Date post: | 20-Mar-2017 |
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Career |
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Learning Objectives
1. Define electronic commerce (EC) and the content and dimensions of field.
2. The benefits of EC to organizations, consumers, and society.
3. The Limitations of EC.4. Impact of e-commerce
Definition and the contents of field
Electronic commerce (EC)The process of buying, selling, or exchanging products, services, or information via computer networks.These computer network consist of:
Internet : Internet is self regulated network connecting millions of
computer networks around the globe. Intranet
An internal corporate or government network (LAN or WAN) that uses Internet tools, such as Web browsers, and Internet protocols behind the companies firewall.
Extranet A network that uses the Internet to link multiple intranets
Definition and the contents of field
EC can be further defined from these perspectives: Communication perspectives
Delivery of information ,product or service, payment Business process perspectives
Use of technology for automation of business process Service perspectives
Increase the speed of service delivery Online perspectives
Enhanced online capabilities of digital products and services
Dimensions of EC e-business
A broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization.
Pure versus Partial EC EC can take several forms depending on the degree
of digitization 1. the product (service) sold2. the delivery method (intermediaries)3. the process (e.g., ordering, payment, fulfillment)
The product can be physical or digital The agent can be physical or digital The process can be physical or digital
The EC field
Framework of EC (figure 1.2) Applications Four Pillars, major areas Supporting Infrastructure
Electronic market Electronic market is the place where shopper
and seller meet to exchange goods, services, money, or information. It is a network based location.
Classification of the EC field by the nature of transactions These are general e-commerce types: Business to Business (or B2B) e-commerce (sometimes
called e-procurement) Business to Consumer (or B2C) e-commerce Consumer-to-consumer (or C2C) e-commerce Non-Business EC: NGOs, universities , schools etc.
activities to improve their operations and reduce costs. Business-to-government (or B2G) e-commerce Intra-business EC: E-commerce category that includes
all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization.
Benefits and Limitations
Benefits to Organizations
Expand marketplace to national and international markets. Allows small businesses to have global customer base Provides purchasing opportunities for buyers (businesses
can identify new suppliers and partners) Increases sales: easily and quickly locate more customers
and suppliers decreases cost :Reduced cost through electronic sales
enquires, price quotes and order taking, instead of retrieving paper-based information
highly specialized business : pets.com Improved image , improved service, compressed cycle
Benefits to… Consumers
Business can be transacted 24hrs a seven days a week. More choices :The level of detail of purchase information
is selected by user. Conduct quick comparison Digital products can be delivered instantly Electronic communities share and exchange ideas and
experiences. Society
Work at home: Less traffic, time saving Tax refunds, public retirement and welfare support costs
less when distributed over the Internet Allows products and services to be available in remote
areas, e.g. e-learning
Limitations Technological
The newness and evolution of the current technology. System security , reliability, protocols and standards Digital divide: insufficient bandwidth Rapid change in technology Integration with old system: Difficulty in integrating
current databases and transaction processing systems into e-commerce solutions
Limitations
Non-technological Cost of opening EC in house very high Security and privacy Trust :Transmission of credit card details Cultural and legal obstacles User résistance, Some consumers unwilling to change Laws are unclear Shipping profile: Products with a low value-to-weight ratio that
can not be efficiently packed and shipped are unsuitable Breakdown in human relationship
Well-suited Business Processes to Particular (only) E-commerce
Sale/purchase of books & CDs, Online delivery of software Travel services (Air, Buss, Railway
Tickets, Hotel bookings), Investments and insurance services Stock ExchangeOnline shipment tracking (DHL)
E-commerce + Traditional commerce Well-suited Business Processes for both
Sale/purchase of automobiles and residential real estate (e.g. do research online then buy from a dealer or real estate agent)
Online banking Matching/friendship service
Traditional Business Processes (Not-suited to E-Commerce)
Products can not be efficiently packed and shipped are unsuitable
Sale/purchase of impulse items for immediate use, high fashion jewelry and antiques
Perishable foods, Fresh vegetables or fruits (personal inspection required; prefer to touch, smell or examine closely)
Small denomination purchases and sales (since there is not yet a standard for transferring small amounts of money)
The Driving Forces Of EC
Markets, technology, and societal pressures, force organizations to respond (table 1.2).
Traditional responses (lowering costs by firing employees, closing unprofitable product or service) may not be sufficient due to magnitude of the pressure and the frequent changes.
Therefore organizations frequently must use innovation and reengineering their operations. e.g. improving service standards. New customized products.
Business Process: Organizational Response…
Strategic systems: Strategic information system increase market
intelligence and result in increase market share.Continuous improvement efforts
Improved productivity (e.g. employees) Improved decision making Customer service innovation
Business process re-engineering
Organizational Response….
Business process re-engineering Reducing cycle time and time to market
Inception of idea to its implementation First mover advantage
Empowerment of employees and collaborative work Delegates authority to team who can execute the work
faster and error free Knowledge management
Organizational know how via intranet Customer focus approach
Mass production to Mass customization Business alliance
Joint venture Virtual cooperation
Impact of e-commerce: everything will change…
Improving direct Marketing/Marketing related effects Product promotion :Interactive and information rich
interaction New sales and distribution channels Direct saving :information/product delivery direct to
customers Reduced cycle time : administrative work load can be
reduced save 90% time Customer service: through intelligent agents, detailed
information
everything will change…
Brand or corporate image: quick and trusty Customization: computers and even cars can
customized Advertisement: more effective than mass
advertisements Ordering system: order can given electronically and
quickly routed to fulfill Markets : new markets explored like digital markets.,
market space converted
everything will change…
Transforming organizations Technology and organizational learning
Before getting it right, organization might have to struggle with different experiments
Re–arrange or new offerings according to better customer feedback
Durable impact cannot be achieved overnight Changing nature of work
Reducing work force Outsourcing Workers are more flexible, constant learner, willing to change
Redefining organization New product capabilities
Mass customization Build customer profile
New business models Direct distribution to end user New products like banner ads/ web developers
Impact on manufacturing Just in time manufacturing Computer aided designs Merging productions from different parts of world, due to
EC communication collaboration and coordination.
everything will change…
Impact on finance and marketing Shake the financial systems even governments New payment systems Online valets Electronic cash Money laundering
Human resource management, training education Online Trainings in organizations Free information access Interactive TVs / online education / CBTs