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The Digital Firm: Electronic Business and Electronic Commerce

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Objectives How can Internet technology facilitate management and ... Extended distribution channels ... Direct Sales Over the Web Disintermediation: ... – PowerPoint PPT presentation

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Title: The Digital Firm: Electronic Business and Electronic Commerce


1
The Digital Firm Electronic Business and
Electronic Commerce
Chapter 4
2
Objectives
  • How has Internet technology changed value
    propositions and business models?
  • What is electronic commerce? How has electronic
    commerce changed consumer retailing and
    business-to-business transactions?
  • What are the principal payment systems for
    electronic commerce?

3
Objectives
  • How can Internet technology facilitate management
    and coordination of internal and
    interorganizational business processes?
  • What are the major managerial and organizational
    challenges posed by electronic business and
    electronic commerce?

4
Management Challenges
  • Digitally integrating the enterprise requires a
    complete change of mind-set.
  • Finding a successful Internet business model.

5
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
Internet Technology and the Digital Firm
  • The Internet
  • Rapidly becoming infrastructure of choice
  • Universal, easy-to-use set of technologies and
    standards
  • Web sites available 24/7
  • Extended distribution channels
  • Reduced transaction costs
  • Reduced network and coordination costs

6
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
New Business Models and Value Propositions
  • Past Information about products and services
    bundled with their physical value chain
  • Today The Internet has unbundled information
    from traditional value chain, creating new
    business models

7
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
New Business Models and Value Propositions
  • Information Asymmetry
  • One party has more information essential to the
    transaction than the other party
  • The Internet shrinks information asymmetry

8
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
New Business Models and Value Propositions
  • Richness and Reach
  • Richness depth and detail of information
  • Reach how many people a business can connect
    with how many products offered those people
  • Internet allows much richer communication with
    farther reach

9
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
The changing economics of information
Figure 4-1
10
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
New Business Models and Value Propositions
  • Internet Business Models
  • Virtual storefront Sells physical products
    directly to consumers or businesses.
  • Information broker Provides product pricing and
    availability information generates revenue from
    advertising or directing buyers to sellers.
  • Transaction Broker Processes online sales
    transactions for fee.

11
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
New Business Models and Value Propositions
  • Internet Business Models
  • Online Marketplace Provides digital environment
    where buyers and sellers meet
  • Content Provider Provides digital content, such
    as news revenue from fees or advertising sales
  • Online Service Provider Provides connectivity
    revenue from fees, advertising, or marketing
    information

12
Electronic Business, Electronic Commerce, and the
Emerging Digital Firm
New Business Models and Value Propositions
  • Internet Business Models (cont.)
  • Virtual Community Provides online meeting place
    for people of similar interests
  • Portal Provides initial point of entry to the
    Web, along with specialized content and services
  • Syndicator aggregates content or applications to
    resell as package to third-party Web sites

13
Electronic Commerce
Categories of Electronic Commerce
  • Business-to-consumer (B2C) Retailing products
    and services to individual shoppers
  • Business-to-business (B2B) Sales of goods and
    services among businesses
  • Consumer-to-consumer (C2C) Consumers selling
    directly to consumers

14
Electronic Commerce
Customer-Centered Retailing
  • Direct Sales Over the Web
  • Disintermediation Removal of intermediary steps
    in a value chain, selling directly to consumers,
    significantly lowers purchase transaction costs
  • Reintermediation Shifting intermediary function
    in a value chain to a new source, such as
    service hubs

15
Electronic Commerce
The benefits of disintermediation to the consumer
Figure 4-2
16
Management Challenges and Opportunities
Business Process Change Requirements
  • Unproven business models
  • Business process change requirements
  • Channel conflicts
  • Legal issues
  • Trust, security, and privacy
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