Chapter 5 Electronic Commerce, Intranets, and Extranets

Chapter 5 Objectives
• Understand e-commerce and how it evolved • Understand e-commerce strategies • Understand the difference between intranets and extranets • Understand consumer-focused and businessfocused e-commerce • Understand key e-commerce applications

and between firms and their customers – More than just buying and selling: • Pre-sale events and marketing • After-sale customer service . services. and money between firms.Electronic Commerce Defined • E-Commerce – online exchange of goods.

Electronic Commerce Defined • E-Commerce – – – – Business-to-Consumer (B2C) Business-to-Business (B2B) Business-to-Employee (B2E) Consumer-to-Consumer (C2C) .

Electronic Commerce Defined • Internet and World Wide Web Capabilities – – – – Expanding market Wider customer base More products Closer relationships with customers .

Web-based customer support (Web chat) • Example: E*Trade .Electronic Commerce Defined • Internet and World Wide Web Capabilities – Real-time access to information • Web site linked to corporate database • Customers can check the balances of their frequent flier accounts • Customers do not have to wait for monthly statement • Example: Alaska Airlines – Mass customization • Tailoring products to a customers needs • Example: Lands’ End (Clothing retailer) developed a virtual model so that customers can dress the model to select clothing – Interactive communication • Improving firm’s image through responsiveness • Firms are augmenting telephone-based ordering.

Electronic Commerce Defined • Internet and World Wide Web Capabilities – – – – Collaboration Reduced transaction costs Enhanced operational efficiency Disintermediation • Cutting out the “middleman” • Reaching customers directly .

Electronic Commerce Defined • Electronic Commerce Business Strategies – Brick-and-mortar • Traditional. physical companies – Click-only (“virtual”) companies • Online only • Example: eBay – Click-and-mortar (or “Brick & Click”) • Both physical and virtual – Challenge: increased IS complexity .

companies buy about $500 billion worth of goods and services electronically per year via EDI networks – EDI: usually over value-added networks (VANs) .Business-to-Business Electronic Commerce • Electronic Data Interchange – Definition – EDI refers to the electronic transmission of business documents between organizations via networks – “EDI is the forefather of B2B” – Estimated that U.S.

EDI System Architecture .

reduces paperwork Shortens time of business transaction (from day to second) Reduces errors .Business-to-Business Electronic Commerce • Electronic Data Interchange – Advantages • • • • • Wide variety of business documents Streamlines business processes Reduced document handling.

Business-to-Business Electronic Commerce • Electronic Data Interchange – Disadvantages • • • • Costly to implement Costly to maintain Requires skilled technicians EDI can cost up to $100.000 and monthly telecommunications charges associated with VANs can be several thousand dollars per month • Often too costly for small or medium-sized companies .

private network using Web technologies to facilitate transmission of proprietary information within the organization – Extranet – two or more firms using the Internet to do business together .Business-to-Business Electronic Commerce • The Internet Changed Everything – B2B now available to companies of all sizes – Intranet – internal.

but remain within the organizations network .Business-to-Business Electronic Commerce • Intranet System Architecture – Firewalls – hardware devices with special software that prevent unauthorized access – An intranet server is placed behind the firewall – Packets are never routed outside the firewall.

Internet Architecture .

presentation slides from their desktop – Application Integration: Intranet integrates all disparate applications installed in different environments to consolidate information • Enterprise Resource Planning (ERP) • Customer Relationship Management (CRM) • Sales Force Automation (SFA) – Online Entry of Information – Real-Time Access to Information – Collaboration .Business-to-Business Electronic Commerce • Intranet Applications – Training: Employee can access video lectures.

and networking Additional component: – Virtual Private Network (VPN) – Secure transmission of proprietary info .Business-to-Business Electronic Commerce • Extranet System Architecture – Extranet • • • • Connects two or more business partners Like an intranet Same software. hardware.

and transmits data over the Internet – A secure “tunnel” is created over the VPN connecting the two intranets • Authentication – Confirms the identity of the remote user who is attempting to access information from the Web server . encrypts.Business-to-Business Electronic Commerce • Extranet System Architecture – Virtual Private Network (VPN) • Tunneling – A technology that encapsulates.

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Business-to-Business Electronic Commerce • Extranet Applications – Supply Chain Management • Example: Dell Computers – Real-Time Access to Information • Example: CSX railroad – Collaboration • Example: Caterpillar .

Business-to-Business Electronic Commerce • Enterprise Portals – Enterprise portals • Extranets for business partners • Access points (or front doors) by which a business partner accesses secured. proprietary information from an organization .

and after sales have been transacted – Trading Exchanges • Electronic marketplaces run by 3rd-party vendors • Revenues are from commissions on transactions . during.Business-to-Business Electronic Commerce • Enterprise Portals – Distribution portals • Automate the business processes in selling products to multiple buyers – Procurement portals • Automate the business processes that occur before.

Business-to-Consumer Electronic Commerce • B2C – Internet – fastest acceptance of any communications technology – Retail transactions between a company and end consumers – Electronic retailing (e-tailing) .

Business-to-Consumer Electronic Commerce • Stages of B2C E-Commerce – E-Information • Disseminate information globally • Example: Ferrari – E-Integration • Consumer-driven access to information • Example: Allstate and Burlington Northern Santa Fe – E-Transaction • Interactive communication and transaction support • Example: eBay and Priceline.com .

Easy to use and fast 4. and return 5. Advertise your Web presence 6. stay. Offer something unique – – – – – 2. Motivate people to visit.Formula for Electronic Commerce Success • The Rules for Web Site Success – 1. Learn from your Web site . Web site must be aesthetically pleasing 3.

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