eFirm & eCommerce

Digital Firm

Contents

1. Introduction2. The opportunities of technology3. Electronic Commerce4. Payment systems5. Management challenges6. Summary

The opportunities of technology

Digital Firm

Digital firm uses internet for Available for customer 24/7 Easiest way to connect with other businesses and

customers Replaces the existing distribution channels Creating new business models Reduces costs Eliminating inefficient intermediaries Equilibrium between Reach and Richness

Reducing costs Reducing costs of

information Creating Sending Storing

Transaction costs Agency costs

Reach & Richness Before the Internet

companies had to make a choice between Richness

depth and details of information that business can supply to the

customer business collects about

customer Reach

How many… people a business can connect

with products it can offer them

Richness

Reach

Easy information flow Nowadays it is possible to gain information direct from

product source Without intermediaries Without physical visiting shop

Quicker, easier and more convenient

Internet Business model Describes how the enterprise

Produces Delivers Sells product/service

Showing how the enterprise creates wealth

Internet Business models Virtual storefront Content provider Online marketplace Virtual community Online service provider Portal

Virtual storefront Sells physical products

directly to consumers or to individual businesses

Content provider Creates revenue by

providing digital content such as News Photos Video Music

Virtual community Provides online meeting

place Users can communicate

and exchange useful information

Portal Provides initial point of

entry to the web along with specialized content and other services

Electronic commerce

eBuisness

Categories of electronic commerce Many ways in which electronic commerce can be

classified Three major categories are:

Business-to-Consumer(B2C) electronic commerce Business-to-Business(B2B) e. c. Consumer-to-Consumer(C2C) e. c.

eCommerce B2C

involves retailing products and services to individual shoppers. B2B

involves sales of goods and services among businesses C2C

involves consumers selling directly to consumers B2B and B2C transaction can take place using mobile

commerce(m-commerce) technology

Direct sales over the Web Reduce the number of steps in traditional distribution

channel Disintermediation

The removal of organization or business process layers responsible for certain intermediary steps in a value chain

Manufacture

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Distributor

Retailer

CustomerM

anufacturer

Retailer

CustomerMa

nufacture

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Custome

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Interactive Marketing & personalization Interactive capabilities

can be used to build closer relationship with customers in marketing and support

Web personalization Used to deliver content geared to the specific interest of each

user Build personal relationship to the webpage

Make access to the web more and more easier Learning and examination customers behaviors by the

visiting web page is cheaper

Net marketplaces Sometimes called e-hubs Many sellers Many buyers Transaction oriented Prices established through

auctions, negotiations, etc.

Example: internet auctions- eBay, Allegro, aukro

Net Marketplace

Suppliers

Buyers

Payment systems

eBuisness

Payment systems Digital credit card systems Digital wallets Digital cash P2P payments Digital checking Electronic billing presentment and payment

Intranet & extranet Forming the underpinnings of electronic business by

providing low cost technology that can run on almost any computer platform

Intranet inside company Inexpensive Accessible for most computer platforms Scalable

Extranet Can be used by more than one computer and customers Private intranets extended to selected users

Intranet applications Finance and accounting Human resources Sales and Marketing Manufacturing and Production

Challenges

Challenges for managers Enabling Digital firm requires

Deep organizational change Redesign business processes Recasting relationships with

customers Suppliers Other business partners

New roles for employees

Disadvantages? Not always more profitable and more efficient than

traditional business models Security Privacy Chanel conflicts

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