E-Business: Chapter 1: Intro to E-B

Chapter 1
Introduction to e-business
and e-commerce
Page 1 | arry.arman@yahoo.com, 2013
and e-commerce
Arry Akhmad Arman
School of Electrical Engineering and Informatics
arry.arman@yahoo.com
Modified from original ppt of “E-Business and E-Commerce Management” book.

• Define the meaning and scope of e-
business and e-commerce and their different
elements
• Summarize the main reasons for
adoption of e-commerce and e-business
and barriers that may restrict adoption
Learning Outcomes
and barriers that may restrict adoption
• Use resources to define the extent of
adoption of the Internet as a communications
medium for consumers and businesses
• Outline the business challenges of
introducing e-business and e-commerce to
an organization.

Management Issues
• How do we explain the scope
and implications of e-business and
e-commerce to staff?
• What is the full range of
benefits of introducing e-
benefits of introducing e-
business and what are the risks?
• How great will the impact
of the Internet be on our business?
What are the current and
predicted adoption levels?

Case: Amazon.com

Case: eBay.com

Case: detik.com

Case: kompas.com

Case: Facebook.com

Case: tokobagus.com

Case: App Store

Case: e-book & e-magazine

E-Business Opportunities
ReachReach
• Over 1 billion users globally
• Connect to millions of products
E-
Business
E-
Business
RichnessRichnessAffiliationAffiliation
• Detailed product information
on 20 billion + pages indexed
by Google. Blogs, videos, feeds…
• Personalised messages for users
• Partnerships are key
in the networked economy

The impact of the Internet
on business
• Andy Grove, Chairman of Intel, one
of the early adopters of e-
commerce, has made a
meteorological analogy with the
Internet.
Internet.
• He says:
The Internet is a typhoon force, a
ten times force, or is it a bit of wind?
Or is it a force that fundamentally
alters our business? (Grove, 1996)
Andrew Stephen ("Andy")
Grove (born 2 September
1936), is a Hungarian-born
American businessman,
engineer, and author. He is a
science pioneer in the
semiconductor industry. He
escaped from Communist-
controlled Hungary at the age
of 20 and moved to the
United States where he
finished his education. He
later became CEO of Intel
Corporation and helped
transform the company into
the world's largest
manufacturer of
semiconductors.
Image source: wikipedia

E-business Risks
• Making wrong decision about e-
business investments
• Provide poor online customer
experience
experience
Image source: www.infobarrel.com

Internet risks – what can go wrong
with a transactional site?
• Web sites that fail because of spike
in visitor traffic
• Hacker penetrating the security of
the system
• A company emails customer
without receiving their permission
• Problems with fulfilment
• E-mail customer-service enquiries
from the web site don’t reach the
right person
Image source: www.infobarrel.com

Different Perspectives of EC
• Communication
• Business Process
• Service
• Online
• Online
Image source: inkvibe.com

The distinction between Buy-side
and Sell-side e-commerce

Types of sell-side e-commerce
• Transactional e-commerce sites
– www.mph.com.my
• Services-oriented relationship-building web sites
– www.perodua.com.my
– www.perodua.com.my
• Brand-building sites
– www.nokia.com
• Portal or media sites
– www.yahoo.com

Summary and examples of transaction alternatives
between businesses, consumers and governmental
organizations

| arry.arman@yahoo.com, 2013
Figure 1.3 Dubit C2C site for a youth audience (www.dubit.co.uk)

E-Business
• All electronically mediated information exchanges,
both within an organization and with external
stakeholders supporting the range of business
processes
processes
• E-business concepts:
– Applied to strategy and operations
– An adjective to describe businesses that mainly operate
online

E-Business vs E-Commerce
• E-commerce: All electronically mediated
information exchanges between an organization
and its external stakeholder
• Not solely restricted to the actual buying and
selling of products, but also includes pre-sale and
post-sale activities

E-Business vs E-Commerce
• E-commercecovers outward-facing
processes that touch customers, suppliers and
external partners, including sales, marketing, order
taking, delivery, customer service, purchasing of raw
materials and supplies for production and procurement
of indirect operating-expense items, such as office
supplies.
supplies.
• E-business includes e-commerce but also
covers internal processessuch as production,
inventory management, product development, risk
management, finance, knowledge management and
human resources. E-business strategy is more complex,
more focused on internal processes, and aimed at cost
savings and improvements in efficiency, productivity and
cost savings.
http://www.computerworld.com/s/article/53015/The_difference_between_e_business_and_e_commerce?pageNumber=1

