Introduction to MIS

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Introduction to MIS

• Electronic Business

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Electronic Business
Orders, Auctions, and EDI
Large business
Small business/ supplier
Sales and CRM
The Internet
Service, orders, and information
Web hosting and Web-based services
Salesperson
Customer
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Outline

• Forms of Electronic Commerce
• Production Chain and Disintermediation
• Dynamic Pricing
• Distributed Services
• Marketing Phases
• Web Advertising Advertiser
• Web Advertising Publisher
• Web Traffic Analyzer
• Web Hosting Options
• Mobile Commerce
• Entrepreneurship Creating a Business
• Industry Research
• Business Plans
• Forecasting Financial Data
• Forming a Corporation
• Financing a Startup
• E-Commerce Startup
• Cases Travel Industry
• Appendix Business Plans

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Forms of Electronic Commerce
Business Consumer
Business B2B EDI Commodity auctions B2C Consumer-oriented Sales Support
Consumer C2B Minimal examples, possibly reverse auctions like PriceLine C2C Auction sites (eBay) But many of these are dominated by small business sales.
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Production Chain
parts supplier
parts supplier
parts supplier
warehouse
warehouse
supplier
supplier
supplier
tool manufacturer
workers
Manufacturer
wholesaler
wholesaler
distributor
distributor
distributor
retail store
retail store
retail store
retail store
Consumers
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Disintermediation
Production Chain
Manufacturer
E-commerce website
Retailer
Consumer
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Dynamic Pricing
P
S
Price consumer is willing to pay
Perfect competition price
D
Q
The ultimate goal is to set individual prices for
each consumer to capture the maximum price each
is willing to pay. As opposed to the perfect
competition price, where everyone pays the same
price, and some customers gain because they were
willing to pay more.
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Distributed Services
Original document
Company 1
The Internet
Internet Service e.g., automated document
translation
Company 2
Translated document
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XML Extensible Markup Language
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XML In Internet Explorer
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Marketing Phases

• Pre-Purchase
• Static data sites.
• Promotion.
• Product specifications.
• Pictures.
• Schematics.
• Pricing.
• FAQs.
• Interactive sites.
• Configuration.
• Compatibility.
• Complex pricing.

• Purchase
• Transmission security.
• User identification.
• Product selection.
• Payment validation.
• Order confirmation.
• Post-Purchase
• Service.
• Problem tracking.
• Sales leads.
• Resolve problems.
• Answer questions.
• Product evaluation.
• Modifications.
• Tracking customers.

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Web Advertising Advertiser Perspective

• Want viewers to see the ad.
• Want viewers to click through to the main site.
• Need to match site demographics to target
  audience.
• Monitor response rates.
• Cost.

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Web Advertising Publisher Perspective

• Income
• Cost per thousand viewings (1 - 50)
• Need volume (25,000 or 1,000,000 per month)
• Need demographics
• Tasks
• Ad rotation software
• Tracking and monitoring
• Ad sales staff
• Billing
• Third Party DoubleClick

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Website Log Analyzer
SurfStats pro
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Web Hosting Options
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Simple Static HTML Website
Main Web Page Categories
Category 1 Product photo
Category 2 Product photo
Category 3 Product photo
Product 1 Description Price Photo
Product 2 Description Price Photo
Product n Description Price Photo
Product 3 Description Price Photo
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Simple Website with Buy Me Button
Merchant Web site
Card Processor Site
Product Description Price
Buy Me
Shopping Cart Item Price Total
Credit Card Data Name Address Phone Card Number
Check Out
Submit
Notify merchant
Customer Notification (Accept/Reject)
http//www.goemerchant.com/buymebutton.htm
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Credit Card Processing
Visa MasterCard Settlements
Validation
Pay registrar (Verisign) 35/year for domain
name. Pay CA (Verisign) 250/year for
certificate Pay card processor (Verisign) and
Merchant bank fixed fee and value fee 2-5
Online Card Processor
CC Data
-

CC Data
Confirm
Issuing Bank
Merchant Bank
Web Server
Digital Certificate
Encrypted Card Data
CA Verisign
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Web Auctions

• Uncertain price
• Can set reserve price
• Good for unique items
• Efficiency depends on
• Full information
• Adequate number of participants

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Amazon.com zShops
zShop Products Cameras, Digital, Brand Vendor
1 Vendor 2 Vendor 3
Vendor Transfer Description Price Scanned
image Contact info
Consumer Product search Choose vendor Pay for item
Transaction Processing Amazon.com handles
credit Sends order info to merchant Merchant
ships item to consumer
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Virtual Malls
Directory of Shops Product category Vendor
1 Vendor 2
Merchant Site Products Sales

