Professional Documents
Culture Documents
CHAPTER 3 EBUSINESS
McGraw-Hill/Irwin
SECTION 3.1
McGraw-Hill/Irwin
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Amazon.com
The worlds biggest (virtual) bookstore turned the industry upside down.
There are no physical stores Comments and recommendations of buyers are captured, customer traffic is monitored all in an effort to evaluate buying and selling patterns and the success of promotions
Its more than just a website, its an intelligent, global digital business.
Personalized recommendations Online customer reviews 1-click ordering Amazon marketplace where customers sell their own items
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DISRUPTIVE TECHNOLOGY
How can a company like Polaroid go from $60 share in 1997 to $.08 a share in 2002 and eventual bankruptcy? They had a 50% market share with their instant camera.
Using Porters Five Forces, they may have seen two threats: one-hour film processing and digital cameras
Digital Darwinism implies that organizations which cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction
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What do steamboats, transistor radios, and Intels 8088 processor all have in common?
Disruptive technology a new way of doing things that initially does not meet the needs of existing customers but tends to open new markets Sustaining technology produces an improved product in an established market that customers are eager to buy
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Sustaining technologies:
Sustaining technologies tend to provide us with better, faster, and cheaper products in established markets Sustaining technologies virtually never lead in markets opened by new and disruptive technologies
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The Innovators Dilemma - discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers, partners, and stakeholders
Xerox, IBM, Sears and DEC all listened to their existing customers and invested aggressively in technology but still lost their dominant positions in the market. Too much emphasis on satisfying the current needs of their customers rather than looking to meet the customers future needs
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Organizations must be able to transform as markets, economic environments, and technologies change Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology
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World Wide Web (WWW) a global hypertext system that uses the Internet as its transport mechanism Hypertext transport protocol (HTTP) the Internet standard that supports the exchange of information on the WWW
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INTERNET WWW
People often interchange the terms Internet and the World Wide Web, but these terms are not synonymous
The Internet is a global public network of computer networks that pass information from one to another using common computer protocols The World Wide Web is a global hypertext system that uses the Internet as its transport mechanism The World Wide Web operates on the Internet
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Improved content - A key element of the Internet is its ability to provide dynamic relevant content.
Buyers need good content descriptions to make informed purchases, and sellers use content to properly market and differentiate themselves from the competition.
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Evolution of the World Wide Web The Internet makes it possible to perform business in ways not previously imaginable It can also cause a digital divide
Digital divide when those with access to technology have great advantages over those without access to technology
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OLPC is a non-profit organization providing a means to an endan end that sees children in even the most remote regions of the globe being given the opportunity to tap into their own potential, to be exposed to a whole world of ideas, and to contribute to a more productive and saner world community.
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WEB 2.0
Web 2.0 - a set of economic, social, and technology trends that collectively form the basis for the next generation of the Internet
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WEB 2.0
A more mature, distinctive medium characterized by user participation, openness, and network effects. Although the term suggests a new version of the Web, it refers to changes in the ways software developers and end-users use the Web as a platform. According to Tim OReilly, Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as platform, and an attempt to understand the rules for success on that new platform.
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WEB 2.0
More than just the latest technology buzzword, Web 2.0 is a transformative force that is propelling companies across all industries toward a new way of doing business. Those who act on the Web 2.0 opportunity stand to gain an early-mover advantage in their markets. What is causing this change? Consider the following raw demographic and technological drivers:
One billion people around the globe now have access to the Internet. Mobile devices outnumber desktop computers by a factor of two. Nearly 50 percent of all U.S. Internet access is now via always-on broadband connections.
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WEB 2.0
Combine these drivers with the fundamental laws of social networks and lessons from the Webs first decade, and you get Web 2.0, the next-generation, user-driven, intelligent Web:
In the first quarter of 2006, MySpace.com signed up 280,000 new users each day and had the second most Internet traffic of any web site. By the second quarter of 2006, 50 million blogs were creatednew ones were added at a rate of two per second. In 2005, eBay conducted 8 billion API-based Web services transactions.
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WEB 2.0
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Mashups
Web mashup - a website or web application that uses content from more than one source to create a completely new service
The Web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on. Content used in mashups is typically sourced from an Application programming interface (API) - a set of routines, protocols, and tools for building software applications Mashup editor - WSYIWYGs (What You See Is What You Get) for mashups
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Mashups
http://www.programmableweb.com/mashups
1001 Secret Fishing Holes: Over a thousand fishing spots in national parks, wildlife refuges, lakes, campgrounds, historic trails etc. (Google Maps API). 25 Best Companies to Work For: Map of the 100 best U.S. companies to work for as rated by Fortune magazine. (Google Maps API).
