A WEB APPLICANTION FOR THE TOURISM INDUSTRY IN HANOI by Dinh Huu Son

A WEB APPLICANTION FOR THE TOURISM INDUSTRY IN HANOI
by
Dinh Huu Son
A research study submitted in partial fulfillment of the requirements for the degree of Master of
Business Administration
Examination Committee: Dr. Clemens Bechter (Chairman)
Dr. Truong Quang
Dr. Hans Stoessel
Nationality: Vietnamese
Previous Degree: Bachelor of Civil Engineering
Hanoi Construction College
Hanoi, Vietnam
Scholarship Donor: Government of Switzerland
Asian Institute of Technology
School of Management
Bangkok, Thai land
April, 2001
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Acknowledgement
I would like to express my sincere thankfulness to my research advisor Dr. Bechter Clemens for
his invaluable advice and encouragement through out the research work. I also highly
appreciate the research examination of Dr. Truong Quang and Dr. Hans Stoessel as well as their
helpful and innovative ideas to enhance the value of the research.
Now that I have finished the application, it’s time to stop for a moment to reflect and
acknowledge those people who have made this research possible and successful.
First of all, the most important thanks is due to Dr. Hans Stoessel and others in Swiss Vietnam
AIT Management Development Program and Swiss Government who gave financial support to
my study in AIT.
When I think of one-year period living in AIT, I can not help but think of my family for their
support and encouragement through my study in terms of both finance and mentality.
I would like to express the deepest thanks and appreciation to my closest friend for her

encouragement, to my sister for her help in the survey. Special words go to Mr Do Minh
Phuong for his valuable ideas to my program.
Finally, special thanks go to my classmates, those with I have been having great lives together
in AIT.
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Abstract
This research is carried so that the reality of tourism industry in Hanoi is understood. Several
scopes such as banking, internet service etc. will be assessed. Most importantly, a qualitative
survey is carried out to understand what tourists and foreigners who live permanently expect
from a website for tourism purpose. Another qualitative survey of managers and officials of
tourism industry is done to uncover their thinking towards Internet. What are their current
problems of not launching internet as a competitive weapon.
From the problems of “customers” and those of “suppliers”, we come to a solution of how to
solve the conflict. An application (website) is created as the illustration of the solution.
The business model can not be a perfect solution. Yet, it is worth looking at it so that further
innovative ideas can follow.
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Table of Contents
Chapter Page
1. 1 INTRODUCTION.................................................................................................................................................1
1.1 BACKGROUND...........................................................................................................................................1
1.1.1 Tourism industry in Vietnam............................................................................................................1
1.1.2 Internet in Vietnam .........................................................................................................................1
1.1.3 Level of participating in E-commerce of tourism companies...........................................................1
1.1.4 Hanoi...............................................................................................................................................2
1.2 PROBLEM STATEMENT...............................................................................................................................2
1.3 OBJECTIVES OF STUDY..............................................................................................................................2
1.4 SCOPE OF STUDY.......................................................................................................................................3
1.5 METHODOLOGY........................................................................................................................................3
1.5.1 Survey methodology.........................................................................................................................3

1.5.2 Web development tools/languages...................................................................................................3
1.6 LIMITATIONS OF THE RESEARCH...............................................................................................................4
1.7 ORGANIZATION OF THE RESEARCH...........................................................................................................4
2. 2 LITERATURE REVIEW....................................................................................................................................5
2.1 INTERNET AND ECOMMERCE.....................................................................................................................5
2.1.1 Internet history................................................................................................................................5
2.1.2 Commerce.....................................................................................................................................12
2.1.3 Internet E-commerce overview......................................................................................................15
2.1.4 Benefits of Internet for E-commerce..............................................................................................16
2.1.5 Trading environment.....................................................................................................................18
2.1.6 Applications of E-commerce..........................................................................................................23
2.1.7 Levels of internet exploitation........................................................................................................23
2.1.8 Towards E-payments.....................................................................................................................24
2.2 INTERNET IN VIETNAM...........................................................................................................................27
2.3 OVERVIEW OF LANGUAGES AND TOOLS USED FOR THE APPLICATION....................................................27
2.3.1 Hyper text markup language (html)...............................................................................................27
2.3.2 Active server pages (asp)...............................................................................................................28
2.3.3 Javascript......................................................................................................................................29
2.3.4 Microsoft access............................................................................................................................30
2.3.5 Dreamweaver 4.0 ..........................................................................................................................30
2.3.6 Dreamweaver UltraDev.................................................................................................................31
2.3.7 Photoshop......................................................................................................................................31
2.3.8 Fireworks.......................................................................................................................................31
3. 3 RESEARCH METHODOLOGY......................................................................................................................32
3.1 PROCESS.................................................................................................................................................32
3.2 EXPLANATION OF THE RESEARCH METHODOLOGY..................................................................................32
3.3 TARGET GROUP.......................................................................................................................................33
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3.4 ATTRIBUTES............................................................................................................................................34
3.4.1 For general Internet Surfers..........................................................................................................34

