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E-Business FundamentalsE- Business can be defined as the application of computer networks for
business purpose.
In other words it is modern business method for need of organization,
merchants and consumers.
E- Business is new way of conducting, managing and executing
business transactions using computer and telecommunication networks.
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E-Business is expected to improve the productivity and competitiveness of participating business by providing unprecedented access to an online global marketplace with millions of customers and thousands of products and services.
Another goal is to provide participating companies with new more cost and time efficient means for working with customers suppliers and development partners.
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E-Business improve quality of goods and services. E-Business replaces the swapping of money or goods with the exchange of information from computer to computer.
Now traditional business is oriented to E-Business.
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Types of E-BusinessB2B
B2C
C2B
C2C
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B2B(Business to Business):
It is a term commonly used to describe the transaction of
goods or services between business.
It is a term that used in automated process between
trading partners.
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For example dell.com, this company sells computers to several other companies via the Internet.Thus eliminating the middle man and reducing costs by a great deal.
There are two types of B2B.
1. Horizontal
2. Vertical
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Horizontal: They are producers and operate different levels.
Vertical: Work with industries and make their money from advertising sites or from transaction fees.
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B2C:
It describes activities of commercial organizations serving
the end consumer with products / services.
The B2C segment can be used for advertising and selling
products ranging from books or CDs to T-Shirt or even
computers.
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C2B:In C2B consumers offer products and services to companies and the company pay them. This type of business is a complete reversal of traditional business. Example princeline.com
( In the prince line model customers quote the price that they are willing to pay for a product or service)
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C2C:
In C2C business involves the electronically facilitated transactions between consumers through some third party.The auction sites where sellers can place their products for sale and buyers can bid for them.
e.g. ebay.com, auctionindia.com, amazon.com
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BENEFITS OF E-BUSINESS1)Reduce Time to complete business transactions.2)Reduce Overhead Cost.3)Improved product analysis.4)Improved Market analysis.5)Reduce inventories.6)Reduced cost to buyers.7)Create new product and services.8)Enhance human capital9)Reach new market.10)Better departmental interactions.11)Reduced Errors.12)Improved customer relation.
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Electronic business Framework:
From the business Activity already taking place, it is clear that E-Business applications will be built on the existing technology
Infrastructure, Literary of computers, communication networks and communication software forming the necessary information.
Figure shows a variety of possible e-Business applications, including both inter-organizational and consumer oriented.
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E business Applications Supply chain Mgmt Video on Demand Remote Banking
Procurement and Purchasing Online Marketing & Advertising
Common business services infrastructure security
/ authentification/ e – Payment The messaging & information distribution infrastructure Multimedia content & network publishing infrastructure
Public Policy Legal & privacy Issue Technical Standards for e-documents multimedia & network Protocol
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Building Blocks in the Infrastructure
• Common Business service, for facilitating the buying and selling
process.•Messaging and information distribution publishing, for creating a
product and a means to communicate about it.•The information super highway is very foundation for providing the
highway system along which all e-business must travel.
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Building Blocks in the Infrastructure
The two pillars supporting all e-business applications and infrastructure.
Public Policy:- to govern such issues as universal access, privacy and information pricing
Technical Standards:- To dictate the nature of information publishing, user interface and transport in the interest of compatibility across the entire network.
Building the various highway is not enough. Transport vehicles are needed, routing issues must be addressed and of-course the transportation costs must be paid.
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E- Business Application 1. Electronic Fund Transfer.
2. Enterprise Application Integration
3. Supply Chain Management.
4. Remote Banking.
5. Video On Demand.
6. Home Shopping.
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1. Electronic Fund Transfer.EFT systems are a major form of e payment systems in banking and retailing
industries. These systems use a variety of information technologies to capture
and process money and credit transfers between banks and businesses and their
customers.
For example ATM support banking at location throughout the world. In addition
most point of sale terminals in retail stores are networked to bank EFT systems,
this makes it possible for you to use a credit card or debit card to instantly pay
for groceries or other purchases at retail outlets.
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2. Enterprise Application Integration
EAI interconnects several e business application clusters. EAI software
enables users to model the business processes involved in the interactions
that should occur between business applications. EAI also provides
middleware that performs data conversion and coordination, application
communication & messaging services and access to the application interface
involved. Thus EAI software can integrate a variety of enterprise application
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3. Supply Chain Management.
The e-business opportunity lies in the fusing of each company’s
internal system to those of its suppliers, partners and customers. This
fusion forces companies to better integrate enterprise supply chain
processes to improve manufacturing efficiency and distribution
effectiveness.
Many companies are making supply chain management (SCM) a top
strategies objective of their e business initiatives. It is an absolute
requirement if they want to meet their e business customer value what
the customer wants, when and where it is wanted at the lowest possible
cost.
