multinational e-commerce.ppt

8/15/2019 multinational e-commerce.ppt

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Chapter

Copyright© 2007 Thomson Learning All rights reserved

10Multinational E-Commerce:

Strategies and Structures


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Copyright© 2007 South-Western/Thomson Learning All rights reserved

Learning Objectives

• Define the forms of e-commerce• Appreciate the growing presence of e-commerce in the

global economy• Understand the structure of the Internet economy• Identify the basic components of successful

e-commerce strategy

• Define the forms of e-commerce• Appreciate the growing presence of e-commerce in the

global economy• Understand the structure of the Internet economy• Identify the basic components of successful

e-commerce strategy


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Learning Objectives

• Know the basic multinational e-commerce businessmodels

• Identify the practicalities of running a multinationale-commerce business

• Understand the function of enablers in multinational

e-commerce operations

• Know the basic multinational e-commerce businessmodels

• Identify the practicalities of running a multinationale-commerce business

• Understand the function of enablers in multinational

e-commerce operations


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The Internet Economy

• Internet Economy• Growing faster than any other business trend in

history• Companies face issues similar to those faced by

traditional multinational companies

• Internet Economy• Growing faster than any other business trend in

history• Companies face issues similar to those faced by

traditional multinational companies


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What Is E-Commerce?

• efers to the selling of goods or ser!ices o!er theInternet

• Includes goods or ser!ices deli!ered offline- E"g"# Ama$on"com shipping boo% !ia U&'

• Also includes goods and ser!ices deli!ered online- E"g"# downloaded computer software

• efers to the selling of goods or ser!ices o!er theInternet

• Includes goods or ser!ices deli!ered offline- E"g"# Ama$on"com shipping boo% !ia U&'

• Also includes goods and ser!ices deli!ered online- E"g"# downloaded computer software


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Types of E-CommerceTransactions

• ()C* business-to-consumer transactions- (uying toys from e+oys

• ()(* business-to-business transactions- ,a%es up . to /01 of current e-commerce

business• C)C* consumer-to consumer transactions

- Anyone selling online

• C)(* consumer-to-business transactions

• ()C* business-to-consumer transactions- (uying toys from e+oys

• ()(* business-to-business transactions- ,a%es up . to /01 of current e-commerce

business• C)C* consumer-to consumer transactions

- Anyone selling online• C)(* consumer-to-business transactions


7/60Copyright© 2007 South-Western/Thomson Learning All rights reserved

Exhibit 10 1! E-Commerce"a#$e Chain




• +wo indicators of the global presence of e-commerce- 'ecure ser!er* an Internet host that allows users to

send and recei!e encrypted data- Internet hosts* computers connected to the Internet

with their own I& addresses

• 2ECD dominate the Internet with o!er 3.1 of Internethosts

• +wo indicators of the global presence of e-commerce- 'ecure ser!er* an Internet host that allows users to

send and recei!e encrypted data- Internet hosts* computers connected to the Internet

with their own I& addresses

• 2ECD dominate the Internet with o!er 3.1 of Internethosts



Exhibit 10 %! &ec$re &erversan' Internet (osts in &e#ecte'

OEC) Co$ntries




• In 4334# 5 million people used the Internet and almostnone used it for e-commerce"

• +he growth in the use of the Internet or the 6orld 6ide6eb for e-commerce is so dramatic that its impact isdifficult to estimate

• 'ome say that the Internet will ha!e more impact onthe world than the industrial re!olution

• 2ffers tremendous opportunities for multinationals

• In 4334# 5 million people used the Internet and almostnone used it for e-commerce"

• +he growth in the use of the Internet or the 6orld 6ide6eb for e-commerce is so dramatic that its impact isdifficult to estimate

• 'ome say that the Internet will ha!e more impact onthe world than the industrial re!olution

• 2ffers tremendous opportunities for multinationals



Exhibit 10 *! +ercentage of(o$seho#'s ,ith Internet

ccess



Exhibit 10 .! The /$mber of roa'ban'&$bscribers over Time for a /$mber of&e#ecte' Co$ntries