3.4.2 For tourists....................................................................................................................................35
3.4.3 For long term investors..................................................................................................................36
3.4.4 For service suppliers – the main customer....................................................................................37
4. 4 HANOI.................................................................................................................................................................38
4.1 GEOGRAPHICAL......................................................................................................................................38
4.2 TOURIST POTENTIAL...............................................................................................................................40
4.3 HANOI – POINT OF DEPARTURE TO NEIGHBORING REGIONS...................................................................41
4.4 THE DEVELOPMENT OF HANOI TOURISM INDUSTRY IN RECENT YEARS...................................................44
5. 5 NEEDED FEATURES OF A WEB-SITE FOR TOURISTS
AND PERMANENT INVESTORS (SURVEY FINDINGS)...............................................................................47
5.1 SURVEY METHODOLOGY........................................................................................................................47
5.2 SURVEY RESULTS (TOURISTS AND LONG-TERM INVESTORS)...................................................................48
5.3 SURVEY RESULTS (OFFICIALS IN TOURISM INDUSTRY IN HANOI)...........................................................50
5.3.1 Infrastructure ................................................................................................................................51
5.3.2 Web site promotion........................................................................................................................51
5.3.3 The method of payment through network trading..........................................................................52
6. 6 BUSINESS MODEL...........................................................................................................................................53
6.1 OUTLINE MODEL....................................................................................................................................53
6.2 DETAILED MODEL..................................................................................................................................53
6.3 HOTEL BOOKING PROCESS *...................................................................................................................56
7. 7 WEB DEVELOPMENT.....................................................................................................................................57
7.1 RATIONALE.............................................................................................................................................57
7.1.1 Service and normal features of a website.......................................................................................57
7.1.2 Hotel Booking................................................................................................................................58
7.2 WEB DESIGN...........................................................................................................................................58
8. 8 CONCLUSION AND RECOMMENDATIONS.............................................................................................60
8.1 THE ROLE OF E-COMMERCE FOR HANOI TOURISM INDUSTRY.................................................................60
8.2 LEVEL OF PARTICIPATING IN E-COMMERCE OF TOURISM COMPANIES IN HANOI.....................................60
8.3 RECOMMENDATIONS...............................................................................................................................61
8.4 DIRECTION FOR FURTHER RESEARCH .....................................................................................................61

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Chapter 1
1 Introduction
1.1 Background
1.1.1 Tourism industry in Vietnam
In developing countries, tourism industry is often one of the important most industries that
attract large amounts of hard currencies from more developed countries. On the way of
development, VN is no exception. In early 1990s to the mid of the decade, the number of
tourists coming to Vietnam increased by 30 percents. However, there was a decline of 10
percent from 1997 to 1999. There are several causes that are clear:
• Infrastructure of tourism industry in Vietnam is not as good as those of other countries in
region. Low quality service could be found everywhere.
• Lack of information or instructions to places of beauty that tourists want to go
• External causes like starting effects of the financial crisis in Asia and the declining of
other currencies in the region, making it expensive to go to Vietnam.
Yet, tourism industry is coming back to be attractive in the year 2000 with the number of
tourists increased by 15 percent.
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1.1.2 Internet in Vietnam
Internet network was launched in December 1997. There has been 5 ISP so far including
VNPT/VDC, FPT, Saigon Postel, Netnam and Vietel. The number of ICP is 15 providing
mainly public medium of the Internet. The number of Internet users is growing fast including
both individual users and enterprise side. With the amazing development of telephone,
internet has been, is and is going to be a vital means of communication, of resource
exchanging and most importantly, of doing business in Vietnam.
1.1.3 Level of participating in E-commerce of tourism companies
At the current, there are some reasons that make the Internet unattractive to the tourism
companies as lacking information and technical skill. As the result of unawareness of the
opportunities from the Internet, the level of utilization of the new media stayed at the email
and some advertisement with low information content from companies’ websites. But what

foreigners want is not provided. Foreigners want to see concrete information referring to the
1

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location, means of traveling, hotel booking, boat renting etc. But these kinds of websites just
reveal mere information describing how beautiful the destination is. Therefore, the aid
created by website establishment by tourism companies contribute little help to the
development of the tourism industry in Vietnam.
1.1.4 Hanoi
Hanoi is the capital of Vietnam. It is the second biggest city of the country, behind
Hochiminh City in terms of size. With the advantage that it is the place where the
government locates, Hanoi is the destination for many investors who are ambitiously seeking
opportunities to make money. Besides, it is very famous for its rich culture with many
historical and historic places as well as for its tranquil scenery… As the result, more and
more foreigners are coming to Hanoi for the purpose not only of visiting but also of living
permanently. It has another advantage to attract tourists. It is the location advantage. Due to
the fact that there is only international airport, which is Noibai airport, in the North of
Vietnam. So, every tourist wanting to visit beautiful scenes in the North of Vietnam has to
visit this airport and Hanoi is the first city to stop by after going out of the airport. Those
advantages above do make Hanoi an attractive place for an investment in the tourism
industry.
1.2 Problem statement
When surveying websites about Hanoi, I found that there are several websites. But not
enough information is provided. The contents of those websites are advertising oriented.
There are no websites to bring an over view of Hanoi but at the same time to give details
about a large number of various services that can satisfy the needs of not only a fastidious
tourist but also a permanently staying foreign investor.
1.3 Objectives of study
• Identify various activities currently going on in Hanoi which are important to the needs
and lives of tourists and those who stay permanently

