1. 4.1 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce THE DIGITAL FIRM: ELECTRONIC BUSINESS AND ELECTRONIC COMMERCE Chapter 4 4

2. 4.2 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce How has Internet technology changed value propositions and business models?How has Internet technology changed value propositions and business models? What is electronic commerce? How has electronic commerce changed consumer retailing and business-to-business transactions?What is electronic commerce? How has electronic commerce changed consumer retailing and business-to-business transactions? What are the principal payment systems for electronic commerce?What are the principal payment systems for electronic commerce? OBJECTIVES

3. 4.3 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce How can Internet technology support management and coordination of internal business processes and supply chain management?How can Internet technology support management and coordination of internal business processes and supply chain management? What are the major managerial and organizational challenges posed by electronic business and electronic commerce?What are the major managerial and organizational challenges posed by electronic business and electronic commerce? OBJECTIVES

4. 4.4 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Emerging digital firmEmerging digital firm Electronic commerceElectronic commerce Electronic businessElectronic business Challenges and opportunitiesChallenges and opportunities MANAGEMENT CHALLENGES

5. 4.5 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce 1.Digitally enabling the enterprise requires a new mind set 2.Finding a successful Internet business model MANAGEMENT CHALLENGES

6. 4.6 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Internet Technology and The Digital Firm Information technology infrastructure: Provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizationsInformation technology infrastructure: Provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations Direct communication between trading partners: Disintermediation removes intermediate layers, streamlines processDirect communication between trading partners: Disintermediation removes intermediate layers, streamlines process ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

7. 4.7 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Round-the-clock service: Web sites available to consumers 24 hours a dayRound-the-clock service: Web sites available to consumers 24 hours a day Extended distribution channels: Outlets created for attracting customers who otherwise would not patronizeExtended distribution channels: Outlets created for attracting customers who otherwise would not patronize Reduced transaction costs: Costs of searching for buyers, sellers, etc. reducedReduced transaction costs: Costs of searching for buyers, sellers, etc. reduced Internet Technology and the Digital Firm ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

8. 4.8 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Business Model: Defines an enterpriseDefines an enterprise Describes how the enterprise delivers a product or serviceDescribes how the enterprise delivers a product or service Shows how the enterprise creates wealthShows how the enterprise creates wealth New Business Models and Value Propositions ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

9. 4.9 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Information asymmetry: One party in a transaction has more information than the otherInformation asymmetry: One party in a transaction has more information than the other Increases richness: Depth and detail of informationIncreases richness: Depth and detail of information Increases reach: Number of people contactedIncreases reach: Number of people contacted The Changing Economics of Information ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

10. 4.10 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Richness New levels of richness and reach attainable Reach ENABLERS Explosion of connectivity Dissemination of standards Figure 4-1 The Changing Economics of Information ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

11. 4.11 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Internet Business Models Virtual storefront: Sells goods, services on-lineVirtual storefront: Sells goods, services on-line Information broker: Provide info on products, pricing, etc.Information broker: Provide info on products, pricing, etc. Transaction broker: Buyers view rates, terms from various sourcesTransaction broker: Buyers view rates, terms from various sources ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

12. 4.12 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Online Marketplace: Concentrates information from several providersOnline Marketplace: Concentrates information from several providers Content provider: Creates revenue through providing client for a fee, and advertisingContent provider: Creates revenue through providing client for a fee, and advertising Internet Business Models ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

13. 4.13 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce On-line service provider: Provides service, support for hardware, software productsOn-line service provider: Provides service, support for hardware, software products Virtual community: Chat room, on-line meeting placeVirtual community: Chat room, on-line meeting place Portal: Initial point of entry to Web, specialized content, servicesPortal: Initial point of entry to Web, specialized content, services Internet Business Models EELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

14. 4.14 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Syndicator: Online content provider that aggregates information from several sources sold to other companiesSyndicator: Online content provider that aggregates information from several sources sold to other companies Auction: P roducts, prices, change in response to demand. Used in online marketplacesAuction: P roducts, prices, change in response to demand. Used in online marketplaces Internet Business Models ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM

15. 4.15 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Dynamic pricing: real-time interactions between buyers and sellers determine worth of itemsDynamic pricing: real-time interactions between buyers and sellers determine worth of items Banner ad: Graphic display used for advertising, linked to the advertiser’s Web siteBanner ad: Graphic display used for advertising, linked to the advertiser’s Web site Internet Business Models ELECTRONIC COMMERCE

16. 4.16 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Categories of Electronic Commerce Business-to-customer (B2C): Retailing of products and services directly to individual customersBusiness-to-customer (B2C): Retailing of products and services directly to individual customers Business-to-business (B2B): Sales of goods and services among businessesBusiness-to-business (B2B): Sales of goods and services among businesses Consumer-to-consumer (C2C): Individuals use Web for private sales or exchangeConsumer-to-consumer (C2C): Individuals use Web for private sales or exchange ELECTRONIC COMMERCE

17. 4.17 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Business-To-Consumer Customer-centered retailing: Closer, yet more cost-effective relationship with customersCustomer-centered retailing: Closer, yet more cost-effective relationship with customers Web sites: Provide information on products, services, prices, ordersWeb sites: Provide information on products, services, prices, orders ELECTRONIC COMMERCE

18. 4.18 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Business-To-Consumer Disintermediation: The removal of organizations or business process layers responsible for certain intermediary steps in a value chainDisintermediation: The removal of organizations or business process layers responsible for certain intermediary steps in a value chain Reintermediation: The shifting of the intermediary role in a value chain to a new sourceReintermediation: The shifting of the intermediary role in a value chain to a new source ELECTRONIC COMMERCE

