Creating a Winning E-Business

Second Edition

Understanding E-Business

Chapter 1

Creating a Winning E-Business Second Edition, Chapter 1

2

Learning Objectives

• Discuss e-business basics

• Describe the Internet and World

Wide Web

• Discuss the role of e-business in the

global economy

• List e-business advantages and

disadvantages

Creating a Winning E-Business Second Edition, Chapter 1

3

Learning Objectives (continued)

• Explain e-business value chains and

value activities

• Identify e-business models

Creating a Winning E-Business Second Edition, Chapter 1

4

E-Business Basics• E-commerce – Process of buying or

selling goods or services across a telecommunications network

• E-business – Widest spectrum of business activities using Internet and Web technologies

• Many technologies facilitate e-business– Electronic funds transfer (EFT)– Electronic data interchange (EDI)– Internet / World Wide Web

Creating a Winning E-Business Second Edition, Chapter 1

5

The Internet andWorld Wide Web

• Network – Group of two or more computers– Linked by communication media

• Cable• Telephone lines• Wireless connections

• Networks servers– Give users access to shared network

resources– Printers, files, telecommunication lines

Creating a Winning E-Business Second Edition, Chapter 1

6

The Internet andWorld Wide Web (continued)

Creating a Winning E-Business Second Edition, Chapter 1

7

The Internet andWorld Wide Web (continued)

• Internet– A worldwide public network that connects

private networks– Originated in the late 1960s as ARPANET– Managed by the National Science Foundation

in the 1980s and early 1990s as NSFnet– Connected colleges, universities, and

research centers– Commercial activity was prohibited until 1991

Creating a Winning E-Business Second Edition, Chapter 1

8

The Internet andWorld Wide Web (continued)

• Internet (continued)– Replaced by commercial high-speed

telecommunications backbones in 1995• Individuals and SMBs connect via an

Internet Service Provider (ISP)• Large businesses, colleges, and

universities may have direct connection

Creating a Winning E-Business Second Edition, Chapter 1

9

The Internet andWorld Wide Web (continued)

Creating a Winning E-Business Second Edition, Chapter 1

10

The Internet andWorld Wide Web (continued)

Creating a Winning E-Business Second Edition, Chapter 1

11

The Internet andWorld Wide Web (continued)

Creating a Winning E-Business Second Edition, Chapter 1

12

The Internet andWorld Wide Web (continued)

• World Wide Web (Web)– A subset of the Internet– Built on the concept of hypertext– System of linked pages called Web pages– Related Web pages are called a Web site– Viewed in a Web browser– Stored on Web servers

• Millions of people around the world access the Internet and Web daily

Creating a Winning E-Business Second Edition, Chapter 1

13

E-Business and theGlobal Economy

• Widespread linking of individuals and businesses has changed global economy– Time and space are no longer limiting

factors– Business value of information is greater– Information is more accessible– Traditional intermediaries have been

replaced by new types of intermediaries

Creating a Winning E-Business Second Edition, Chapter 1

14

E-Business and theGlobal Economy (continued)

• Buyers are growing more powerful

• Internet and Web access has changed buyers expectations– Information on competing products– Transaction speed and convenience

Creating a Winning E-Business Second Edition, Chapter 1

16

E-Business and theGlobal Economy (continued)

Creating a Winning E-Business Second Edition, Chapter 1

17

E-Business and theGlobal Economy (continued)

Creating a Winning E-Business Second Edition, Chapter 1

18

E-Business and theGlobal Economy (continued)

Creating a Winning E-Business Second Edition, Chapter 1

19

E-Business and theGlobal Economy (continued)

Creating a Winning E-Business Second Edition, Chapter 1

20

E-Business and theGlobal Economy (continued)

• Value chain or value network– Activities involved in the production of

goods or services– Internet and Web technologies facilitate

value chains and networks• Improve communication• Improve transaction speed

• Internet and Web access allows businesses to rethink their value chains

Creating a Winning E-Business Second Edition, Chapter 1

21

E-Business and theGlobal Economy (continued)

Creating a Winning E-Business Second Edition, Chapter 1

22

E-Business and theGlobal Economy (continued)

Creating a Winning E-Business Second Edition, Chapter 1

23

E-Commerce and E-Business• Electronic commerce is the use of

technology, in particular the Internet, to conduct business – e-commerce generally refers to buying or

selling electronically, usually interactively– e-business refers to conducting business

activities, including business to business activities, using electronic communication

– e-[you fill in the blank]

Creating a Winning E-Business Second Edition, Chapter 1

25

E-COMMERCE TECHNOLOGIES• Will we see continued growth in e-

commerce (Internet) applications?• Consider Metcalfe’s Law:

The value of a network to each of its members is proportional to the number of other users, expressed as (n2 – n) / 2

– There are increasing returns to be gained as more organizations and people use the Web

