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Defining e-Business
• e-Business (electronic business)- The organized effort of individuals to produce and sell, for a profit, the products and services that satisfy society’s needs through the facilities available on the Internet
• e-Commerce- Buying/selling activities conducted online- Identifying suppliers, selecting products or services, making purchase commitments, completing financial transactions, and obtaining service
• Outsourcing- the process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost.
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Satisfying Needs Online
• The Internet has created new customer needs
• E-business can satisfy those needs as well as traditional ones– Global access to information and
entertainment
– Virtually unlimited selections of products
– Opportunities for interaction
– Individually custom-tailored content
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Creating e-Business Profit
• Revenue growth– Revenue stream
• Source of revenue flowing into a firm
– Sales of merchandise online– Intelligent information systems to
suggest purchases to repeat online customers
– Increased sales in physical stores because of product information available online
– Advertising on web pages– Subscription fees charged for
access to online services and content
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Creating e-Business Profit (cont’d)
• Expense reduction– Offering services that
• Reduce transaction costs• Provide information• Provide customer assistance
– Reduces the costs of dealing with customers
– Reduces the need for as many physical store locations
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Advantages and Disadvantages of e-Business
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A Framework for Understanding e-Business
• World Wide Web– The Internet’s multimedia environment of audio, visual,
and text data
• Digitized data– Data that have been converted to a type of signal that
the computers and telecommunications equipment that make up the Internet can understand
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A Brief History of the Internet and e-Business
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The Three Primary Groups of e-Business
• The activities of most technology firms overlap into more than one area of e-business
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Opportunities in e-Business
• Global e-Business– All three primary groups of e-business firms
are competing to capture global business– The ability to customize content on the
Internet makes it adaptable for global business
• Small e-Business– Challenges
• Security concerns, technology challenges, products unsuited for selling online
– Opportunities• Marketing/advertising, market research,
networking with other entrepreneurs, managing accounts, low cost, ability to target a niche, venue for finding an audience, dealing directly with customers
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Fundamental Models of e-Business
• Business model– A group of common characteristics and
methods of doing business to generate sales revenues and reduce expenses
• Business-to-Business (B2B) model– Firms that use the Internet to conduct
business with other businesses• Facilitating sales transactions between
businesses• Elicit bids and offers from suppliers and
potential suppliers; learning about the customer’s rules and procedures. Cost savings: reduced labor to enter and track orders and reduced order entry errors
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Fundamental Models of e-Business (cont’d)
• Business-to-Consumer (B2C) model – Firms that focus on
conducting business with individual buyers
– Success comes from understanding how the customer behaves online to build good customer relationships
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Insert table 4.2, 9e with title, p. 127
Other e-Business Models
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Planning for a New Internet Business or Building an Online Presence for an Existing Business
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Social and Legal Concerns
• Ethics and social responsibility– Opportunity
• The Internet provides a shelter of anonymity for both individuals and firms
– Privacy issues• Cookie: A small piece of software
sent by a website that tracks an individual’s Internet use
– Questionable content such as pornography and hate literature
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Social and Legal Concerns (cont’d)
• Privacy and confidentiality issues– Monitoring employees
• Log-file records: Files that store a record of the websites visited
– Using and/or selling customer information• Data mining: The practice of searching through
data records looking for useful information
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Social and Legal Concerns (cont’d)
• Security concerns and cybercrime– Computer viruses
• Software codes that are designed to disrupt normal computer operations
– Fraud and larceny
– Secure electronic transaction (SET)
• An encryption process developed by MasterCard, Visa, IBM, Microsoft, and Netscape that prevents merchants from ever actually seeing any transaction data, including the customer’s credit card number
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Social and Legal Concerns (cont’d)
• Digital property and copyright concerns– Copyright
• Legal right to control content ownership
– Ease of copying and distributing content without permission
– Ease of copying and using company name or trademark without permission
• Government regulation and taxation– The Internet is an extension of the traditional business
and workplace– Online vendors are legally treated like mail-order
companies regarding taxes– Sale and distribution of restricted products (such as
prescriptions)
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The Future of e-Business: Growth, Opportunities, and Challenges
• The Internet will continue to expand along with related technologies
• Opportunity: Only one billion of the world’s 6 billion people are online
• Americans comprise 20 percent of all users—the largest group online.
• Of the almost 300 million people making up the American population, 185 million use the Internet—140 million actively
• More than 40% of Americans enjoy fast broadband access at home
• American men spend 6.7 hours online per week; and American women spend 5.3 hours per week
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Internal and External Forces That Affect an e-Business
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Environmental Forces Affecting e-Business
• Globalization– Positive: Drawing people of the
world together– Negative: A threat to national
cultures, identities, languages, ways of life
• Convergence of technologies– The overlapping capabilities and
the merging of products and services into one fully integrated interactive system
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The Future of e-Business: Growth, Opportunities, and Challenges (cont’d)
• Online communities– Groups of individuals or firms that want
to exchange information, products, or services over the Internet
• Partnering online– By playing a role with a large entity,
small firms can enjoy competitive advantage and access to marketable items, thereby increasing their rate of market penetration and growth