Managing information systems 7th edition brow ch07

MANAGEMENT INFORMATION SYSTEMS

CHAPTER 7
E- BUSINESS SYSTEMS

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SOME DEFINITIONS
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E-Business Systems
Enable the electronic transmission of business transactions or other related information between a buyer and seller

Dot-Com (pure-play)
A business that conducts business solely through their Web site (single channel)

Bricks and Clicks (click-and-mortar)
A company that uses Internet sales as an additional channel to an offline business (multichannel)

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SOME DEFINITIONS
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Internet

A worldwide network of networks, accessible to the public, that employs the TCP/IP protocol

Intranet
A private network operating within an organization that employs the TCP/IP protocol, to provide information,
applications, and other tools for use by the organization’s employees

Extranet
A portion of a company’s private intranet that is accessible via the internet to authorized organizations that are business
partners (such as customers or suppliers)

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E-BUSINESS GROWTH

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Metcalfe’s Law is a theoretical explanation for continued e-business growth

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Metcalfe’s Law: The value of a network to each of its members is proportional to the number of other
connected users in the network

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By this law, the network on the right has a value that is 15 times that of the network on the left

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E-BUSINESS FRAMEWORK

Internet Applications and Services are built upon two types of pillars
TECHNOLOGY

LEGAL AND REGULATORY PILLAR

PILLAR

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LEGAL AND REGULATORY ENVIRONMENT

Environmental influences on Internet growth:

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Sales tax policies

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For example: Sales taxes in U.S. at State level, but “location” of purchase not clear via Internet and

federal government chose not to implement an Internet sales tax

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Laws to protect Individual Privacy

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Antitrust laws

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E-BUSINESS TECHNOLOGIES: FIRST DECADE
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E-BUSINESS TECHNOLOGIES

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Pre-Internet B2B electronic commerce used EDI

EDI (Electronic Data Interchange):

Proprietary applications for communicating with trading partners based on agreed-upon standards for business
document transmission

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E-BUSINESS TECHNOLOGIES

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XML enables B2B electronic commerce via the Internet

XML (Extensible Markup Language):
A markup language standard to facilitate data interchange across applications on the Web

XML specification:
Tags to convey the meaning of data

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XML EXAMPLE
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<?xml version="1.0" ?>
<NetworkTypes>

<type visibility="public">
<name>Internet</name>
<definition>
A worldwide network of networks, accessible to the public,

that employs the TCP/IP protocol

</definition>
</type>
<type visibility="private">
<name>Intranet</name>
<definition>
A private network operating within an organization that employs the TCP/IP
other tools (such as

protocol, to provide information, applications, and

collaboration tools), for use by the organization’s employees
</definition>

</type>
<type visibility="private">
<name>Intranet</name>
<definition>
A private network that is a portion of a company’s Intranet, which is made
outside of the company

accessible (normally over the Internet) to business partners

(such as customers or suppliers)

</definition>
</type>
</NetworkTypes>

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E-BUSINESS TECHNOLOGIES

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The availability of broadband increased user access to different types of file content from their homes

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E-BUSINESS TECHNOLOGIES

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Digital Signatures
Used to authenticate the sender of a digital message

Digital Signature:
A type of asymmetric cryptography that provides message authentication by utilizing a public-private key pair

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STRATEGIC E-BUSINESS OPPORTUNITIES
(AND THREATS)

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Porter’s Competitive Forces Model can be used to assess the opportunities and threats on pre-existing companies due to th
influence of the Internet

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STRATEGIC E-BUSINESS OPPORTUNITIES
(AND THREATS)

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Examples of potential Internet opportunities for existing companies:

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Procurement of supplies via Internet can increase company’s power over suppliers

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Size of potential market is expanded

- Distribution channels between traditional company and customer can be eliminated

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STRATEGIC E-BUINESS OPPORTUNITIES
(AND THREATS)

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Examples of threats to existing companies:

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Migration to price competition – difficult to keep offerings proprietary

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Increased number of potential competitors

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Internet reduces some traditional barriers (such as in-person sales force)

- Customers increase their bargaining power – Internet reduces customer’s switching costs

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THE DOT-COM MELTDOWN

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E-business changes after the “dot-com meltdown”

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B2B APPLICATIONS

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If buyers and sellers are fragmented markets, Independent intermediaries are more likely to be needed

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B2B APPLICATIONS

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If sellers are concentrated, sellers are likely to dominate

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B2B APPLICATIONS

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If buyers are concentrated, buyers are likely to dominate

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B2B APPLICATIONS-

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Reverse Auctions
Suppliers bid online in real time for a customer contract. They lower their prices to out bid their competitors.

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INTERNET USAGE ACROSS THE GLOBE
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B2C APPLICATIONS

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Benefits to Sellers

Seller Benefits:

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24/7 access to customer for sales and support
Lower costs from online channel
Multimedia opportunities for marketing
New ways to research potential markets

New ways to distribute (if product/service can be digitized)
Global reach to buyers

Fig 7.9: Potential B2C benefits to Sellers

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B2C APPLICATIONS FOR RETAILERS

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Dot-com
- Amazon.com
- Netflix.com

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Traditional Catalog
- Dell
- Lands’ End

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Traditional Store
- Staples
- Tesco

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DOT-COM RETAILERS

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AMAZON

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Dot-com pioneer in online retailing of third-party products
Began as bookseller
Superior online shopping experiences for millions of customers

By 1999: Competitor to Wal-Mart
2003: First year profitable
2007: Proprietary E-Book reader (Kindle)
2008: Most popular shopping site worldwide

AMAZON
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DOT-COM RETAILERS

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NETFLIX

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Established in 1998
DVD rentals mailed to members

- 2007: Proprietary video streaming
- 2010: Greater market share than Blockbuster

Netflix
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