• Essentially a marketing agreement
• The mall provides a directory to merchants
• The merchant site runs on a different server

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Web Commerce Servers
Your Web site Products Shopping cart Sales
Customers
Merchants
Commerce Server Shell
Load database Images Descriptions Prices Customize
site
Database
Web servers
Web/Commerce Hosting Company
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Application Service Provider
Business Application e.g., Accounting
Store data Analyze data Facilitate
company interaction
Businesses that lease the use of the application
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Web Hosting Questions
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Mobile Commerce
Fujitsus tablet computer
Palm VII wireless PDA
Prototype Nokia 3G
As PDAs, cell phones, and tablet computers
converge people will ultimately be able to
connect to any business every place they go.
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Creating a Business
Idea Plan Implementation
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Expand Your Focus
It might be better to sell your innovation as a
service to the dominant firm or to be an
intermediary for consumers.
Big competitor
You might try to compete directly.
customers
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Industry Research

• Competition
• Number
• Concentration ratios
• Sales by firm
• Technology plans
• Size of the market
• Number of customers
• Amount of revenue
• Growth rate
• Market comparison for substitute products
• Consumer focus group interviews
• Production costs
• Startup/fixed costs
• Operating costs
• Legal environment

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Business Plans
Executive Summary Strategy, Competition, and
Market Analysis Forecasts, Cash Flow, and
Investment Budget Marketing Organization and
Timetable
tasks
time
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Forecasting Financial Data
Balance Sheet
Income Statement
Profit and Loss
Cash Flow
Customers and Sales estimate
Infrastructure scale
Employees
Financial statement estimates
Sales revenue Marketing costs
Operating and selling costs
Salary costs
Financial statements and ratios
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Breakeven Analysis
Revenue
Cost
Breakeven point
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Forming a Corporation

• State Forms
• Articles of Incorporation
• Corporate Bylaws
• Registered Agent (self)
• Business Registration Form
• State Employer Number
• Withholding ID
• Sales Tax ID
• Additional licenses
• Federal Forms
• SS-4 Application for Employer Identification
  Number
• 2553 Election by a Small Business Corporation

• Commercial
• Bank Account
• DUNS Number
• Accounting System
• Purchase software
• Hire accountant
• Define chart of accounts
• Standards
• Additional detail
• Define processes

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Financing a Startup
Venture Capital Partners
Become owners with some control over management.
Successful firm IPO Additional funds Reward to
original investors
Funding for development and operations.
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Additional Setup Steps for E-Commerce

• Additional risk and challenge of obtaining
  funding.
• Website development.
• Programming cost.
• Time and management.
• Purchase or lease merchant software if possible.
• Find a web hosting ISP.
• Site complexity.
• Internet connectivity.
• Costs.
• Host site yourself.
• Time to get leased line.
• Choose site location based on Internet access.

• Obtain digital security certificate (Verisign).
• Find bank that will provide merchant account
  services to accept credit card payments.
• Setup fee.
• Monthly fee.
• Transaction fee.
• Find a credit card processing firm that works
  with your bank and your software.
• Setup fee.
• Monthly fee.
• Transaction fee.

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Cases Package Delivery Industry
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Cases United Parcel ServiceFederal Express
www.ups.com www.fedex.com
What is the companys current status? What is the
Internet strategy? How does the company use
information technology? What are the prospects
for the industry?
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Appendix Business Plan

• Purposes
• Help managers identify strategies and plan for
  future
• Identify goals and concrete objectives
• Provide measurement of success and identify
  problems
• Provide detailed information to investors
• Outline budget needs

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Business Plan Structure

• Introduction
• Outline and summary of the company and the plan
• Marketing
• Competitors
• Market analysis
• Advertising
• Sales Management
• Product Management prices and costs
• Historic Analysis
• Sales, profits, structural changes
• Organization
• Structure of the firm and management
• Financing
• Detailed cash needs
• Projections
• Estimates of sales, costs, growth with detailed
  data and forecasts

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Marketing Plans

• Products
• Costs
• Prices
• Profits
• Competition
• Strategy
• Sales Goals and Forecasts
• Promotional methods
• Sales Management
• Distribution and Service

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Rolling Thunder Bicycles Example
Sales estimated while the firm was being formed.
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Rolling Thunder Bicycles Estimated Sales
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Projected Income Statement
Interest rate on borrow 8.00 Interest rate on
short term investments 3.00 Depreciation, 5
years, straight line 0.2 Tools
purchases 250,000 50,000 50,000
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Projected Balance Sheet
Assumptions Receivables as percent of sales
10 Payables as percent of material costs
10 Inventory as percent of material costs 12
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Projected Cash Flow