1. Chapter 9 – E - Commerce

2.  Electronic commerce (e-commerce) is defined as
sharing business information, maintaining business
relationships, and conducting business transactions
through the use of telecommunication networks.
What is referred to as traditional e-commerce has
been conducted using EDI, enterprise-wide
messaging systems, fax communication, bar coding,
and other private local area network and wide area
network systems. E-commerce is also about
reorganizing internal business processes and
external business alliances and creating new
consumer-oriented products and services globally.
The term e-business is sometimes used
interchangeably with the term e-commerce to
refer to this broader concept.

3.  Internet-based electronic commerce is
developing at an astounding rate. It’s estimated
that e-commerce will account for 8.6 percent of
worldwide sales of goods and services within just
a few years. The expected benefits of e-
commerce for a company are enormous. A
company can create a competitive advantage by
dramatically expanding its market from local to
national, to international, and to global.
Ultimately, the company may be able to reduce
infrastructure costs by closing down physical
shops in favour of a pure e-commerce business
model.

4.  The phases of learning how to use the Internet
an organization can go through are as follows:
 Phase 1—when a company decides to use e-mail
as a communication tool.
 Phase 2—when a company decides to create a
public Web site.
 Phase 3—when a company decides to develop a
private intranet (a self-contained
intraorganizational network designed using
Internet technology and TCP/IP protocols).
 Phase 4—when a company learns to use the
Internet to actually conduct business
transactions with its customers, suppliers, and
other organizations.

5.  There are several forms of e-commerce, or e-
commerce models, based on who is involved in the
transaction:
 Business-to-business (B2B). The business-to-business
(B2B) model represents inter-organizational
information systems in which a company handles
transactions within its own value chain or with
other businesses and organizations.
 Business-to-consumer (B2C). The business-to-
consumer (B2C) model represents retailing
transactions between a company and individual
customers.
 Consumer-to-consumer (C2C). The consumer-to-
consumer (C2C) model represents individuals who
are selling and buying directly with each other via
a Web site.

6.  9.2.1 Characteristics of an Intranet
 An intranet is made up of physical technology
and information content. The communication
software for an intranet includes middleware
and TCP/IP. Middleware is software that
handles the actual physical communication
connections between the computers, scanners,
printers, and other devices on the network.
 A firewall protects the intranet against
unauthorized access by users on a network
external to the organization. The information
The information content of an intranet is
designed just as a public Web site on the
Internet.

7.  An extranet, or extended intranet, is a
private inter-organizational information
system connecting the intranets of two or
more companies in a business alliance. An
extranet extends the cross-functional
activities between trusted business
partners and facilitates their working
relationships.

8.  There are three types of extranets:
 An extranet can be set up as a secure private
network by physically attaching the intranets
with private, leased telephone lines.
 An extranet can be set up as a public network
by using a public communications network,
such as a public utility telecommunication
network or the Internet.
 An extranet can be set up as a virtual private
network (VPN) by using a public network with
special protocols that provide a very secure,
private “tunnel” across the network between
the business partners’ intranets. An extranet
is called an Internet VPN when the public
network used is the Internet.

9.  Top managers, particularly in large companies, are
challenged ethically when they consider using e-
commerce, especially to gain competitive advantage. A
major e-commerce ethical issue is top managers’
responsibility for their organizations to develop a code of
ethics and professional conduct, especially in the area of
the Internet.
 Incorporating the following areas into the company’s
information code of ethics ensures that users of the Web
site will be aware of the company’s electronic commerce
policies:
 A clear, explicit statement of the
 organization’s privacy policy.
 • A policy statement addressing situations in which a
person’s permission must be secured before his or her ID,
photo, ideas, or communications are used or transmitted.

10.  A clear policy stating how the company will
inform customers of the intended uses of
personal information gathered during an on-line
transaction and how to secure permission from
customers for those uses.
 • A statement that addresses issues of ownership
with respect to network postings and
communications.
 • A policy of how the company monitors, or
tracks, user behaviours on the Web site.
Currently, a Webmaster can tell which files,
pictures, and other resources you are most
interested in based on how long you examine a
particular page, image, or file.