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4.1Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
THE DIGITAL FIRM:THE DIGITAL FIRM:
ELECTRONIC ELECTRONIC BUSINESS AND BUSINESS AND ELECTRONIC ELECTRONIC COMMERCECOMMERCE
4.2Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• How has Internet technology changed How has Internet technology changed business models?business models?
• What are the principal payment systems for e-What are the principal payment systems for e-commerce?commerce?
• How can Internet technology facilitate internal How can Internet technology facilitate internal business processes and SCM?business processes and SCM?
• What are the major managerial challenges What are the major managerial challenges posed by e-commerce?posed by e-commerce?
OBJECTIVES
4.3Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Business Model: Business Model: • An abstraction of what an enterprise is An abstraction of what an enterprise is • Describes how the enterprise delivers a Describes how the enterprise delivers a
product or serviceproduct or service• eg: traditional bookstore vs Amazon.comeg: traditional bookstore vs Amazon.com• finding a successful one for e-commerce finding a successful one for e-commerce
has been difficulthas been difficult
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.4Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• Business-to-Customer (B2C):Business-to-Customer (B2C):– Electronic retailing directly to individual customers
• Business-to-Business (B2B):Business-to-Business (B2B):– Electronic sales among businesses
• Consumer-to-Consumer (C2C):Consumer-to-Consumer (C2C): – Consumers selling electronically to other consumers
• Mobile Commerce (M-Commerce):Mobile Commerce (M-Commerce): – use of handheld wireless devices for purchasing goods
and services– Used in B2B and B2C e-commerce transactions
ELECTRONIC COMMERCE
4.5Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• Facilitates Dynamic Pricing: Facilitates Dynamic Pricing: – Real-time interactions between buyers
and sellers determine worth of items
• Facilitates Banner AdsFacilitates Banner Ads– vs. Pop-up Ads (user must click to close)
• Makes ‘Disintermediation’ possibleMakes ‘Disintermediation’ possible– removal of business process layers in a
value chain
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.6Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceTHE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.7Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• Shrinks Information Asymmetry:Shrinks Information Asymmetry:– One party in a transaction has more
information than the other
• Allows Web Personalization:Allows Web Personalization:– tailoring of web content directly to a
specific user
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.8Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceTHE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.9Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• Reduces need to tradeoff Reduces need to tradeoff Richness for Reach :Richness for Reach :
– can now have both!
• Reduces Transaction Costs:Reduces Transaction Costs:
– Reduces costs of finding buyers, collecting payments, and (perhaps) delivering product (eg?)
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.10Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceINFORMATION SYSTEMS IMPACT
4.11Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceTHE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.12Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• Makes possible new Business ModelsMakes possible new Business Models– ‘Virtual Storefront’:
• move from ‘bricks and mortar’ to ‘clicks and mortar’, or ‘pure play’ to sell product
– ‘Net Marketplace’: • Buyers and sellers meet - revenue from
transaction fees. • can serve either vertical or horizontal markets• vs. Private Industrial Network
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.13Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceTHE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.14Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceTHE EFFECT OF THE INTERNET ON BUSINESS MODELS
E.G.: Covisint to supply automobile ‘vertical
market’
4.15Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• Makes possible new Business ModelsMakes possible new Business Models– ‘Content Provider’:
• Provides digital content - customer pays for access
• Advertising can also provide revenue.
– ‘Portal’: • initial point of entry to web• specialized content and services
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
4.16Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• How has Internet technology changed How has Internet technology changed business models?business models?
• What are the principal payment systems for e-What are the principal payment systems for e-commerce?commerce?
• How can Internet technology facilitate internal How can Internet technology facilitate internal business processes and SCM?business processes and SCM?
• What are the major managerial challenges What are the major managerial challenges posed by e-commerce?posed by e-commerce?
OBJECTIVES
4.17Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceELECTRONIC COMMERCE PAYMENT SYSTEMS
Digital Credit Card Secure services for credit card payments – see Chapter 11 for details
Digital Wallet Software that stores credit card info, address etc; e.g. Amazon.com’s 1-Click shopping
Accumulated Balance Payment System
Accumulates micropayments as a debit balance; e.g. Qpass
Digital Cash (e-cash) A stored value digital account enabling instant payments; e.g. eCoin, Mondex smart cards
Peer-to-Peer Payment Digital currency for vendors who do not have pre-arranged payment options; e.g.PayPal
Digital Chequing Electronic cheque with digital signature; e.g. CHEXpedite
Electronic Billing Supports electronic payment of monthly bills; e.g. epost.ca
4.18Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic CommerceELECTRONIC COMMERCE PAYMENT SYSTEMS
4.19Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• How has Internet technology changed How has Internet technology changed business models?business models?