Page 240

Creating a Winning E-Business Second Edition, Chapter 1

26

The Nature of Markets

• In a free market economy, transactions take place where the downward sloping demand curve intersects the upward sloping supply curve. – The intersection of these two curves determines

both the price and the quantity sold

Creating a Winning E-Business Second Edition, Chapter 1

27

Economics of E-Marketplaces

Creating a Winning E-Business Second Edition, Chapter 1

28

Economics of E-Marketplaces

Creating a Winning E-Business Second Edition, Chapter 1

29

Electronic Marketplaces

What are the functions of markets?1. matching buyers and sellers

2. facilitating the exchange of information, goods, services, and payments associated with market transactions

3. providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market

Creating a Winning E-Business Second Edition, Chapter 1

30

• Business models– How a company conducts business

in order to generate revenue– Widespread access to the Internet

and Web allows companies to adapt old models and create new ones

• E-business models are often categorized by type of customer

E-Business Models

Creating a Winning E-Business Second Edition, Chapter 1

31

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

32

• Business-to-consumer (B2C)– Retail sales (e-retail) including airline tickets,

entertainment venue tickets, hotel rooms, stock purchases, diet and fitness programs

• Brick-and-mortar companies are moving to brick-and click companies– Sears, Best Buy, Barnes & Noble, the Gap

• Pure-play e-retailers and catalog merchants– Amazon.com, eBags, Harry and David

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

34

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

35

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

36

E-Business Models (continued)

• Business-to-business (B2B)– Businesses selling to other businesses– Online stores, such as Office Depot,

Staples– Internet and Web technologies

• Web hosting• Web design• Hardware and software• Consulting

Creating a Winning E-Business Second Edition, Chapter 1

37

E-Business Models (continued)

• Business-to-business (B2B) – Online trading communities for vertical

markets– Exchanges, aggregators, auctions

• Virtual marketspaces for buyers and sellers

• Elance, ATLA Exchange, Business.com, HedgeHog

Creating a Winning E-Business Second Edition, Chapter 1

38

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

39

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

40

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

41

E-Business Models (continued)

• Business-to-government (B2G)– Businesses provide a marketspace for

other businesses and government agencies

– Bidmain, B2GMarkets

Creating a Winning E-Business Second Edition, Chapter 1

42

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

43

E-Business Models (continued)

• Consumer-to-consumer (C2C)– Consumers sell or exchange products

and services directly with other consumers

– Auctions, online classified ads, expert information exchanges

• eBay, American Boat Listing, TraderOnline.com, AllExperts

Creating a Winning E-Business Second Edition, Chapter 1

44

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

45

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

46

E-Business Models (continued)

• Consumer-to-business (C2B)– Reverse auctions in which a single

consumer names his or her own price for products or services

– Consumer’s offer made to multiple businesses, which can accept or decline offer

– Priceline.com

Creating a Winning E-Business Second Edition, Chapter 1

47

E-Business Models (continued)

Creating a Winning E-Business Second Edition, Chapter 1

48

Typical Business Modelsin EC

• Online direct marketing• Electronic tendering

systems (e.g., reverse auction)

• Name your own price• Affiliate marketing• Viral marketing• Group purchasing• Online auctions• Product and service

customization customization

• Electronic marketplaces and exchanges

• Value-chain integrators• Value-chain service

providers• Information brokers• Bartering • Deep discounting• Membership• Supply chain improvers

Creating a Winning E-Business Second Edition, Chapter 1

49

Porter’s Competitive Forces Model: How the Internet Influences Industry Structure

Creating a Winning E-Business Second Edition, Chapter 1

50

Summary of Work-Group Computing Shifts

Organizational HierarchyOrganizational Hierarchy Business Team OrganizationBusiness Team Organization

Personal ComputingPersonal Computing Work-Group ComputingWork-Group Computing

Emphasis on the individualEmphasis on the individual Emphasis on the groupEmphasis on the group

Designing TechnologyDesigning Technology Redesigning the entire systemRedesigning the entire system

TaylorismTaylorism The new work reengineeringThe new work reengineering

Technical UsersTechnical Users Direct support of all personnelDirect support of all personnel

Installing TechnologyInstalling Technology Leadership for evolving workLeadership for evolving work

Creating a Winning E-Business Second Edition, Chapter 1

51

Islands of Technology• Technology is implemented to

manage three resources:– Physical Assets– Human Resources– Financial Assets

• What if they are not speaking to one another???

Creating a Winning E-Business Second Edition, Chapter 1

52

Problems With Enterprises that aren’t speaking…

• Redundancy of Functionality• Miscommunications due to lack of

integration• Poor quality customer service• Operational inefficiencies due to

miscommunications and redundant processing

• Internal Focus

Creating a Winning E-Business Second Edition, Chapter 1

53

Problems With Enterprises that aren’t speaking…

• Systems are perpetuated in order to treat operational symptoms without recognizing fundamental problems

• Organizational conflict and ‘turf’ battles erupt due to the historical creation of data processing developing financial solutions, engineering developing physical assets, and administrative groups to manage human resources

Creating a Winning E-Business Second Edition, Chapter 1

54

What happens when an enterprise shifts to integration

Technology ApplicationsTechnology Applications Organizational RestructuringOrganizational Restructuring

