1. E-Commerce: The Second Wave Fifth Annual Edition Chapter 1: Introduction to E- commerce/e-Business

2. E-Commerce: The Second Wave, Fifth Annual Edition2 About me! Nehemiah Mavetera Lecturer at SIT(ZA) BSc Survey(Hons) UZ PM Geoinformation Management(ITC) Netherlands PhD in IT(UP) -current 8 yrs. Experience in Land, Engineering & Mining Surveying, Project Manager. Lecturer in Photogrammetry, Surveying, Land Information Management at Harare Polytechnic(ZW) Lecturer in IT, Monash University SA Campus, Senior lecturer INF-NWU Research Interests: E-Business/ E-markets, Ontologies, Software agents & E-Governance.

3. E-Commerce: The Second Wave, Fifth Annual Edition3 Assessment Coursework and Examination Coursework=50% Coursework= tests(2), project, and labs in Html, xml and FrontPage. 40% of coursework=Tests and quizzes 60% of coursework=Project Exam=50% You need C+FE=>50/100 to pass.

4. E-Commerce: The Second Wave, Fifth Annual Edition4 Resources Textbook: Gary Schneider, Electronic Commerce: The Second Wave, Fifth Edition, Course Technology Incorporated, 2004, 0-619-21331-0 Study: Lecture notes Lab Sessions: DP lab, www.w3schools.com-html, xml and others. Assignments

5. E-Commerce: The Second Wave, Fifth Annual Edition5 Contact Details Office GAB 221 Tel: 018 389 2143 Email: Maveteran@uniwest.ac.za Office Hours: 9am-3pm Subjects Taught: INF 113, INF 215, INF 711, INF 799. Duties: Honors Program Coordinator & Students Advisor

6. E-Commerce: The Second Wave, Fifth Annual Edition6 OUTCOMES In this chapter, students must know: What electronic commerce is and how it is poised for a second wave of growth and profitability Why business models have given way to revenue models and the analysis of business processes as key elements of electronic commerce initiatives

7. E-Commerce: The Second Wave, Fifth Annual Edition7 OUTCOMES How economic forces have created a business environment that is fostering a rebirth of electronic commerce How businesses use value chains to identify electronic commerce opportunities How businesses use SWOT analysis to analyze and evaluate business opportunities

8. E-Commerce: The Second Wave, Fifth Annual Edition8 OUTCOMES Why electronic commerce is international by its very nature and what challenges arise in doing global electronic commerce

9. E-Commerce: The Second Wave, Fifth Annual Edition9 Purchase Order PO Acknowledgment PRODUCT Delivery Docket Signed Delivery Docket Invoice Remittance Advice CASH Statement Information exchanges in trading Trading at a Distance Customer’s System Vendor’s System

10. E-Commerce: The Second Wave, Fifth Annual Edition10 Product & Cash Control System PRODUCT CASH VENDOR CUSTOMER Sales Orders and Dispatching Debtors Control Purchase Orders and Receiving Creditors Control

11. E-Commerce: The Second Wave, Fifth Annual Edition11 Receiving VENDORCUSTOMER Sales Dispatch Accounts Receivable Ordering Purchase Accounts Payable EDI Vendor Schedule / P.O. EDI P.O. Ackn. EDI A.S.N. Enter Shipment Details Print Bar code A.C.H Labels Requirements EDI Invoice Scan Bar coded Products Requirements Enter Customer Bank Cash and Remittance Advice Via EFT Bar coded Product Info PRODUCT Receipt Advice Vendor Bank This is where we are heading B2B E-Commerce

12. E-Commerce: The Second Wave, Fifth Annual Edition12 Electronic Commerce: The Second Wave Electronic commerce (e-commerce) –Businesses trading with other businesses and internal processes Electronic business (e-business) –Term used interchangeably with e-business –The transformation of key business processes through the use of Internet technologies

13. E-Commerce: The Second Wave, Fifth Annual Edition13 Categories of Electronic Business Five general e-business categories –Business-to-consumer –Business-to-business –Business processes –Consumer-to-consumer –Business-to-government Supply management or procurement –Departments devoted to negotiating purchase transactions with suppliers

14. E-Commerce: The Second Wave, Fifth Annual Edition14 What is e-business? “The seamless application of information and communication technology from its point of origin to its end point along the entire value chain of business processes conducted electronically and designed to enable the accomplishment of a business goal” Too complex?

15. E-Commerce: The Second Wave, Fifth Annual Edition15 What is e-business? “The buying and selling of goods and services on the Internet, especially the WWW.” “Electronic techniques for accomplishing business transactions, inclusing electronic mail or messaging, WWW technology, electronic bulletin boards, purchase cards, electronic funds transfers, and electronic data interchange.” Too narrow?

16. E-Commerce: The Second Wave, Fifth Annual Edition16 What is e-business? These are better: “The strategic deployment of computer-mediated business tools and information technologies to satisfy business objectives.” “Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks.”

