chapter 1 introduction to electronic commerce. learning objectives in this chapter, you will learn...
TRANSCRIPT
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Chapter 1
Introduction to Electronic Commerce
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Learning Objectives
In this chapter, you will learn about:
• The basic elements of electronic commerce
• Differences between electronic commerce and traditional commerce
• Economic forces that have created a business environment that fosters electronic commerce
• The ways in which businesses use value chains to identify electronic commerce opportunities
• The ways in which businesses use SWOT analysis and evaluate business opportunities
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Traditional Commerce and Electronic Commerce
• Although consumer shopping on the Web was running about $130 billion per year in 2002 and is expected to exceed $500 billion by 2004, electronic commerce is much broader and encompasses many more business activities than just Web shopping.
• The three main elements of e-commerce are:– Business-to-consumer– Business-to-business– The transactions and business processes that support selling
and purchasing activities on the Web
• Other categories include: consumer-to-consumer and consumer-to-government.
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Electronic Commerce
• Electronic Data Interchange (EDI) occurs when one business transmits computer-readable data in a standard format to another business.
• The standard formats used in EDI contain the same information that businesses have always included in their standard paper invoices, purchase orders, and shipping documents.
• Firms, such as General Electric and Wal-Mart, have been pioneers in using EDI to improve their purchasing process.
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Value Added Network (VAN)
• A value added network is an independent firm that offers connection and EDI transaction forwarding services to buyers and sellers engaged in EDI.
• VANs are responsible for ensuring the security of transmitted data.
• VANs charge a fixed monthly fee plus a per-transaction charge to subscribers.
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Activities as Business Processes
• A Business Process is a group of logical, related and sequential activities and transactions in which businesses engage, including:
– Seeking quotations from suppliers
– Placing orders with suppliers
– Accepting orders from customers
– Accepting and making payments
– Sending invoices to customers
– Shipping goods to customers
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Business Process Suitability to Type of Commerce
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Advantages of Electronic Commerce
• Electronic commerce can increase sales and decrease costs.
• Web advertising reaches a large number of potential customers throughout the world.
• The Web creates virtual communities for specific products or services.
• A business can reduce its costs by using electronic commerce in its sales support and order-taking processes.
• Electronic commerce increases sales opportunities for the seller.
• Electronic commerce increases purchasing opportunities for the buyer.
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Disadvantages of Electronic Commerce
• Some products are unsuitable for electronic commerce.
• Return-on-investment is difficult to apply to electronic commerce.
• Businesses face cultural and legal obstacles to conducting electronic commerce.
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International Electronic Commerce
• About 60 percent of all electronic commerce sites are in English, therefore many language barriers need to be overcome.
• The political structures of the world present some challenges.
• Legal, tax, and privacy are concerns of international electronic commerce.
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Value Chains
• Electronic commerce includes so many activities and transactions that it can be difficult for managers to decide where and how to use it in their businesses.
• One way to focus on specific business processes as candidates for electronic commerce is to break the business down into a series of value-adding activities that combine to generate profits and meet other goals.
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Industry Value Chains
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Value Chains
A strategic business unit is one particular combination of product, distribution channel, and customer type.
A value chain is a way of organizing the activities that each strategic business unit undertakes to design, produce, promote, market, deliver, and support the products or services it sells.
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Value Chain for Strategic Business Units
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SWOT Analysis:Evaluating Business Unit Opportunities
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Summary
Electronic commerce can play a role in – reducing costs– improving product quality– reaching new customers or suppliers– creating new ways of selling existing products