prentice hall, 2002 1 chapter 18 e-communities, global ec, and other ec issues

Prentice Hall, 2002 1

Chapter 18

E-Communities, Global EC, and Other EC Issues


Learning Objectives

Describe the role and impact of virtual communitiesEvaluate the issues involved in global ECAnalyze the impact of EC on small businessesDescribe the relationship between EC and BPR, knowledge management, and virtual corporationsUnderstand the research opportunities in ECDescribe the future of EC


The Australian Fishing Community

Australian Fishing Shop (aufish.com.au) is a small e-tailer carrying information for recreational fisherpeopleSells vacation fishing trips and equipment

Hints and tips for fishingWhat’s newPhoto galleryChat boardsAuction mechanismMuch more


The Australian Fishing Community (cont.)

Very small company that survives because its strategy is:

Provide value-added servicesAllow advertisers to sponsor the siteAims at the global marketAggregate orders with a small number of suppliersBank on a virtual community


Virtual Communities

The Internet Virtual Communities The Web is being transformed into a social

Web of communities. Four major types:Communities of transactionsCommunities of interestCommunities of relations (practice)Communities of fantasy


Virtual Communities (cont.)

Communities of transactions

Facilitate buying and sellingEvineyard.com

Sells wineProvides expert information on winesProvides chat room

Communities of interest

Place for people to interact with each other on a specific topicMotley fool (fool.Com)

Forum for individual investors



Communities of relations (practice)

Be organized around certain life experiencesPlasticsnet.com used by thousands of engineers in the plastics industry

Communities of fantasy

Place for participants to create imaginary environmentsESPNet participants create competing teams and “play” with Michael Jordan


Figure 18-1Virtual Community Categorization Scheme

Source: Schubert and Ginsburg (2000).



Ways to transform a community site into a commerce site:

Understand a particular niche industryIts information needsUse a step-by-step process by which it does the research needed to do business

Build a site that provides valuable information

Through partnerships with existing publishers and information providersBy gathering it independently



Set up the site to mirror the steps a user goes through in the information-gathering and decision-making processBuild a community that relies on the site for decision supportStart selling products and services, such as sample chips to engineers, that fit into the decision-support process



The Expected PaybackCustomer loyalty increasesIncreased salesCustomer participation and feedback increasesIncreased repeat traffic to siteDrive new traffic to the site



Creating economic valueMembers input useful information in the form of comments, feedback, elaborating their attitudes and beliefs, and information needs of the communityThe community brings together consumers of specific demographic and interestCommunities charge members content fees for downloading certain articles, music, or pictures


Figure 18-2Value Creation in Electronic Communities

Source: Kannen et al. “Marketing Information on the I-Way,” Communications of the ACM, June 1996. Kannen et al. © 1998 AMC, Inc. Reproduced by permission.



Financial viability of communitiesBased on sponsorship and advertisementExpenses are very high because of the need to provide:

Fresh contentFree servicesFree membership

This model did not work well, many companies sustained heavy losses in 2000-2001; too few members, too few purchases


Key Strategies forSuccessful Online Communities

Be member-centric from the startDefine community’s focusInvolve community membersWeigh internal staffing and outsourcingBuying vs. building technologiesProvide personalization


Key Strategies for Successful Online Communities (cont.)

Minimize need for participants to go elsewhere for:

Content

Service

Trading

Facilitate communication among membersKeep an open door to the outsideBuild alliances and partnerships



Eight principles for community success:Increase traffic and participation in communityFocus on needs of members (use facilitators and coordinators)Encourage free sharing of opinions and informationFinancial sponsorship is a must



Eight principles for community success (cont.):

Consider the cultural environmentCommunities are not just discussion groups; provide tools and activitiesMembers must be involved in activities and recruitingGuide discussions, provoke controversy, raise sticky issues


Global Electronic Commerce

While geographical market boundaries may be falling, global interest-based communities will spring upMainly in support of business-to-business financial and other repetitive, standard transactions, e.g. EFT & EDIThe emergence of the Internet and the extranets resulted in an inexpensive and flexible infrastructure that can greatly facilitate global trade


Barriers to Global Electronic Commerce

Legal IssuesUncoordinated actions must be avoided and an international policy of cooperation should be encouraged

Market Access IssuesCompanies starting e-commerce need to evaluate bandwidth needs by analyzing the data required, time constraints, access demands, and user technology limitations


Barriers to Global Electronic Commerce (cont.)

