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Creating a Winning E-BusinessSecond Edition
Operating Your E-Business
Chapter 5
Creating a Winning E-Business Second Edition, Chapter 5
2
Learning Objectives
Describe operational challenges for a startup
e-business
Define legal, office space, and human resources
issues
Discuss electronic payment methods
Explain front-end and back-end e-business
systems
Creating a Winning E-Business Second Edition, Chapter 5
3
Learning Objectives(continued)
Identify e-business technologies and technology
providers
Discuss the benefits of outsourcing e-business
operations
Creating a Winning E-Business Second Edition, Chapter 5
4
Startup and Operational Challenges
Identifying and solving legal issues Planning for and acquiring commercial office
space Hiring employees Selecting and managing electronic payment
methods Selecting e-business technologies and
technology providers
Creating a Winning E-Business Second Edition, Chapter 5
5
Legal Issues
Establish a relationship with an attorney experienced in startups– Helps to develop business plan
– Establishes company valuation for investors
– Provides leads to investors
– Participates in negotiations
– Reviews all legal documents
– Advises on copyright, trademark, employee benefits, personnel policies
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Legal Issues (continued)
Copyright– Form of legal protection for original work
– Takes effect the moment the work is created
– Need copyright notice on Web site as a best practice
– U.S. Copyright Office good source of information on copyright law
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Legal Issues (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Legal Issues (continued)
Trademark and service mark– Distinctive symbol, word, or phrase used to
identify a business
– Make it easy for consumers to identify source of products and services
– U.S. Patent and Trademark Office good source of information on trademarks and service marks
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Legal Issues (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Legal Issues (continued)
Content liability– Exposure to potential liabilities based on Web
content
– Need appropriately worded disclaimer of liability at Web site
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Legal Issues (continued)
Customer information privacy– Customers may hesitate to provide information
– Must have clear policy on how customer information is handled, secured, and used
– Consider voluntary programs such as TRUSTe• Non-profit organization• Advocates disclosure of information privacy
programs• Members post TRUSTe seal at Web site
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Legal Issues (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Legal Issues (continued)
An e-business is subject to same property and income taxes as any brick-and-mortar business
Collection of sales taxes remains problematic– Collection of sales taxes from online customers
not required unless e-business has presence in state
– Rules are changing Need tax advice from professional (attorney or
accountant)
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14
Commercial Office Space
Startup e-business often begins in converted space in entrepreneur’s home
Factors requiring a move to commercial office space– Cramped quarters
– Hiring new employees
– Need for professional meeting areas
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Commercial Office Space (continued)
Create a facilities plan before looking for space– How much space is required?
– How will the space be divided?
– What are electrical and telecommunication needs?
– Is there access to parking, major roads, public transportation, qualified job applications?
– What are the security requirements?
– What is the budget?
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Hiring Employees
Knowing whom to hire first can be confusing First hires should be key management and
operations staff Startup often must offer key employees
– Pleasant working environment
– Competitive salaries and benefits
– Ownership equity
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Hiring Employees (continued)
Leads on finding qualified and talented employees– Investors and advisors
– Family and friends
– Professional recruiters
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Hiring Employees (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Hiring Employees (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Hiring Employees (continued)
U.S. Department of Labor and Salary.com– Good sources of area information
• Salaries• Benefits• Employment statistics
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Hiring Employees (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Hiring Employees (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Electronic Payment Methods
Make selection based on type of products and services offered and type of customer
Payment cards– Credit, debit, and charge cards
• Require a merchant account to accept payment card receipts
• Require access to a payment gateway to process payments
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Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Electronic Payment Methods (continued)
Cost of accepting payment cards– Merchant account fees
• Setup• Per transaction• Statement• Discount rate (percentage of each transaction)
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Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Electronic Payment Methods (continued)
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Electronic Payment Methods (continued)
Must provide secure transmission of data– Use Secure Sockets Layer (SSL) protocol to
encrypt transaction data• Relies on digital certificates for authentication• https://
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Electronic Payment Methods (continued)
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Electronic Payment Methods (continued)
Risks of accepting payment cards– Cardholder not present risk
– Chargeback risk when fraud occurs or when customer returns products
E-businesses must also be on the alert for corporate identity theft– Theft of business names, logos, addresses, and
Web site information
– Used to defraud customers
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Electronic Payment Methods (continued)
Other electronic payment methods– Stored value cards, such as gift cards and smart
cards
– Electronic checks – Electronic equivalent of paper checks
– Electronic cash (micropayments)
– P2P payment systems
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Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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Electronic Payment Methods (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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E-Business Technologies
Technology decisions– Processing sales and payment transactions
– Monitoring inventory
– Accounting and internal recordkeeping
– Connecting to the Internet
– Hosting a Web site
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E-Business Technologies (continued)
Front-end systems– Customer interaction and control
– Web site and related processes Back-end systems
– Not directly accessed by customers• Accounting and budgeting• Manufacturing, warehousing, distribution• Order tracking and customer support• Marketing
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E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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E-Business Technologies (continued)
Integration of front-end and back-end systems – Requires technologies to tie disparate systems
together
– Reduces costs by sharing the same transaction data across systems
– Issues to consider when integrating systems• Need for real-time or batch processing• System security• Compatibility
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E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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E-Business Technologies (continued)
Creating a Winning E-Business Second Edition, Chapter 5
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E-Business Technologies (continued)
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E-Business Technologies (continued)
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E-Business Technologies (continued)
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E-Business Technologies (continued)
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Outsourcing Operations
Wide array of outsourced technology solutions are available– Internet service providers
– Web hosting companies
– Application service providers
– Fulfillment houses Major advantage is reduced cost Major disadvantage is loss of control
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Outsourcing Operations (continued)
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Chapter Summary
Establish relationships with an attorney and accountant or other professionals
Post appropriately worded liability disclaimer and privacy policy at Web site
Create a facilities plan before securing new office space
First hires should be key management personnel
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Chapter Summary(continued)
Electronic payment methods– Payment cards and stored value cards
– Electronic checks and electronic cash
– Micropayments and P2P payment systems Merchant account and payment gateway
– Necessary to accept payment cards
– Risks include cardholder not present risk and chargeback risk
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Chapter Summary(continued)
E-businesses technologies– Integrate front-end and back-end systems
– Storefront software
– Content management systems (CMS)
– Enterprise resource planning (ERP)
– Customer relationship management (CRM)
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Chapter Summary(continued)
Outsourcing technology requirements– ISPs and Web hosting companies
– Application service providers (ASPs)
– Order fulfillment houses