BSAD 372 SPRING 2017 CH 1
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The document provides an introduction to electronic commerce, covering its evolution, categories, and early forms. It discusses how electronic commerce began in the US but China has become the leader in online retail sales. It also outlines the main categories of electronic commerce including business-to-consumer, business-to-business, and how businesses use it to improve internal processes. Finally, it discusses early electronic commerce technologies like electronic funds transfers and electronic data interchange between businesses.
BSAD 372 SPRING 2017 CH 1
- 1. Introduction to Electronic Commerce CHAPTER 1 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. .
- 2. In this chapter, you will learn: • What electronic commerce is and how it has evolved in three waves of development • Why companies concentrate on revenue models and the analysis of business processes instead of business models when they undertake electronic commerce initiatives • How to identify opportunities for and barriers to electronic commerce initiatives © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 22 Learning Objectives
- 3. Learning Objectives (cont’d.) • How economic forces have led to the development and continued growth of electronic commerce • How businesses use value chains and SWOT analysis to identify electronic commerce opportunities • How the international nature of electronic commerce affects its growth and development © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 33
- 4. Introduction • Electronic commerce began in the United States – China the leader in online retail sales since 2013 – More and more sales being made on smartphones • China is the world’s largest potential online market – Active Internet users and upward economic growth – Buyers use U.S. and domestic sites and are influenced by online reviews and discussions – Has led to online review sites and seller participation in Chinese chat and messaging sites © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 4 IntroductionIntroduction
- 5. Introduction (cont’d.) • Sellers in China must account for regional differences within a diverse country – Distribution and delivery difficult without well- developed roads and standardized shipping practices – Some sellers have created their own distribution systems • Chapter addresses how online businesses have emerged and grown to accommodate various cultures and infrastructure challenges around the world © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 5
- 6. The Evolution of Electronic Commerce • Electronic commerce history – Rapid growth from mid-1990s to 2000 – “Dot-com boom” followed by “dot-com bust” – 2000 to 2003: Overly gloomy news reports – 2003: Signs of profound rebirth • Sales and profit growth returned • Electronic commerce grew faster than overall economy and became a larger part of the total economy © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 66
- 7. The Evolution of Electronic Commerce • Electronic commerce history (cont’d.) – 2008 general recession • Electronic commerce suffered far less than most of economy – From 2003 to the present • Electronic commerce has expanded more in good times and contracted less in bad times than other economic sectors © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 77
- 8. Electronic Commerce and Electronic Business • Electronic commerce – Shopping on the Web – Businesses trading with other businesses – Internal company processes – Broader term: electronic business (e-business) – Includes all business activities using Internet technologies • Internet and World Wide Web (Web) • Wireless transmissions on mobile telephone networks • Dot-com (pure dot-com) – Businesses operating only online © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 88
- 9. Categories of Electronic Commerce • Business-to-consumer (B2C) – Consumer shopping on the Web • Business-to-business (B2B): e-procurement – Transactions conducted between Web businesses – Supply management (procurement) departments • Negotiate purchase transactions with suppliers • Business processes – Use of Internet technologies within the business 99© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
- 10. Business Processes • Business activity is a task ask performed by a worker doing his or her job – May or may not be related to a transaction • Transaction is an exchange of value – Purchase, sale, or conversion of raw materials into finished product – Involves at least one business activity • Business processes are groups of logical, related, sequential activities and transactions • Web helps people work more effectively © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 10
- 11. Relative Size of Electronic Commerce Elements • Rough approximation shown in Figure 1-1 • Dollar volume and number of transactions – B2B much greater than B2C • Number of transactions – Supporting business processes greater than B2C and B2B combined © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 11
- 12. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 12 FIGURE 1-1 Elements of electronic commerce ©CengageLearning2017
- 13. Relative Size of Electronic Commerce Elements (cont’d.) • Consumer-to-consumer (C2C) – Individuals buying and selling among themselves • Web auction site – C2C sales included in B2C category • Seller acts as a business (for transaction purposes) • Business-to-government (B2G) – Business transactions with government agencies • Paying taxes, filing required reports – B2G transactions included in B2B discussions © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 1313
- 14. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 14 FIGURE 1-2 Electronic commerce categories ©CengageLearning2017
