1. Lesson # 1 Introduction to E-Commerce & Technology Infrastructure

2. In this chapter, you will learn about: What electronic commerce is and how it is experiencing a second wave of growth with a new focus on profitability The international nature of electronic commerce and the challenges that arise in engaging in electronic commerce on a global scale

3. Electronic commerce (e-commerce)  Businesses trading with other businesses and internal processes Electronic business (e-business)  Term used interchangeably with e-commerce  The transformation of key business processes through the use of Internet technologies

4. Five general e-commerce categories:  Business-to-consumer  Business-to-business  Business processes  Consumer-to-consumer  Business-to-government

6. Transaction  An exchange of value such as purchase, sell Business processes  The group of logical, related, and sequential activities and transactions in which businesses engage  Ex. Transferring funds, shipping goods, invoices Telecommuting or telework  Employees log in to company computers through the Internet instead of traveling to the office

9. 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  Reduce errors, no need to reenter data

10. Trading partners  Businesses that engage in EDI with each other Value-added network (VAN)  Independent firm that offers connection and transaction- forwarding services to buyers and sellers engaged in EDI

12. Defining characteristics of the first wave:  Dominant influence of U.S. businesses  Extensive use of the English language  Many new companies started with outside investor money  Unstructured use of e-mail  Over-reliance on advertising as a revenue source

13. Second wave:  Global enterprises in many countries are participating in electronic commerce  Established companies fund electronic commerce initiatives with their own capital  Customized e-mail strategies are now integral to customer contact

14. Business model  A set of processes that combine to yield a profit Revenue model  A specific collection of business processes used to:  Identify customers  Market to those customers  Generate sales to those customers

15. Addition to Revenue Model, rest of operations as specific business processes.  Managing Transportation, training employes

16. Merchandising  Convenience consumers to buy  Combination of store design, layout, and product display knowledge  Identify customer needs

17. Commodity item  Hard to distinguish from the same products or services provided by other sellers  Features have become standardized and well known  A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market.  Examples are petroleum, notebook paper, milk, copper etc.

18. 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, Ex. Airline Ticket  Ex. Kodak camera vs. Real Estate

19. Electronic commerce can increase sales and decrease costs If advertising is done well on the Web, it can get a firm’s promotional message out to potential customers in every country Using e-commerce sales support and order-taking processes, a business can:  Reduce costs of handling sales inquiries  Provide price quotes

20. It increases purchasing opportunities for buyers Negotiating price and delivery terms is easier Easier to audit/monitor payments Protection against fraud and theft losses

21. Perishable grocery products are much harder to sell online It is difficult to:  Calculate return on investment  Integrate existing databases and transaction-processing software into software that enables e-commerce Cultural and legal obstacles also exist

22. Firm  Multiple business units owned by a common set of shareholders Industry  Multiple firms that sell similar products to similar customers

23. Value chain  A way of organizing the activities that each strategic business unit undertakes Primary activities include:  Designing, producing, promoting, marketing, delivering, and supporting the products or services it sells Supporting activities include:  Human resource management and purchasing

24. Prof. Ash E-Commerce & E-Business - 151602

25. Importance of strategic business unit fits within its industry Value system  Larger stream of activities into which a particular business unit’s value chain is embedded  Also referred to as industry value chain

27. In SWOT analysis:  An analyst first looks into the business unit to identify its strengths and weaknesses  The analyst then reviews the operating environment and identifies opportunities and threats  Ex. Dell Computers

30. To do business effectively in other cultures a business must adapt to those cultures Researchers have found that customers are more likely to buy products and services from Web sites in their own language “think globally, act locally”

31. An important element of business trust is anticipating 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  Significance of colors-China vs. US

32. Internet infrastructure includes:  Computers and software connected to the 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

33. 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

36. Internet hosts: directly connected computers Internet growth  Technological and social accomplishment  Used by millions of people  Thousands of different software packages  Billions of dollars change hands yearly  Led to World Wide Web

37. Protocol: collection of network data rules  Includes transmission rules  Computers must use same protocol ARPANET: Network Control Protocol (NCP) Proprietary architecture (closed architecture)  Manufacturer creates own protocol Open architecture (Internet core)  Uses common protocol  Four key message-handling rules  Contributed to the Internet’s success

38. Internet protocols  Transmission Control Protocol (TCP)  Controls message or file disassembly into packets before Internet transmission  Controls packet reassembly into original formats at destinations  Internet Protocol (IP)  Specifies addressing details for each packet  Labels packet with origination and destination addresses TCP/IP refers to both protocols  Used today (replaced ARPANET NCP)

39. Dotted decimal notation difficult to remember Domain names  Sets of words assigned to specific IP addresses  Example: www.sandiego.eduwww.sandiego.edu  Contains three parts separated by periods  Top-level domain (TLD): rightmost part  Generic top-level domains (gTLDs)  Sponsored top-level domains (sTLD)  Internet Corporation for Assigned Names and Numbers (ICANN)  Responsibility: managing non-sTLD

41. Electronic mail (e-mail)  Formatted according to common set of rules  Client/server structure E-mail server  Computer devoted to e-mail handling  Stores, forwards e-mail messages E-mail client software  Reads and sends e-mail  Communicates with e-mail server software Standardization and rules very important

42. Two common protocols  Simple Mail Transfer Protocol (SMTP)  Specifies mail message format  Describes mail administration e-mail server  Describes mail transmission on the Internet

43.  Post Office Protocol (POP)  An application-layer Internet standard protocol used by local e-mail clients to retrieve e-mail from a remote server over a TCP/IP connection  Sends mail to user’s computer, deletes from server  Sends mail to user’s computer, does not delete  Asks if new mail arrived

44. Internet2  a dynamic, innovative and cost-effective hybrid optical and packet network  Replacement for original ARPANET laboratory  Experimental networking technologies test bed  High end of the bandwidth spectrum (10 Gbps)  Used by universities, medical schools, CERN  Focus  Mainly technology development  Bandwidth-intensive requirements

45. Semantic Web project (next-generation Web)  Goal: blending technologies and information into a next- generation Web  Have words on Web pages tagged (using XML) with their meanings  machine-readable metadata about pages and how they are related to each other  Uses software agents (intelligent programs)  Read XML tags, determine meaning of words in their contexts  Resource description framework (RDF)  Set of XML syntax standards  Development of Semantic Web will take many years

46. 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