• Internet economy has four layers4" +he infrastructure)" +he applications infrastructure5" +he Internet intermediaries7" +he Internet commerce layer

• Internet economy has four layers4" +he infrastructure

)" +he applications infrastructure5" +he Internet intermediaries7" +he Internet commerce layer



Layer 1

• +he Internet infrastructure is the bac%bone of theInternet# including the Internet ser!ice pro!iders 8I'&s9#

e"g"#- Communications 8:west# ,CI# 6orldCom9- Internet ser!ice pro!iders 8,indspring# A2;#

Earthlin%9- # =&9

• +he Internet infrastructure is the bac%bone of theInternet# including the Internet ser!ice pro!iders 8I'&s9#

e"g"#- Communications 8:west# ,CI# 6orldCom9- Internet ser!ice pro!iders 8,indspring# A2;#

Earthlin%9- # =&9



Layer %

• +he applications infrastructure- Companies and consultants that build web systems

and supporting software• Consultants 8'cient9• Commerce applications 8



Layer *

• +he internet intermediaries- Companies that pro!ides lin%ing ser!ices on the

Internet and deri!e re!enues from commissions#ad!ertising# and membership fees• 2nline tra!el agencies 8+ra!elweb#

+ra!elocity"com9• 2nline bro%erages 8E + ADE9• Content aggregators 8C



Layer .

• +he Internet commerce layer- Companies that conduct commercial transactions on

the 6eb• E-retailers 8wine"com# diamond"com9• ,anufacturers selling directly 8hpshopping"com#

Dell9• 'ubscription-based companies 8@ (2"com9• +ransportation ser!ices 8most airlines9

• 'hipping ser!ices 8 edEF# U&'9

• +he Internet commerce layer- Companies that conduct commercial transactions on

the 6eb• E-retailers 8wine"com# diamond"com9• ,anufacturers selling directly 8hpshopping"com#

Dell9• 'ubscription-based companies 8@ (2"com9• +ransportation ser!ices 8most airlines9• 'hipping ser!ices 8 edEF# U&'9



$n'amenta#s of E-Commerce

• E-commerce is e!ol!ing >uic%ly"• ailures of many start-ups show it s not without ris%s"

• E-commerce presents significant opportunities andthreats"

• E-commerce is e!ol!ing >uic%ly"• ailures of many start-ups show it s not without ris%s"

• E-commerce presents significant opportunities andthreats"



Exhibit 10 2! E-Commerce$siness 3o'e#s



&teps for &$ccessf$#E-Commerce &trategy

• ;eadership- 'uccessful e-commerce is only possible through

dynamic and strong leadership"• (uild on current business models and eFperiment with

new e-commerce models

- Use e-commerce to search for ways to reduce costsor enhance the business"

• ;eadership- 'uccessful e-commerce is only possible through

dynamic and strong leadership"• (uild on current business models and eFperiment with

new e-commerce models

- Use e-commerce to search for ways to reduce costsor enhance the business"



&teps for &$ccessf$#E-Commerce &trategy 4cont 5

• ,eet the challenge of de!eloping an e-commerceorgani$ation

- Entire firm 8not only top management9 must beprepared to embrace the e-commerce model"

• Allocate resources to the e-commerce business

- Commit financial# human# and technologicalresources to de!elop e-commerce capabilities

• ,eet the challenge of de!eloping an e-commerceorgani$ation

- Entire firm 8not only top management9 must beprepared to embrace the e-commerce model"

• Allocate resources to the e-commerce business

- Commit financial# human# and technologicalresources to de!elop e-commerce capabilities



&teps for &$ccessf$#E-Commerce &trategy 4cont 5

• (uild a superior e-commerce infrastructure as a basisof a differentiation strategy

- &ro!ide superior online eFperiences• =a!e an e-commerce strategy

- Use strategic management to implement a strongand ade>uate strategic e-commerce plan

• (uild a superior e-commerce infrastructure as a basisof a differentiation strategy

