1. 1 The Business and Operations Value Chain and How EC impact the conventional Value Chain

2. 2 Activity 2 Puzzle Challenge

3. Electronic Commerce is Interdisciplinary  Management information systems  Accounting and auditing  Management  Business law and ethics  Marketing  Computer sciences  Consumer behavior and psychology  Finance  Economic  Production/Logistic 3

4. Competitive Advantage  Derives from the value a company creates for its buyers:  Low cost  Selling equivalent product at below-competitor prices  Differentiation  In a unique way relative to its competitors 4

5. Value Chain Concept  An instrument to analyze a firm ’ s competitive advantages  Provides a systematic means of displaying and categorizing activities Primary Activities Support Activities Inbound Logistics ServicesOperationsOutbound Logistics Marketing And Sales Corporate Infrastructure Human Resources Management Technology Development Procurement Margin 5

6. The Value Chain  Primary activities  Inbound logistics  Operations  Outbound logistics  Marketing & sales  Service  Supporting Activities  Corporate infrastructure  Human resource management  Technology development  Procurement 6

7. Primary Activities  Inbound logistics  Materials receiving, storing, and distribution to manufacturing premise.  Operations  Transforming inputs into finished products.  Outbound logistics  Storing and distributing products.  Marketing and Sales  Promotion and sales force.  Service  Service to maintain or enhance product value. 7

8. Supporting Activities  Corporate infrastructure  Support of entire value chain, such as general management, planning, finance, accounting, legal services, government affairs, and quality management.  Human resource management  Recruiting, hiring, training, and development.  Technology development  Improving product and manufacturing process.  Procurement  Function or purchasing input. 8

9. Application and benefits of electronic commerce  Inbound logistic  A large department store chain is linked directly to several of its textile suppliers.This hookup has not only improved delivery and permitted inventory reduction; it has also provided the chain the flexibility to meet changing demand almost immediately. 9 Example

10. Application and benefits of electronic commerce  Operations and product structure  A major insurance company thought of its business as a provider of diversified financial services and as a bit-moving company. It improved its services to policyholders by allowing them immediate on-line checking of status for claims processing. 10 Example

11. Application and benefits of electronic commerce  Outbound logistic  An international delivery company offering free, state-of-the-art program download and shipment tracking application program for e-business integration. These empowered businesses to serve existing and emerging markets more effectively and more responsively. 11 Example

12. Application and benefits of electronic commerce  Marketing and sales  A large pharmaceutical company offers on- line order-entry services to pharmacies for itself and a consortium of allied, non- competing companies. This service has increased its market share and derived sizable added revenues from its consortium partners. 12 Example

13. Application and benefits of electronic commerce  Service  A large manufacturer of industrial machinery has installed an expect maintenance system in its home-office computer. When a machine failure occurs on a customer ’ s premises, the machine is connected over a telephone lint to the manufacturer ’ s computer, which performs a fault analysis and issues instructions to the machine operator. 13 Example

14. Application and benefits of electronic commerce  Corporate infrastructure  In some instances IT has dramatically enhanced coordination through fairy simple by but powerful tools such as voice mail, e- mail. These tools have dramatically accelerated the depth and breadth of communication 14 Example

15. Application and benefits of electronic commerce  Human resources  The corporate management committee members of an oil company has full-on-line access to the detailed personnel files of the 400 most senior members in the corporation, compete with such data as five-year performance appraisals, photographs, and lists of positions each person is backing up. The company believes this capability has facilitated its important personal decisions. 15 Example

16. Application and benefits of electronic commerce  Technology development  CAD/CAM (computer-aided design and manufacturing) technology has fundamentally changed the quality and speed up the manufacturing process. 16 Example

17. Application and benefits of electronic commerce  Procurement  A retailer, by virtue of its large size, has succeeded in its demand for on-line access to the inventory files and production schedules of it suppliers. This access has permitted the company to mange its inventories more tightly than before and to pressure suppliers on price and product availability. 17 Example

18. 18 Can you think of other examples?

19. Sourcing  Upstream focuses in B2B activities  Downstream focuses in B2C activities Upstream InternalDownstream Assembly/ Manufacturing and Packaging Distribution Centers Retailers Customers Supply Chain Model 1 st Tier Supplier 2 nd Tier Supplier 2 nd Tier Supplier 2 nd Tier Supplier 1 st Tier Supplier 19

20. What Business Purchase  Manufacturing Inputs  Manufacturing inputs are the raw material and components that go directly into a product or a process. Spot sourcing  Operating Inputs (MRO)  Operating Inputs tend not to be industry specific 20

21.  Systematic Sourcing  Involves Negotiation  Tend to be long term  Static Price  Spot Sourcing  Fulfil an immediate need  Lowest possible cost How Business Purchase 21

22. Traditional Sourcing Issues  Insufficient Supplier / Buyer Information  Geographical Restriction  Buyers/ Suppliers connection and experience  Fragmented Market  Continuously changing parts and suppliers 22

23. Traditional Sourcing Issues  Spot Sourcing  Short time frame  Lower Buyer ’ s bargaining power  Manual Process  Inefficient and information duplication  Purchased from non-approved suppliers  Ordering rules difficult to enforce  Slow ordering process 23

24. Definition of E-Sourcing  Using the Internet/www and related tools to buy goods and services  Using the Internet/www to support processes to buy goods and services 24

25. E-marketplace  Buyers and sellers could be brought together in cyberspace  Reducing NxN interactions to Nx1 interactions among the players P6 P2 P5 P1 P4 P3 P6 P2 P5 P1 P4 P3 E-Markets 25

26. Examples of E-marketplace (1)  Power.National.com  Designer ’ s web bench  Output-oriented site 26

27. Examples of E-marketplace (2)  Chemweb.com  Chemistry, biology, lab supplies and reagents 27

28. Examples of E-marketplace (3)  TradeWeb.com  Bond market 28

29. Examples of E-marketplace (4)  PlasticsNet.com  Market place for industry professionals 29

30. Examples of E-marketplace (5)  Seafax.com  All you need for Food Industry 30

31. Example of e-marketplace (6)  www.hktaiga.com The Global Apparel Trade Gateway www.hktaiga.com 31