This amusing viral video casts the Iraq war alliance between George W. Bush and Tony Blair in a whole new light. Created by Johan Sderberg for a Swedish television program called 'Kobra,' this parody synchs up images of Bush and Blair singing Diana Ross and Lionel Richie's breathless ballad "Endless Love." Their war may have gone horribly awry, but their hearts still beat as one.
http://politicalhumor.about.com/od/bushvideos/youtube/bushblairlove.htm
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Second Life
IBM - Two IBM Academy of Technology inworld events were not only extremely successful, but also saved hundreds of thousands of dollars in travel and meeting costs. Plus, the 300+ team members also had the opportunity to meet, socialize, and network. The National Oceanic and Atmospheric Administration (NOAA) NOAA has used Second Life as a marketing channel to reach new audiences in new and meaningful ways. In fact, 40 percent of visitors to NOAA in Second Life reported that they hadnt heard of the organization prior to their Second Life visit and 94 percent recommended that NOAA expand their virtual presence. Northrop Grumman Corporation (NGC) has established a sophisticated five region presence in Second Life that enables the company to simply and inexpensively prototype products, conduct simulations, and train employees in environments that would be prohibitively dangerous, expensive, or even impossible in the physical world. The Open University Open University, based in the UK, enable their students the flexibility of learning in Second Life with their extended virtual world campus. Loyalist College Case Study: Loyalist College in Canada massively improves test scores and training outcomes using Second Life.
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Online service provider (OSP) offers an extensive array of unique services such as its own version of a Web browser.
An OSP offers services such as access to private computer networks and information resources such a bulletin boards, downloadable programs, news articles, chat rooms, and electronic mail services.
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Application service provider (ASP) a company that offers an organization access over the Internet to systems and related services that would otherwise have to be located in personal or organizational computers.
Software offered using an ASP model is also sometimes called On-demand software. The most limited sense of this business is that of providing access to a particular application program (such as medical billing) using a standard protocol such as HTTP.
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WISP - an ISP that allows subscribers to connect to a server at designated hotspots or access points using a wireless connection
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ISPs, OSPs, and ASPs use service level agreements (SLA) which define the specific responsibilities of the service provider and set the customer expectations
Availability, accessibility, performance, maintenance, backup/recovery, upgrades, equipment ownership, software ownership, security, confidentiality ASP market is expected to grow worldwide from around $13 billion in 2005 to $23 billion by 2008
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SECTION 3.2
EBUSINESS
McGraw-Hill/Irwin
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EBUSINESS BASICS
How do ecommerce and ebusiness differ?
Ecommerce the buying and selling of goods and services over the Internet (online transactions only) Ebusiness the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners
http://www.ted.com/index.php/talks/view/id/105
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EBUSINESS BASICS
Industries Using Ebusiness
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ebusiness Business
How are different industries are using ebusiness
Manufacturing and Retail: RFID, online payments and orders, sales via the Internet, customer service via the Internet Financial: online banking, online mortgages, online loans Telecommunications: Voice over the Internet (VoIP) Healthcare: digital hospitals, pharmacy orders via the Internet Travel: online reservations, Travelocity, Expedia
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EBUSINESS MODELS
Ebusiness model an approach to conducting electronic business on the Internet
Can a business operate with more than one e-business model?
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EBUSINESS MODELS
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EBUSINESS MODELS
B2B: Electronic marketplace, Google search marketing B2C: Progressive insurance, Carfax, Best Buy, Amazon C2B: eBay, Amazon C2C: eBay, Amazon
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Business-to-Business (B2B)
Electronic marketplace (emarketplace) interactive business communities providing a central market where multiple buyers and sellers can engage in ebusiness activities
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Business-to-Business (B2B)
Electronic marketplace (e-marketplace) present structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers Existing e-marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials
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Business-to-Consumer (B2C)
Common B2C e-business models include: e-shop a version of a retail store where customers can shop any time without leaving their home e-mall consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shops
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Consumer-to-Business (C2B)
Priceline.com is an example of a C2B ebusiness model The demand for C2B ebusiness will increase over the next few years due to customers desire for greater convenience and lower prices
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Consumer-to-Consumer (C2C)
Online auctions
Electronic auction (eauction) - sellers and buyers solicit bids and prices are determined dynamically Forward auction - a selling channel to many buyers and the highest bid wins Reverse auction - buyers use to purchase a product or service, selecting the seller with the lowest bid
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Consumer-to-Consumer (C2C)
C2C Communities
Communities of interest - People interact with each other on specific topics, such as golfing and stamp collecting Communities of relations - People come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiasts Communities of fantasy - People participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan
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Marketing/Sales
Generating revenue on the Internet
An online ad (often called banner ad) is a box running across a Web page that is often used to contain advertisements. The banner generally contains a link to the advertisers Web site. Web-based advertising services can track the number of times users click the banner, generating statistics that enable advertisers to judge whether the advertising fees are worth paying. Banner ads are like living, breathing classified ads. A pop-up ad is a small Web page containing an advertisement that appears on the Web page outside of the current Web site loaded in the Web browser. A popunder ad is a form of a pop-up ad that users do not see until they close the current Web browser screen.