- 15. Early Electronic Commerce • Electronic Funds Transfers (EFTs) – Wire transfers – Electronic transmissions of account exchange information over private communications networks • Electronic Data Interchange (EDI) – Business-to-business transmission of computer- readable data in standard format – Standard transmitting formats benefits • Reduces errors, avoids printing and mailing costs and eliminates need to reenter data © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 1515
- 16. Early Electronic Commerce (cont’d.) • Trading partners – Businesses engaging in EDI with each other – EDI pioneers (example: Walmart) improved purchasing processes and supplier relationships – Pioneers faced high implementation costs • Value-added network (VAN) – Independent firm offering EDI connection and transaction-forwarding services • EDI continues to be a large portion of B2B electronic commerce © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 1616
- 17. The First Wave of Electronic Commerce, 1995-2003 • 1997 to 2000 – More than 12,000 Internet businesses were started • 2000 to 2003 – More than 5,000 start-ups went out of business – Extensive coverage of “dot.com bust” – $200 billion spent on bailing out and starting businesses • Set the stage for significant future growth © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 1717
- 18. The Second Wave of Electronic Commerce, 2004-2009 • Expanding international scope • Established companies used own funds to finance gradual expansion • Faster, less expensive Internet technologies available – Increase in broadband connections a key element of the B2C component of this wave • E-mail became an integral part of marketing and customer contact • Renewed interest in Internet advertising © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 1818
- 19. The Second Wave of Electronic Commerce, 2004-2009 (cont’d.) • Promise of available technologies fulfilled – Legal distribution of music, video, and other digital products • Web 2.0 technologies – Users participate in creating and modifying content on third party Web sites • Shift in online business strategy – Away from the first-mover advantage which is expensive and not always successful to a smart- follower strategy • “Second mouse gets the cheese” © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 1919
- 20. The Third Wave of Electronic Commerce, 2010 - Present • Factors in the third wave – Critical mass of mobile users with powerful devices • Increased availability of smartphones and tablets • Mobile apps used for over 40% of online sales – Increase in electronic commerce activity • Growing number of people using handheld devices to access the Internet – Widespread participation in social networking • Businesses can use social commerce to advertise, promote or suggest specific products and services © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 20
- 21. The Third Wave of Electronic Commerce, 2010 - Present • Factors in the third wave (cont’d) – Increased online participation by smaller businesses in sales, purchasing, and capital-raising activities • Crowdsourcing – Sophisticated analysis of data companies collect about online customers • Big data and data analytics – Increased integration of tracking technologies into B2B electronic commerce and the management of business processes within companies • RFID devices and biometric technologies © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 21
- 22. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 22 FIGURE 1-3 Key characteristics of the first three waves of electronic commerce ©CengageLearning2017
- 23. Business Models, Revenue Models, and Business Processes • Business model – Set of processes combined to achieve company goal • In the first wave of electronic commerce, investors sought Internet-driven business models – Expectations of rapid sales growth, market dominance – Successful “dot-com” business models emulated – Led to many business failures – Michael Porter argued business models did not exist © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 2323
- 24. Business Models, Revenue Models, and Business Processes (cont’d.) • Instead of copying model, companies should examine their business elements – Streamline, enhance, or replace with Internet technology driven processes • Revenue model – Specific collection of business processes used to identify, market and make sales to customers – Classifies revenue-generating activities for communication and analysis purposes © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 2424
- 25. Focus on Specific Business Processes • Examples of business processes – Purchasing raw materials or goods for resale – Converting materials and labor into finished goods – Managing transportation and logistics – Hiring and training employees – Managing business finances • Identify processes that benefit from ecommerce technologies – Not all processes can be improved with technology – Firms can use it to help them adapt to change © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 2525
- 26. Role of Merchandising • Combination of store design, layout, and product display knowledge • Salespeople have skills to identify customer needs and meet them • Merchandising and personal selling skills can be difficult to practice remotely – Companies must be able to transfer these skills to have Web site success – Some products are easier to sell on the Internet than others © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 2626
- 27. Product/Process Suitability to Electronic Commerce • Some products good candidates for electronic commerce – Customers do not need to experience physical characteristics before purchase – Technology has made more processes suitable for electronic commerce • Commodity items are standardized, well-known products only differentiated by price – Must have attractive shipping profile to sell online – Includes books, clothing, shoes, kitchen accessories and other small household items © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 27