• What are the principal payment systems for e-What are the principal payment systems for e-commerce?commerce?
• How can Internet technology facilitate internal How can Internet technology facilitate internal business processes and SCM?business processes and SCM?
• What are the major managerial challenges What are the major managerial challenges posed by e-commerce?posed by e-commerce?
OBJECTIVES
4.20Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
How Intranets Support Electronic Business
4.21Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
How Intranets Support Electronic Business
4.22Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Supply Chain Management needs more than an Intranet!How Intranets Support Electronic Business
4.23Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
• How has Internet technology changed How has Internet technology changed business models?business models?
• What are the principal payment systems for e-What are the principal payment systems for e-commerce?commerce?
• How can Internet technology facilitate internal How can Internet technology facilitate internal business processes and SCM?business processes and SCM?
• What are the major managerial challenges What are the major managerial challenges posed by e-commerce?posed by e-commerce?
OBJECTIVES
4.24Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
MANAGEMENT CHALLENGES & OPPORTUNITIES
4.25Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Current status of E-Business in Canada:Current status of E-Business in Canada:• Internet use per capita – higher than USInternet use per capita – higher than US• E-commerce use per capita or per business E-commerce use per capita or per business
– lower than US– lower than US• E-commerce salesE-commerce sales
– up 27% in 2002 (down from 46% in 2001)– .6% of total revenue– 7 firms stopped using e-commerce in
2002 for every 10 that started• What are the barriers?What are the barriers?
MANAGEMENT CHALLENGES & OPPORTUNITIES
4.26Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Barriers Reported Barriers Reported (Cdn E-Business Roundtable):
• Products not suited to e-commerce (56%)Products not suited to e-commerce (56%)• Prefer current business model (36%)Prefer current business model (36%)
– E.G. ‘channel conflicts’
• Security concerns (14%)Security concerns (14%)• High costs (12%)High costs (12%)
– HBC - $40M / yr to upgrade web site
• Lack of skills (10%)Lack of skills (10%)• Customers not ready to purchase online Customers not ready to purchase online
(9.6%)(9.6%)
MANAGEMENT CHALLENGES & OPPORTUNITIES
4.27Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Other Barriers to consider:Other Barriers to consider:• Unproven business modelsUnproven business models
• Business process change requirementsBusiness process change requirements
• Legal issuesLegal issues
• Trust, security and privacyTrust, security and privacy
• Lack of broadband accessLack of broadband access
• False sense of security in retail circlesFalse sense of security in retail circles– previously sheltered from US competitionpreviously sheltered from US competition
• Investment decisions often based on ROIInvestment decisions often based on ROI– appropriate for e-commerce investment?appropriate for e-commerce investment?
MANAGEMENT CHALLENGES & OPPORTUNITIES
4.28Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Roundtable RecommendationsRoundtable Recommendations– Put all government services onlinePut all government services online
• Canada already leads the world in e-government
• portal at http://www.gc.ca/
– Offer financial incentives to businessesOffer financial incentives to businesses
– Expand the e-business talent poolExpand the e-business talent pool
– Build Canada’s e-business leadership profile Build Canada’s e-business leadership profile internationallyinternationally
MANAGEMENT CHALLENGES & OPPORTUNITIES
4.29Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
Opportunities for Canadian Opportunities for Canadian Leadership:Leadership:
1.1. Network InfrastructureNetwork Infrastructure
2.2. Multimedia NorthMultimedia North
3.3. Global Customer Care CentresGlobal Customer Care Centres
4.4. Remote Service ProviderRemote Service Provider
5.5. Web Tools DeveloperWeb Tools Developer
4.5 STATUS OF CANADIAN E-COMMERCE
4.30Copyright © 2005 Pearson Education Canada Inc.
Management Information Systems, Management Information Systems, Second Canadian EditionSecond Canadian Edition
Chapter 4: The Digital Firm: Electronic Business and Electronic CommerceChapter 4: The Digital Firm: Electronic Business and Electronic Commerce
THE DIGITAL FIRM:THE DIGITAL FIRM:
ELECTRONIC ELECTRONIC BUSINESS AND BUSINESS AND ELECTRONIC ELECTRONIC COMMERCECOMMERCE