17. E-Commerce: The Second Wave, Fifth Annual Edition17 What can we do on the Internet, these days? Paying bills Online games and gambling Searching for information Creating virtual communities Communication  email, web cam, etc. Dating! Buying and selling  goods, services and stocks Getting a degree  distance learning, virtual campus, virtual universities!, virtual toursvirtual tours

18. E-Commerce: The Second Wave, Fifth Annual Edition18 Types of e-business Business to Consumer (B-to-C) Business to Business (B-to-B) Intraorganisational e-business Consumer to Consumer (C-to-C) Business/Consumer to Government

19. E-Commerce: The Second Wave, Fifth Annual Edition19 Types of e-business Relationships in EC Aggregation Matching Facilitation Suppliers Consumers

20. E-Commerce: The Second Wave, Fifth Annual Edition20 What makes e-business work? Business Technologies People

21. E-Commerce: The Second Wave, Fifth Annual Edition21 Elements of Electronic Commerce

22. E-Commerce: The Second Wave, Fifth Annual Edition22 Categories of Electronic Commerce (Continued) Transaction –An exchange of value Business processes –The group of logical, related, and sequential activities and transactions in which businesses engage Telecommuting or telework –Employee logs in to company computer through Internet instead of traveling to office

23. E-Commerce: The Second Wave, Fifth Annual Edition23 Electronic Commerce Categories

24. E-Commerce: The Second Wave, Fifth Annual Edition24 The Development and Growth of Electronic Commerce Electronic funds transfers (EFTs) –Also called wire transfers –Electronic transmissions of account exchange information over private communications networks Electronic data interchange (EDI) –Transmitting computer-readable data in a standard format to another business

25. E-Commerce: The Second Wave, Fifth Annual Edition25 The Development and Growth of Electronic Commerce (Continued) Trading partners –Businesses that engage in EDI with each other Value-added network (VAN) –Independent firm –Offers connection and transaction-forwarding services to buyers and sellers engaged in EDI

26. E-Commerce: The Second Wave, Fifth Annual Edition26 Actual and Estimated Online Sales in B2C and B2B Categories

27. E-Commerce: The Second Wave, Fifth Annual Edition27 The Second Wave of Electronic Commerce Defining characteristics of first wave –Dominant influence of U.S. businesses –Extensive use of the English language –Low bandwidth data transmission technologies –Unstructured use of e-mail –Overreliance on advertising as a revenue source

28. E-Commerce: The Second Wave, Fifth Annual Edition28 The Second Wave of Electronic Commerce (Continued) As second wave begins –Future of electronic commerce will be international in scope –Language translation and handling currency conversion problem will need to be solved –E-mail will be used as an integral part of marketing and customer contact strategies

29. E-Commerce: The Second Wave, Fifth Annual Edition29 Business Models, Revenue Models, and Business Processes Business model –A set of processes that combine to yield a profit Revenue model –Used to Identify customers Market to those customers Generate sales to those customers

30. E-Commerce: The Second Wave, Fifth Annual Edition30 Focus on Specific Business Processes Merchandising –Combination of store design, layout, and product display knowledge Commodity item –Hard to distinguish from the same products or services provided by other sellers –Features have become standardized and well known

31. E-Commerce: The Second Wave, Fifth Annual Edition31 Focus on Specific Business Processes (Continued) Shipping profile –Collection of attributes that affect how easily a product can be packaged and delivered High value-to-weight ratio –Can make overall shipping cost a small fraction of the selling price

32. E-Commerce: The Second Wave, Fifth Annual Edition32 Advantages of Electronic Commerce Can increase sales and decrease costs If advertising done well on the Web –Can get a firm’s promotional message out to potential customers in every country Using e-business sales support and order- taking processes, a business can –Reduce costs of handling sales inquiries –Provide price quotes

33. E-Commerce: The Second Wave, Fifth Annual Edition33 Advantages of Electronic Commerce (Continued) Increases purchasing opportunities for buyer Negotiating price and delivery terms is easier The following cost less to issue and arrive securely and quickly –Electronic payments of tax refunds –Public retirement –Welfare support

34. E-Commerce: The Second Wave, Fifth Annual Edition34 Disadvantages of Electronic Commerce Perishable grocery products are much harder to sell online Difficult to –Calculate return-on-investment –Integrate existing databases and transaction- processing software into software that enables e-business Cultural and legal obstacles also exist

35. E-Commerce: The Second Wave, Fifth Annual Edition35 Economic Forces and Electronic Commerce Economics –Study of how people allocate scarce resources Two conditions of a market –Potential sellers of a good come into contact with potential buyers –A medium of exchange is available

36. E-Commerce: The Second Wave, Fifth Annual Edition36 Transaction Costs Total costs that a buyer and seller incur Significant components of transaction costs –Cost of information search and acquisition –Investment of seller in equipment or in the hiring of skilled employees to supply product or service to buyer