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Marketing/Sales
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Marketing/Sales
Viral marketing is a technique that induces Web sites or users to pass on a marketing message to other Web sites or users, creating exponential growth in the messages visibility and effect.
One example of successful viral marketing is Hotmail, which promotes its service and its own advertisers messages in every users e-mail notes. Viral marketing encourages users of a product or service supplied by an e-business to encourage friends to join. Viral marketing is a word-of-mouth type advertising program.
Mass customization is the ability of an organization to give its customers the opportunity to tailor its products or services to the customers specifications. For example, customers can order M&Ms with customized sayings such as Marry Me.
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Marketing/Sales
Personalization occurs when a Web site can know enough about a persons likes and dislikes that it can fashion offers that are more likely to appeal to that person.
Personalization involves tailoring a presentation of an e-business Web site to individuals or groups of customers based on profile information, demographics, or prior transactions. Amazon uses personalization to create a unique portal for each of its customers.
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Marketing/Sales
A blog (the contraction of the phrase Web log) is a Web site in which items are posted on a regular basis and displayed in reverse chronological order. Like other media, blogs often focus on a particular subject, such as food, politics, or local news. Some blogs function as online diaries.
A typical blog combines text, images, and links to other blogs, Web pages, and other media related to its topic. Since its appearance in 1995, blogging has emerged as a popular means of communication, affecting public opinion and mass media around the world.
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Marketing/Sales
Real simple syndications (RSS) is a family of Web feed formats used for Web syndication of programs and content. RSS is used by (among other things) news Web sites, blogs, and podcasting, which allows consumers and journalists to have news constantly fed to them instead of searching for it. In addition to facilitating syndication, RSS allows a Web sites frequent readers to track updates on the site.
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Marketing/Sales
Podcasting is the distribution of audio or video files, such as radio programs or music videos, over the Internet to play on mobile devices and personal computers. Podcastings essence is about creating content (audio or video) for an audience that wants to listen when they want, where they want, and how they want. Podcasters Web sites also may offer direct download of their files, but the subscription feed of automatically delivered new content is what distinguishes a podcast from a simple download or real-time streaming. Usually, the podcast features one type of show with new episodes either sporadically or at planned intervals such as daily, weekly, etc.
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Marketing/Sales
Search engine optimization (SEO) is a set of methods aimed at improving the ranking of a Web site in search engine listings. Search engines display different kinds of listings in the search engine results pages (SERPs), including: payper-click advertisements, paid inclusion listings, and organic search results. SEO is primarily concerned with advancing the goals of Web sites by improving the number and position of search results for a wide variety of relevant keywords. SEO strategies can increase the number of visitors and the quality of visitors, where quality means visitors who complete the action the site intends (e.g., purchase, sign up, learn something).
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Marketing/Sales
Spamdexing (black hat SEO) uses a variety of deceptive techniques in an attempt to manipulate search engine rankings, whereas legitimate, white hat SEO focuses on building better sites and using honest methods of promotion. What constitutes an honest, or ethical, method is an issue that has been the subject of numerous debates.
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Financial Services
Online consumer payments include:
Financial cybermediary - an Internet-based company that facilitates cybermediary payments over the Internet. PayPal is the bestknown example of a financial cybermediary. Electronic check - a mechanism for sending a payment from a checking or savings account. There are many implementations of electronic checks, with the most prominent being online banking.
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Financial Services
Electronic bill presentment and payment (EBPP) - a system that sends presentment and bills over the Internet and provides an easy-touse mechanism (such as payment (EBPP) clicking on a button) to pay the bill. EBPP systems are available through local banks or online services such as Checkfree and Quicken. Digital wallet - both software and information the software provides security for the transaction and the information includes payment and delivery information (for example, the credit card number and expiration date).
