About the PresentationsThe presentations cover the objectives found in the opening of each chapterAll chapter objectives are listed in the beginning of each presentationYou may customize the presentations to fit your class needsSome figures from the chapters are included; a complete set of images from the book can be found on the Instructor Resources disc*E- Business, Ninth Edition
E- Business, Ninth Edition
E- BusinessNinth EditionChapter 1 The Second Wave of Global E-Business*E- Business, Ninth Edition
E- Business, Ninth Edition
E- Business, Ninth Edition**Learning ObjectivesIn this chapter, you will learn about:What electronic commerce is and how it has evolved into a second wave of growthWhy companies concentrate on revenue models and the analysis of business processes instead of business models when they undertake electronic commerce initiativesHow economic forces have created a business environment that is fostering the second wave of electronic commerce
E- Business, Ninth Edition
E- Business, Ninth Edition**Learning Objectives (contd.)How businesses use value chains and SWOT analysis to identify electronic commerce opportunitiesThe international nature of electronic commerce and the challenges that arise in engaging in electronic commerce on a global scale
E- Business, Ninth Edition
E- Business, Ninth Edition**Electronic Commerce: The Second WaveElectronic commerce historyMid-1990s to 2000: rapid growthDot-com boom followed by dot-com bust2000 to 2003: overly gloomy news reports2003: signs of new lifeSales and profit growth returnElectronic commerce growing at a rapid paceElectronic commerce becomes part of general economy2008 general recessionElectronic commerce hurt less than most of economySecond wave underway
E- Business, Ninth Edition
E- Business, Ninth Edition**Electronic Commerce and Electronic BusinessElectronic commerceShopping on the WebBusinesses trading with other businessesInternal company processesBroader term: electronic business (e-business)Electronic commerce includes: All business activities using Internet technologiesInternet and World Wide Web (Web)Wireless transmissions on mobile telephone networksDot-com (pure dot-com)Businesses operating only online
E- Business, Ninth Edition
E- Business, Ninth Edition**Categories of Electronic CommerceBusiness-to-consumer (B2C)Consumer shopping on the WebBusiness-to-business (B2B): e-procurementTransactions conducted between Web businessesSupply management (procurement) departmentsNegotiate purchase transactions with suppliersBusiness processesUsing Internet technologies to support organization selling and purchasing activitiesConsumer-to-consumer (C2C)Business-to-government (B2G)
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-1 Elements of electronic commerce
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E- Business, Ninth Edition*Elements of electronic commerceRelative sizes of elementsRough approximationDollar volume and number of transactionsB2B much greater than B2CNumber of transactionsSupporting business processes greater than B2C and B2B combinedCategories of Electronic Commerce (contd.)
E- Business, Ninth Edition
E- Business, Ninth Edition**Categories of Electronic Commerce (contd.)ActivityTask performed by a worker in the course of doing his or her jobMay or may not be related to a transactionTransaction: exchange of valuePurchase, sale, or conversion of raw materials into finished productInvolves at least one activityBusiness processesGroup of logical, related, sequential activities and transactions
E- Business, Ninth Edition
E- Business, Ninth Edition**Categories of Electronic Commerce (contd.)Web helping people work more effectivelyTelecommuting (telework)Consumer-to-consumer (C2C)Individuals buying and selling among themselvesWeb auction siteC2C sales included in B2C categorySeller acts as a business (for transaction purposes)Business-to-government (B2G)Business transactions with government agenciesPaying taxes, filing required reportsB2G transactions included in B2B discussions
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-2 Electronic commerce categories
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E- Business, Ninth Edition**The Development and Growth of Electronic CommercePeople engaging in commerce:Adopt available tools and technologiesInternet Changed way people buy, sell, hire, organize business activitiesMore rapidly than any other technologyElectronic Funds Transfers (EFTs)Wire transfersElectronic transmissions of account exchange informationUses private communications networks
E- Business, Ninth Edition
E- Business, Ninth Edition**The Development and Growth of Electronic Commerce (contd.)Electronic Data Interchange (EDI)Business-to-business transmissionComputer-readable data in standard formatStandard transmitting formats benefitsReduces errorsAvoids printing and mailing costsEliminates need to reenter dataTrading partnersBusinesses engaging in EDI with each otherEDI pioneers (General Electric, Sears, Wal-Mart)Improved purchasing processes and supplier relationships
E- Business, Ninth Edition
