1. Introduction to MIS1 Copyright © 1998-2002 by Jerry Post Introduction to MIS Chapter 11 Electronic Business

2. Introduction to MIS2 Electronic Business Large business Small business/ supplier Customer Salesperson The Internet Orders, Auctions, and EDI Sales and CRM Service, orders, and information Web hosting and Web-based services

3. Introduction to MIS3 Outline Forms of Electronic Commerce Production Chain and Disintermediation Dynamic Pricing Distributed Services Marketing Phases Web Advertising: Advertiser Web Advertising: Publisher Web Traffic Analyzer Web Hosting Options Mobile Commerce Entrepreneurship: Creating a Business Industry Research Business Plans Forecasting Financial Data Forming a Corporation Financing a Startup E-Commerce Startup Cases: Travel Industry Appendix: Business Plans

4. Introduction to MIS4 Forms of Electronic Commerce BusinessConsumer BusinessB2B EDI Commodity auctions B2C Consumer-oriented Sales Support ConsumerC2B Minimal examples, possibly reverse auctions like PriceLine C2C Auction sites (eBay) But many of these are dominated by small business sales.

5. Introduction to MIS5 Production Chain parts supplier parts supplier parts supplier warehouse supplier tool manufacturer Manufacturer workers wholesaler distributor retail store Consumers

6. Introduction to MIS6 Disintermediation Manufacturer Retailer Consumer Production Chain E-commerce website

7. Introduction to MIS7 Dynamic Pricing P Q D S Perfect competition price Price consumer is willing to pay The ultimate goal is to set individual prices for each consumer to capture the maximum price each is willing to pay. As opposed to the perfect competition price, where everyone pays the same price, and some customers gain because they were willing to pay more.

8. Introduction to MIS8 Distributed Services Company 1 Company 2 The Internet Original document Translated document Internet Service e.g., automated document translation

9. Introduction to MIS9 XML: Extensible Markup Language 1 3/6/2001 $33.54 Need immediately. 30 Flea Collar-Dog-Medium 208 $4.42 27 Aquarium Filter & Pump 8 $24.65

10. Introduction to MIS10 XML In Internet Explorer

11. Introduction to MIS11 Marketing Phases Pre-Purchase Static data sites. Promotion. Product specifications. Pictures. Schematics. Pricing. FAQs. Interactive sites. Configuration. Compatibility. Complex pricing. Purchase Transmission security. User identification. Product selection. Payment validation. Order confirmation. Post-Purchase Service. Problem tracking. Sales leads. Resolve problems. Answer questions. Product evaluation. Modifications. Tracking customers.

12. Introduction to MIS12 Web Advertising: Advertiser Perspective Want viewers to see the ad. Want viewers to click through to the main site. Need to match site demographics to target audience. Monitor response rates. Cost.

13. Introduction to MIS13 Web Advertising: Publisher Perspective Income Cost per thousand viewings ($1 - $50) Need volume (25,000 or 1,000,000 per month) Need demographics Tasks Ad rotation software Tracking and monitoring Ad sales staff Billing Third Party: DoubleClick

14. Introduction to MIS14 Website Log Analyzer SurfStats pro

15. Introduction to MIS15 Web Hosting Options

16. Introduction to MIS16 Simple Static HTML Website Main Web Page Categories … Category 1 Productphoto… Category 2 Productphoto… Category 3 Productphoto… Product 1 Description Price Photo Product 2 Description Price Photo Product n Description Price Photo Product 3 Description Price Photo

17. Introduction to MIS17 Simple Website with Buy Me Button Merchant Web site Product Description Price Buy Me Shopping Cart ItemPrice… Total Check Out Credit Card Data Name Address Phone Card Number Submit Card Processor Site Customer Notification (Accept/Reject) Notify merchant http://www.goemerchant.com/buymebutton.htm

18. Introduction to MIS18 Web Auctions Uncertain price Can set reserve price Good for unique items Efficiency depends on Full information Adequate number of participants

19. Introduction to MIS19 Amazon.com zShops zShop Products Cameras, Digital, Brand Vendor 1 Vendor 2 Vendor 3 Vendor Transfer Description Price Scanned image Contact info Consumer Product search Choose vendor Pay for item Transaction Processing Amazon.com handles credit Sends order info to merchant Merchant ships item to consumer

20. Introduction to MIS20 Virtual Malls Essentially a marketing agreement The mall provides a directory to merchants The merchant site runs on a different server Directory of Shops Product category Vendor 1 Vendor 2 Merchant Site Products Sales