• Survey all service available; list important places with essential information including
historical places, entertainment locations (in Hotel category, list all big hotels with
number of rooms, room rates, address, etc.)
• Develop a website providing the above information. Tailor to suit the needs of both short-
time tourists and permanent investors
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1.4 Scope of study
The research/project mainly focuses on tourism industry in Hanoi. Survey is done to
understand the most important needs of tourists/ investors. Then, another intensive survey is
carried out to see what is available in Hanoi. Matching demand with supply is achieved by
the creation of a Website that provides information about Hanoi such as information about
historic places, hotels, restaurants, discotheques, supermarkets etc. More importantly, the
website makes it possible for visitors to book online some of those services.
1.5 Methodology
1.5.1 Survey methodology
An in-depth pilot interview is carried out first to understand general needs of a typical short-
time tourist and a typical permanent investor. There are 15 in each category to be
interviewed. So, there should be a total number of 30 people to take part in this study. All
these people are selected arbitrarily.
For understanding services available in Hanoi, secondary data is best. Sources of
information can be taken from magazines, newspapers and the yellow book. Information
from pilot interview may be useful for this part. However, it is necessary to validate all this
information by contacting directly by telephone and site-surveying.
Further, I carried out a small qualitative survey of officials in the tourism industry in Hanoi.
The sample size is only 15. As mentioned above, the sample size for qualitative work is
usually small because we do not need to have too accurate result while spending lots of time.
1.5.2 Web development tools/languages
There are several tools/languages used in the website development. Here is the list of most of
them. More are added later
• Hyper text markup language (html)

• Active server pages (asp)
• Javascript
• Microsoft access
• Dreamweaver 4.0 and Dreamweaver UtraDev 4.0
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• Photoshop
• Fireworks
1.6 Limitations of the research
The research is application oriented. Therefore, it can not avoid several setbacks.
• Because only pilot work is carried out, the needs revealed in the research may not present
the needs of the whole population coming and living in Hanoi.
• The application developed may not be used to the full extent for other locations.
Modifications should be made as the result.
• The use or the outcome of the application is hindered by the difficult Internet
accessibility, low speed of information transmission, and the high Internet use price
• Many places do not offer its services online. Other have their own intranet. It is most
convenient to provide a website with the customers interface and another interface for
service suppliers to update their own database. So, there is no immediate link from the
application’s database and the database of the suppliers.
1.7 Organization of the research
• Introduction
• Literature review
Internet
E-commerce
Tourism industry in Hanoi
Tools and languages
• Needed features of a website for tourists and permanent investors (Survey findings)
• Website development
• Conclusion and recommendations
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Chapter 2
2 Literature Review
2.1 Internet and Ecommerce
2.1.1 Internet history
The Internet has revolutionized the computer and communications world like nothing before.
The invention of the telegraph, telephone, radio, and computer set the stage for this
unprecedented integration of capabilities. The Internet is at once a world-wide broadcasting
capability, a mechanism for information dissemination, and a medium for collaboration and
interaction between individuals and their computers without regard for geographic location.
The Internet represents one of the most successful examples of the benefits of sustained
investment and commitment to research and development of information infrastructure.
Beginning with the early research in packet switching, the government, industry and academia
have been partners in evolving and deploying this exciting new technology. Today, terms like
"" and "" trip lightly off the tongue of the random
person on the street. This is intended to be a brief, necessarily cursory and incomplete history.
Much material currently exists about the Internet, covering history, technology, and usage. A
trip to almost any bookstore will find shelves of material written about the Internet.
The Internet today is a widespread information infrastructure, the initial prototype of what is
often called the National (or Global or Galactic) Information Infrastructure. Its history is
complex and involves many aspects - technological, organizational, and community. And its
influence reaches not only to the technical fields of computer communications but throughout
society as we move toward increasing use of online tools to accomplish electronic commerce,
information acquisition, and community operations. Now, lets go back step by step to the
history of internet.
The first recorded description of the social interactions that could be enabled through
networking was a series of memos written by J.C.R. Licklider of MIT in August 1962
discussing his "Galactic Network" concept. He envisioned a globally interconnected set of
computers through which everyone could quickly access data and programs from any site. In
spirit, the concept was very much like the Internet of today. Licklider was the first head of the
computer research program at DARPA, starting in October 1962. While at DARPA he

convinced his successors at DARPA, Ivan Sutherland, Bob Taylor, and MIT researcher
Lawrence G. Roberts, of the importance of this networking concept.
5
Leonard Kleinrock at MIT published the first paper on packet switching theory in July 1961
and the first book on the subject in 1964. Kleinrock convinced Roberts of the theoretical
feasibility of communications using packets rather than circuits, which was a major step along
the path towards computer networking. The other key step was to make the computers talk
together. To explore this, in 1965 working with Thomas Merrill, Roberts connected the TX-2
computer in Mass. to the Q-32 in California with a low speed dial-up telephone line creating
the first (however small) wide-area computer network ever built. The result of this experiment
was the realization that the time-shared computers could work well together, running
programs and retrieving data as necessary on the remote machine, but that the circuit switched
telephone system was totally inadequate for the job. Kleinrock's conviction of the need for
packet switching was confirmed.
In late 1966 Roberts went to DARPA to develop the computer network concept and quickly
put together his plan for the "ARPANET", publishing it in 1967. At the conference where he
presented the paper, there was also a paper on a packet network concept from the UK by
Donald Davies and Roger Scantlebury of NPL. Scantlebury told Roberts about the NPL work
as well as that of Paul Baran and others at RAND. The RAND group had written a paper on
packet switching networks for secure voice in the military in 1964. It happened that the work
at MIT (1961-1967), at RAND (1962-1965), and at NPL (1964-1967) had all proceeded in
parallel without any of the researchers knowing about the other work. The word "packet" was
adopted from the work at NPL and the proposed line speed to be used in the ARPANET
design was upgraded from 2.4 kbps to 50 kbps.
In August 1968, after Roberts and the DARPA funded community had refined the overall
structure and specifications for the ARPANET, an RFQ was released by DARPA for the
development of one of the key components, the packet switches called Interface Message
Processors (IMP's). The RFQ was won in December 1968 by a group headed by Frank Heart
at Bolt Beranek and Newman (BBN). As the BBN team worked on the IMP's with Bob Kahn
playing a major role in the overall ARPANET architectural design, the network topology and