- 28. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 28 FIGURE 1-5 Business process suitability to type of commerce ©CengageLearning2017
- 29. Product/Process Suitability to Electronic Commerce (cont’d.) • Easier-to-sell products have: – Strong brand reputation – Appeal to small but geographically diverse groups • Traditional commerce better for: – Products relying on personal selling skills – Transactions involving large amounts of money • Combination of electronic and traditional commerce strategies best when: – Business process includes both commodity and personal inspection aspects © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 2929
- 30. Opportunities for Electronic Commerce • Electronic commerce can help increase profits and sales and decrease business costs • Virtual community – Gathering of people sharing a common interest • E-commerce purchasing opportunities – Identify new suppliers and business partners – Efficiently obtain competitive bid information – Increase speed, information exchange accuracy – Wider range of choices available 24 hours a day © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 30
- 31. Opportunities for Electronic Commerce (cont’d.) • Benefits extend to general society – Lower costs to issue and secure • Electronic payments of tax refunds • Public retirement • Welfare support – Provides faster transmission – Provides fraud, theft loss protection • Electronic payments easier to audit and monitor – Telecommuting reduces traffic, pollution – Products and services available in remote areas © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 3131
- 32. Electronic Commerce: Current Barriers • Poor choices for electronic commerce – Perishable foods and high-cost, unique items • Four barriers – Need for critical mass of customers with appropriate technology – Unpredictability in costs and revenues – Insufficient tools for hardware and software integration – Cultural and legal barriers © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 3232
- 33. Economic Forces and Electronic Commerce • Economics – Study how people allocate scarce resources • Markets – Potential sellers come into contact with buyers – Medium of exchange available (currency or barter) • Hierarchical business organizations – Firms or companies • Transaction costs – Motivation for moving economic activity to hierarchically structured firms © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 3333
- 34. Transaction Costs • Total costs a buyer and seller incur while gathering information and negotiating purchase-and-sale transaction • Costs include: – Brokerage fees and sales commissions – Cost of information search and acquisition • Sweater dealer example (Figure 1-6) © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 3434
- 35. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 35 FIGURE 1-6 Market form of economic organization ©CengageLearning2017
- 36. Markets and Hierarchies • Coase’s analysis of high transaction costs – Hierarchical organizations replace market-negotiated transactions – Supervision and worker-monitoring elements – Vertical integration sweater example (Figure 1-7) • Oliver Williamson (extended Coase’s analysis) – Complex manufacturing, assembly operations • Hierarchically organized, vertically integrated – Manufacturing innovations increased monitoring activities’ efficiency and effectiveness © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 3636
- 37. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 37 FIGURE 1-7 Hierarchical form of economic organization ©CengageLearning2017
- 38. Markets and Hierarchies (cont’d.) • Strategic business unit (business unit) – Part of a company large enough to manage itself – Small enough to quickly respond to business environment changes • Exception to hierarchy trend – Commodities © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 38
- 39. Using Electronic Commerce to Reduce Transaction Costs • Electronic commerce can – Improve flow of information – Increase coordination of actions – Change attractiveness of vertical integration • Example: employment transaction – Telecommuting reduces or eliminates transaction costs © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 3939
- 40. Network Economic Structures • Neither market nor hierarchy • Strategic alliances (strategic partnerships) – Coordinate strategies, resources, skill sets by forming long-term relationships based on shared purposes – Strategic partners come together for specific projects • Network organizations well suited to information- intensive technology industries – Electronic commerce makes networks easier to construct and maintain – Castells predicts economic networks will become the organizing structure for social interactions © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 4040
- 41. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 41 FIGURE 1-8 Network form of economic organization ©CengageLearning2017
- 42. Network Effects • Law of diminishing returns – Activities yield less value as consumption amount increases • Example: hamburger consumption • Network effect – Exception to law of diminishing returns – As more people or organizations participate in network, the value to each participant increases – Examples: Landline phones, e-mail © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 4242
- 43. Identifying Electronic Commerce Opportunities • Focus on specific business processes – Break business down – Series of value-adding activities that combine to meet firm’s goals • Business activities conducted by firms of all sizes • Firm – Multiple business units owned by a common set of shareholders • Industry – Multiple firms selling similar products to similar customers © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 4343