- &ro!ide superior online eFperiences• =a!e an e-commerce strategy

- Use strategic management to implement a strong

and ade>uate strategic e-commerce plan



&teps for &$ccessf$# E-Commerce &trategy 4cont 5

• De!elop appropriate e-commerce systems- 6or% hard to remo!e traditional barriers to ensure

that there are increased coordination andinformation flows among the !arious functionalareas

• ,easure success- =a!e metrics in place to measure e-commerce

success

• De!elop appropriate e-commerce systems- 6or% hard to remo!e traditional barriers to ensure

that there are increased coordination andinformation flows among the !arious functionalareas

• ,easure success- =a!e metrics in place to measure e-commerce

success


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Exhibit 10 6! &$mmary of E-Commerce 7'on8ts9 base' on

est +ractices


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E-Commerce &tr$ct$re!Integrate' or $tonomo$s

• Company needs to decide how e-commerce fits intoeFisting design

• ight miFture of bric%s and clic%s- =ow much to integrate Internet into traditional

businesses

• (ric%-and-mortar* traditional or non-!irtual businessoperation

• Company needs to decide how e-commerce fits intoeFisting design

• ight miFture of bric%s and clic%s- =ow much to integrate Internet into traditional

businesses

• (ric%-and-mortar* traditional or non-!irtual businessoperation


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• Degree of interaction between bric%-and-mortaroperations can occur anywhere in the !alue chain

• Can range from near seamless operations 8e"g"# 2fficeDepot9 to the mostly independent operations 8e"g"#(arnes H


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• +he independent benefits- aster and more entrepreneurial

- reed from corporate bureaucracy• +he integrated benefits

- Cross-promotion# shared information# increased>uantity purchases# use of same distributionchannels

• +he independent benefits- aster and more entrepreneurial

- reed from corporate bureaucracy• +he integrated benefits

- Cross-promotion# shared information# increased>uantity purchases# use of same distributionchannels


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Exhibit 10 :! ;ey )ecisions inthe Integration vs &eparation

)ecision


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• 6ays companies can integrate their online and offlineoperations

- Keep customers informed- Integrate business operations- 'hare customer data across channels

• 6ays companies can integrate their online and offlineoperations

- Keep customers informed- Integrate business operations- 'hare customer data across channels


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''itiona# Operationa#Cha##enges for an E-Commerce

$siness• inding partnerships and alliances with customers or

third parties

• Attracting# retaining# and de!eloping employees in thee-commerce unit

• Inade>uate e-commerce training

• E-commerce employee retention• Deciding what e-commerce functions to outsource

• inding partnerships and alliances with customers orthird parties

• Attracting# retaining# and de!eloping employees in thee-commerce unit

• Inade>uate e-commerce training

• E-commerce employee retention• Deciding what e-commerce functions to outsource


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+$re E-b$siness CompanyTas


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Tas


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Exhibit 10 =! Organi>ationa# Changes in3ajor 3$#tinationa# Co $i#'ingE-Commerce


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E-Commerce &ec$rity

• E-Commerce security* refers to the degree to whichcustomers feel that their pri!ate# personal information

can be safeguarded in the hands of online companiescollecting such information

• E-Commerce security* refers to the degree to whichcustomers feel that their pri!ate# personal information

can be safeguarded in the hands of online companiescollecting such information


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E-Commerce &ec$rity

• Companies need to be concerned about a number ofinformation security issues such as

- Confidentiality* ma%ing sure that pri!ate information isprotected- A!ailability* ensuring that information is accessible to

authori$ed users

- Integrity* ensuring that the information collected is accurateand reliable

- Authentication* ha!ing systems in place to ensure that

persons using the systems are legitimate

• Companies need to be concerned about a number ofinformation security issues such as- Confidentiality* ma%ing sure that pri!ate information is

protected- A!ailability* ensuring that information is accessible to

authori$ed users

- Integrity* ensuring that the information collected is accurateand reliable

- Authentication* ha!ing systems in place to ensure thatpersons using the systems are legitimate


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E-Commerce &ec$rity

• +o ensure that these Internet security issues areaddressed# eFperts suggest the following