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Financial Services
There is currently a move towards converging and consolidating Finance provisions into shared services within an organization. Rather than an organization having a number of separate Finance departments performing the same tasks from different locations a more centralized version can be created. Information systems will greatly help the achievement of this goal. What will be the driving force that changes online consumer payments in the future?
Security Ease of use Common formats
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Financial Services
Online business payments include:
Electronic data interchange (EDI) - a standard format for exchanging business data. One way an organization can use EDI is through a value-added network. Value-added network (VAN) - a private network, provided by a third party, for exchanging information through a high-capacity connection. VANs support electronic catalogs (from which orders are placed), EDIbased transactions (the actual orders), security measures such as encryption, and EDI mailboxes. Financial EDI (financial electronic data interchange) is a standard electronic process for B2B market purchase payments. National Cash Management System is an automated clearinghouse that supports the reconciliation of the payments.
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Financial Services
Why do businesses use different forms of online payments than consumers?
Business payments are typically much larger than consumer payments and need additional security With supply chain management systems online business payments are automated using EDI
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Financial Services
Electronic trading network
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Financial Services
A recent report has concluded that the providers of ETNs are most competitive over, and often share different opinions on, three areas of ETN services:
Speed of implementation Services provided, including overall service and integration management Product applicability to small and mediumsize enterprises
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Procurement
Maintenance, repair, and operations (MRO) materials (also called indirect materials) materials necessary for running an organization but do not relate to the companys primary business activities Web-based procurement of maintenance, repair, and operations (MRO) supplies is expected to reach more than $200 billion worldwide by the year 2009
E-procurement - the B2B purchase and sale of supplies and services over the Internet Electronic catalog - presents customers with information about goods and services offered for sale, bid, or auction on the Internet
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Customer Service
Customer service is the business process where the most human contact occurs between a buyer and a seller E-business strategists are finding that customer service via the Web is one of the most challenging and potentially lucrative areas of e-business
Availability 24x7 to help customers Detailed customer service information can cut down on phone calls to the company More convenient for the customer
The primary issue facing customer service departments using e-business is consumer protection
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Consumer Protection
Issues for consumer protection
Unsolicited goods and communications Illegal or harmful goods, services, and content Insufficient information about goods Invasion of privacy Cyberfraud and cybercrime
Identity theft is already so common that there are entire units within law enforcement that deal with this issue every day
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Consumer Protection
E-business security
Encryption - scrambles information into an alternative form that requires a key or password to decrypt. Encryption is achieved by scrambling letters, replacing letters, replacing letters with numbers, and other ways. Secure socket layer (SSL) - (1) creates a secure and private connection between a client and server computer, (2) encrypts the information, and (3) sends the information over the Internet. SSL is identified by a Web site address that includes an s at the endhttps.
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Consumer Protection
Secure electronic transaction (SET) a transmission security method that ensures transactions are secure and legitimate. Similar to SSL, SET encrypts information before sending it over the Internet. SET also enables customer authentication for credit card transaction; endorsed by major e-commerce players including MasterCard, American Express, Visa, Netscape, and Microsoft.
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Intermediaries
Intermediaries agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance ebusiness
Reintermediation using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways
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The Yankee Group reports that 66 percent of companies determine Web site success solely by measuring the amount of traffic
New customer acquisition ranked second Revenue generation ranked third
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Analyzing Web site traffic is one way organizations can understand the effectiveness of Web advertising
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Website Metrics
Clickstream data tracks the exact pattern of a consumers navigation through a website Clickstream data can reveal:
Number of pageviews Pattern of websites visited Length of stay on a website Date and time visited Number of customers with shopping carts Number of abandoned shopping carts
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Website Metrics
Web site metrics include:
Visitor metrics
Unidentified visitor, session visitor, tracked visitor, identified visitor
Exposure metrics
Page exposure, site exposure
Visit metrics
Stickiness (visit duration), total web pages exposure per session, total unique web page exposure per session
Hit metrics
Hits (each element of a requested page including graphics, text, interactive items is a hit), qualified hits (exclude less important hits such as error messages
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traditional brick-and-mortar store, use comparative shopping methods, search Amazon.com for its price, and make a purchasing decision accordingly.
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It must also deal with security issues such as identity theft if there was a breach in its customer systems since it maintains customer credit card numbers. It must also ensure it is adhering to tax laws
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