economics were designed and optimized by Roberts working with Howard Frank and his team
at Network Analysis Corporation, and the network measurement system was prepared by
Kleinrock's team at UCLA.
Due to Kleinrock's early development of packet switching theory and his focus on analysis,
design and measurement, his Network Measurement Center at UCLA was selected to be the
first node on the ARPANET. All this came together in September 1969 when BBN installed
6
the first IMP at UCLA and the first host computer was connected. Doug Engelbart's project
on "Augmentation of Human Intellect" (which included NLS, an early hypertext system) at
Stanford Research Institute (SRI) provided a second node. SRI supported the Network
Information Center, led by Elizabeth (Jake) Feinler and including functions such as
maintaining tables of host name to address mapping as well as a directory of the RFC's. One
month later, when SRI was connected to the ARPANET, the first host-to-host message was
sent from Kleinrock's laboratory to SRI. Two more nodes were added at UC Santa Barbara
and University of Utah. These last two nodes incorporated application visualization projects,
with Glen Culler and Burton Fried at UCSB investigating methods for display of
mathematical functions using storage displays to deal with the problem of refresh over the
net, and Robert Taylor and Ivan Sutherland at Utah investigating methods of 3-D
representations over the net. Thus, by the end of 1969, four host computers were connected
together into the initial ARPANET, and the budding Internet was off the ground. Even at this
early stage, it should be noted that the networking research incorporated both work on the
underlying network and work on how to utilize the network. This tradition continues to this
day.
Computers were added quickly to the ARPANET during the following years, and work
proceeded on completing a functionally complete Host-to-Host protocol and other network
software. In December 1970 the Network Working Group (NWG) working under S. Crocker
finished the initial ARPANET Host-to-Host protocol, called the Network Control Protocol
(NCP). As the ARPANET sites completed implementing NCP during the period 1971-1972,
the network users finally could begin to develop applications.
In October 1972 Kahn organized a large, very successful demonstration of the ARPANET at

the International Computer Communication Conference (ICCC). This was the first public
demonstration of this new network technology to the public. It was also in 1972 that the initial
"hot" application, electronic mail, was introduced. In March Ray Tomlinson at BBN wrote the
basic email message send and read software, motivated by the need of the ARPANET
developers for an easy coordination mechanism. In July, Roberts expanded its utility by
writing the first email utility program to list, selectively read, file, forward, and respond to
messages. From there email took off as the largest network application for over a decade. This
was a harbinger of the kind of activity we see on the World Wide Web today, namely, the
enormous growth of all kinds of "people-to-people" traffic.
7
The original ARPANET grew into the Internet. Internet was based on the idea that there
would be multiple independent networks of rather arbitrary design, beginning with the
ARPANET as the pioneering packet switching network, but soon to include packet satellite
networks, ground-based packet radio networks and other networks. The Internet as we now
know it embodies a key underlying technical idea, namely that of open architecture
networking. In this approach, the choice of any individual network technology was not
dictated by a particular network architecture but rather could be selected freely by a provider
and made to interwork with the other networks through a meta-level "Internetworking
Architecture". Up until that time there was only one general method for federating networks.
This was the traditional circuit switching method where networks would interconnect at the
circuit level, passing individual bits on a synchronous basis along a portion of an end-to-end
circuit between a pair of end locations. Recall that Kleinrock had shown in 1961 that packet
switching was a more efficient switching method. Along with packet switching, special
purpose interconnection arrangements between networks were another possibility. While
there were other limited ways to interconnect different networks, they required that one be
used as a component of the other, rather than acting as a peer of the other in offering end-to-
end service.
In an open-architecture network, the individual networks may be separately designed and
developed and each may have its own unique interface which it may offer to users and/or
other providers. including other Internet providers. Each network can be designed in

accordance with the specific environment and user requirements of that network. There are
generally no constraints on the types of network that can be included or on their geographic
scope, although certain pragmatic considerations will dictate what makes sense to offer.
The idea of open-architecture networking was first introduced by Kahn shortly after having
arrived at DARPA in 1972. This work was originally part of the packet radio program, but
subsequently became a separate program in its own right. At the time, the program was called
"Internetting". Key to making the packet radio system work was a reliable end-end protocol
that could maintain effective communication in the face of jamming and other radio
interference, or withstand intermittent blackout such as caused by being in a tunnel or blocked
by the local terrain. Kahn first contemplated developing a protocol local only to the packet
radio network, since that would avoid having to deal with the multitude of different operating
systems, and continuing to use NCP.
8
However, NCP did not have the ability to address networks (and machines) further
downstream than a destination IMP on the ARPANET and thus some change to NCP would
also be required. (The assumption was that the ARPANET was not changeable in this regard).
NCP relied on ARPANET to provide end-to-end reliability. If any packets were lost, the
protocol (and presumably any applications it supported) would come to a grinding halt. In this
model NCP had no end-end host error control, since the ARPANET was to be the only
network in existence and it would be so reliable that no error control would be required on the
part of the hosts.
Thus, Kahn decided to develop a new version of the protocol which could meet the needs of
an open-architecture network environment. This protocol would eventually be called the
Transmission Control Protocol/Internet Protocol (TCP/IP). While NCP tended to act like a
device driver, the new protocol would be more like a communications protocol.
Kahn began work on a communications-oriented set of operating system principles while at
BBN and documented some of his early thoughts in an internal BBN memorandum entitled
"Communications Principles for Operating Systems". At this point he realized it would be
necessary to learn the implementation details of each operating system to have a chance to
embed any new protocols in an efficient way. Thus, in the spring of 1973, after starting the