System IslandsSystem Islands Integrated SystemsIntegrated Systems

Separate Systems Separate Systems Integrated EnvironmentsIntegrated Environments

Single-form SystemsSingle-form Systems Integrated data, voice, & imageIntegrated data, voice, & image

Cost ReductionCost Reduction Enterprise EffectivenessEnterprise Effectiveness

Creating a Winning E-Business Second Edition, Chapter 1

55

What happens when an enterprise shifts to integration

Value ChainValue Chain Value NetworkValue Network

Simple Market CombatSimple Market Combat Competition via CooperationCompetition via Cooperation

Manual Communications Manual Communications Electronic CommunicationElectronic Communication

Enterprise TechnologyEnterprise Technology Interorganizational ComputingInterorganizational Computing

Purchaser of InformationPurchaser of Information Information Purchaser/VendorInformation Purchaser/Vendor

Creating a Winning E-Business Second Edition, Chapter 1

56

The Collaboration and Communication Imperative

• Organizations have always needed to communicate effectively to survive– Ram’s horns and bugles– Roman roads– The Pony Express– Telegraph– Phones– Faxes– Email– EDI

Creating a Winning E-Business Second Edition, Chapter 1

57

The Collaboration and Communication Imperative

• Organizations that don’t communicate and collaborate effectively are doomed to failure (e.g., K-mart & Sears v. Wal-mart and Target)

Creating a Winning E-Business Second Edition, Chapter 1

58

• Collective intelligence– From Wikipedia: “…a shared or group

intelligence that emerges from the collaboration and competition of many individuals.”

The Collaboration and Communication Imperative

Creating a Winning E-Business Second Edition, Chapter 1

59

Enterprise 2.0 and corporate collaboration, coordination,

and communication• Enterprise 2.0: social media and web 2.0

software used in "enterprise" (i.e., business) applications. – Social media and networked intranets used to

organize and facilitate communication– Bottom up form of knowledge dissemination

and capture (as contrasted with traditional enterprise software, which defines structure prior to use)

Creating a Winning E-Business Second Edition, Chapter 1

60

Why Enterprise 2.0?According to Coleman & Levine, there are 10

Trends in Collaboration driving adoption1. Convergence of media2. Presence Everywhere3. Integration of synchronous and asynchronous4. Collaborative consolidation in IT5. Collaboration pushed into the infrastructure6. Market Consolidation7. Collaboration pushed into critical processes8. Changing distribution channels for collaboration9. Changing buyers of collaboration services10.Mobile collaboration

Creating a Winning E-Business Second Edition, Chapter 1

61

But, why Enterprise 2.0?• Many of these trends are symptoms, not drivers. What are

the drivers?– Robust collaborative technologies: Technologies today work,

and they work well!– Ubiquitous connectivity: Convergence of devices and

applications has led to the ability to connect anytime, anywhere across multiple platforms (we ain’t cloistered anymore)

– Globalization: Organizations and teams are spread around the country or the world; venders have provided solutions to allow teams to work together across space and time

– Societal and Generational Change: A generation of employees is entering the workforce who have grown up on cable, the Internet, and ready access to information. It’s part of the culture!

Creating a Winning E-Business Second Edition, Chapter 1

62

But, why Enterprise 2.0?• One final driver …

– The competitive imperative: everyone else is doing it, shouldn’t we?

– The answer to this question is not always “yes” but in this case it most likely should be answered in the affirmative

Creating a Winning E-Business Second Edition, Chapter 1

63

An Outline of the course

• Introduction to Organizations• Teams and teamwork• Virtual Teams• Collaboration and coordination • Virtual Worlds• Technologies to support web 2.0

– SharePoint – Google Sites

• Virtual Organizations• Marketing and Applications• Implementation and Deployment• The rest…

Creating a Winning E-Business Second Edition, Chapter 1

64

What is Web 2.0?• Web 2.0: A term that focuses on the use of various web

technologies and applications that can be used to information sharing and collaboration.

• Web 2.0 encompasses social media, social networks, wikis, blogs and other software tools that connect people into loosely or tightly coupled networks – Social Media: a class of technologies that have in common a

participatory mode of information collection, validation, and publication

– Social Networks: a class of technologies that focus on tying groups of people together into loosely aligned groups based on common interests or affiliations

– Wikis: A web-based software applications designed to allow end-users to create, edit, and link web pages

– Blog: derived from the term “web log” is essentially an online diary of commentary, activity logs, and other content developed by a blog author

Creating a Winning E-Business Second Edition, Chapter 1

65

Web 20

Creating a Winning E-Business Second Edition, Chapter 1

66

Chapter Summary

• E-business – Conducting a broad spectrum of business activities over a telecommunications network

• Internet – A worldwide public network that connects private networks

• World Wide Web – A subset of the Internet

• Time, space, and geographic location no longer limiting factors

Creating a Winning E-Business Second Edition, Chapter 1

67

Chapter Summary(continued)

• Buyers are growing more powerful• Businesses are rethinking their value

chains• Business model – The way a company

conducts its activities in order to generate revenue

• Businesses are adapting old business models and creating new ones

• E-business models – B2C, B2B, B2G, C2C, C2B