e-Commerce System Managerial Principles

e-Commerce System Managerial Principles

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Description: E-commerce is a new way of conducting business, and as with any other new application of technology, it presents both opportunities for improvement and potential problems. Identify several advantages of e-commerce. Outline a multistage model that describes how e-commerce works.

Identify some of the major challenges that companies must overcome to succeed in e-commerce. Describe some of the current uses and potential benefits of mcommerce. Identify several e-commerce applications.

 
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Domain:  Business Category: Management 
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Contents:
• E-commerce is a new way of conducting business, and as
with any other new application of technology, it presents
both opportunities for improvement and potential
problems

• Identify several advantages of e-commerce
• Outline a multistage model that describes how e-commerce works
• Identify some of the major challenges that companies must
overcome to succeed in e-commerce
• Describe some of the current uses and potential benefits of mcommerce
• Identify several e-commerce applications
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• E-commerce requires the careful planning and integration
of a number of technology infrastructure components

• Outline the key components of technology infrastructure
that must be in place for e-commerce to succeed
• Discuss the key features of the electronic payments
systems needed to support e-commerce

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• Users of e-commerce technology must use safeguards to
protect themselves

• Identify the major issues that represent significant threats
to the continued growth of e-commerce

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• Organizations must define and execute a strategy to be
successful in e-commerce

• Outline the key components of a successful e-commerce
strategy

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An Introduction to Electronic Commerce
• Business-to-consumer (B2C) e-commerce: customers
deal directly with the organization, avoiding any
intermediaries
• Business-to-business (B2B) e-commerce: participants
are organizations
• Consumer-to-consumer (C2C) e-commerce:
participants are individuals, with one serving as the buyer
and the other as the seller

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Multistage Model for E-commerce
• Search and identification
• Selection and negotiation

• Purchasing products and services electronically
• Product and service delivery
• After-sales service

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Figure 8.1: Multistage Model for ECommerce (B2B and B2C)

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E-Commerce Challenges
• Define an effective e-commerce model and strategy
• Need to change distribution systems and work processes

• Integrate Web-based order processing with traditional
systems

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Figure 8.3: Three Basic Components of
a Successful E-Commerce Model

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Figure 8.4: Web-Based Order Processing Must
Be Linked to Traditional Back-End Systems

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The E-Commerce Supply Chain
• Supply chain management is a key value chain composed
of:
• Demand planning
• Supply planning
• Demand fulfillment

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Figure 8.5: Supply Chain Management

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The E-Commerce Supply Chain
(continued)
• E-commerce supply chain management allows businesses
an opportunity to achieve:
• Increased revenues and decreased costs
• Improved customer satisfaction

• Inventory reduction across the supply chain

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Business-to-Business (B2B) ECommerce
• Allows manufacturers to buy at a low cost worldwide
• Enterprises can sell to a global market
• Offers great promise for developing countries

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Business-to-Consumer (B2C) ECommerce
• Convenience
• Many goods and services are cheaper when purchased via
the Web
• Comparison shopping
• Disintermediation: elimination of intermediate
organizations between the producer and the consumer

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Consumer-to-Consumer (C2C) ECommerce
• Often done through Web auction sites such as eBay
• Growth of C2C is responsible for reducing the use of the
classified pages of newspapers to advertise and sell
personal items

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Global E-Commerce
• Localization: adapting an existing U.S.-centric Web site
to another language and culture
• Steps involved in localization
• Recognizing and conforming to the nuances, subtleties, and
tastes of local cultures
• Supporting basic trade laws such as those covering each
country’s currency, payment preferences, taxes, and tariffs
• Ensuring that technological capabilities match local
connection speeds

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Global E-Commerce (continued)
• Determine which global markets make the most sense for
selling products or services online
• Decide whether Web content should be generated or
updated centrally or locally

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Mobile Commerce
• Mobile commerce (m-commerce) relies on the use of
wireless devices, such as personal digital assistants, cell
phones, and smart phones, to place orders and conduct
business
• Issues confronting m-commerce
• User-friendliness of the wireless device
• Network speed

• Security
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Technology Needed for Mobile
Commerce
• Handheld devices used for m-commerce have limitations
that complicate their use
• Wireless application protocol (WAP): a standard set of
specifications for Internet applications that run on
handheld, wireless devices

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E-Commerce Applications: Retail and
Wholesale
• Electronic retailing (e-tailing): the direct sale from
business to consumer through electronic storefronts,
typically designed around an electronic catalog and
shopping cart model
• Cybermall: a single Web site that offers many products
and services at one Internet location
• Manufacturing, repair, and operations (MRO) goods and
services
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Manufacturing
• To raise profitability and improve customer service, many
manufacturers move their supply chain operations onto
the Internet
• Electronic exchange: an electronic forum where
manufacturers, suppliers, and competitors buy and sell
goods, trade market information, and run back-office
operations

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Figure 8.6: Model of an
Electronic Exchange

