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E-commerce

Course Overview:The objective of this course is to familiarize the students with what is different about managing in a networked economy. It will give them an insight and understanding into the world of e-commerce. Students have already learnt the importance of technology in business. This course would build upon that knowledge and help the students to understand how the business is changing with the use of technology and how new businesses are also being formed in what is being called the new information economy. Students should be able to think of and craft an effective ebusiness strategy at the end of this course.

E-commerce Defined
E-commerce involves digitally enabled commercial transactions between and among organizations and individuals Digitally enabled transactions include all transactions mediated by digital technology Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services

Why Study E-commerce?


E-commerce technology is different and more powerful than any of the other technologies that we have seen in the past century. E-commerce has challenged much traditional business thinking E-commerce has a number of unique features that help explain why we have so much interest in e-commerce

Seven Unique Features of E-commerce Technology and Their Significance


Is ubiquitous (available everywhere, all the time) Offers global reach (across cultural/national boundaries) Operates according to universal standards (lowers market entry for merchants and search costs for consumers) Provides information richness (more powerful selling environment) Is interactive (can simulate face-to-face experience, but on a global scale) Increases information density (amount and quality of information available to all market participants) Permits personalization/customization

The Visions and Forces Behind Ecommerce: 19952000


For computer scientists, vindicated a vision of universal communications and computing environment that could be accessed by everyone For economists, vision of a perfect market and friction-free commerce For entrepreneurs-commerce represented an extraordinary opportunity to return far above normal returns on investment.

The dimensions of E-commerce

How does EC market work?

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EC Payment Systems
Credit cards Electronic Funds Transfer (EFT) transfers money value from one bank account to another (uses debit card e.g. switch) Stored-value cards and E-cash digital currency used for micro payment e.g. smart cards Electronic Check Systems similar to paper-based cheque system

Security schemes for Epayment


4 essential security requirements
Authentication amethodtoverifythebuyers identity before payment is authorized Encryption a process of making messages indecipherable except by those who have an authorised decryption key Integrity ensuring that information will not be accidentally or maliciously altered or destroyed during transmission Non-repudiation protectionagainstcustomers denialofordersplacedandagainstmerchants denial of payments made

Advantages of E-Commerce
May increase sales:
Reach new markets. Improve promotion effectiveness (via 1:1 marketing). Lower customer service costs. Lower costs of payment processing. Lower search and other transaction costs. Provide customized price quotes. Increase purchasing opportunities for buyer (efficient market).
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May reduce costs:

May improve business capabilities:

Disadvantages of ECommerce
Not all products are salable on the Internet: Difficult to calculate ROI:
Perishable grocery products. Antiques. Costs and benefits hard to measure. Integrating existing databases and transaction-processing software between firms.

System integration challenging: Global competition. Cultural and legal obstacles.


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Impact of e-Commerce
Improving market opportunities Creation of new markets Cultural integration and melt-down Electronic cast system 2 classes: havesandhavenots Organizational transformation and redefinition
Global teams Global knowledge management

Difference Between EBusiness and E-Commerce


The term E-business refers primarily to the digital establishment of transactions and processes within a firm, involving information systems under the control of the firm. For the most part, in our view e-business does not include commercial transactions involving an exchange of value across organizational boundaries. For example a companys online inventory mechanisms are a component of e-business, but such internal processes do not directly generate revenue for the firm from outside businesses or consumers as e-commerce does.

Types of EC
Business-to-business (B2B) most EC is of this type electronic market transactions between organizations. Business-to-consumer (B2C) retailing transactions with individual shoppers (amazon.com) Consumer-to-consumer (C2C) e.g selling in classified ads Consumer-to-business (C2B) individuals who sell to organizations, individuals who seek sellers. Non-business EC academic institutions, not-for-profit organizations, religious organization, social organizations, government agencies to reduce expenses (eg improve purchasing) or improve operations and customer service Intra-business EC all internal organizational activities usually performed on intranets

A business (also called a firm or an enterprise) is a legally recognized organization designed to provide goods and/or services to consumers.

THE EVOLUTION OF BUSINESS

Assembly Line Industrial Titans Wealth Creation Mass Production Increase in Living Standard Factories Manipulation/Competition Work Specialization Exploitation Efficiency No Customer Focus Hard Sell Decrease Costs Refining Production Productivity Gains

Consumer Power Growth in Consumerism Product Differentiation Customer Focus

Long-term Relationships Satisfied Customers Use of Technology

Industrial Revolution 1700-mid 1800s

Entrepreneurship Production Era Era Mid 1800s Early 1900s

Marketing Era 1950s

Relationship Era

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In side ( Seller ) HR, Training, Admin, Purchase, Finance, Logistics, Sales & Mkting , Delivery, Corporate

Demand side (Buyer)

Organization

Supply side (Producer)

Demand = 0, Supply feasible (new market) Distributor Demand > Supply ?? (Emerging market) Reseller

Retail Client

Demand = Supply ?? (Mature market) Demand < Supply ?? (Declining market)

Manufacturer

Wholesalers

Supplier
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Business and IT Challenges


TopChallengesofTodaysOrganizations

1. Improving customer service and relationships 2. Improving operating efficiency 3. Reducing costs 4. Creating competitive advantage with technology 5. Applying technology to increase productivity 6. Driving accountability 7. Aligning information technology (IT) with the business strategies 8. Gain visibility into current IT performance

Buyer utility
Is there exceptional buyer utility In your business idea???

No

Think Again

yes

Price
Is your price easily acceptable to the Most of your buyers??

No

Think Again

BLUE OCCEAN STRATEGY

yes

Cost
Can you attain your cost target To profit at your strategic price??

No

Think Again

yes

Adoption
What are the adoption hurdles in Achieving your business goals?? Are you addressing them up there??

No

Think Again

yes
Fantastic! This is commercially viable idea.

Architecture assists with translating business requirements into workable and holistic architectures/solutions to suit the business requirements.

IBM Global Services Method

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