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4. Remote Banking
RB is one of the most important modern banking services enabling
the customers to make payments from any place in the world and at any
time via a PC or mobile phone. Telephone banking or mobile banking is the
most convenient and simple methods of receiving information on the status
of the account and transactions on the account may be performed by
telephone. The remote banking is also known as the Internet Banking.
It allows you to access your credit account via the Internet from
your phone or computer. It is free and gives you access to your account 24
hour a day.
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5. Video on Demand
VOD is an interactive multimedia system that works like cable television,
the difference being that the customer can select a movie from a large video
database. VOD systems allow users to select and watch video and clip
content over a network as part of an interactive television system.
E.g.: Interactive TV guides, Interactive telephone yellow pages.
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Overview of Electronic Commerce
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Definitions
Business-to-business (B2B)◦ Businesses make online transactions purchases with
other businessBusiness-to-consumer (B2C)
◦ Online transactions between businesses and consumers
Business-to-employee (B2E)◦ Information and services made available to employees
online
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Electronic Commerce Terms
E-businessEC defined from these perspectives
◦Communications◦Business process◦Service◦Online◦Collaborations◦Community
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Electronic Commerce Terms (cont.)Pure vs. Partial EC: based on the degree of
digitization of◦Product◦Process◦Delivery agent
Traditional commerce: all dimensions are physical
Pure EC: all dimensions are digitalPartial EC: all other possibilities include a mix of
digital and physical dimensions
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Electronic Commerce Terms (cont.)
Internet vs. Non-Internet EC◦VANs◦LANs◦Click and Mortar
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Figure 1-1The Dimensions of Electronic Commerce
Source: Choi et al. (1997), p. 18.
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◦A method of doing business by which a company can generate revenue to sustain itself. Examples:
◦Name your price◦Find the best price◦Dynamic brokering◦Affiliate marketing
Business Models
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Business Models (cont.)
◦Group purchasing◦Electronic tendering systems◦Online auctions◦Customization and personalization◦Electronic marketplaces and exchanges
◦Supply chain improvers◦Collaborative commerce
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Business Models (cont.)
Orbis Corporation
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Business Models (cont.)
Orbis Corporation
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A market is a network of interactions and relationships where
information, products, services, and payments are exchanged.
◦ It handles all the necessary transactions
◦ It is a place where shoppers and sellers meet electronically
◦ Sellers and buyers negotiate, submit bids, agree on an
order, and finish the execution on- or off-line
Electronic Markets(E-marketplaces or E-market spaces)
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Transactions in Electronic Markets
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Electronic Exchanges
Electronic exchanges provide dynamic pricing by
matching real-time supply and demand
◦ Live auctions
◦ Stock exchanges
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◦Inter organizational information system (IOS) involves information flow among two or more organizations
◦Major objective is efficient routine transaction processing, such as transmitting orders, bills, and payments using EDI or extranets
◦Scope: Unified system encompassing two or several business partners
◦Typical IOS includes a company, its suppliers, and and/or customers
Inter organization Information Systems
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Figure 1-3 A Framework for Electronic Commerce
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MarketingComputer sciencesConsumer behavior
and psychologyFinanceEconomics
Management information systems
Accounting and auditing
ManagementBusiness law and
ethicsOthers
Electronic Commerce is Interdisciplinary
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The Driving Forces ofElectronic Commerce
The New World of Business◦Business pressures◦Organizational responses◦The role of Information Technology (including
electronic commerce)
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Major Business Pressures
Market andeconomic
pressures
Strong competitionGlobal economyRegional trade agreements (e.g. NAFTA)Extremely low labor cost in some countriesFrequent and significant changes in marketsIncreased power of consumers
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Major Business Pressures (cont.)
Societal and environmental pressures
Changing nature of workforceGovernment deregulation of banking and other servicesShrinking government subsidiesIncreased importance of ethical and legal issuesIncreased social responsibility of organizationsRapid political changes
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Major Business Pressures (cont.)
Technological pressures
Rapid technological obsolescenceIncrease innovations and new technologiesInformation overloadRapid decline in technology cost vs. performance ratio
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Organizational Responses
Strategic systemsContinuous improvement effortsBusiness process reengineering
(BPR)Business AlliancesElectronic commerce
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Reducing cycle time and time to market
Empowerment of employees and collaborative
work
Supply chain improvements
Mass customization
Change management
IT Support and EC
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The Benefits of EC
Benefits to Organizations◦Expands the marketplace to national and
international markets◦Decreases the cost of creating,
processing, distributing, storing and retrieving paper-based information
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Benefits of EC (cont.)
Benefits to Organizations (cont.)
◦ Allows reduced inventories and overhead by facilitating pull-type
supply chain management
◦ The pull-type processing allows for customization of products and
services which provides competitive advantage to its implementers
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Benefits of EC (cont.)
