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Title: Chapter 13: Electronic Commerce and Electronic Business Part 1

1
Chapter 13Electronic Commerce and Electronic
BusinessPart 1
2
British Airways Case

How has the Internet and technology changed
British Airways business model what are they
doing differently?
What are some of the major benefits BA is getting
from using the Internet?

3
Learning Objectives

Explain how Internet technology transforms
organizations and business models
Compare categories of electronic commerce
Evaluate the principal electronic payment systems
Demonstrate how Internet technology supports
electronic business

4
Management Challenges

Internet provides many opportunities, but also
challenges, such as
Electronic commerce electronic business require
a new way of thinking
Finding a successful Internet business model
The .com bubble burst
Most eCommerce efforts have not returned
significant profits Amazon.com
Internet flops
what were they thinking?

5
Reasons for .com failures

Customer service meltdown One Internet research
firm that measured customer service at 79 online
sites found 30 of customer service e-mails went
unanswered
Doing the same thing Companies that do not make
fundamental changes to their corporate goal, and
objectives and simply operate according to
business as usual are going to put themselves in
a bad situation when the changes that e-commerce
creates begin to effect the company.
Inadequate order fulfillment Too many companies
still don't have stock on hand or readily
available to meet customer orders Use of
primitive search and transaction tools Many
websites make consumers wait too long or take too
many steps to find what they're looking for.
Building community, not clientele Too many
dot-coms have emphasized building a community
instead of clientele.
Source http//www.witiger.com/ecommerce/dotcomfa
ilures.htm

6
Reasons for .com failures

Insufficient budgets deploying a website is just
the beginning of a company's e-commerce
expenditures. Many companies under-budget their
needs in website maintenance and marketing.
Channel conflict Many companies leap into
Internet sales without considering the impact on
their channel partners, such as dealers or
retailers. The resulting chill has set back many
e-commerce initiatives.
Innovation - the intensity of the competitive
environment and the continued developments in the
technological environment require that a company
constantly search for innovative ways to produce
and dispense the product and deal with customers
Customers to Ambassadors - mass advertising turns
people off - if they like your product, they will
tell other people - this is desirable. If you can
use internet structures and great customer
service to turn customers into ambassadors of
your product, you will be, in effect, increasing
your sales
Source http//www.witiger.com/ecommerce/dotcomfa
ilures.htm

7
Before the Internet

Organizations attempted to integrate information
systems with those of suppliers and customers
Organizations have been trying to become digital
for a long time.
Used proprietary technology (non-standard)
Difficult, time consuming and expensive
EDI
The Internet is
A universal, inexpensive and easy to use set of
technologies and technology standards.
http//www.isc.org/
More on this in later chapter

8
Internet Technology affects Relationships

Information flows seamlessly
Throughout the organization
With trading partners, suppliers distributors
To and from customers
Information flows 24 hours per day, 7 days per
week

9
Internet Technology affects the Organization

Internet technology allows organizations to
communicate directly with their constituents at a
very low cost
Removes layers between the organization and its
partners (disintermediation)
Reduces transaction costs

Transaction Costs
10
Business Model

Defines an enterprise
Describes how the enterprise delivers a product
or service
Shows how the enterprise creates wealth and value
St FX
Amazon.com
St Marthas Hospital

11
New Business Models and Value Propositions

The internet changes economics related to access
to information
The Internet reduces information asymmetry and
search costs
one party involved in a transaction has more
information that the other
costs other much more to search for information.
Example buying a car
http//www.edmunds.com/
The Internet eliminates the tradeoff between
richness and reach of information

12
New Business Models and Value Propositions

Prior to the Internet firms had to trade off
information richness and information reach WHY?
Richness The amount and quality of information
that can be exchanged with a constituent
Reach The number of constituents that can be
contacted
The Internet eliminates the tradeoff

13
Internet Business Models