E- Business, Ninth Edition**The Development and Growth of Electronic Commerce (contd.)EDI pioneers problemHigh implementation costExpensive computer hardware and softwareEstablishing direct network connections to trading partners or subscribing to value-added networkValue-added network (VAN)Independent firm offering EDI connection and transaction-forwarding servicesEnsure transmitted data securityCharge fixed monthly fee plus per transaction chargeGradually moved EDI traffic to the InternetReduced EDI costs
E- Business, Ninth Edition
E- Business, Ninth Edition**The Dot-Com Boom, Bust, and Rebirth1997 to 2000 irrational exuberance12,000 Internet-related businesses started$100 billion of investors money5,000+ companies went out of business or acquired2000 to 2003$200 billion invested Fueled online business activity growth rebirthOnline B2C sales growth continued more slowly2008-2009 recessionB2C and B2B increasing growth rates continueDriving force: people with Internet access increasing
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-3 Actual and estimated online sales in B2C and B2B categories
E- Business, Ninth Edition
E- Business, Ninth Edition**The Second Wave of Electronic CommerceFour waves based on the Industrial RevolutionFirst and second wave characteristicsRegional scopeFirst wave: United States phenomenonSecond wave: internationalStart-up capitalFirst wave: easy to obtainSecond wave: companies using internal fundsInternet technologies usedFirst wave: slow and inexpensive (especially B2C)Second wave: broadband connections
E- Business, Ninth Edition
E- Business, Ninth Edition**The Second Wave of Electronic Commerce (contd.)First and second wave characteristics (contd.)Internet technology integrationFirst wave: bar codes, scannersSecond wave: Radio Frequency Identification (RFID) devices, smart cards, biometric technologiesElectronic mail (e-mail) useFirst wave: unstructured communicationSecond wave: integral part of marketing, customer contact strategiesRevenue sourceFirst wave: online advertising (failed)Second wave: Internet advertising (more successful)
E- Business, Ninth Edition
E- Business, Ninth Edition**The Second Wave of Electronic Commerce (contd.)First and second wave characteristics (contd.)Digital product salesFirst wave: fraught with difficulties (music industry)Second wave: fulfilling available technology promiseMobile telephone based commerce (mobile commerce or m-commerce)Smart phone technology enabling mobile commerceWeb 2.0: making new Web business possibleBusiness online strategy First wave: first-mover advantageSecond wave: businesses not relying on first-mover advantage
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-4 Key characteristics of the first two waves of electronic commerce
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E- Business, Ninth Edition**Business Models, Revenue Models, and Business ProcessesBusiness modelSet of processes combined to achieve company goal of yielding profitElectronic commerce first waveInvestors sought Internet-driven business modelsExpectations of rapid sales growth, market dominanceSaw copying of successful dot-com business modelsMichael Porter argued business models did not exist
E- Business, Ninth Edition
E- Business, Ninth Edition**Business Models, Revenue Models, and Business Processes (contd.)Instead of copying model, examine business elementsStreamline, enhance, replace with Internet technology driven processesRevenue model used todaySpecific collection of business processesIdentify customersMarket to those customersGenerate salesHelpful for classifying revenue-generating activitiesCommunication and analysis purposes
E- Business, Ninth Edition
E- Business, Ninth Edition**Focus on Specific Business ProcessesCompanies think in terms of business processesPurchasing raw materials or goods for resaleConverting materials and labor into finished goodsManaging transportation and logisticsHiring and training employeesManaging business financesIdentify processes benefiting from e-commerce technologyUses of Internet technologiesImprove existing business processes, identify new business opportunities, adapt to change
E- Business, Ninth Edition
E- Business, Ninth Edition**Role of MerchandisingMerchandisingCombination of store design, layout, product display knowledgeSalespeople skillsIdentify customer needsFind products or services meeting needsMerchandising and personal sellingDifficult to practice remotelyWeb site successTransfer merchandising skills to the WebEasier for some products than others
E- Business, Ninth Edition
E- Business, Ninth Edition*ClassificationsDepend on available technologies current stateChange as new e-commerce tools emergeProduct/Process Suitability to Electronic CommerceFIGURE 1-5 Business process suitability to type of commerce
E- Business, Ninth Edition
E- Business, Ninth Edition**Product/Process Suitability to Electronic Commerce (contd.)Commodity item: well suited to e-commerce sellingProduct or service hard to distinguish from same products or services provided by other sellersFeatures: standardized and well knownPrice: distinguishing factorConsider products shipping profileCollection of attributes affecting how easily that product can be packaged and deliveredNote value-to-weight ratioDVD: good exampleExpensive jewelry: high value-to-weight ratio
