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Chapter 1

Overview of Electronic
Commerce

LEARNING OBJECTIVES
1. Define electronic commerce (EC)
and describe its various categories.
2. Describe and discuss the content
and framework of EC.
3. Describe the major types of EC
transactions.
4. Discuss e-commerce 2.0.
5. Understand the elements of the
digital world.
Copyright © 2011 Pearson
Education, Inc. Publishing as
Prentice Hall

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LEARNING OBJECTIVES
6. Describe the drivers of EC as they
relate to business pressures and
organizational responses.
7. Describe some EC business models.
8. Describe the benefits and limitations
of EC to organizations, consumers,
and society.

Copyright © 2011 Pearson
Education, Inc. Publishing as
Prentice Hall

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Copyright © 2011 Pearson Education. or information via computer. Inc. selling.ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS • electronic commerce (EC) The process of buying. or exchanging products. services. Publishing as Prentice Hall 1-4 .

collaborating with business partners. and conducting electronic transactions within an organization. Publishing as Prentice Hall 1-5 . but also servicing customers. Copyright © 2011 Pearson Education. Inc.ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS • e-business A broader definition of EC that includes not just the buying and selling of goods and services.

g. Inc.. the delivery method Copyright © 2011 Pearson Education. Publishing as Prentice Hall 1-6 . the process (e. ordering. the product (service) sold 2. fulfillment) 3. payment.ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS • MAJOR EC CONCEPTS – Pure Versus Partial EC – EC can take several forms depending on the degree of digitization (the transformation from physical to digital) of: 1.

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ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS • MAJOR EC CONCEPTS – EC Organizations • brick-and-mortar (old economy) organizations Old-economy organizations (corporations) that perform their primary business offline. Copyright © 2011 Pearson Education. Inc. selling physical products by means of physical agents. Publishing as Prentice Hall 1-8 .

usually as an additional marketing channel. Inc. Publishing as Prentice Hall 1-9 .ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS • virtual (pure-play) organizations Organizations that conduct their business activities solely online. Copyright © 2011 Pearson Education. • click-and-mortar (click-and-brick) organizations Organizations that conduct some ecommerce activities.

– intranet An internal corporate or government network that uses Internet tools. Inc.ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS • ELECTRONIC MARKETS AND NETWORKS – electronic market (e-marketplace) An online marketplace where buyers and sellers meet to exchange goods. Prentice Hall . Publishing as 1-10 multiple intranets. – extranet A network that uses Internet to link Copyright © 2011the Pearson Education. services. or information. and Internet protocols. such as Web browsers. money.

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AND HISTORY • CLASSIFICATION OF EC BY THE NATURE OF THE TRANSACTIONS AND THE RELATIONSHIPS AMONG PARTICIPANTS – business-to-business (B2B) E-commerce model in which all of the participants are businesses or other organizations.THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION. Copyright © 2011 Pearson Education. Inc. – business-to-consumer (B2C) E-commerce model in which businesses sell to individual shoppers. CONTENT. Publishing as Prentice Hall 1-12 .

CONTENT.THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION. AND HISTORY – e-tailing Online retailing. – business-to-business-to-consumer (B2B2C) E-commerce model in which a business provides some product or service to a client business that maintains its own customers. usually B2C. Publishing as Prentice Hall 1-13 . Inc. – consumer-to-business (C2B) E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers Copyright © or 2011 services Pearson to bid on products they need. Education.

or information among various units and individuals in an organization. CONTENT. – business-to-employees (B2E) E-commerce model in which an organization delivers services. services. Copyright © 2011 Pearson Education. AND HISTORY – intrabusiness EC E-commerce category that includes all internal organizational activities that involve the exchange of goods. information. Publishing as Prentice Hall 1-14 . – consumer-to-consumer (C2C) E-commerce model in which consumers sell directly to other consumers.THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION. Inc. or products to its individual employees.

– e-learning The online delivery of information for purposes of training or education. Publishing as 1-15 goods. – e-government E-commerce model in which a government entity buys or provides Copyright © 2011 Pearson Education. AND HISTORY – collaborative commerce (ccommerce) E-commerce model in which individuals or groups communicate or collaborate online. services. or information from or to Prentice Hall . Inc.THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION. CONTENT.

Inc. Publishing as Prentice Hall 1-16 .THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION. AND HISTORY • A BRIEF HISTORY OF EC – The Interdisciplinary Nature of EC – The Google Revolution – EC Failures – EC Successes • THE FUTURE OF EC Copyright © 2011 Pearson Education. CONTENT.

such as social networking sites.0: FROM WEB 2. Publishing as Prentice Hall 1-17 . • Web 2. Inc.0 TO ENTERPRISE SOCIAL NETWORKING AND VIRTUAL WORLDS • social computing An approach aimed at making the human–computer interface more natural.E-COMMERCE 2. communication tools.0 The second generation of Internetbased services that lets people collaborate and share information online in new ways. wikis. and Copyright © 2011 Pearson Education.