E-Government
• The application of e-business technologies
to government and public services for
citizens and businesses
• Cover services for:
– Citizens
– Suppliers
– Internal communications
Image source: ec.europa.eu

Three definitions of the relationship
between e-commerce and e-business

UK rate of adoption
of different digital media
Source: MORI Technology Tracker, January 2006. See www.mori.com/technology/techtracker.shtml for latest details

Drivers of Consumer InternetAdoption
ContentContent
CustomizationCustomization
Cost
reduction
Cost
reduction
CommunityCommunity
ConvenienceConvenience
ChoiceChoice

Barriers of Consumer Internet
Adoption
• No perceived benefit
• Lack of trust
• Security problems
• Lack of skills
• Lack of skills
• Cost
Image source: www.charlesstone.com

Drivers of Business Adoption
Increase
Revenue
Increase
Revenue
Cost
Reduction
Cost
Reduction
DriversDrivers

Attitudes to business benefits of
OnlineTechnologies

Cost/efficiency and competitiveness
drivers
Cost/efficiency drivers
• Increasing speed with
which supplies can be
obtained
Competitiveness drivers
• Customer demand
• Improving the range and
quality of services offered
obtained
• Increasing speed with
which goods can be
dispatched
• Reduced sales and
purchasing costs
• Reduced operating
costs
quality of services offered
• Avoid losing market share
to businesses already
using e-commerce.

Tangible and Intangible Benefits
Tangible benefits Intangible benefits
 Increased sales from new sales leads giving rise to
increased revenue from:
– new customers, new markets
– existing customers (repeat-selling)
– existing customers (cross-selling).
 Marketing cost reductions from:
– reduced time in customer service
 Corporate image communication
 Enhancement of brand
 More rapid, more responsive marketing
communications including PR
 Faster product development lifecycle enabling faster
response to market needs
 Improved customer service
– reduced time in customer service
– online sales
– reduced printing and distribution costs of
marketing communications.
 Supply-chain cost reductions from:
– reduced levels of inventory
– increased competition from suppliers
– shorter cycle time in ordering.
 Administrative cost reductions from more efficient
routine business processes such as recruitment, invoice
payment and holiday authorization.
 Improved customer service
 Learning for the future
 Meeting customer expectations to have a web site
 Identifying new partners, supporting existing
partners better
 Better management of marketing information and
customer information
 Feedback from customers on products

Adoption of Internet and e-business
Services across Europe
Source: Eurostat, Community Survey on ICT usage in enterprises, eEurope (2005) Information Society Benchmarking Report, © European Communities 2005,
http://europa.eu.int/information_society

| arry.arman@yahoo.com, 2013

KeyCategories of InternetApplications
in Indonesia vs Global
Source: http://www.teknojurnal.com/2011/03/11/perkembangan-internet-di-indonesia-pada-tahun-2010/

Barriers to Development of
OnlineTechnologies

The McKinsey 7S framework
• The McKinsey 7S Framework
is a management model
developed by well-known
business consultants Robert
H.Waterman, Jr. andTom
Peters (who also developed
the MBWA-- "Management By
Source: Adapted from Waterman et al. (1980)
the MBWA-- "Management By
Walking Around" motif, and
authored In Search of
Excellence) in the 1980s.
• This was a strategic vision for
groups, to include businesses,
business units, and teams.

The McKinsey 7S framework
• The 7S are structure, strategy, systems,
skills, style, staff and shared values.
• The model is most often used as a tool to
assess and monitor changes in the
internal situation of an organization.
Usage
• Improve the performance of a company
• Examine the likely effects of future changes within
a company
• Align departments and processes during a merger
or acquisition
• Determine how best to implement a proposed
strategy
The Seven Interdependent Elements
• OBJECTIVE OFTHE MODEL (To analyze
how well an organization is positioned to
achieve its intended objective)
The Seven Interdependent Elements
• The basic premise of the model is that there are
seven internal aspects of an organization that need
to be aligned if it is to be successful
• Hard Elements
– Strategy
– Structure
– Systems
• Soft Elements
– Shared Values
– Skills
– Style
– Staff

Exercise
• Please identify one company for each the types of
e-commerce below:
– Transactional e-commerce sites
– Services-oriented relationship-building web sites
– Brand-building sites
– Portal or media sites
• Refer to Figure 1.2 and identify a company for each
the category provided.

End of Slides

E-Business: Chapter 1: Intro to E-B

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