slide 1-1 e-business strategy and implementation mis 415/575 spring 2011 introduction

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E-Business Strategy and Implementation

MIS 415/575

Spring 2011

Introduction

Overview

1. E-business, what is it?2. Why study e-business?3. Characteristics4. Expectations (Dotcom-boom vs. –bust)5. Types of E-business6. Impact of E-Business on Market Structures

(example)

1. E-Business, E-Commerce – what is it? Electronic commerce

Shopping on the Web Businesses trading with other businesses Internal company processes Broader term: electronic business (e-business)

Electronic commerce includes: All business activities using Internet technologies

Internet and World Wide Web (Web) Wireless transmissions and personal digital

assistants Dot-com (pure dot-com)

Businesses operate only online

2. Why Study E-Business? The Internet changes everything except the

rules of business.Shapiro/Varian, Information Rules

E-commerce technology is different, more powerful than previous technologies

Traditional commerce: Passive consumer Sales-force driven Fixed prices Information asymmetry

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3. 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 Social Technology (“Web 2.0”)

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4. Expectations: Amazon at 10: Profitable at Last

Story of Amazon in many ways mirrors story of e-commerce itself

Process of continuous change and exploration for profits

What are the reasons why people shop at Amazon? Why wasn’t it profitable from Day 1? How and when did it become profitable? How many of you have used Amazon recently? What was your experience? Do you think Amazon will remain profitable?

5. Types of E-Commerce

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Business-to-consumer (B2C): Consumer shopping on the Web

Business-to-business (B2B): E-procurement

Transactions conducted between Web businesses

Supply Chain management Business processes

Using Internet technologies to support organization selling and purchasing activities

Electronic Commerce, Eighth Edition 8

Types of E-Commerce (cont’d)

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Web helping people work more effectively Telecommuting (telework)

Consumer-to-consumer (C2C) Individuals buying and selling among themselves

Web auction sites C2C sales included in B2C category

Seller acts as a business (for transaction purposes)

Business-to-government (B2G) Business transactions with government agencies

Paying taxes, filing required reports B2G transactions included in B2B discussions

Electronic Commerce, Eighth Edition 10Electronic Commerce, Eighth Edition 10

6. Example: Economic Forces and Electronic Commerce

Economics Study how people allocate scarce resources

Through commerce and government actions Commerce organizations participate in markets

Potential sellers come into contact with buyers Medium of exchange available (currency or barter)

Organization hierarchy (flat or many levels) Bottom level includes largest number of employees

Transaction costs Motivation for moving to hierarchically structured firms


Transaction Costs Total of all costs that a buyer and seller incur

Gathering information and negotiating purchase-and-sale transaction

Brokerage fees and sales commissions Cost of information search and acquisition

Sweater dealer example


Markets and Hierarchies General trend toward hierarchies Coase’s analysis of high transaction costs

Hierarchical organizations formed Replace market-negotiated transactions Strong supervision and worker-monitoring elements

Sweater example Oliver Williamson (extended Coase’s analysis)

Complex manufacturing, assembly operations Hierarchically organized, vertically integrated

Manufacturing innovations increased monitoring activities’ efficiency effectiveness


Using Electronic Commerce to Reduce Transaction Costs

Electronic commerce Change vertical integration attractiveness Change transaction costs’ level and nature

Example: employment transaction Telecommuting

May reduce or eliminated transaction costs

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Network Economic Structures Neither market nor hierarchy Strategic alliances (strategic partnerships)

Coordinate strategies, resources, skill sets Form long-term, stable relationships with other

companies and individuals Based on shared purposes

Strategic partners Come together for specific project or activity Form many intercompany teams

Undertake variety of ongoing activities


Network Economic Structures (cont’d.)

Network organizations Well suited to technology industries

Information intensive Sweater example

Knitters organize into networks of smaller organizations Specialize in styles or designs

Electronic commerce role Makes such networks easier to construct, maintain

Predominant in near future


Network Effects Activities yield less value as consumption amount

increases Law of diminishing returns

Example: hamburger consumption Networks (network effect)

Exception to law of diminishing returns More people or organizations participate in

network Value of network to each participant increases

Example: fax machine


Using Electronic Commerce to Create Network Effects

E-mail account Provides access to network of people with e-mail

accounts Smaller network

E-mail generally less valuable Internet e-mail accounts

Far more valuable than single-organization e-mail Due to network effect

Need way to identify business processes Evaluate electronic commerce suitability

For each process


Identifying Electronic Commerce Opportunities

Focus on specific business processes Break business down

Series of value-adding activities Combine to generate profits, meet firm’s goal

Commerce: conducted by firms of all sizes Firm

Multiple business units owned by a common set of shareholders or company

Industry Multiple firms selling similar products to similar

customers

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Potential Limitations on the Growth of B2C E-commerce

Expensive technology Complex software interface Sophisticated skill set Persistent cultural attraction of physical

markets and traditional shopping experiences Persistent global inequality limiting access to

telephones and computers

slide 1-1 e-business strategy and implementation mis 415/575 spring 2011 introduction

Documents

study ebusiness

business b2b

business activities

rules of business

ebusiness strategy

introduction slide

online slide

types of ecommerce slide