- Use firewalls# intrusion detection software# andanti!irus shields

- Encrypt data

- e>uire two-phased authentication- Use web site monitoring tools- Abide by pri!acy rules

• +o ensure that these Internet security issues areaddressed# eFperts suggest the following

- Use firewalls# intrusion detection software# andanti!irus shields

- Encrypt data

- e>uire two-phased authentication- Use web site monitoring tools- Abide by pri!acy rules


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#oba#i>ing Thro$gh theInternet

• Internet is enabling the emergence of a new form ofmultinational# the born-global firms

• (orn-global firms are able to obtain a significantportion of their re!enues from sales in internationalmar%ets

• (orn-global firms tend to adopt a global !iew ofmar%ets and de!elop competiti!e ad!antages tosucceed in the !arious mar%ets

• Internet is enabling the emergence of a new form ofmultinational# the born-global firms

• (orn-global firms are able to obtain a significantportion of their re!enues from sales in internationalmar%ets

• (orn-global firms tend to adopt a global !iew ofmar%ets and de!elop competiti!e ad!antages tosucceed in the !arious mar%ets


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3$#tinationa# E-Commerce&trategy orm$#ation

• Depends on- uirements

- +elecommunications infrastructure to mo!einformation

- &ayment infrastructure to mo!e money

- &hysical infrastructure to deli!er products

• Depends on- uirements

- +elecommunications infrastructure to mo!einformation- &ayment infrastructure to mo!e money- &hysical infrastructure to deli!er products


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ttractions of E-Commerce

• Cost reduction- ;ess eFpensi!e to reach international customers

• +echnology- Already a!ailable

• Efficiencies- ,ore efficient

• Cost reduction- ;ess eFpensi!e to reach international customers

• +echnology- Already a!ailable

• Efficiencies- ,ore efficient


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ttractions of E-commerce4cont 5

• Con!enience- 6eb is operating all the time regardless of location

• 'peed of access- Company s products or ser!ices can be accessed

immediately from anywhere in the world

• Con!enience- 6eb is operating all the time regardless of location

• 'peed of access- Company s products or ser!ices can be accessed

immediately from anywhere in the world


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E-Commerce)eterrents@Cha##enges

• eturnJreceipt burden and cost of deli!ery- EFpect 5.-7.1 return rate

• Costs of site construction# maintenance# upgrades• Channel conflicts• Easily copied models

- Competitors can easily see and copy businessmodel

• eturnJreceipt burden and cost of deli!ery- EFpect 5.-7.1 return rate

• Costs of site construction# maintenance# upgrades• Channel conflicts• Easily copied models

- Competitors can easily see and copy businessmodel


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E-Commerce )eterrents

• Cultural differences- 6eb sites must be appropriate culturally

• +raditional cross-border compleFities remain- EFchange rates# different taFes# and go!ernment

regulations• 'tandard or local web sites• Customer trust and satisfaction

• Cultural differences- 6eb sites must be appropriate culturally

• +raditional cross-border compleFities remain- EFchange rates# different taFes# and go!ernment

regulations

• 'tandard or local web sites• Customer trust and satisfaction


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+ic


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+ic


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Exhibit 10 A! E-Bea'iness of&e#ecte' Co$ntries


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3$#tinationa# E-Commerce&trategy Imp#ementation

• e>uires building an appropriate organi$ation andde!eloping the necessary technical capabilities to

conduct electronic transactions

• e>uires building an appropriate organi$ation andde!eloping the necessary technical capabilities to

conduct electronic transactions


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The 3$#tinationa# E-CommerceOrgani>ation

• +hree-tiered miFing of global and local functions• =ead>uarters

- @ision# strategy# leadership for worldwideelectronic mar%eting

- Also pro!ide shared ser!ices such as networ%infrastructure

• +hree-tiered miFing of global and local functions• =ead>uarters

- @ision# strategy# leadership for worldwideelectronic mar%eting

- Also pro!ide shared ser!ices such as networ%

infrastructure


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The 3$#tinationa# E-CommerceOrgani>ation 4cont 5