E- Business, Ninth Edition
E- Business, Ninth Edition**Product/Process Suitability to Electronic Commerce (contd.)Easier-to-sell products have:Strong brand reputation (Kodak camera)Appeal to small but geographically diverse groupsTraditional commerceBetter for products relying on personal selling skillsCombination of electronic and traditional commerceBusiness process includes both commodity and personal inspection items
E- Business, Ninth Edition
E- Business, Ninth Edition**Advantages and Disadvantages of Electronic CommerceE-commerce increases sales and decreases costsVirtual community: gathering of people onlineUsing Web 2.0 technologiesE-commerce buyer opportunitiesIncreases purchasing opportunitiesIdentifies new suppliers and business partnersEfficiently obtains competitive bid informationEasier to negotiate price and delivery termsIncreases speed, information exchange accuracyWider range of choices available 24 hours a dayImmediate access to prospective purchase information
E- Business, Ninth Edition
E- Business, Ninth Edition**Advantages and Disadvantages of Electronic Commerce (contd.)Benefits extend to general society welfareLower costs to issue and secure:Electronic payments of tax refundsPublic retirementWelfare supportProvides faster transmissionProvides fraud, theft loss protectionElectronic payments easier to audit and monitorReduces commuter-caused traffic, pollutionDue to telecommutingProducts and services available in remote areas
E- Business, Ninth Edition
E- Business, Ninth Edition**Disadvantages of Electronic CommercePoor choices for electronic commercePerishable foods and high-cost, unique itemsDisadvantages will disappear when:E-commerce maturesBecomes more available to and accepted by general populationCritical masses of buyers become equipped, willing to buy through Internet Online grocery industry example
E- Business, Ninth Edition
E- Business, Ninth Edition**Disadvantages of Electronic Commerce (contd.)Additional problemsCalculating return on investmentRecruiting and retaining employeesTechnology and software issuesCultural differencesConsumers resistant to changeConflicting laws
E- Business, Ninth Edition
E- Business, Ninth Edition**Economic Forces and Electronic CommerceEconomicsStudy how people allocate scarce resourcesThrough commerce and government actionsCommerce organizations participate in marketsPotential sellers come into contact with buyersMedium of exchange available (currency or barter)Organization hierarchy (flat or many levels)Bottom level includes largest number of employeesPyramid structureTransaction costsMotivation for moving to hierarchically structured firms
E- Business, Ninth Edition
E- Business, Ninth Edition**Transaction CostsTotal costs a buyer and seller incurWhile gathering information and negotiating purchase-and-sale transactionIncludes:Brokerage fees and sales commissionsCost of information search and acquisitionSweater dealer example (Figure 1-6)
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E- Business, Ninth Edition*FIGURE 1-6 Market form of economic organization
E- Business, Ninth Edition
E- Business, Ninth Edition**Markets and HierarchiesCoases analysis of high transaction costsHierarchical organizations formedReplace market-negotiated transactionsStrong supervision and worker-monitoring elementsSweater example (Figure 1-7)Oliver Williamson (extended Coases analysis)Complex manufacturing, assembly operationsHierarchically organized, vertically integratedManufacturing innovations increased monitoring activities efficiency and effectiveness
E- Business, Ninth Edition
E- Business, Ninth Edition*Strategic business unit (business unit)One particular combination of product, distribution channel, and customer typeException to hierarchy trendCommoditiesFIGURE 1-7 Hierarchical form of economic organization
E- Business, Ninth Edition
E- Business, Ninth Edition**Using Electronic Commerce to Reduce Transaction CostsElectronic commerceChange vertical integration attractivenessChange transaction costs level and natureExample: employment transactionTelecommutingMay reduce or eliminate transaction costs
E- Business, Ninth Edition
E- Business, Ninth Edition**Network Economic StructuresNeither market nor hierarchyStrategic alliances (strategic partnerships)Coordinate strategies, resources, skill setsForm long-term, stable relationships with other companies and individualsBased on shared purposesStrategic partnersCome together for specific project or activityForm many intercompany teamsUndertake variety of ongoing activities
E- Business, Ninth Edition
E- Business, Ninth Edition**Network Economic Structures (contd.) Network organizationsWell suited to information-intensive technology industriesSweater exampleKnitters organize into networks of smaller organizationsSpecialize in styles or designsElectronic commerce makes such networks easier to construct and maintainWill be predominant in the near futureManuel Castells predicts economic networks will become the organizing structure for all social interactions
