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MIS Course "Home of the Power of Technology"

Chapter 8
Your Instructor
Drop Box
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Case Study
Extra Resources

  • Electronic Commerce. Electronic commerce encompasses the entire online process of developing, marketing, selling, delivering, servicing, and paying for products and services. The Internet and related technologies and e-commerce websites on the World Wide Web and corporate intranets and extranets serve as the business and technology platform for e-commerce marketplaces for consumers and businesses in the basic categories of business- to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C) e-commerce. The essential processes that should be implemented in all e-commerce applications--access control and security, personalizing and profiling, search management, content management, catalog management, payment systems, workflow management, event notification, and collaboration and trading--are summarized in Figure 8.4.
  • e-Commerce Issues. Many e-business enterprises are moving toward offering full-service B2C and B2B e-commerce portals supported by integrated customerfocused processes and internetworked supply chains as illustrated in Figure 8.10. In addition, companies must evaluate a variety of e-commerce integration or separation alternatives and benefit trade-offs when choosing a clicks and bricks strategy and e-commerce channel, as summarized in Figures 8.19 and 8.20.
  • B2C e-Commerce. Businesses typically sell products and services to consumers at e-commerce websites that provide attractive Web pages, multimedia catalogs, interactive order processing, secure electronic payment systems, and online customer support. However, successful e-tailers build customer satisfaction and loyalty by optimizing factors outlined in Figure 8.12, such as selection and value, performance and service efficiency, the look and feel of the site, advertising and incentives to purchase, personal attention, community relationships, and security and reliability. In addition, a Web store has several key business requirements, including building and marketing a Web business, serving and supporting customers, and managing a Web store, as summarized in Figure 8.14.
  • B2B e-Commerce. Business-to-business applications of e-commerce involve electronic catalog, exchange, and auction marketplaces that use Internet, intranet, and extranet websites and portals to unite buyers and sellers, as summarized in Figure 8.16 and illustrated in Figure 8.17. Many B2B e-commerce portals are developed and operated for a variety of industries by third-party market-maker companies called infomediaries, which may represent consortiums of major corporations.

Chapter 8: Applications in Business and Management


1.      Most businesses should engage in electronic commerce on the Internet.  Do you agree or disagree with this statement?  Explain your position.


Electronic commerce is no longer a luxury.  In order to compete in the global marketplaces, businesses must engage in electronic commerce and have a presence on the Internet.  The Internet is the driving force in the new economy.  Businesses are engaging in e-commerce to develop, market, sell, deliver, service, and pay for products and services which are being transacted on the internetworked, global marketplaces of customers, and with the support of a worldwide network of business partners.


2.      Are you interested in investing in, owning, managing, or working for a business that is primarily engaged in electronic commerce on the Internet?  Explain your position.


This is a very subjective question, and will vary from student to student.  However, one thing is for sure, this is a growing field of interest, and businesses are seriously considering this new concept of conducting business.  Certainly, this field is also opening new career opportunities for individuals who are interested in working in this dynamic and changing environment.    


3.      Refer to the Real World Case on eBay in the chapter. What are the benefits and limitations of being an eBay Power Seller or Trading Assistant?


   Benefits would include:

         eBay Power Sellers and Trading Assistants feel like owners.

         They take the initiative to expand the eBay Economy – often beyond eBay management’s wildest dreams.

         They get to influence almost every new feature or policy, no matter how small.

         They have helped spur the (organic) growth of new businesses and business owners.


4.     Why do you think there have been so many business failures among “dot-com” companies that were devoted only to retail e-commerce?


Students’ answers will vary, however one possible reason that they may give is the simple fact that organizations rushed into the getting a presence on the Internet without really knowing what or how it would work.  Retail e-commerce is not simply a matter of having a site presence; it is servicing your customers better than your competitors.  E-commerce customer value is imperative – what the customer wants, when and where it’s wanted, at the lowest possible cost.  Common sense had to prevail – simply putting a site together does not guarantee that customers will come.


5.      Do the e-commerce success factors listed in Figure 8.12 guarantee success for an e-commerce business venture?  Give a few examples of what else could go wrong and how you would confront such challenges.