• 'hared functional ser!ices- &ro!ide = ,# mar%eting# partner management to

regions• ;ocal subsidiaries

- Deli!er goods# manage functions better done locally

such as the supply chain

• 'hared functional ser!ices- &ro!ide = ,# mar%eting# partner management to

regions• ;ocal subsidiaries

- Deli!er goods# manage functions better done locally

such as the supply chain


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Exhibit 10 10! Organi>ationa#&tr$ct$res of the 3$#tinationa#

E-Corporation


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Technica# Capabi#ities for3$#tinationa# E-commerce

• Ability to process multiple currencies• Ability to calculateJshow purchase information on

international shipping# duties# and local taFes such as@A+

• 'ystems that chec% compliance with local and

international laws

• Ability to process multiple currencies• Ability to calculateJshow purchase information on

international shipping# duties# and local taFes such as@A+• 'ystems that chec% compliance with local and

international laws


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Technica# Capabi#ities for

3$#tinationa# E-commerce• Ability to pro!ide support in multilingual ser!ice centers• raud protection

• Electronic payment models in addition to credit cards

• Ability to pro!ide support in multilingual ser!ice centers• raud protection

• Electronic payment models in addition to credit cards


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Web &ites! To Loca#i>e or&tan'ar'i>e

• 'tandardi$ed web site* companies web sites are fairlysimilar in layout and design around the world

• ;ocali$ed web site* !alues# appeals# symbols# ande!en themes in the communication content is adaptedto the local culture

• 'tandardi$ed web site* companies web sites are fairlysimilar in layout and design around the world

• ;ocali$ed web site* !alues# appeals# symbols# ande!en themes in the communication content is adaptedto the local culture


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Exhibit 10 11! (igh-Context an' Lo,-ContextC$#t$res an' T,o of (oftse'e8s C$#t$ra#)imensions an' +otentia# Inf#$ence on Web)esign an' Layo$t


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73ission-Critica#9 actors toComm$nicate to #oba#

$'ience4" ;in% all 6eb sites to corporate 6eb site)" 6eb site should contain all nonelectronic local contact

information for feedbac% or comment5" &ro!ide a prominent list of languages used by the

company s 6eb site

7" Use different languages for downloads

4" ;in% all 6eb sites to corporate 6eb site)" 6eb site should contain all nonelectronic local contact

information for feedbac% or comment5" &ro!ide a prominent list of languages used by the

company s 6eb site

7" Use different languages for downloads


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$'ience 4cont 50" ;ocali$e by language the parts of the parent company

6eb site that recei!e the most access

" &ro!ide a site map" &ro!ide the firm s pri!acy statement in all locallanguages

0" ;ocali$e by language the parts of the parent company6eb site that recei!e the most access

" &ro!ide a site map" &ro!ide the firm s pri!acy statement in all locallanguages


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$'ience 4cont 5/" Guard against local piracy by putting your policies in

local languages

3" ;ocali$e your graphics and written material4.";ocali$e content management

/" Guard against local piracy by putting your policies inlocal languages

3" ;ocali$e your graphics and written material4.";ocali$e content management


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Exhibit 10 1%! 3ajor +rob#emsI'entifie' in Web &ite

#oba#i>ation


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To $i#' or O$tso$rceTechnica# Capabi#ities?

• +wo options- un all e-commerce functions internally or outsource

to e-commerce enablers• E-commerce enablers* fulfillment specialists that

pro!ide ser!ices such as 6eb site translation

- &ro!ide ser!ices and software that translate 6ebsites# calculate shipping# !alue-added taFes# duties#and other charges uni>ue to each country

• +wo options- un all e-commerce functions internally or outsource

to e-commerce enablers• E-commerce enablers* fulfillment specialists that

pro!ide ser!ices such as 6eb site translation

- &ro!ide ser!ices and software that translate 6ebsites# calculate shipping# !alue-added taFes# duties#and other charges uni>ue to each country


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multinational e-commerce.ppt

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