19. 4.19 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Benefits of Disintermediation to the Consumer Figure 4-2 Cost/ Sweate r Manufacturer Distributor Retailer Customer $48.50 $40.34 $20.45 ELECTRONIC COMMERCE

20. 4.20 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Interactive Marketing and Personalization Web personalization: Benefits of using individual sales peopleBenefits of using individual sales people Dramatically lower costsDramatically lower costs ELECTRONIC COMMERCE

21. 4.21 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Web Site Personalization ELECTRONIC COMMERCE Figure 4-3

22. 4.22 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce M-Commerce and Next Generation Marketing Mobile commerce (m-commerce): Wireless devices used to conduct both business-to-consumer and business-to- business e-commerce transactions over the InternetWireless devices used to conduct both business-to-consumer and business-to- business e-commerce transactions over the Internet Extend personalization by delivering new value-added services directly to customers at any time and placeExtend personalization by delivering new value-added services directly to customers at any time and place ELECTRONIC COMMERCE

23. 4.23 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Customer Personalization Figure 4-4 ELECTRONIC COMMERCE

24. 4.24 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Business-To-Business Electronic Commerce Automation of purchase, sale transactions from business to business Private industrial networks (private exchanges): Coordination between companies for efficient supply chain management and collaborative activitiesPrivate industrial networks (private exchanges): Coordination between companies for efficient supply chain management and collaborative activities Net marketplaces: On-line marketplaces, point-to-point connections, integrated informationNet marketplaces: On-line marketplaces, point-to-point connections, integrated information ELECTRONIC COMMERCE

25. 4.25 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce A Private Industrial Network Figure 4-5 ELECTRONIC COMMERCE

26. 4.26 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce A Net Marketplace Figure 4-6 ELECTRONIC COMMERCE

27. 4.27 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Exchanges: Third-party net marketplace Primarily transaction orientedPrimarily transaction oriented Connects buyers and suppliers for spot purchasingConnects buyers and suppliers for spot purchasing ELECTRONIC COMMERCE

28. 4.28 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Electronic Commerce Payment Systems ELECTRONIC COMMERCE

29. 4.29 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Electronic Commerce Information Flows Figure 4-7 ELECTRONIC COMMERCE

30. 4.30 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce BenefitsBenefits Group collaborationGroup collaboration Functional applicationsFunctional applications Supply chain managementSupply chain management How Intranets Support Electronic Business ELECTRONIC BUSINESS AND THE DIGITAL FIRM

31. 4.31 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Connectivity: accessible from most computing platformsConnectivity: accessible from most computing platforms Can be tied to internal corporate systems and core transaction databasesCan be tied to internal corporate systems and core transaction databases Can create interactive applicationsCan create interactive applications Scalable to larger or smaller computing platformsScalable to larger or smaller computing platforms Benefits of Intranets ELECTRONIC BUSINESS AND THE DIGITAL FIRM

32. 4.32 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Easy-to-use, universal Web interfaceEasy-to-use, universal Web interface Low start-up costsLow start-up costs Richer, more responsive information environmentRicher, more responsive information environment Reduced information distribution costsReduced information distribution costs Benefits of Intranets ELECTRONIC BUSINESS AND THE DIGITAL FIRM

33. 4.33 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Finance and accountingFinance and accounting Human resourcesHuman resources Sales and marketingSales and marketing Manufacturing and productionManufacturing and production Functional Applications of Intranet ELECTRONIC BUSINESS AND THE DIGITAL FIRM

34. 4.34 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Figure 4-8 Functional Applications of Intranets ELECTRONIC BUSINESS AND THE DIGITAL FIRM

35. 4.35 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Finance and Accounting General ledger reportingGeneral ledger reporting Project costingProject costing Annual reportsAnnual reports BudgetingBudgeting ELECTRONIC BUSINESS AND THE DIGITAL FIRM

36. 4.36 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Human Resources Company On-line publishing of corporate policyOn-line publishing of corporate policy Job postings and internal job transfersJob postings and internal job transfers Company telephone directories, and trainingCompany telephone directories, and trainingEmployees HealthcareHealthcare Employee savingsEmployee savings Competency testsCompetency tests ELECTRONIC BUSINESS AND THE DIGITAL FIRM

37. 4.37 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Sales and Marketing Competitor analysisCompetitor analysis Price updatesPrice updates Promotional campaignsPromotional campaigns Sales presentationsSales presentations Sales contractsSales contracts ELECTRONIC BUSINESS AND THE DIGITAL FIRM

38. 4.38 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Manufacturing and Production Quality measurementsQuality measurements Maintenance schedulesMaintenance schedules Design specificationsDesign specifications Machine outputsMachine outputs Order trackingOrder tracking ELECTRONIC BUSINESS AND THE DIGITAL FIRM

39. 4.39 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce The Future Internet-Driven Supply Chain Figure 4-9 ELECTRONIC BUSINESS AND THE DIGITAL FIRM

40. 4.40 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce Unproven business modelsUnproven business models Business process change requirementsBusiness process change requirements Channel conflictsChannel conflicts Legal issuesLegal issues Security and privacySecurity and privacy MANAGEMENT CHALLENGES & OPPORTUNITIES

41. 4.41 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 4 The Digital Firm: Electronic Business & Electronic Commerce THE DIGITAL FIRM: ELECTRONIC BUSINESS AND ELECTRONIC COMMERCE Chapter 4 4