internetting effort, he asked Vint Cerf (then at Stanford) to work with him on the detailed
design of the protocol. Cerf had been intimately involved in the original NCP design and
development and already had the knowledge about interfacing to existing operating systems.
So armed with Kahn's architectural approach to the communications side and with Cerf's NCP
experience, they teamed up to spell out the details of what became TCP/IP.
The give and take was highly productive and the first written version of the resulting
approach was distributed at a special meeting of the International Network Working Group
(INWG) which had been set up at a conference at Sussex University in September 1973. Cerf
had been invited to chair this group and used the occasion to hold a meeting of INWG
members who were heavily represented at the Sussex Conference.
The original Cerf/Kahn paper on the Internet described one protocol, called TCP, which
provided all the transport and forwarding services in the Internet. Kahn had intended that the
TCP protocol support a range of transport services, from the totally reliable sequenced
delivery of data (virtual circuit model) to a datagram service in which the application made
direct use of the underlying network service, which might imply occasional lost, corrupted or
reordered packets.
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However, the initial effort to implement TCP resulted in a version that only allowed for
virtual circuits. This model worked fine for file transfer and remote login applications, but
some of the early work on advanced network applications, in particular packet voice in the
1970s, made clear that in some cases packet losses should not be corrected by TCP, but
should be left to the application to deal with. This led to a reorganization of the original TCP
into two protocols, the simple IP which provided only for addressing and forwarding of
individual packets, and the separate TCP, which was concerned with service features such as
flow control and recovery from lost packets. For those applications that did not want the
services of TCP, an alternative called the User Datagram Protocol (UDP) was added in order
to provide direct access to the basic service of IP.
The early implementations of TCP were done for large time sharing systems such as Tenex
and TOPS 20. When desktop computers first appeared, it was thought by some that TCP was
too big and complex to run on a personal computer. David Clark and his research group at

MIT set out to show that a compact and simple implementation of TCP was possible. They
produced an implementation, first for the Xerox Alto (the early personal workstation
developed at Xerox PARC) and then for the IBM PC. That implementation was fully
interoperable with other TCPs, but was tailored to the application suite and performance
objectives of the personal computer, and showed that workstations, as well as large time-
sharing systems, could be a part of the Internet. In 1976, Kleinrock published the first book on
the ARPANET. It included an emphasis on the complexity of protocols and the pitfalls they
often introduce. This book was influential in spreading the lore of packet switching networks
to a very wide community.
Widespread development of LANS, PCs and workstations in the 1980s allowed the nascent
Internet to flourish. Ethernet technology, developed by Bob Metcalfe at Xerox PARC in 1973,
is now probably the dominant network technology in the Internet and PCs and workstations
the dominant computers. This change from having a few networks with a modest number of
time-shared hosts (the original ARPANET model) to having many networks has resulted in a
number of new concepts and changes to the underlying technology. First, it resulted in the
definition of three network classes (A, B, and C) to accommodate the range of networks.
Class A represented large national scale networks (small number of networks with large
numbers of hosts); Class B represented regional scale networks; and Class C represented local
area networks (large number of networks with relatively few hosts).
10
A major shift occurred as a result of the increase in scale of the Internet and its associated
management issues. To make it easy for people to use the network, hosts were assigned
names, so that it was not necessary to remember the numeric addresses. Originally, there were
a fairly limited number of hosts, so it was feasible to maintain a single table of all the hosts
and their associated names and addresses. The shift to having a large number of
independently managed networks (e.g., LANs) meant that having a single table of hosts was
no longer feasible, and the Domain Name System (DNS) was invented by Paul Mockapetris
of USC/ISI. The DNS permitted a scalable distributed mechanism for resolving hierarchical
host names (e.g. www.acm.org) into an Internet address.
The increase in the size of the Internet also challenged the capabilities of the routers.

Originally, there was a single distributed algorithm for routing that was implemented
uniformly by all the routers in the Internet. As the number of networks in the Internet
exploded, this initial design could not expand as necessary, so it was replaced by a
hierarchical model of routing, with an Interior Gateway Protocol (IGP) used inside each
region of the Internet, and an Exterior Gateway Protocol (EGP) used to tie the regions
together. This design permitted different regions to use a different IGP, so that different
requirements for cost, rapid reconfiguration, robustness and scale could be accommodated.
Not only the routing algorithm, but the size of the addressing tables, stressed the capacity of
the routers. New approaches for address aggregation, in particular classless inter-domain
routing (CIDR), have recently been introduced to control the size of router tables.
As the Internet evolved, one of the major challenges was how to propagate the changes to the
software, particularly the host software. DARPA supported UC Berkeley to investigate
modifications to the Unix operating system, including incorporating TCP/IP developed at
BBN. Although Berkeley later rewrote the BBN code to more efficiently fit into the Unix
system and kernel, the incorporation of TCP/IP into the Unix BSD system releases proved to
be a critical element in dispersion of the protocols to the research community. Much of the CS
research community began to use Unix BSD for their day-to-day computing environment.
Looking back, the strategy of incorporating Internet protocols into a supported operating
system for the research community was one of the key elements in the successful widespread
adoption of the Internet.
One of the more interesting challenges was the transition of the ARPANET host protocol
from NCP to TCP/IP as of January 1, 1983. This was a "flag-day" style transition, requiring
all hosts to convert simultaneously or be left having to communicate via rather ad-hoc
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mechanisms. This transition was carefully planned within the community over several years
before it actually took place and went surprisingly smoothly (but resulted in a distribution of
buttons saying "I survived the TCP/IP transition").
TCP/IP was adopted as a defense standard three years earlier in 1980. This enabled defense to
begin sharing in the DARPA Internet technology base and led directly to the eventual
partitioning of the military and non- military communities. By 1983, ARPANET was being

