Topic 3 e-commerce-and_e-business

MANAGEMENT INFORMATION SYSTEMS
Executive MBA PGSM
MBA program, Paris Graduate School of Management, Management Information System, Dr. Pham Van Tai 1
Management Information System
E-BUSINESS SYSTEMS
E-Business Systems
• Enable the electronic transmission of business transactions or other
related information between a buyer and seller
E-business systems
• A business that conducts business solely through their Web site
(single channel)
Dot-com (pure-play)
• A company uses Internet sales as an additional channel to an offline
business (multichannel)
Bricks-and-clicks (click-and-mortar)

Executive MBA PGSM
E-Business Systems
• Explosive growth in demand for e-business
systems in the 1990s
• Forecasts predict continued growth in e-
business systems
E-Business Systems
• Metcalfe’s Law is a possible theoretical reason for e-business growth
• By this law, the network on the right has a value that is 15 times that of
the network on the left.
• The value of a network to each of its members is
proportional to the number of other users,
expressed as (n2 - n)/2
Metcalfe’s Law

Executive MBA PGSM
E-Business Systems
• A worldwide network of networks, accessible to the public, that employs
the TCP/IP protocol
Internet
• A private network operating within an organization that employs the
TCP/IP protocol, to provide information, applications, and other tools
(such as collaboration tools), for use by the organization’s employees
Intranet
• A private network that is a portion of a company’s Intranet, which is made
accessible (normally over the Internet) to business partners outside of the
company (such as customers or suppliers)
Extranet
E-Business Framework
• IT Applications and services are built upon two
types of pillars
– Legal and Regulatory Pillar
– Technology Pillar
Figure 8.1

Executive MBA PGSM
E-Business Technologies
Browser
Web content
(without
interactivity)
Search
Engines,
Agents
Push
Technology,
Java Applets
Portal, Credit
Card
Processing
1994 1995 1996 1997 1998
Customization,
Tracking
XML, Digital
Signature, Peer-
to-Peer
Broadband DSL
and Cable
Modems
Wireless
Applications for
Handhelds
1999 2000 2001 2002

Executive MBA PGSM
• Traditional B2B electronic commerce used EDI
• Proprietary applications for
communicating with trading partners
based on agreed-upon standards for
business document transmission
EDI (Electronic Data Interchange)
• XML provides the opportunity of lower-cost,
flexible B2B transactions
• A standard in which additional information,
such as structure, can be added to data to
data through the use of customizable
elements
XML (Extensible Markup Language)

Executive MBA PGSM
• While XML does provide some advantages
over traditional EDI, many large retailers are
still using EDI for business transactions
– Wal-Mart still requires suppliers to use EDI
• Legal and Regulatory Environment
– Limited legal intervention
– Tax policies
• Sales taxes in US
– Privacy issues
– Antitrust laws

Executive MBA PGSM
• Digital signatures can be used to authenticate
the message sender in digital transactions,
much like an actual signature
• A type of asymmetric cryptography that
provides message authentication by utilizing
a public-private key pair
Digital Signature
Strategic E-Business Opportunities
(and Threats)
• Porter’s Competitive Forces Model can be
used to assess the opportunities and threats
due to the influence of the Internet

Executive MBA PGSM
Figure 8.4
(and Threats)
• Opportunities due to the Internet:
– Procurement of supplies via Internet can increase
company’s power over suppliers
– Size of potential market is expanded
– Distribution channels between traditional
company and customer can be eliminated

Executive MBA PGSM
(and Threats)
• Threats to traditional companies due to the
Internet:
– Migration to price competition – difficult to keep
offerings proprietary
– Increased number of potential competitors
– Internet reduces some traditional barriers (such as
in-person sales force)
– Customers increase their bargaining power –
Internet reduces customer’s switching costs
(and Threats)
• Since the “dot-com meltdown” e-business has
changed in many ways
Figure 8.5

Executive MBA PGSM
B2B Applications
• If buyers and sellers are fragmented,
Independent Intermediaries are likely to be
successful
Figure 8.6
B2B Applications
• If sellers are concentrated, sellers are likely to
dominate
Figure 8.6

Executive MBA PGSM
B2B Applications
• If buyers are concentrated, buyers are likely to
dominate
Figure 8.6
B2B Applications
• B2B Intermediaries
– Converge
– Virtual Chip Exchange
– Alibaba.com

Executive MBA PGSM
B2B Applications
• Reverse Auctions
– Sellers sequentially lower their bid to provide
goods to a single buyer Figure 8.3
Internet Statistics
Figure 8.7

Executive MBA PGSM
Internet Statistics
Figure 8.8
B2C Applications
• Dot-com retailers
– Amazon.com
– Netflix
• Traditional Catalog Retailers
– Dell
– Lands’ End
• Traditional Store Retailers
– Staples
– Blockbuster

Executive MBA PGSM
Dot-Com Retailers
• Amazon
– Dot-com pioneer in online retailing of third-party products
– Began as bookseller competitor
– Now a multi-store, online mall
– First profitable year 2003
– Provides excellent online shopping experiences for millions
of customers
Dot-Com Retailers
• Netflix
– Relatively late pure-play
– Online movie rental business
– Social recommendation system

Executive MBA PGSM
Catalog Retailers
• Dell
– Traditional direct seller and market leader of
made-to-order PCs
– Developed custom software to support “mass
customization” strategy
– Took advantage of early penetration of Internet
market
– Moved to multichannel (partnering with Wal-
Mart) after losing market share to HP
Catalog Retailers
• Lands’ End
– Traditional catalog company
– Developed capability for customers to make
orders for new custom clothing via its Web site

Executive MBA PGSM
Store Retailers
• Staples
– Traditional office products retailer
– Built separate Web sites for business procurement
– Focuses on efficiency, not aesthetic appeal
– By 2006, over 25% of revenues were e-business
Store Retailers
• Blockbuster
– Traditional retail movie rental business
– Added online rentals like Netflix
– Late in adding multichannel
– In 2007, purchased Movielink to add online
download service

Executive MBA PGSM
Dot-com Intermediaries
• eBay
– A dot-com pioneer in electronic auctions
– One of first dot-coms to achieve profitability
– Purchased PayPal in 2003 for payment capability
– Risks with transactions
– Now is a C2C, B2B, and B2C intermediary
• Autobytel
– A dot-com pioneer as intermediary between
automotive dealers and buyers
– Provides leads to dealerships
– Fills niche created by US state laws which prohibit
manufacturers to sell cars directly to consumers

Executive MBA PGSM
• Google
– Leading online search engine
– 99% of revenue from targeted advertising
– Growing through innovation and acquisition
• What makes a good web site?Special Issue
• 7 C’s
• Site’s layout and design—functionally vs. aesthetically dominant or
both (integrated)Context
• Text, pictures, sound, and video that Web site contains, including
dominant “store types”Content
• Site’s capabilities to enable commercial transactions—functional
tools and pricingCommerce
• Ways that the site utilizes user-to-user communication to enable
feelings of membership and shared common interestsCommunity
• Extent to which the site is linked to other sites—links out and inConnection
• Site’s ability to tailor itself to different users or to allow users to
personalize the siteCustomization

Executive MBA PGSM
• What makes a good web site?Special Issue
• Designing for mobile devices
– Smaller displays
– Limited attention of users

Topic 3 e-commerce-and_e-business

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Topic 3 e-commerce-and_e-business