Electronic Commerce

1
Electronic Commerce

• Learning objectives
• To appreciate the impact that e-commerce is
  having in changing the competitive environment
• Reshaping buyer-supplier relationships
• Improving core business processes
• Reaching new segments and markets

2
Electronic Commerce

• Process of doing business electronically and
  involves the automation of various
  business-to-business and business-to-consumer
  transactions
• B2B
• 26bn 1996/97
• 330bn 2002
• 1000bn 2005

3
 Electronic Commerce Technologies (Laudon and
Laudon, 1997)
4
E-Commerce Definitions

• Business-to business (B2B) Both sides of the
  transaction are businesses, non-profit
  organizations, or governments.
• Business-to-consumer (B2C) E-commerce
  transactions where customers are individual
  consumers
• Consumer-to-consumer (C2C) Consumers sell
  directly to each other.
• Consumer-to-business (C2B) Individuals sell
  services or goods to businesses

5
Benefits of E-Commerce

• Improved, lower cost information
• Lower entry costs
• Available 24/7, virtually anywhere in the world
• Availability expands markets
• Decreases the cost of paper-based information
• Reduces the cost of communication
• Provides richer communication
• Fast delivery of digitized products
• Increased flexibility of location

6
Limitations of E-commerce

• Lack of system security, reliability and
  standards
• Lack of privacy
• Insufficient bandwidth
• Integrating e-commerce software with existing
  software
• Lack of trust in (1) unknowns on the other end of
  the transaction, (2) integrity of the transaction
  itself, and (3) electronic money that is only
  bits and bytes
• Cost of technology

7
E-Procurement

• On-line catalogues
• Vendor
• Intermediaries
• Buyer
• RFQs and bid packaging
• On-line auctions

8
Case 1

• Rationalisation of the supply base structure and
  reduction in transaction costs
• Reduces lead times
• Quality inspection becomes responsibility of
  supplier
• EDI requires less purchasing resource
• EDI reduces administrative processes
• Buyers able to focus on more value-adding tasks
• Supplier has core competency in managing logistics

9
Case 2

• Developing specifications
• Interchangeable parts
• Part standardisation and simplification
• Part exclusions
• Management perspective
• Improved communication linkages
• Brings suppliers into design process at an
  earlier stage
• Enhanced the relationship between designers

10
Case 3

• Internal efficiency
• Data capture and representation
• Unique product features
• Lowers inventory levels
• Immediate feedback
• Improves customer service
• Search related costs
• Suggests alternatives
• Alerts customers to promotions

11
Case 3

• Inter-organisational efficiency
• Work can be exported
• Provides benefits of vertical integration
• Removes a level of the supply chain
• Production scheduling enhanced
• Evaluates quickly promotional programmes
• Rapid transmission of information
• Extends market reach

12
Conclusion

• Distinction between BPR and BNR
• Eliminating activities which used to be carried
  out by participants
• Blurring the boundary between buyers and
  suppliers
• Creating opportunities for suppliers to add value
  to customer businesses
• Automation of transaction type activities allows
  focus on value-adding activities
• Increases leverage of suppliers
• Behavioural implications

13
The Future

• Are high costs of human and capital assets offset
  by lower costs and expanded market opportunities?
• Will customer and supplier resistance to use of
  new technology require operation of parallel
  systems?
• Is it better to be a leader or a laggard?
• What parts of business operations will not work
  effectively in a virtual world?