21. Introduction to MIS21 Web Commerce Servers Your Web site Products Shopping cart Sales Web servers Database Commerce Server Shell Web/Commerce Hosting Company Customers Merchants Load database Images Descriptions Prices Customize site

22. Introduction to MIS22 Application Service Provider Business Application e.g., Accounting Store data Analyze data Facilitate company interaction Businesses that lease the use of the application

23. Introduction to MIS23 Web Hosting Questions

24. Introduction to MIS24 Mobile Commerce Fujitsus tablet computer As PDAs, cell phones, and tablet computers converge; people will ultimately be able to connect to any business every place they go. Palm VII wireless PDAPrototype Nokia 3G

25. Introduction to MIS25 Creating a Business Idea Plan Implementation

26. Introduction to MIS26 Expand Your Focus customers Big competitor You might try to compete directly. It might be better to sell your innovation as a service to the dominant firm or to be an intermediary for consumers.

27. Introduction to MIS27 Industry Research Competition Number Concentration ratios Sales by firm Technology plans Size of the market Number of customers Amount of revenue Growth rate Market comparison for substitute products Consumer focus group interviews Production costs Startup/fixed costs Operating costs Legal environment

28. Introduction to MIS28 Business Plans Executive Summary Strategy, Competition, and Market Analysis Forecasts, Cash Flow, and Investment Budget Marketing Organization and Timetable tasks time

29. Introduction to MIS29 Forecasting Financial Data Customers and Sales estimate Infrastructure scale Employees Sales revenue Marketing costs Operating and selling costs Salary costs Balance Sheet Income Statement Profit and Loss Cash Flow Financial statement estimates Financial statements and ratios

30. Introduction to MIS30 Breakeven Analysis Revenue Cost Breakeven point

31. Introduction to MIS31 Forming a Corporation State Forms Articles of Incorporation Corporate Bylaws Registered Agent (self) Business Registration Form State Employer Number Withholding ID Sales Tax ID Additional licenses Federal Forms SS-4 Application for Employer Identification Number 2553 Election by a Small Business Corporation Commercial Bank Account DUNS Number Accounting System Purchase software Hire accountant Define chart of accounts Standards Additional detail Define processes

32. Introduction to MIS32 Financing a Startup Venture Capital Angel Investor Partners Become owners with some control over management. Funding for development and operations. Successful firm IPO: Additional funds Reward to original investors

33. Introduction to MIS33 Additional Setup Steps for E-Commerce Additional risk and challenge of obtaining funding. Website development. Programming cost. Time and management. Purchase or lease merchant software if possible. Find a web hosting ISP. Site complexity. Internet connectivity. Costs. Host site yourself. Time to get leased line. Choose site location based on Internet access. Obtain digital security certificate (Verisign). Find bank that will provide merchant account services to accept credit card payments. Setup fee. Monthly fee. Transaction fee. Find a credit card processing firm that works with your bank and your software. Setup fee. Monthly fee. Transaction fee.

34. Introduction to MIS34 Cases: Travel Industry

35. Introduction to MIS35 Cases: The Sabre Group American Express What is the companys current status? What is the Internet strategy? How does the company use information technology? What are the prospects for the industry? www.sabre.com www.americanexpress.com

36. Introduction to MIS36 Appendix: Business Plan Purposes Help managers identify strategies and plan for future Identify goals and concrete objectives Provide measurement of success and identify problems Provide detailed information to investors Outline budget needs

37. Introduction to MIS37 Business Plan Structure Introduction Outline and summary of the company and the plan Marketing Competitors Market analysis Advertising Sales Management Product Management: prices and costs Historic Analysis Sales, profits, structural changes Organization Structure of the firm and management Financing Detailed cash needs Projections Estimates of sales, costs, growth with detailed data and forecasts

38. Introduction to MIS38 Marketing Plans Products Costs Prices Profits Competition Strategy Sales Goals and Forecasts Promotional methods Sales Management Distribution and Service

39. Introduction to MIS39 Rolling Thunder Bicycles Example Sales estimated while the firm was being formed.

40. Introduction to MIS40 Rolling Thunder Bicycles Estimated Sales

41. Introduction to MIS41 Projected Income Statement Interest rate on borrow8.00% Interest rate on short term investments3.00% Depreciation, 5 years, straight line0.2 Tools purchases$250,000$50,000$50,000

42. Introduction to MIS42 Projected Balance Sheet Assumptions Receivables as percent of sales: 10% Payables as percent of material costs: 10% Inventory as percent of material costs: 12%

43. Introduction to MIS43 Projected Cash Flow