Starting and Growing Your Business

Part 2
Starting and
Growing Your
Business
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 7
Electronic
Commerce: The
Internet and
Online Business
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Discuss how the Internet provides new routes to
business success.
2. Describe the increasing diversity of Internet users.
3. Summarize the Internet’s four functions and give
examples of each.
4. List the major forms of business-to-business (B2B) and
business-to-consumer (B2C) e-commerce.
5. Describe some challenges associated with Internet
selling.
6. List the steps involved in developing successful Web
sites.
7. Identify methods for measuring Web site effectiveness.
8. Explain how global opportunities result from
technological advances.
7-3 Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
The Internet: A Key to Business Success
 Internet—worldwide network of
interconnected computers that lets anyone
with access to a personal computer send and
receive images and data anywhere.
 World Wide Web—collection of resources on

the Internet that offers easy access to text,
graphics, sound, and other multimedia
resources.
 Website—integrated document composed of
electronic pages that integrate text, graphics,
audio, and video elements, as well as
hypertext links to other documents.
 Domain Name—a Web site address
 How Information Travels on the Internet
How the Internet Works
 Internet Service Provider—organization that
provides access to the Internet, via a
telephone or cable television network.
 Digital Subscriber Line (DSL)

a cable modem, or a satellite link to the
internet which makes the data move at fast
speeds
How the Internet Works
 ISP’s Server—a larger, special computer that
holds information, providing it to clients on
request
 Client—another computer or device that

relies on the resources of other servers to
help with its own processing
 Who’s on the Net
Once dominated by men
Gender gap has narrowed
Women users now represent more than ½
in the U.S.
Women users growing rapidly in other
nations
 Top Ten Internet Users
 Four Functions of the Internet
Using the Net’s Four Functions
 Communication
Email—electronic messages sent via the
Internet.
Instant messaging—when a message sent
is immediately displayed on recipient’s
screen
Online communities—a forum (often a chat
room) in which a group of people can share
messages
 Information
Newsgroups provide a forum for
participants to share information on
selected topics
Portals—sites designed to be a user’s
starting place when entering the WWW
Search Engines
 Google
 Entertainment
Everything from concert Webcasts to
online gaming available online
NFL Game Day a “video game” played on
the Internet.
 Business Transactions: E-Commerce
 Electronic e-commerce—online
marketing of goods and services,
including product information, ordering,
invoicing, payment processes, and
customer service.
The Scope of Electronic Commerce
 E-Commerce and the Not-for-Profit Sector
Girl Scouts use the Internet to streamline
their cookie sales
Girl Scouts also have a online storefront
 Benefits of E-Commerce
 Profiting from E-Commerce
Websites catering to business customers,
only a minority of firms report profits from
Web Site Operations
Websites catering to consumers are
making steady progress in becoming
profitable
 Business-to-Business Transactions Lead
the Way
Business-to-Business e-commerce—
electronic business transactions between
organizations using the Internet.
Electronic Data Interchange
Electronic Exchanges—Web-Based
marketplaces that cater to a specific
industry's needs
 How Online
Parts
Exchanges
Save Money
for
Automakers
 Business-to-Business Transactions Lead
the Way
Extranets—secure networks used for e-
commerce and accessible through the
firm’s Web site by authorized users
Private Exchange—secure Web site at
which a company and its suppliers share
all types of data related to e-commerce
 Online Shopping Comes of Age
Business-to-consumer (B2C) commerce:
selling directly to consumers over the
Internet
Electronic Storefront—Web sites where
items are offered for sale to consumers
Electronic Shopping Cart—a file that
displays items that a consumer has
indicated that they wish to buy. consumer
can review cart and make changes if
desired
 Top Products Sold Online
 Online Shopping Comes of Age
Developing Safe Online Payment Systems
 Encryption: encoding data for security
purposes
 Electronic Cash: Buyers register with a bank
to make secure Internet Payment
 Electronic Wallet: a computer file containing
electronic cash, credit card information, owner
identification, address, and other information
 Smart Cards: plastic cards that store
encrypted information on embedded computer
chips instead of magnetic strips
 Roadblocks to E-Commerce
 E-Commerce Challenges
Privacy Issues
 Electronic Signatures—a way to enter
into a legal contract
 Children’s Online Privacy Protection Act
 Firewall—electronic barrier between a
company’s internal network and the
Internet that limits access into and out of
the network.
Internet Fraud
Traffic Jams Caused by System Overload
Poor Web Site Design and Service
Unreliable Delivery and Returns
Lack of Retail Experience
Competition and Disagreements among

Buyers and Sellers
Protection of Intellectual Property
 Questions to Consider in Developing a Web Site
Managing a Web Site
 Developing Successful Websites
Planning and Preparation
Naming your Web Site
Content and Connections
Managing a Web Site
 Costs and Maintenance
Costs are highly variable
Development Costs
Web Host Costs
Keeping Web Site Current
Managing a Web Site
 Measuring Website Effectiveness
Click-through rates—percentage of
people presented with a Web banner ad
who click it.
Conversion rate—percentage of visitors to

a Web site who make a purchase.
 Measures of Web Site Effectiveness
The Global Environment of E-Commerce
 Internet creates an enormous pool of
potential customers
 Firms can market their offerings
internationally and locate distribution sources
and trading partners online
 Customers can search for products and
information conveniently
 Sites must consider both language and global
cultural variations
 E-commerce can heighten competition
 Importance of Considering the Internet’s
Global Population

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Part 2

 World Wide Web—collection of resources on

 Domain Name—a Web site address

 Digital Subscriber Line (DSL)

 Client—another computer or device that

Traffic Jams Caused by System Overload

Poor Web Site Design and Service

Lack of Retail Experience

Competition and Disagreements among

Protection of Intellectual Property

Naming your Web Site

Content and Connections

Web Host Costs

Keeping Web Site Current

Conversion rate—percentage of visitors to

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