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-8 Network form of economic organization
E- Business, Ninth Edition
E- Business, Ninth Edition**Network EffectsActivities yield less value as consumption amount increasesLaw of diminishing returnsExample: hamburger consumptionNetworks (network effect)Exception to law of diminishing returns More people or organizations participate in networkValue of network to each participant increasesExample: telephone
E- Business, Ninth Edition
E- Business, Ninth Edition**Using Electronic Commerce to Create Network EffectsE-mail account exampleProvides access to network of people with e-mail accountsIf e-mail account is part of smaller networkE-mail generally less valuableInternet e-mail accountsFar more valuable than single-organization e-mailDue to network effectNeed way to identify business processesEvaluate electronic commerce suitabilityFor each process
E- Business, Ninth Edition
E- Business, Ninth Edition**Identifying Electronic Commerce OpportunitiesFocus on specific business processesBreak business downSeries of value-adding activitiesCombine to generate profits, meet firms goalCommerce conducted by firms of all sizesFirmMultiple business units owned by a common set of shareholders or company IndustryMultiple firms selling similar products to similar customers
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E- Business, Ninth Edition*Strategic Business Unit Value ChainsValue chainOrganizing strategic business unit activities to design, produce, promote, market, deliver, and support the products or servicesMichael Porter includes supporting activitiesHuman resource management and purchasingStrategic business unit primary activitiesIdentify customers, design, purchase materials and supplies, manufacture product or create service, market and sell, deliver, provide after-sale service and support
E- Business, Ninth Edition
E- Business, Ninth Edition*Strategic Business Unit Value Chains (contd.)Strategic business unit primary activities (contd.)Importance depends on:Product or service business unit providesCustomers Central corporate organization support activitiesFinance and administrationHuman resourceTechnology development
E- Business, Ninth Edition
E- Business, Ninth Edition*Left-to-right flow Does not imply strict time sequenceFIGURE 1-9 Value chain for a strategic business unit
E- Business, Ninth Edition
E- Business, Ninth Edition*Industry Value ChainsExamine where strategic business unit fits within industryPorters value systemDescribes larger activities stream into which particular business units value chain is embeddedIndustry value chain refers to value systemsDelivery of product to customerUse as purchased materials in its value chainAwareness of businesses value chain activitiesAllows identification of new opportunitiesUseful way to think about general business strategy
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-9 Value chain for a strategic business unit
E- Business, Ninth Edition
E- Business, Ninth Edition*SWOT Analysis: Evaluating Business Unit OpportunitiesSWOT analysisStrengths, weaknesses, opportunities, and threatsConsider all issues systematicallyFirst: look into business unitIdentify strengths and weaknessesThen: review operating environmentIdentify opportunities and threats presentedTake advantage of opportunitiesBuild on strengthsAvoid threatsCompensate for weaknesses
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E- Business, Ninth Edition*FIGURE 1-11 SWOT analysis questions
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E- Business, Ninth Edition*FIGURE 1-12 Results of Dells SWOT analysis
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E- Business, Ninth Edition*International Nature of Electronic CommerceInternet connects computers worldwideWhen companies use Web to improve business process:They automatically operate in global environmentKey international commerce issuesTrust CultureLanguageGovernmentInfrastructure
E- Business, Ninth Edition
E- Business, Ninth Edition*Trust Issues on the WebImportant to establish trusting relationships with customersRely on established brand namesDifficult for online businessesAnonymity exists in Web presenceBanking example: browsing sites pagesDifficult to determine bank size or how well establishedBusiness must overcome distrust in Web strangers
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-13 This classic cartoon from The New Yorker illustrates anonymity on the Web
E- Business, Ninth Edition
E- Business, Ninth Edition*Language IssuesBusiness must adapt to local culturesThink globally, act locallyProvide local language versions of Web siteCustomers more likely to buy from sites translated into own language50 percent of Internet content in EnglishHalf of current Internet users do not read EnglishBy 2015: 70% of e-commerce transaction will involve at least one party outside of the United StatesLanguages may require multiple translationsSeparate dialects
E- Business, Ninth Edition