The success factors listed in Figure 8.12 are very important; however they certainly do not guarantee success for an e-commerce business venture.  What is important is that organizations develop and continue to improve their websites so that they capture and maintain their customers.  Stress to students that customers can and do “click” away from a site when they are not satisfied with it or find it difficult to use.  Businesses must continually strive to find ways to build customer satisfaction, loyalty, and relationships with their customers to keep them coming back. 


6.      If personalizing a customer’s website experience is a key success factor, then electronic profiling processes to track visitor website behavior are necessary.  Do you agree or disagree with this statement?  Explain your position.


When companies personalize the shopping experience of their customers, they are encouraging them to buy and make return visits.  Through specialized software companies are able to automatically record details of their customer’s visits and build user profiles of them.  Rather it is necessary to track visitor website behavior may be argumentative for some students.  Companies use profiling in order to build one-to-one marketing and relationship with their customers.  This is done in the name of marketing – in order to capture market share, however it may also be considered an invasion of privacy if the individual does not know that their web behavior is being tracked for this purpose.


7.      All corporate procurement should be accomplished in e-commerce auction marketplaces, instead of using B2B websites that feature fixed-price catalogs or negotiated prices.  Explain your position on this proposal. 


Business value of using FreeMarkets auction services versus developing a company’s own online auction is that the business can save money by using an online auction service.  By utilizing existing services such as FreeMarket, a business can concentrate on their core business rather than that of taking on the challenges of Internet technology.  FreeMarket acts as the consultant, showing new clients how to spell out every possible requirement in the RFQ.  FreeMarket is also expert at finding and screening suppliers that the client’s don’t have the time or the information to track on their own.  FreeMarket culls down a long list of buyers and selects those it wants to invite as bidders.


8.      Refer to the Real World Case on Corporate Express in the chapter. What are some of the business and IT challenges that companies face in integrating their procurement systems with their customers and suppliers? What are several solutions to such problems?


      Challenges and solutions faced could include:

         Small business customers that lack their own automated procurement system.  Companies such as Corporate Express permit these companies to log into their system effectively providing an automated procurement system for their small business customers.

         Most businesses have unique procurement rules.  Corporate Express’ E-Way system permits these procurement rules to be placed in its system so E-way can check budgets, buyer authorizations and other controls for the customers.

         For large business customers having an automated procurement system there is a need to integrate with the system.  E-Way integrates into the customer’s system to permit the customer to build the order locally and then bridge into the E-Way system thus leveraging the integration features of the e-commerce software.

         Product catalogs become lengthy and unmanageable.  Corporate Express tailors every catalog to a given user’s format, terminology and buying practices.


9.      If you were starting an e-commerce Web store, which of the business requirements summarized in Figure 8.14 would you primarily do yourself, and which would you outsource to a Web development or hosting company? Why?


This is a very subjective question, and will vary from student to student.  If students have no expertise in this area they may suggest that it would be beneficial to have all of the work outsourced to a professional Web development or hosting company.  If the site is not developed properly, and with a professional look customers will not be interested in it.  Also, if it is poorly designed and difficult to use you will not attract any business.  On the other hand, companies can now use simple website design software tools and predesigned templates which are readily available from website hosting services to construct their Web retail sites.  The aim of the Web store is to market it so that it will attract customers and transform them into loyal Web customers.  Whatever suggestions students give to answering this question they must keep in mind the simple fact is that the best possible development is what is required in order to increase the chances of having a successful site.   


10.     Which of the e-commerce clicks and bricks alternatives illustrated in Figure 8.19 would you recommend to Barnes & Noble?  Wal-Mart?  Any business?  Explain your position.


Figure 8.19 illustrates the spectrum of alternatives and benefit trade-offs that e-business enterprises face when choosing an e-commerce “clicks and bricks” strategy.  In all of the companies listed in this question, the most important strategy is that managers must be able to decide if they should integrate their e-commerce virtual business operations with their traditional physical business operations, or keep them separated.  Being that these two alternatives are the opposite extreme of each other, companies can choose to use other strategies that combine both of these alternatives – spin-off, strategic partnership, joint venture, and in-house division.  Barnes&Noble chose a completely separate clicks and bricks strategy by creating a totally independent e-commerce company from their retail chain.  Wal-Mart would probably be best suited with a joint venture division due to their product offering and the large number of different suppliers.


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