Benefits to Organizations (cont.)
◦Reduces the time between the outlay of capital and the
receipt of products and services
◦Supports business processes reengineering (BPR) efforts
◦Lowers telecommunications cost - the Internet is much
cheaper than value added networks (VANs)
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Benefits of EC (cont.)
Benefits to consumers◦ Enables consumers to shop or do other transactions
24 hours a day, all year round from almost any location
◦ Provides consumers with more choices◦ Provides consumers with less expensive products and
services by allowing them to shop in many places and conduct quick comparisons
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Benefits of EC (cont.)
Benefits to consumers (cont.)
◦Allows quick delivery of products and services (in some
cases) especially with digitized products
◦Consumers can receive relevant and detailed information
in seconds, rather than in days or weeks
◦Makes it possible to participate in virtual auctions
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Benefits of EC (cont.)
Benefits to consumers (cont.)◦Allows consumers to interact with other consumers n
electronic communities and exchange ideas as well as
compare experiences
◦Facilitates competition, which results in substantial
discounts
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Benefits of EC (cont.)
Benefits to society
◦ Enables more individuals to work at home, and to do less
traveling for shopping, resulting in less traffic on the roads,
and lower air pollution
◦ Allows some merchandise to be sold at lower prices benefiting
less affluent people
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Benefits of EC (cont.)
Benefits to society (cont.)
◦ Enables people in Third World countries and rural areas to enjoy
products and services which otherwise are not available to them
◦ Facilitates delivery of public services at a reduced cost, increases
effectiveness, and/or improves quality
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The Limitations of EC
Technical limitations of electronic commerce
◦Lack of sufficient system’s security, reliability, standards, and
communication protocols
◦ Insufficient telecommunication bandwidth
◦The software development tools are still evolving and changing
rapidly
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The Limitations of EC (cont.)
Technical Limitations of EC (cont.)◦Difficulties in integrating the Internet and
electronic commerce software with some existing applications and databases
◦The need for special Web servers and other infrastructures, in addition to the network servers (additional cost)
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The Limitations of EC (cont.)
Technical Limitations of EC (cont.)◦Possible problems of interoperability,
meaning that some EC software does not fit with some hardware, or is incompatible with some operating systems or other components
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Non-Technical Limitations
Cost and justification ◦The cost of developing an EC in house can be very
high, and mistakes due to lack of experience may result in delays.
◦There are many opportunities for outsourcing, but where and how to do it is not a simple issue
◦In order to justify the system, one needs to deal with some intangible benefits which are difficult to quantify.
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Security and Privacy ◦These issues are especially important in the
B2C area, but security concerns are not so serious from a technical standpoint
◦Privacy measures are constantly improving too ◦The EC industry has a very long and difficult
task of convincing customers that online transactions and privacy are, in fact, very secure
Non-Technical Limitations (cont.)
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Non-Technical Limitations (cont.)
Lack of trust and user resistance ◦Customers do not trust:
Unknown faceless sellers Paperless transactions Electronic money
◦Switching from a physical to a virtual store may be difficult
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◦Other limiting factors are: Lack of touch and feel online Many unresolved legal issues Rapidly evolving and changing EC Lack of support services Insufficiently large enough number of sellers and
buyers Breakdown of human relationships Expensive and/or inconvenient accessibility to the
Internet
Non-Technical Limitations (cont.)
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Putting It All Together
Major concern of today’s companies—how to transform themselves to take part in digital economy
Example:Toys, Inc.◦Uses intranet for internal communications,
collaboration, dissemination of information◦Networked to e-marketspaces and large corporations◦Corporate portal for communication and
collaboration with business partners
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Figure 1-7
Putting It All Together
Prentice Hall, 2002 60
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Is it real?How to evaluate the magnitude of the
business pressures.What should be my company’s strategy
towards EC?
Managerial Issues
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Managerial Issues (cont.)
Why is the B2B area so attractive?What is the best way to learn about
EC?What ethical issues exist?How can failures be avoided?
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Figure 1-8
Plan of the Book
Prentice Hall, 2002 63
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EC Demonstration ICICI Bank
◦ Account Statement ◦ EFT◦ Bill Payment ◦ E-cheque
State BankLIC India
◦ Premium payment ◦ Online status checking and reminder (on phone)
Reliance Infocom ◦ Current charges ◦ Bill detail and payment
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EC Demonstration IIT Student Registration System
Student Registration detail Course registration Dues payment
Faculty Programme Coordinator Course Coordinator Grade Upload Attendance sheet
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Figure 1-1The Dimensions of Electronic Commerce
Source: Choi et al. (1997), p. 18.
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Electronic Commerce Terms (cont.)
Internet vs. Non-Internet EC◦VANs◦LANs◦Click and Mortar
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Figure 1-3 A Framework for Electronic Commerce
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