Lecture 6 - University of Wollongong

clappingknaveSoftware and s/w Development

Dec 14, 2013 (3 years and 7 months ago)

70 views

E
-
commerce


University of Wollongong

IACT303


INTI 2005

World Wide Networking

What is E
-
Commerce
About?


Changing transaction costs


Changing market structures


Changing boundaries of firms


New products, processes and
services


Greater speed


How?


Through the application of Internet
Technologies


The Structure of E
-
Commerce



Technology



Law



Economics



Social Relations


Write down one example of each of
these


Extract the key terms from
these definitions


“E
-
Commerce is the exchange of information across
electronic networks at any stage in the supply chain whether
within an organisation , between businesses, between
business & consumers, or between public and private sectors
whether paid or unpaid”
UK Government


“ E
-
Commerce is the sharing of business information , maintaining
business relationships & conducting business transactions by means
of telecommunications networks” Zwass (1998)

Extract the key terms from
these definitions


“The transformation of key business processes through the use of
internet technologies” IBM’s Definition of E
-
Business



“E
-
Commerce is buying & selling activities over digital media”


E
-
Business


encompasses e
-
commerce &


“includes the front & back
-
office applications that form the engine
for modern business. Its not just about e
-
commerce transactions,
it’s about redefining old business models with the aid of technology
to maximise customer value” R. Kalakota (1999) p4



Cost savings in e
-
commerce come from
“disintermediation”

Source: Benjamin & Wigand (1995)

Fundamental Shift in the
Economics is Under way


The explosion in connectivity is
causing new patterns of behaviour
and business strategy


In the past, the focus has been on
adapting operating processes to IT.


Now a change in strategic business
fundamentals is underway

Case Study


The Demise
of Encyclopaedia
Britannica


Cost structure designed to support
an army of salesman


Competition form Microsoft
EnCarta

turned the business on its head

Information and
Organisations


Information is the glue that holds
organisations together


Information is intrinsic to Physical
Value Chain activities


Information asymmetries
characterise many buy
-
seller
relationships


Information forms the basis for
competitive advantage

Information and
Organisations


Information and the means of
delivery determine corporate
structures


When information is carried by
“things” it is generally constrained by
the physical chain

Reach and Richness


Reach
-

the number of people exchanging
information



Richness




combination of bandwidth,


the degree to which the network can be
customised and


it’s interactivity


In general, richness has demanded
proximity

Richness v Reach before
WWW

Reach

Richness

Evans and Wurster, 1997

Reach and Richness


There has traditionally been a trade off
between richness and reach because
information activities have been
intrinsically tied to physical value chains.


With the arrival of greater connectivity
and the adoption of non
-
proprietary
protocols increasing richness and reach is
possible simultaneously.

Implications for Company
Structures


The trade
-
off between reach and
richness has determined
organisational hierarchies


The elimination of the trade
-
off
means that traditional channels of
information and control are no longer
necessary

Deconstruction of the
Value Chain


Newspaper case study.


No longer tied to the print medium.


Possible to deconstruct newspaper
business and selectively offer parts of
the business online

Deconstruction of the
Value Chain


High cost of distribution channels
has driven the economics of banking


Increasing richness has allowed
greater richness of information over
a distance through telebanking


Hence, a cheaper distribution channel
has appeared.

Types of E
-
Commerce


Business to Consumer (B2C)


Business to Business (B2B)


Business to Government (B2G)


Consumer to Consumer (C2C)


Consumer to Business (C2B)

The B2B Transformation


Electronic commerce emerged in the1980s
with the use of electronic messaging
technologies and EDI


EDI was effective in



reducing costs incurred in processing,



handling and storage of product



improving profitability of business

The B2B Transformation


EDI was
not

effective in



leveling the playing field for small business
operators.


The proprietary nature of EDI systems meant
that suppliers had to invest in several
(expensive) pieces of software when doing
business with different companies.



ensuring flexibility


“Pair
-
wise” tyranny rules under EDI


incremental adoption path was not possible


Integration costs of EDI were high

The Internet’s Role


The internet has emerged as a low cost, non
-
proprietary, easy to use medium to conduct
business


XML plays a vital role in B2B infrastructure
today


Effort is being given to standardising business
processes so that they can be captured in
“web services” software.


Microsoft .Net is an example of this


Defining a message schema for
information exchange between
partners


SOAP
-

Simple Object Access Protocol


SOAP is a communication protocol for
accessing Web Services.


