2. E-Commerce Any form of economic activity conducted via electronic connections Seamless application of ICT from O-D along entire value chain of business processes Use of ICT to network economic activities and processes to reduce information related transaction costs Approach to achieving business goals in which internet technology enables or facilitates execution of activities in and across value chains as well as supporting decision-making underlying these activities Common ingredient is market and its coordination

3. Value Chain Components Value chain model identifies distinct activities that a firm or organization performs in doing business Five primary: production, marketing, delivery, support and service Four secondary: firm infrastructure, human resources, technology development and procurement

4. IT Effects on E-Commerce Communication effect-allows more info to be sent in given time reducing transaction costs Integration effect-tighter linkage between trader and consumer Brokerage effect-electronic marketplace where buyers and sellers can compare offerings Strategic Network effect-allows firms to design and deploy particular linkages to gain competitive advantage

6. Forms of E-Commerce Forms of E-commerce shape virtual and physical value chains B2B- business to business (Intel to Dell) B2C- business to consumer –consumers buying goods for their own use (Amazon) More than 70%, perhaps as much as 90% of global e-commerce transactions are B2B In 2001 E-commerce 18% of Manufacturing shipments, 10% of Merchant Wholesale Trade, 1% of Retail Trade and.8% of Selected Services 68% of all E-Commerce shipments occur in five industry groups: transportation equipment, beverage and tobacco, electrical equipment, appliances and components and computer and electric products

8. Tools of E-Commerce Electronic data interchange (EDI)- electronic method of ordering invoicing and billing their products EDI requires a contractual agreement to trade Electronic mail is second major tool Both viewed as value added network services and allow user to substitute e- forms