- 44. Strategic Business Unit Value Chains • Value chain – Organizing strategic business unit activities to design, produce, promote, market, deliver, and support the products or services – Michael Porter includes supporting activities such as human resource management and purchasing • Strategic business unit primary activities – Design, identify customers, purchase materials and supplies, manufacture product or create service, market and sell, deliver, provide after-sale service and support © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 44
- 45. Strategic Business Unit Value Chains (cont’d.) • Importance of primary activities depends on: – Product or service – Customers • Central corporate organization support activities – Finance and administration – Human resource – Technology development © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 45
- 46. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 46 FIGURE 1-9 Value chain for a strategic business unit ©CengageLearning2017
- 47. Industry Value Chains • Examine where strategic business unit fits within industry • Porter’s value system – Describes larger activities stream into which particular business unit’s value chain is embedded – Industry value chain refers to value systems • Awareness of businesses value chain activities – Allows identification of new opportunities – Useful way to think about general business strategy © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 47
- 48. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 48 FIGURE 1-10 Industry value chain for a strategic business unit ©CengageLearning2017
- 49. SWOT Analysis: Evaluating Business Unit Opportunities • Define SWOT (strengths, weaknesses, opportunities, and threats) • First look into business unit – Identify strengths and weaknesses • Then review operating environment – Identify opportunities and threats presented • Take advantage of opportunities – Build on strengths – Avoid threats – Compensate for weaknesses © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 49
- 50. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 50 FIGURE 1-11 SWOT analysis questions ©CengageLearning2017
- 51. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 51 FIGURE 1-12 Results of Dell’s SWOT analysis ©CengageLearning2017
- 52. International Nature of Electronic Commerce • Internet connects computers worldwide • When companies use Web to improve business process they automatically operate in global environment • Third wave – Rapidly increasing proportion outside US – China, India, and Brazil have seen enormous recent growth • Key issues in international commerce include trust, culture, language, government and infrastructure © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 52
- 53. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 53 FIGURE 1-13 Proportion of online B2C sales by geographic region, 2014 ©CengageLearning2017
- 54. Trust Issues on the Web • Important for all businesses to establish trusting relationships with customers • Companies can rely on established brand names • Challenging for new companies because anonymity exists when trying to establish a Web presence – Plan for establishing credibility is essential – Sellers cannot assume site visitors will know they are trustworthy • Business must overcome distrust in Web “strangers” © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 54
- 55. Language Issues • Business must adapt to local cultures – “Think globally, act locally” – Provide local language versions of Web site as customers are more likely to buy from sites in own language • Websites available in English only have declined dramatically to about 25% of total sites • Languages may require multiple translations for separate dialects – Localization means a translation considers multiple elements of the local environment © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 55
- 56. Cultural Issues • Important element of business trust is anticipating how the other party to a transaction will act in specific circumstances • Culture is the combination of language and customs – Varies across national boundaries, regions within nations • Care must be taken in choosing packaging, product names, icons used to represent common actions and even colors • Japanese shoppers resisted US sites for years because of their resistance to use of credit cards © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 56
- 57. Culture and Government • Some areas have cultural environments inhospitable to online discussions that occur on the Internet – May lead to government controls that limit electronic commerce development – Many countries filter available Web content and some have denounced the Internet • Countries such as the People’s Republic of China and Singapore traditionally control access to information but want to reap the benefits of electronic commerce – Result has been many regulations and requirements © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 57
- 58. Infrastructure Issues • Computers and software connected to Internet and the related communications networks • Outside the U.S. the telecommunications industry is either government owned or regulated – Inhibits development or limits expansion • High local telephone connection costs affect online behavior • Over half of all Websites turn away international orders because of no process to handle them – Problem is increasing globally © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 58
- 59. Infrastructure Issues (cont’d.) • Freight forwarder arranges international transactions’ shipping and insurance • Customs broker arranges tariff payment and compliance with international shipping laws • Bonded warehouse is a secure location that holds international shipments until customs requirements or payments satisfied • Handling international transactions paperwork has an annual cost of $700 billion – Software automates some paperwork © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 59
- 60. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use 60 FIGURE 1-14 Parties involved in a typical international trade transaction ©CengageLearning2017