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Marketing
• Market segmentation: the identification of specific
markets to target them with advertising messages
• Technology-enabled relationship management: use of
detailed information about a customer’s behavior,
preferences, needs, and buying patterns to set prices,
negotiate terms, tailor promotions, add product features,
and otherwise customize the entire relationship with that
customer

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Investment and Finance
• Online stock trading
• Online banking

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Figure 8.7: Key Technology
Infrastructure Components

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Hardware
• Storage capacity and computing power required of the
Web server depends on:
• Software that will run on the server
• Volume of e-commerce transactions

• Website hosting

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Web Server Software
• Security and identification
• Web sites must be designed to protect against attacks

• Denial-of-service (DOS) attack

• Retrieving and sending Web pages
• Web site tracking

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Web Server Software (continued)
• Web site development
• Web page construction
• Static Web page
• Dynamic Web page

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E-Commerce Software
• Catalog management
• Product configuration
• Shopping cart facilities
• E-commerce transaction processing
• Web traffic data analysis

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Figure 8.8: Electronic Shopping Cart

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E-Commerce Transaction Processing
• E-commerce transaction processing software: connects
participants in the e-commerce economy and enables
communication between trading partners, regardless of
their technical infrastructure
• Fully automates transaction processes from order
placement to reconciliation
• Web site traffic data analysis software: processes and
analyzes data from the Web log file to provide useful
information to improve Web site performance
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Electronic Payment Systems
• Digital certificate: an attachment to an e-mail message or
data embedded in a Web page that verifies the identity of
a sender or a Web site
• Certificate authority (CA): a trusted third party that
issues digital certificates
• Secure Sockets Layer (SSL): a communications protocol
used to secure sensitive data
• Electronic cash: an amount of money that is
computerized, stored, and used as cash for e-commerce
transactions
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Electronic Payment Systems (continued)
• Electronic wallet: a computerized stored value that holds
credit card information, electronic cash, owner
identification, and address information
• Credit card
• Charge card
• Debit card
• Smart card
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Threats to E-Commerce
• E- and m-commerce incidents
• Theft of intellectual property
• Intellectual property: music, books, inventions, paintings,
and other special items protected by patents, copyrights, or
trademarks
• Patents on business processes

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Fraud
• Phishing: bogus messages purportedly from a legitimate
institution to pry personal information from customers by
convincing them to go to a “spoof” Web site
• Online auction fraud
• Spam: e-mail sent to a wide range of people and Usenet
groups indiscriminately

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Fraud (continued)
• Pyramid schemes
• Investment fraud

• Stock scams

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Invasion of Consumer Privacy
• Online profiling: the practice of Web advertisers’
recording online behavior to produce targeted advertising
• Clickstream data: data gathered based on the Web sites
visited and the items clicked on
• Safe harbor principles: principles that address the ecommerce data privacy issues of notice, choice, and
access

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Figure 8.9: TRUSTe Seal

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Figure 8.10: BBB Online Privacy Seal

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Table 8.4: How to Protect Your
Privacy While Online

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Strategies for Successful
E-Commerce: Developing an Effective
Web Presence
• Decide which tasks the site must accomplish
• An effective Web site creates an attractive presence and
meets the needs of its visitors
• It may be necessary to redefine your site’s business model
to capture new business opportunities

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Putting up a Web Site
• Web site hosting companies: companies that provide the
tools and services required to set up a Web page and
conduct e-commerce within a matter of days and with
little up-front cost
• Storefront broker: companies that act as middlemen
between your Web site and online merchants that have
the products and retail expertise

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Building Traffic to Your Web Site
• Obtain and register a domain name
• Make your site search-engine-friendly
• Meta tag: a special HTML tag, not visible on the displayed
Web page, that contains keywords representing your site’s
content, which search engines use to build indexes pointing
to your Web site

• Web site traffic data analysis software

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Maintaining and Improving Your Web Site
• Be alert to new trends and developments in e-commerce
• Be prepared to take advantage of new opportunities

• Personalization: the process of tailoring Web pages to
specifically target individual consumers
• Explicit
• Implicit

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Summary
• In business-to-consumer (B2C) e-commerce, customers
deal directly with the organization
• In business-to-business (B2B) e-commerce, the
participants are organizations
• In consumer-to-consumer (C2C) e-commerce, the
participants are individuals
• A multistage model for e-commerce includes search and
identification, selection and negotiation, purchasing,
product or service delivery, and after-sales service

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Summary (continued)
• Supply chain management is a key value chain composed
of demand planning, supply planning, and demand
fulfillment
• Mobile commerce (m-commerce) uses wireless devices to
place orders and conduct business
• Electronic retailing (e-tailing) is the direct sale from
business to consumer through electronic storefronts
• A digital certificate is an attachment to an e-mail message
or data embedded in a Web page that verifies the identity
of a sender or a Web site
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Summary (continued)
• Threats to e-commerce include e- and m-commerce
incidents, theft of intellectual property, fraud, and
invasion of consumer privacy
• Strategies for successful e-commerce
• Developing an effective Web presence

• Putting up a Web site
• Building traffic to your Web site

• Maintaining and improving your Web site
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