP DEVELOP SOURCE SOURCE MANUFACTURE MANUFACTURE SELL SELL FULFILL FULFILL*

7. © Prentice Hall 2002 7.7 FIVE COMPETITIVE FORCES* *Adapted from Porter, 1985 INDUSTRY COMPETI TORS SUPPLIER POWER CUSTOMER POWER THREAT OF NEW ENTRAN TS THREAT OF SUBSTITUTE PRODUCTS

8. © Prentice Hall 2002 7.8 INTERNET TECHNOLOGY TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCE TOOLS FOR WEB PAGE DEVELOPMENT & SITE MAINTENANCE SEARCH ENGINES FOR PORTALS SEARCH ENGINES FOR PORTALS EXTENSIBLE MARKUP LANGUAGE (XML): Expected to become standard language for e- business EXTENSIBLE MARKUP LANGUAGE (XML): Expected to become standard language for e- business COOKIES: User profiles stored on user’s computer COOKIES: User profiles stored on user’s computer*

9. © Prentice Hall 2002 7.9 TECHNOLOGY ENABLERS BROWSER BROWSER WEB PRESENCE WITH CONTENT WEB PRESENCE WITH CONTENT SEARCH ENGINES, AGENTS SEARCH ENGINES, AGENTS PUSH TECHNOLOGY, JAVA APPLETS PUSH TECHNOLOGY, JAVA APPLETS PORTALS & CREDIT CARD PROCESSING PORTALS & CREDIT CARD PROCESSING CUSTOMIZATION & TRACKING CUSTOMIZATION & TRACKING PEER-TO-PEER DIGITAL SIGNATURE PEER-TO-PEER DIGITAL SIGNATURE*

10. © Prentice Hall 2002 7.10 METCALFE’S LAW VALUE OF NETWORK PROPORTIONAL TO n, THE NUMBER OF USERS: (n 2 - n)/2 VALUE OF NETWORK PROPORTIONAL TO n, THE NUMBER OF USERS: (n 2 - n)/2 INCREASING RETURNS TO INTERNET USERS AS MORE JOIN NETWORK INCREASING RETURNS TO INTERNET USERS AS MORE JOIN NETWORK*

11. © Prentice Hall 2002 7.11 ELECTRONIC COMMERCE FRAMEWORK COMPONENTS ARE SUPPORTED BY TWO PILLARS COMPONENTS: Applications, common business services, messaging & knowledge distribution, electronic publication, electronic highway COMPONENTS: Applications, common business services, messaging & knowledge distribution, electronic publication, electronic highway PILLAR 1: Public policy, legal environment, privacy issues PILLAR 1: Public policy, legal environment, privacy issues PILLAR 2: Technological standards, communications protocols, security technology PILLAR 2: Technological standards, communications protocols, security technology*

12. © Prentice Hall 2002 7.12 LEGAL & REGULATORY ENVIRONMENT TAX POLICIES: Initially sales tax enforcement was low to encourage growth. Currently this is changing TAX POLICIES: Initially sales tax enforcement was low to encourage growth. Currently this is changing COPYRIGHT & PATENT LAWS: Difficult to enforce at international level COPYRIGHT & PATENT LAWS: Difficult to enforce at international level ANTITRUST LAWS: Market share and mergers could lead to monopolies ANTITRUST LAWS: Market share and mergers could lead to monopolies*

13. © Prentice Hall 2002 7.13 ORGANIZATIONAL CONCERNS SECURITY: Must safeguard proprietary and customer data. Primary control is FIREWALL, a barrier between organization’s network and Internet SECURITY: Must safeguard proprietary and customer data. Primary control is FIREWALL, a barrier between organization’s network and Internet ENCRYPTION: Uses encryption code to secure communication; uses decryption code to unscramble it ENCRYPTION: Uses encryption code to secure communication; uses decryption code to unscramble it*

14. © Prentice Hall 2002 7.14 ORGANIZATIONAL CONCERNS ANTIVIRUS PROTECTION: Use software to detect and negate viruses ANTIVIRUS PROTECTION: Use software to detect and negate viruses PRIVACY: Legal requirements to maintain employee & customer confidentiality. A major concern is the ability for profiling habits, selling profiles to others. A related concern is protecting freedom of expression. PRIVACY: Legal requirements to maintain employee & customer confidentiality. A major concern is the ability for profiling habits, selling profiles to others. A related concern is protecting freedom of expression.*

15. © Prentice Hall 2002 7.15 REQUIREMENTS FOR SUCCESSFUL ONLINE MERCHANTS INSTALL FIREWALL INSTALL FIREWALL KEEP SECURITY PATCHES UP-TO-DATE KEEP SECURITY PATCHES UP-TO-DATE ENCRYPT STORED AND TRANSMITTED DATA ENCRYPT STORED AND TRANSMITTED DATA USE & UPDATE ANTIVIRUS SOFTWARE USE & UPDATE ANTIVIRUS SOFTWARE RESTRICT EMPLOYEE ACCESS TO SENSITIVE DATA RESTRICT EMPLOYEE ACCESS TO SENSITIVE DATA*