Financial IssuesCustoms and taxationElectronic payment systems

Other IssuesIdentification of buyers and sellersTrustSecurity (for example, viruses)


Barriers to Global Electronic Commerce (cont.)

Other Issues (cont.)Cultural diversityInternational agreements (multi-lateral agreements)Role of governmentPurchasing in local currenciesLanguage and translation


The U.S. Policy RegardingGlobal Electronic Commerce

The private sector should leadGovernments should avoid undue restrictions on electronic commerceWhere government involvement is needed, its aim should be to support and enforce a predictable minimalistic, consistent and simple legal environment for commerce


The U.S. Policy RegardingGlobal Electronic Commerce (cont.)

Governments should recognize the unique qualities of the InternetElectronic commerce on the Internet should be facilitated on a global basisGlobal marketspace erases national borders and gives small companies worldwide reach


Global Electronic Commerce

Localization—just translating from one language to another is inadequate

Localize content

Adapt local business practices

Globalization and joint venturesJoining marketplaces


Culture

Multiple cultures warrant different marketing approachesCredit cards are widely used in the U.S., but not in ChinaMany European and Asian customers complete transactions with off-line payments


Culture (cont.)

Small, seemingly insignificant details make a difference

ColorsFormattingSymbolsNavigation Fonts


Breaking down theGlobal EC Barriers

Value the human touchBe strategicKnow your audienceBe a perfectionistRemember, it’s the Web

Integrate properlyKeep the site flexible and up-to-dateSynchronize contentOECD (oecd.org)

“Dismantling the Barriers to Global EC”Major report on all issues in this chapter


The Opportunities for Small Businesses

InexpensiveSource of informationWay of advertisingWay of conducting market researchWay to build (or rent) a storefrontWay of providing catalogsWay to reach worldwide customers


The Opportunities for Small Businesses (cont.)

Lower transaction costNiche market, specialty products (cigars, wines, sauces) are the best place to beImage and public recognition can be accumulated fast


Risks and Disadvantagesfor Small Businesses

Inability to use EDI, unless it is EDI/InternetLack of resources to fully exploit the WebLack of expertise in legal issues, advertisementLess risk tolerance than a large company


Risks and Disadvantagesfor Small Businesses (cont.)

Disadvantage when a commodity is the product (for example, CDs)No more personal contact, which is a strong point of a small businessNo advantage to being in a local community


Success Factors for Small Businesses

Niche products Low volumeNot carried by regular retail stores

Small volumeE.g., special books

Oldtechnical

International productsNot easily available to off-line customers

InformationGartnerGroup provides access to online research material by subscriptionSmaller companies may provide specialized information (home and gardening)


Success Factors forSmall Businesses (cont.)

Capital investment must be smallInventory should be minimal or non-existentElectronic payments schema existPayment methods must be flexibleLogistical services must be quick and reliable



The Web site should be submitted to directory-based search engine services like Yahoo, in a correct wayJoin an online service or mall and do banner exchangeDesign a Web site that is functional and provides all needed services to consumers



Web site design should follow basic principlesMarket properly (see Chapters 3 and 4)Understand your customers and their buying habitsPrice product or service correctlyAnticipate cash flow needs



Monitor your:CompetitionTechnologyMarketplace changes

Keep growth slow and steadyDelegateDevelop good internal communications


Business Process Reengineering (BPR)

Redesign of the enterprise process and BPR

Does not make sense to automate poorly designed process—so restructure

Necessary to change processes to fit commercially available software

Fit is required between systems and processes of different companies


Business Process Reengineering (BPR) (cont.)

Change processes to fit procedures and standards of public e-marketplacesAdjust procedures and processes to align with available services

LogisticsPaymentsSecurity

Changes to assure flexibility and scalability


Figure 18-3Software Cybermall in Korea

Source: Publicly distributed governmental documents in Korea.


Workflow Software

Workflow—supports automation of business processes

Managing movement of informationSequence of steps making up work procedureMaintaining record of changes in status of document or transaction


Workflow Software (cont.)