37. E-Commerce: The Second Wave, Fifth Annual Edition37 The Role of Electronic Commerce Businesses and individuals –Can use electronic commerce to reduce transaction costs by Improving flow of information Increasing coordination of actions

38. E-Commerce: The Second Wave, Fifth Annual Edition38 Network Economic Structures Network economic structure –Companies coordinate their strategies, resources, and skill sets Strategic alliances (strategic partnerships) –Relationships created within the network economic structure

39. E-Commerce: The Second Wave, Fifth Annual Edition39 Network Economic Structures (Continued) Virtual companies –Strategic alliances that occur between or among companies operating on the Internet Strategic partners –Come together as a team for a specific project or activity

40. E-Commerce: The Second Wave, Fifth Annual Edition40 Network Effects Law of diminishing returns –Most activities yield less value as the amount of consumption increases Network effect –As more people or organizations participate in a network Value of network to each participant increases

41. E-Commerce: The Second Wave, Fifth Annual Edition41 Value Chains in Electronic Commerce Strategic business unit –One particular combination of product, distribution channel, and customer type Firm –Multiple business units owned by a common set of shareholders Industry –Multiple firms that sell similar products to similar customers

42. E-Commerce: The Second Wave, Fifth Annual Edition42 Strategic Business Unit Value Chains Value chain –A way of organizing the activities that each strategic business unit undertakes Primary activities –Design, produce, promote, market, deliver, and support the products or services it sells Supporting activities –Human resource management and purchasing

43. E-Commerce: The Second Wave, Fifth Annual Edition43 Value Chain for a Strategic Business Unit

44. E-Commerce: The Second Wave, Fifth Annual Edition44 Industry Value Chains Value system –Larger stream of activities into which a particular business unit’s value chain is embedded –Also referred to as industry value chain

45. E-Commerce: The Second Wave, Fifth Annual Edition45 Industry Value Chain for a Wooden Chair

46. E-Commerce: The Second Wave, Fifth Annual Edition46 SWOT Analysis: Evaluating Business Unit Opportunities SWOT analysis –Analyst first looks into the business unit to identify its strengths and weaknesses –Analyst then reviews operating environment and identifies opportunities and threats

47. E-Commerce: The Second Wave, Fifth Annual Edition47 SWOT Analysis Questions

48. E-Commerce: The Second Wave, Fifth Annual Edition48 Results of Dell’s SWOT Analysis

49. E-Commerce: The Second Wave, Fifth Annual Edition49 International Nature of Electronic Commerce Companies with established reputations –Often create trust by ensuring that customers know who they are –Can rely on their established brand names to create trust on the Web Customers’ inherent lack of trust in “strangers” on the Web – Logical and to be expected

50. E-Commerce: The Second Wave, Fifth Annual Edition50 This Cartoon from The New Yorker Illustrates Anonymity on the Web

51. E-Commerce: The Second Wave, Fifth Annual Edition51 Language Issues To do business effectively in other cultures –Must adapt to culture Researchers have found that –Customers are more likely to buy products and services from Web sites in their own language Localization –Translation that considers multiple elements of local environment

52. E-Commerce: The Second Wave, Fifth Annual Edition52 Culture Issues Important element of business trust –Anticipate how the other party to a transaction will act in specific circumstances Culture –Combination of language and customs –Varies across national boundaries –Varies across regions within nations

53. E-Commerce: The Second Wave, Fifth Annual Edition53 Infrastructure Issues Internet infrastructure includes –Computers and software connected to Internet –Communications networks over which message packets travel Organization for Economic Cooperation and Development’s (OECD) –Statements on Information and Communications Policy Deal with telecommunications infrastructure development issues

54. E-Commerce: The Second Wave, Fifth Annual Edition54 Infrastructure Issues (Continued) Flat-rate access system –Consumer or business pays one monthly fee for unlimited telephone line usage –Contributed to rapid rise of U.S. electronic commerce Targets for technological solutions –Paperwork and processes that accompany international transactions

55. E-Commerce: The Second Wave, Fifth Annual Edition55 Parties Involved in a Typical International Trade Transaction

56. E-Commerce: The Second Wave, Fifth Annual Edition56 Summary Commerce –Negotiated exchange of goods or services Electronic commerce –Application of new technologies to conduct business more effectively First wave of electronic commerce –Ended in 2000 Second wave of electronic commerce –New approaches to integrating Internet technologies into business processes

57. E-Commerce: The Second Wave, Fifth Annual Edition57 Summary Using electronic commerce, businesses have –Created new products and services –Improved promotion, marketing, and delivery of existing offerings Global nature of electronic commerce –Leads to many opportunities and few challenges To conduct electronic commerce across international borders –You must understand the trust, cultural, and language legal issues