16. © Prentice Hall 2002 7.16 BUSINESS TO CONSUMER B2C B2C E-COMMERCE IS ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS, RELATED INFORMATION BETWEEN END- CONSUMERS AND ONE OR MORE COMPANIES B2C E-COMMERCE IS ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS, RELATED INFORMATION BETWEEN END- CONSUMERS AND ONE OR MORE COMPANIES*

17. © Prentice Hall 2002 7.17 B2C BENEFITS SELLER: LOWER COSTS LOWER COSTS GLOBAL REACH GLOBAL REACH MULTIMEDIA MARKETING OPPORTUNITIES MULTIMEDIA MARKETING OPPORTUNITIES 24x7 SALES & CUSTOMER SUPPORT CHANNEL 24x7 SALES & CUSTOMER SUPPORT CHANNEL DIGITIZED DISTRIBUTION CHANNEL DIGITIZED DISTRIBUTION CHANNEL*

18. © Prentice Hall 2002 7.18 B2C BENEFITS BUYER: EASY ACCESS TO PRODUCT INFORMATION EASY ACCESS TO PRODUCT INFORMATION ANYTIME, ANYWHERE ANYTIME, ANYWHERE AGENTS HELP FIND THINGS, COMPARE COSTS AGENTS HELP FIND THINGS, COMPARE COSTS ONLINE DISTRIBUTION OF DIGITIZED PRODUCT/SERVICE ONLINE DISTRIBUTION OF DIGITIZED PRODUCT/SERVICE*

19. © Prentice Hall 2002 7.19 B2C APPLICATIONS FORECAST TO GROW AS MORE CUSTOMERS HAVE INTERNET ACCESS FORECAST TO GROW AS MORE CUSTOMERS HAVE INTERNET ACCESS PRODUCT RETAILERS: Site allows customers to browse available wares, select, order, arrange for payment PRODUCT RETAILERS: Site allows customers to browse available wares, select, order, arrange for payment SERVICE RETAILERS: Information intensive. Buyer may download materials for fee SERVICE RETAILERS: Information intensive. Buyer may download materials for fee RETAILING INTERMEDIARIES: Allows client to compare models and prices of many vendors RETAILING INTERMEDIARIES: Allows client to compare models and prices of many vendors*

20. © Prentice Hall 2002 7.20 B2C STRATEGIES* ONLINE OFFLINE CUSTOMER INTERFACE FULFILLMENT SYSTEMS *RAYPORT & JAWORSKI, 2000 EGGHEAD YAHOO! BN.COM AMAZON.COM Mc DONALD’S

21. © Prentice Hall 2002 7.21 BUSINESS-TO-BUSINESS (B2B) B2B E-COMMERCE IS ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS & INFORMATION BETWEEN TWO OR MORE BUSINESSES B2B E-COMMERCE IS ELECTRONIC TRANSMISSION OF BUYER-SELLER TRANSACTIONS & INFORMATION BETWEEN TWO OR MORE BUSINESSES PREDECESSOR WAS INTERORGANIZATIONAL SYSTEM (IOS) PREDECESSOR WAS INTERORGANIZATIONAL SYSTEM (IOS)*

22. © Prentice Hall 2002 7.22 ELECTRONIC DATA INTERCHANGE (EDI) COMPUTER-TO-COMPUTER COMMUNICATION BETWEEN TRADING PARTNERS: Hub organization and spoke customers & suppliers use structured formatsCOMPUTER-TO-COMPUTER COMMUNICATION BETWEEN TRADING PARTNERS: Hub organization and spoke customers & suppliers use structured formats EXAMPLES: Purchase orders, invoices, shipping notices, price listingsEXAMPLES: Purchase orders, invoices, shipping notices, price listings*

23. © Prentice Hall 2002 7.23 EDI BENEFITS REDUCED CYCLE TIMES REDUCED CYCLE TIMES COST SAVINGS: Automated transactions, reduced paper COST SAVINGS: Automated transactions, reduced paper IMPROVED INTER-FIRM COORDINATION: Reduced coordination costs IMPROVED INTER-FIRM COORDINATION: Reduced coordination costs*

24. © Prentice Hall 2002 7.24 CHANNELS FOR INTERNET EDI* WEB EDI: Use EDI templates designed by Web server WEB EDI: Use EDI templates designed by Web server FTP EDI: EDI transactions stored at spoke company. Periodically transmitted as batch to hub company FTP EDI: EDI transactions stored at spoke company. Periodically transmitted as batch to hub company E-MAIL EDI: EDI transactions sent as e- mail over Internet E-MAIL EDI: EDI transactions sent as e- mail over Internet* *Senn, 2000

25. © Prentice Hall 2002 7.25 EXTRANET B2B APPLICATIONS BASED ON WEB TECHNOLOGY: Business partners use Web browser on client machine to gain access to another company’s intranet B2B APPLICATIONS BASED ON WEB TECHNOLOGY: Business partners use Web browser on client machine to gain access to another company’s intranet*

26. © Prentice Hall 2002 7.26 CHAPTER 7 Electronic Commerce Applications