Inc. e-mail.0: FROM WEB 2. and so on using a variety of tools. or individuals with specific interests by providing free services such as photos presentation. business partners. blogging. Copyright © 2011 Pearson Education. Publishing as Prentice Hall 1-18 .E-COMMERCE 2.0 TO ENTERPRISE SOCIAL NETWORKING AND VIRTUAL WORLDS • social network A category of Internet applications that help connect friends.

such as blogging. Publishing as Prentice Hall 1-19 .E-COMMERCE 2. Inc.0: FROM WEB 2. done in a social network (external or internal). – social networking The creation or sponsoring of a social network service and any activity.0 TO ENTERPRISE SOCIAL NETWORKING AND VIRTUAL WORLDS • social network service (SNS) A service that builds online communities by providing an online space for people to build free homepages and that provides basic communication and support tools for conducting different activities in the social network. Copyright © 2011 Pearson Education.

Inc.com Copyright © 2011 Pearson Education.0: FROM WEB 2.com • ENTERPRISE SOCIAL NETWORKS – Example of an Enterprise Social Network: Carnivalconnections. – Example of a Business-Oriented Social Network: Xing.E-COMMERCE 2.0 TO ENTERPRISE SOCIAL NETWORKING AND VIRTUAL WORLDS • business-oriented networks Social networks whose primary objective is to facilitate business. Publishing as Prentice Hall 1-20 .

E-COMMERCE 2.0: FROM WEB 2.0 TO ENTERPRISE SOCIAL NETWORKING AND VIRTUAL WORLDS • virtual world A user-defined world in which people can interact. The most publicized virtual world is Second Life.0 – The Essentials of Twitter for Business Copyright © 2011 Pearson Education. and do business. Inc. Publishing as Prentice Hall 1-21 . • How Students Make Money in a Virtual World • THE MAJOR TOOLS OF WEB 2. play.

AND SOCIETY • digital economy An economy that is based on digital technologies.THE DIGITAL WORLD: ECONOMY. also called the Internet economy. software. Copyright © 2011 Pearson Education. Publishing as Prentice Hall 1-22 . ENTERPRISES. including digital communication networks. the New economy. or the Web economy. computers. and other related information technologies. Inc.

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boost employee productivity. Inc. and improve operating efficiency. It uses converged communication and computing technology in a way that improves business processes. Publishing as Prentice Hall 1-24 . AND SOCIETY • digital enterprise A new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: reach and engage customers more effectively. Copyright © 2011 Pearson Education. ENTERPRISES.THE DIGITAL WORLD: ECONOMY.

THE DIGITAL WORLD: ECONOMY. element of the digital world is people and the way they live and interact. ENTERPRISES. Publishing as Prentice Hall 1-25 . • THE DIGITAL SOCIETY – The final. and perhaps most important. and the public can enter a corporate Web site. business partners. AND SOCIETY – corporate portal A major gateway through which employees. Inc. Copyright © 2011 Pearson Education.

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Publishing as Prentice Hall 1-27 . BUSINESS PRESSURES. AND ORGANIZATIONAL RESPONSES – The Business Environment and Performance Impact Model – Business Pressures – Organizational Response Strategies Copyright © 2011 Pearson Education. Inc.AND THE CHANGING BUSINESS ENVIRONMENT • PERFORMANCE.

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• THE STRUCTURE AND PROPERTIES OF BUSINESS MODELS – Revenue Models • • • • • Sales Transaction Fees Subscription Fees Advertising Fees Copyright © 2011 Pearson Inc. Prentice Hall 1-29 .ELECTRONIC COMMERCE BUSINESS MODELS • business model A method of doing business by which a company can generate revenue to sustain itself. Publishing as Affiliate FeesEducation. – value proposition The benefits a company can derive from using EC.

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Publishing as 1-31 potentialPrentice Hall .ELECTRONIC COMMERCE BUSINESS MODELS – Functions of a Business Model • Describe the major business processes of a company • Describe the business models’ positioning within the value network linking suppliers and customers • Formulate the venture’s competitive strategy and its long-range plans • Articulate a customer value proposition • Identify a market segment • Define the venture’s specific value chain structure • EstimateCopyright the cost and profit © 2011 structure Pearson Education. Inc.

0 tools Copyright © 2011 Pearson Education.ELECTRONIC COMMERCE BUSINESS MODELS • TYPICAL EC BUSINESS MODELS – Online direct marketing – Electronic tendering systems • tendering (bidding) system Model in which a buyer requests would-be sellers to submit bids. the lowest bidder wins. – Electronic marketplaces and exchanges – Viral marketing – Social networking and Web 2. Publishing as Prentice Hall 1-32 . Inc.

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BENEFITS. AND IMPACTS OF ELECTRONIC COMMERCE • Ethical Issues – ethics The branch of philosophy that deals with what is considered to be right and wrong. Publishing as Prentice Hall 1-36 . • WHY STUDY E-COMMERCE? Copyright © 2011 Pearson Education. LIMITATIONS. Inc.

What should be my business model? 4.MANAGERIAL ISSUES 1. What are the top challenges of EC? Copyright © 2011 Pearson Education. Publishing as Prentice Hall 1-37 . Is EC real? 2. How can we exploit social/business networking? 5. Inc. Why is B2B e-commerce so essential and successful? 3.