used by a significant number of defense R&D and operational organizations. The transition of
ARPANET from NCP to TCP/IP permitted it to be split into a MILNET supporting
operational requirements and an ARPANET supporting research needs.
Thus, by 1985, Internet was already well established as a technology supporting a broad
community of researchers and developers, and was beginning to be used by other
communities for daily computer communications. Electronic mail was being used broadly
across several communities, often with different systems, but interconnection between
different mail systems was demonstrating the utility of broad based electronic
communications between people.
The recent development and widespread deployment of the World Wide Web has brought
with it a new community, as many of the people working on the WWW have not thought of
themselves as primarily network researchers and developers. A new coordination organization
was formed, the World Wide Web Consortium (W3C). Initially led from MIT's Laboratory
for Computer Science by Tim Berners-Lee (the inventor of the WWW) and Al Vezza, W3C
has taken on the responsibility for evolving the various protocols and standards associated
with the Web.
Thus, through the over two decades of Internet activity, we have seen a steady evolution of
organizational structures designed to support and facilitate an ever-increasing community
working collaboratively on Internet issues.
2.1.2 Commerce
The meaning of commerce as follows:
Commerce n [MF, fr. L commercium, fr. com- + merc-, merx merchandise] (1537)
• The exchange or buying and selling of commodities on a large scale involving
transportation from place to place
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The commerce is, quite simply, the exchange of goods and services, usually for money. We
see commerce all around us in in millions of different forms. When you buy something at a
grocery store or at Wal-mart you are participating in commerce. In the same way, if you cart
half of your possessions onto your front lawn for a yard sale, you are participating in
commerce from a different angle. If you go to work each day for a company that produces a

product, that is yet another link in the chain of commerce.
When you think about commerce in these different ways, you instinctively recognize several
different roles:
Buyers, these are people with money who want to purchase a good or service.
Sellers, these are the people who offer goods and services to buyers. Sellers are generally
recognized in two different forms: retailers who sell directly to consumers and wholesalers or
distributors who sell to retailers and other businesses.
Producers, these are the people who create the products and services that sellers offer to
buyers. A producer is always, by necessity, a seller as well.
The producer sells the products produced to wholesalers, retailers or directly to the consumer.
You can see that at this high level, commerce is a fairly simple concept! Whether it is
something as simple as a person making and selling popcorn on a street corner or as complex
as a contractor delivering a space shuttle to NASA, all of commerce at its simplest level relies
on buyers, sellers and producers.
When you get down to the actual elements of commerce and commercial transactions, things
get slightly more complicated because you have to deal with the details. However, these
details boil down to a finite number of steps. The following list highlights all of the elements
of a typical commerce activity. In this case, the activity is the sale of some product by a
retailer to a customer:
If you would like to sell something to a customer, at the very core of the matter is the
something itself. You must have a product or service to offer. The product can be anything
from ball bearings to back rubs. You may get your products directly from a producer, or you
might go through a distributor to get them, or you may produce the products yourself.
You must also have a place from which to sell your products. Place can sometimes be very
ephemeral - for example a phone number might be the place. If you are a customer in need of
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a back rub, if you call "Judy's Backrubs, Inc." on the telephone to order a back rub, and if
Judy shows up at your office to give you a backrub, then the phone number is the place where
you purchased this service. For most physical products we tend to think of the place as a store
or shop of some sort. But if you think about it a bit more you realize that the place for any

traditional mail order company is the combination of an address or a catalog and a phone
number or a mail box.
You need to figure out a way to get people to come to your place. This process is known as
marketing. If no one knows that your place exists, you will never sell anything. Locating your
place in a busy shopping center is one way to get traffic. Sending out a mail order catalog is
another.
There is also advertising, word of mouth and even the guy in a chicken suit who stands by the
road waving at passing cars! You need a way to accept orders. At Wal-mart this is handled by
the check out line. In a mail order company the orders come in by mail or phone and are
processed by employees of the company. You also need a way to accept money. If you are at
Wal-mart you know that you can use cash, check or credit cards to pay for products.
Business-to-business transactions often use purchase orders. Many businesses do not require
you to pay for the product or service at the time of delivery, and some products and services
are delivered continuously (water, power, phone and pagers are like this). That gets into the
whole area of billing and collections.
You need a way to deliver the product or service, often known as fulfillment. At a store like
Wal-mart fulfillment is automatic. The customer picks up the item of desire, pays for it and
walks out the door. In mail-order businesses the item is packaged and mailed. Large items
must be loaded onto trucks or trains and shipped.
Many products today are so complicated that they require customer service and technical
support departments to help customers use them. Computers are a good example of this sort
of product. On-going products like cell phone service may also require on-going customer
service because customers want to change the service they receive over time. Traditional
items (for example, a head of lettuce), generally require less support that modern electronic
items. You find all of these elements in any traditional mail order company. Whether the
company is selling books, consumer products, information in the form of reports and papers,
or services, all of these elements come into play.
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2.1.3 Internet E-commerce overview
Internet Commerce Opportunity Phenomenal growth has occurred and is expected to continue