SOAP is written in XML and enables
applications to exchange information over
HTTP.


SOAP overcomes the problem of firewalls
blocking messages by using HTTP.


In summary,


SOAP is platform independent enabling
applications on different platforms to
exchange information.


SOAP will become a W3C endorsed
standard


SOAP is also at the heart of Microsoft’s
.NET Web Services


For more information see:

http://www.w3schools.com/soap/soap_intro.
asp

Components of a well
-
functioning commercial web site


As far as the consumer is concerned the
tech
-
talk is well and good but does the
website achieve the following?



A well
-
organized collection of products
and/or services


A convenient way for a customer to select
products


Convenient order forms


Convenient and secure ways of payment


A way of keeping information about orders


Customer support and feedback


Implications for
Competitive Advantage


Deconstruction of the Value Chain
represents a threat for established
businesses and an opportunity for
others

Channel Extending Intermediaries

supplier

customer

CEI

supplier

supplier

supplier

customer

customer

customer

Search for opportunities to add value: e.g. high customer
search costs, switching costs, low customer satisfaction


Wield new power by consolidating traditional buyers &
customers. Become the first
-
line interface with consumers.

Implications for
Competitive Advantage

1.
Existing value chains will fragment into
multiple businesses each of which will
have it’s own source of competitive
advantage.

a.
Why should this occur?

Implications for
Competitive Advantage

2.
Some new businesses will benefit from
network economics of scale that can give
rise to monopolies

a.
How does this come about?

Implications for
Competitive Advantage

3.
As value chains fragment and
reconfigure, new opportunities will arise
for purely physical businesses

a.
What examples can you think of that support
this?

Implications for
Competitive Advantage

4.
When a company focuses on different
activities the value proposition
underlying its brand identity will change.

a.
What does this mean?

Implications for
Competitive Advantage

5.
Customers switching costs will drop and
companies will have to develop new ways
of generating customer loyalty

a.
Why have switching costs dropped?

Implications for
Competitive Advantage

8.
Incumbents could easily become victims
of their obsolete physical infrastructure
and their own psychology.

a.
Can you think of any examples?

What Will Happen to
Your Business


Newspapers


Banking


Football Club


Hospital


General Practitioner


Supermarket

“The music industry will be out
in five years


kaboom, gone.”

Tim White

Editor, Billboard Magazine

Wired, Feb. 2003

Will it?

Further readings


Kalakota R., Robinson M (2000), e
-
Business, Roadmap for Success,
Addison
-
Wesley


Lawrence et al., 2002, Technology
of Internet Business, John Wiley &
Sons Australia


Laudon & Laudon (2002), Management
Information Systems, Prentice Hall


Further readings


Evans, Philip B. and Wurster, Thomas S. 1997,
‘Strategy and the new economics of information’,

Harvard Business Review,
Sept
-
Oct 1997 75(5)
p. 70
-
80


Glushko, R. et al. (1999) ‘ An XML Framework for
agent based E
-
commerce’ in Communication of the
ACM, Vol. 42, Issue 3.

Go to…

Barua, A. et al. (2001)
‘Measuring the Internet
Economy’, Centre of
Electronic Commerce
Research, University of
Texas. Available from
http://crec.mccombs.utexas.edu/works/articles/inte
rnet_economy.pdf


Measuring the Internet
Economy

1.
Identify the four layers that the authors propose for the
Internet economy.



2.
If you are currently employed, what layer are you
employed at? If you are not employed, what layer of the
Internet layer would you like to work at and why?



3.
Where in the Internet Economy “food chain” does
Malaysia and Indonesia exist?



4.
What are the key findings of the paper?


Answers

1.
Identify the four layers that the authors propose for the
Internet economy.



Internet Infrastructure Level;

The Internet applications layer;

the internet intermediary layer;

the internet commerce layer


Answers

2.

If you are currently employed, what layer are you
employed at? If you are not employed, what layer of the
Internet layer would you like to work at and why?




Answers

3.
Where in the Internet Economy “food chain” does
Singapore exist?




Answers



4.
What are the key findings of the paper?


Internet economy is much bigger than originally thought.
(101 billion


IE is growing at an astounding rate


IE rivals century old industries such as (energy, cars and
telecommunications)


IE has had a major impact on jobs and responsibilities


Infrastructure and applications players make up over half
of the IE.


Internet intermediaries are critical to IE growth