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Overview of

Electronic Commerce

Qantas Airways A New Way to Compete
The Problem
Increased fuel costs placed pressure on the airline industry Qantas faced two major competitors and higher fees at Sydney Airport Air traffic dwindled after September 11th Qantas needed to replace aircraft in order to stay competitive Australian economy slowed down

and exchanging goods.) The Solution Bought fuel contracts for future dates (traditional response) Took major steps to implement e-commerce (EC) involving buying. services.Qantas Airways (cont. selling. and payments electronically . information.

) Business-to-business (B2B) E-marketplace member Joined Airnew Airways ( with 13 other large Australian corporations Electronically purchase general goods and services Office supplies Light bulbs Maintenance services .— links major airlines with suppliers Fuel Fuel services Light maintenance services Catering Joined Corporcure.

Qantas Airways (cont.) Formed Pan-Pacific exchange E-marketplace Business-to-business-to-consumer (B2B2C) Provides Full spectrum travel services Products and services to business partners Travel agencies who can use this marketplace to sell directly to consumers .

) Business-to-customer (B2C): Online booking E-mails to frequent-flyer members Mileage bonuses and opportunities to win $10.Qantas Airways (cont.000 AU Business-to-employee (B2E): Online training Online banking Wireless communications .

) The Results Qantas expects to see an estimated $85 million AU in cost reductions per year by 2003 Qantas expects to increase annual revenues by $700 million AU from nontravel sales Outlasted one competitor .Qantas Airways (cont.

process. Partial EC: based on the degree of digitization of product. delivery agent .) E-business is a broader definition of EC that includes not just the buying and selling of goods and services.EC Definitions & Concepts (cont. but also Servicing customers Collaborating with business partners Conducting electronic transactions within an organization Pure vs.

) Pure EC: all dimensions are digital Pure online (virtual) organizations New-economy organization Sell products or services only online Partial EC: a mix of digital and physical dimensions Click-and-mortar organizations Conduct EC activities Do their primary business in the physical world .EC Definitions & Concepts (cont.

Brief History of EC EC applications first developed in the early 1970s Electronic funds transfer (EFT) Limited to: Large corporations Financial institutions A few other daring businesses .

) Electronic data interchange (EDI)— electronic transfer of documents: Purchase orders Invoices E-payments between firms doing business Enlarged pool of participants to include: Manufacturers Retailers Service providers .Brief History of EC (cont.

Brief History of EC (cont.) Interorganizational systems (IOS) Stock trading Travel reservation systems Internet became more commercialized in the early 1990s Almost all medium-and large-sized organization in the world now has a Web site Most large corporations have comprehensive portals .

processing. storing and retrieving paper-based information Allows reduced inventories and overhead by facilitating pull-type supply chain management . distributing.The Benefits of EC Benefits to Organizations Expands the marketplace to national and international markets Decreases the cost of creating.

all year round from almost any location Provides consumers with more choices Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons .) Benefits to consumers Enables consumers to shop or do other transactions 24 hours a day.Benefits of EC (cont.

) Consumers can receive relevant and detailed information in seconds. rather than in days or weeks Makes it possible to participate in virtual auctions Allows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiences Facilitates competition.Benefits of EC (cont. which results in substantial discounts .

benefiting less affluent people Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them Facilitates delivery of public services at a reduced cost. and/or improves quality . increases effectiveness.) Benefits to society Enables more individuals to work at home. and lower air pollution Allows some merchandise to be sold at lower prices.Benefits of EC (cont. and to do less traveling for shopping. resulting in less traffic on the roads.

security. and reliability The telecommunications bandwidth is insufficient Software development tools are still evolving There are difficulties in integrating the Internet and EC software with some existing applications and databases. Special Web servers in addition to the network servers are needed (added cost). Internet accessibility is still expensive and/or inconvenient .The Limitations of EC Technical limitations There is a lack of universally accepted standards for quality.

Putting It All Together The task facing each organization is how to put together the components that will enable the organization to gain competitive advantage by using EC .

Putting It All Together (cont. such as Web browsers. and Internet protocols Extranet--A network that uses the Internet to link multiple intranets .) The first step is to put in the right connective networks The vast majority of EC is done on computers connected to: Internet Intranet--An internal corporate or government network that uses Internet tools.

Putting It All Together (cont. collaboration. Uses intranet for internal communications.) Major concern of today’s companies—how to transform themselves to take part in digital economy Example:Toys. dissemination of information Networked to e-marketspaces and large corporations Corporate portal for communication and collaboration with business partners . Inc.

Managerial Issues Is it real? How to evaluate the magnitude of the business pressures. Why is the B2B area so attractive? There are so many EC failures—how can one avoid them? What should be my company’s strategy toward EC? How do we transform our organization into a digital one? .