for the Internet World Wide Web. Estimates for the numbers of consumers and businesses
online vary considerably for markets around the world. Still, experts believe that more than
36 million households will have access to the Web by the year 2000 in the U.S. alone. In
Europe this number is lower, based on lower penetration of personal computers, but still
approaches and dazzling figure of near 20 million households. In Japan approximately 12
million households will have access to the Web in the year 2000.
The number of business Web sites is equally impressive, reaching more than approximately 2
million by the year 2000 in the U.S., and as many as 1 million each in Europe and Japan. This
significant adoption of the Internet World Wide Web by businesses and consumers presents
two tremendous opportunities for businesses. First, a growing standard means for businesses
to communicate transactional information with other businesses more cost-effectively:
"business-to-business commerce." Second, a growing channel for efficient delivery of goods
and services to consumers: "business-to-consumer commerce." In this section, we take a
quick look at trends in these two areas of opportunity. Common requirements are then
explored. Business-to-Business Commerce Opportunity EDI for All Businesses
Businesses today transact with trading partners in one of two generalized fashions. First, the
majority of businesses use non-automated means of communicating commerce-related
information with trading partners: mail, telephone, and fax. Second, a small number of
primarily the largest companies in the world—fewer than 50,000—conduct a significant
portion of their transactions in an automated fashion such as Electronic Data Interchange
(EDI). EDI conducted either with leased lines or, more commonly, through Value Added
Networks (VANs)—can be costly and complex. Large companies maintain full-time EDI staff
for the ongoing management of translation systems and auditing of the operation. EDI VAN-
based systems, because of their complexity and ensuing cost, exclude small and medium-
sized businesses from participation in automated trading communities.
Electronic commerce is decreasing the importance of geographical location, as the buyer and
seller can be physically located on the other sides of the world and yet conduct business on-
line. This is particularly relevant for non-physical, information products, which can be sold,
paid for and distributed globally by electronic means. Although physical products are also
traded electronically on international markets even to consumers (e.g Amazon.com selling

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books to consumers all around the world), distance plays a role because it adds to the time
and cost of the delivery.
The Internet will bring radical change to automation in trading. By providing a ubiquitous
public network and standards for communication, the Internet will help businesses lower costs
in EDI-like transactions. More importantly, the Internet will make it easier for small and
medium-sized businesses to participate in automated commerce transactions. Many
businesses—small, medium, and large—will soon send and receive the majority of their
purchase orders and invoices over the Internet.
2.1.4 Benefits of Internet for E-commerce
• Ease of access and global search: there was a consensus that the World Wide Web
(WWW) is an ideal mechanism for providing relevant information to the public globally.
It allows organizations an opportunity for publicizing their products and services at
minimum cost. By putting information on routinely asked questions on the home pages,
organizations are saving costs by reducing the number of customer service
representatives. Also, customer can place order through the Internet once security issues
are worked out. The WWW holds the potential to increase the market share and helps
expand into new market by virtue of its global reach. Additionally, easy access to
information through the Internet gives the opportunities to compare the costs and
characteristics of products and services (R Nath et al).
• Low cost advertising medium: there is no doubt that Internet has become an
inexpensive advertising medium for organizations and is being effectively used by some
firms for commerce. The comments made by the president of a large IT international firm
allude to this issue as: the purpose of Internet offerings is to open their products and
services to a new customer base who prefers to use the Internet for their shipping needs
and to maintain a leading edge technology position and image in the market place and
against their competitions. (R Nath et al).
• Low barriers to entry: small and large firms alike have the opportunity to be on the
WWW and conduct business on the Internet. The barriers to entry to the Internet are
minuscule. The home pages give equal footing to small organizations with large national

firms (R Nath et al).
• Perceived image enhance : For many companies, they have to present on the Internet
because their competitors are already on the Internet. Without it their reputation can be
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tarnished and they will be perceived as laggards in employing state of the art technologies.
(R Nath et al).
• Establish direct link to customers : To deliver new services or by pass
intermediaries, Internet enables build direct connections to customers. That means more
than just designing a web site to market a company’s offerings. The behavior of customers
who are already buying goods and services on line clearly indicates that companies can
build momentum in their digital channels by using Internet technology to deliver three
forms of services to customers. First of all, companies can give customers just about the
same level of service through the Internet that they can currently get directly from a
salesperson. Secondly, companies can use the Internet technology to personalize
interactions with their customers and build customer loyalty. One way is to tailor the
information and options customers see at a site to just what they want. Finally, companies
can provide valuable new services inexpensively. Company can draw on data from its
entire customer base to make available wide-ranging knowledge of some topic. The
combination of the three levels of services can make the Internet channel very compelling
for customers (Shikhar Ghosh,1998)
• Bypass other in the value chain: companies may find they have little choice but to
risk damaging relationships in their physical chains to compete in the e- channel. The
ubiquity of the Internet, the fact that anyone can link to anyone else, makes it potentially
possible for a participant in the value chain to usurp the role of any other participant
(Shikhar Ghosh,1998)
• Develop and delivery new product and service : instead of or perhaps in addition
to pirating value from others in the value chain, company that establishes Internet
channels can choose to introduce new products or services to customers. Not only in the
Internet channel a direct connection to customers or to any participant in the value chain,
it is also a platform for innovation. It is a way to produce and distribute new combinations