Two categories:Collaborative workflow—products address project-oriented and collaborative processesProduction workflow—tools address mission-critical, transaction-oriented processes


Virtual Corporations

A company composed of partners who are in different locations (several possible structures)

Virtual corporations (VC): networking between business partners


Virtual Corporations (cont.)

Major attributes of VCs:

ExcellenceUtilizationOpportunism

B2B platform for VCs:

Lack of bordersTrustAdaptability to changeTechnology


Knowledge Management (KM)

Knowledge is recognized as the most important asset in any organizationKM activities:

Capturing or creating knowledgeStoring and protecting knowledgeUpdating it constantlyUsing it whenever necessary

Collected from internal and external sourcesIntegrated with EC and/or BPR


Knowledge Management (cont.)

Knowledge base—database containing knowledge or organization’s know-how

Used for knowledge sharing

Knowledge management promotes integrated approach to processing knowledge:

IdentifyingCapturingRetrievingSharingEvaluating


Research in EC

Behavioral IssuesConsumer behavior Building consumers behavioral profiles and identify ways to utilize themSeller’s behavior and motivation Issue-oriented research (e.g., trust, intermediaries)Internet usage pattern and willingness to buyMental model of consumer product search process, comparison process, and negotiationHow to build trust in the e-marketspace


Research in EC (cont.)

Technical IssuesMethods that help customers find what they wantModels for extranet design and managementNatural language processing and automatic language translationMatching smart card technology with payment mechanisms


Research in EC (cont.)

Technical Issues (cont.)Integrating EC with existing corporate information systems, databases, etc.Retrieval of information from an electronic industry directoryEstablishing standards for international tradeBuilding a mobile Internet distribution command system


Managerial Research Issues

AdvertisementMeasuring the effectiveness, integration and coordination

ApplicationsCreating a methodology of finding EC business applications


Managerial Research Issues (cont.)

StrategyDesigning strategic advantage strategy for ECInitiating “where to market” strategyFinding way to integrate EC into organizations

ImpactsIdentify the necessary organization structure and cultureIntegration with ERP and SCM


Figure 18-4Framework for B2C EC Research


The IS World Survey

Major areas for research findings:Strategic issuesAssessment valuationOrganizational transformation and societal issuesTechnology adoption issuesTheory and methodology


The IS World Survey (cont.)

Major areas for research findings (cont.):

Marketing and CRM issuesTechnical issuesSecurity and legal issuesLogistics/operationsMiscellaneous


The Future of Electronic Commerce

Opportunities for buyingIncrease rapidly

Internet usageIncrease exponentiallyAccess via cell phones!

M-commerceNo need for a computer brings more

people to the web


The Future of Electronic Commerce (cont.)

Purchasing incentivesIncrease buyers’ advantages

Increased security and trustSignificant improvement is expected

Efficient information handingAccessible from anywhere

Innovative organizationsRestructured and reengineered



Virtual CommunitiesSpreading rapidly

Payment systemsAbility to use e-cash cards and make

micropayments is getting close to reality

Business-to-businessContinues to grow rapidly



B2B exchangesProvide infrastructure

AuctionsIncreasing rapidly

Going globalMost appealing benefit of EC



E-government--comprehensiveGovernment-to-consumers (G2C)Government-to-government (G2G)Government-to-business (G2B)Government-to-employees (G2E)

Intrabusiness ECImproving internal supply chain



Technology trendsClients

Thin client and embedded clientServers

Windows NT

Networks XDSL and wireless communication



Technology TrendsEC software and services

Availability of all types of EC softwareCompanies support auctions and multiple types of certifications

EC knowledge The quantity and quality of EC knowledge is increasing rapidly

Networked economy


Managerial Issues

Finding a community that matches your businessGoing global

Threats—difficult to accomplish, especially on large scaleOpportunities—create collaborative projects with partners in other countries (last a long time)


Managerial Issues (cont.)

Small can be beautifulCompeting on commodities with the big guys is very difficult (especially in cyberspace)Finding niche markets is advisableMore opportunities in providing support services than in trading

Restructuring is likely; should be investigatedThe future of EC is very bright, but planning is a must

prentice hall, 2002 1 chapter 18 e-communities, global ec, and other ec issues

Documents

sitevirtual communities

community site

social web of communities

information providersby

marketing information

virtual corporationsunderstand

communitythe community

impact of ec