E- Business, Ninth Edition*Language Issues (contd.)Large site translation may be prohibitiveDecided by corporate department responsible for page contentMandatory translation into all supported languagesHome pageAll first-level links to home pageHigh priority pages to translateMarketing, product information, establishing brandUse translation services and softwareHuman translation: key marketing messagesSoftware: routine transaction processing functions
E- Business, Ninth Edition
E- Business, Ninth Edition*Cultural IssuesImportant element of business trustAnticipating how the other party to a transaction will act in specific circumstancesCultureCombination of language and customsVaries across national boundaries, regions within nationsPersonal property conceptValued in North America and Europe (not Asia)Cultural issue exampleVirtual Vineyards (now Wine.com)
E- Business, Ninth Edition
E- Business, Ninth Edition*Cultural Issues (contd.)Subtle language and cultural standard errorsGeneral Motors Chevrolet Nova automobileBaby food in jars in AfricaSelect icons carefullyShopping cart versus shopping baskets, trolleysHand signal for OK: obscene gesture in BrazilDramatic cultural overtonesIndia: inappropriate to use cow image in cartoonMuslim countries: offended by human arms or legs uncoveredWhite color (purity versus death)
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E- Business, Ninth Edition*Cultural Issues (contd.)Online business apprehensionJapanese shoppers unwillingness to pay by creditSoftbankDevised a way to introduce electronic commerce to a reluctant Japanese population
E- Business, Ninth Edition
E- Business, Ninth Edition*Culture and GovernmentOnline discussion inhospitable to cultural environmentsGovernment controls in some culturesUnfettered communication not desiredUnfettered communication not considered acceptableDenounced Internet material contentUnrestricted Internet access forbiddenFilter Web contentRegularly reviews ISPs and their recordsImpose language requirements
E- Business, Ninth Edition
E- Business, Ninth Edition*Culture and Government (contd.)Internet censorshipRestricts electronic commerceReduces online participant interest levelsChinaWrestling with issues presented by the growth of the Internet as a vehicle for doing businessCreated complex set of registration requirements and regulations governing any business engaging in electronic commerceRegularly conducts reviews of ISPs and their recordsStrong cultural requirements finding their way into the legal codes that govern business conduct
E- Business, Ninth Edition
E- Business, Ninth Edition*Infrastructure IssuesInternet infrastructureComputers and software connected to InternetCommunications networks message packets travelInfrastructure variations and inadequacies existOutside United StatesGovernment-owned industryHeavily regulatedHigh local telephone connection costsAffect buying online behaviorInternational orders: global problemNo process to handle order and paperwork
E- Business, Ninth Edition
E- Business, Ninth Edition*Infrastructure Issues (contd.)Business face challenges posed by variations and inadequacies in the infrastructure supporting the Internet throughout the worldLocal connection costsInability to handle orderFreight forwarderArranges international transactions shipping and insuranceCustoms brokerArranges tariff payment and compliance
E- Business, Ninth Edition
E- Business, Ninth Edition*Infrastructure Issues (contd.)Bonded warehouseSecure locationHolds international shipments until customs requirements or payments satisfiedHandling international transactions paperworkAnnual cost: $800 billionSoftware automates some paperworkCountries have own paper-based forms, proceduresCountries have incompatible computer systemsSee Figure 1-14: complex information flows
E- Business, Ninth Edition
E- Business, Ninth Edition*FIGURE 1-14 Parties involved in a typical international trade transaction
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E- Business, Ninth Edition**SummaryElectronic commerceApplication of new Internet and Web technologiesHelps individuals, businesses, other organizations conduct effective businessAdopted in waves of changeFirst wave ended in 2000Second wave focuses on improving specific business processesTechnology improvementsCreate new products and servicesImproved promotion, marketing, delivery of existing offerings
E- Business, Ninth Edition
E- Business, Ninth Edition**Summary (contd.) Technology improvements (contd.)Improve purchasing and supply activitiesIdentify new customersOperate finance, administration, human resource management activities more efficientlyReduce transaction costsCreate network economic effectsLeads to greater revenue opportunitiesElectronic commerceFits into markets, hierarchies, networks
E- Business, Ninth Edition
E- Business, Ninth Edition**Summary (contd.)Value chainsOccur at business unit, industry levelsValue chains and SWOT analysisTools to understand business processesAnalyze suitability for electronic commerce implementationKey international commerce issuesTrust Culture and languageGovernmentInfrastructure
E- Business, Ninth Edition
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