of digital information or to create new transaction models or services without incurring
the traditional costs of complexity that exist in the physical world. Through Internet,
companies can create new value by taking away bits of some one else’s business. First, a
company can use its direct access to customers, each time customers visit a company’s
web site is an opportunity to deliver additional services or provide a path for other
businesses that want to reach that customers. The second one, a company can mine its
own digital assets to server new customer segments. Lastly, a company can take
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advantage of its ability to conduct transactions over the Internet to take away value from
others (Shikhar Ghosh,1998)
• Controlling access to customer and setting new business rules : companies can
conceivably use the Internet to become the dominant player in the e- channel of specific
industry or segment. First, there are number of reasons that make the companies are not
invalid on the Internet as the physical distance between customer and suppliers, single
store can differentiate services, thus as the result, a small number of companies can meet
the diverse needs of large segments. Furthermore, if customers are not willing to learn
how to navigate hundreds of different sites, each with its own unique layout, then the web
site will turn out to be naturally concentrating medium. Therefore, in any cases, it is
conceivable that some companies will attempt to control the e- channel by becoming the
site that can provide everything that customers want, i.e. Companies can become magnets
by introducing new business models that take advantage of the interactive capabilities of
the Internet (Shikhar Ghosh,1998)
2.1.5 Trading environment
Business- to-business model:
Business-to-business electronic commerce, or B2B e-commerce, refers to that portion of
electronic commerce that takes place between businesses. Unlike B2C, or business-to-
consumer e-commerce, B2B e-commerce emphasizes supply chain integration, direct
marketing over the web, and electronic marketplaces. B2B e-commerce over the Internet can
be as basic as a manufacturer putting up a bare-bones Web site to let distributors securely
order a handful of products.

It can be as complex as a distributor offering thousands of customers company-specific
pricing and content, complex product configuration tools and near real-time access to
inventory levels for its entire product line. Compared with traditional electronic data
interchange (EDI) systems that run across private networks, Internet-based B2B e-commerce
is seen as less of a headache to implement, especially for companies that want to reach
smaller customers and suppliers that can't handle EDI's cost and complexity.
Potentially, the most productive and profitable electronic commerce applications for small
and large businesses alike are B2B transactions on the Web. For example, a company can
streamline its purchasing process by posting its supply requirements on the Web for open
bidding. And the Internet can be used to profile prospects, qualify leads, and deliver proposals
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before a sales representative and a corporate prospect actually meet. B2B sales productivity
can be significantly improved by providing technical information, pricing, scheduling, and
other information to customers over the Internet, enabling sales reps to focus their efforts on
personalized customer relationships. Most companies probably do business with only 10 to 15
percent of their customers a year, but with B2B direct marketing over the Internet, a company
with limited resources can create demand across its total customer base through all sales
channels. In addition, feedback from Web sites, online surveys and e-mail can be an
important source of leads and market data. A smaller company can use the Internet to reach
and serve business customers nationally or internationally without having to expand
geographically.
Business- to-consumer model
Online spending (business to consumer) from five Industry sources. Forecasts for the year
2000 range from $17 - $33 bllion. Forecasting online business to consumer sales depends
upon the number of people online (maximum is total USA population), the average likelihood
of buying, and average annual online spending per person. According to the WVTM2, the
longer someone has been using the Internet the more likely they are to buy (Figure 1) and the
more they spend (Figure 5). In 1998, for example, buyers that had been using the Internet for
12 months had a median annual purchase amount of $180 whereas buyers that had been using
the Internet for 60 months had a median annual purchase of $300. Assuming the number of

online Internet users was 55 million in July 1998, we applied our likelihood to buy data and
spending data to forecast total online retail sales in the USA. Estimates for the growth of
Internet usage in the United States average 2.5% per month (e.g., Broersma 1998; Court 1997;
Emmerce, 1998).
Electronic Commerce based Business's Activities and Functions
There are nine key activities in electronic commerce:
• Advertising and shopping,
• Negotiating,
• Ordering,
• Billing,
• Payment and settlement,
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• Distribution and receipt,
• Accounting,
• Customer service, and
• Information and knowledge processing.
The specific functions associated with these activities in an electronic commerce setting are
discussed below. Note that not all of these activities are performed in every transaction, nor
are they necessarily performed in this order; indeed, they may be performed in parallel. Also,
the activities are not necessarily all conducted electronically. Finally, these activities can vary
in complexity and importance depending on the size and scope of the transaction.
Advertising and Shopping
Advertising and shopping can include the following: A potential buyer browsing electronic
yellow pages and catalogs on a network. An agent shopping on behalf of one or many buyers
and/or sellers. A buyer sending an electronic request for proposal (RFP), and sellers
responding with various offers; Sellers advertising their products and services; and Buyers
electronically navigating and/or browsing through the World Wide Web's online services.
A major problem associated with the advertising and shopping activity is the cost and time
expended in developing, maintaining, and finding relevant information, products, and
services, given the plenitude of available information. Obviously, this problem will become

increasingly complex as more data and services become available online and the choices and
possibilities multiply exponentially. We need new and better ways to find services and
information and to publish and update this information.
Negotiating
Buyers and sellers may elect to negotiate the terms of a transaction (i.e., the terms of
exchange and payment). These terms may cover delivery, refund policies, arranging for
credit, installment payments, copyright or license agreements, usage rights, distribution rights,
and so on. These terms can be standardized for routine commodity use, or customized to suit
unique individual situations. Often, in the case of two parties with a well-established business
relationship, the terms of exchange are prenegotiated as standing contractual terms for all
their future exchanges. Often, this process will also include authentication of the two parties.
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