Chapter 1: Introduction to Electronic CommerceObjectivesObjectives (continued)Electronic Commerce: The Second WaveCategories of Electronic CommercePowerPoint PresentationCategories of Electronic Commerce (continued)Slide 8Slide 9The Development and Growth of Electronic CommerceThe Development and Growth of Electronic Commerce (continued)Slide 12The Second Wave of Electronic CommerceThe Second Wave of Electronic Commerce (continued)Business Models, Revenue Models, and Business ProcessesRole of MerchandisingProduct/Process Suitability to Electronic CommerceProduct/Process Suitability to Electronic Commerce (continued)Advantages of Electronic CommerceAdvantages of Electronic Commerce (continued)Disadvantages of Electronic CommerceEconomic Forces and Electronic CommerceTransaction CostsUsing Electronic Commerce to Reduce Transaction CostsNetwork Economic StructuresNetwork Economic Structures (continued)Network EffectsIdentifying Electronic Commerce OpportunitiesStrategic Business Unit Value ChainsSlide 30Industry Value ChainsSlide 32SWOT Analysis: Evaluating Business Unit OpportunitiesSlide 34Slide 35International Nature of Electronic CommerceLanguage IssuesCulture IssuesInfrastructure IssuesInfrastructure Issues (continued)Slide 41SummarySummary (continued)Chapter 1: Introduction to Electronic Commerce Electronic Commerce, Seventh Annual EditionElectronic Commerce, Seventh Annual Edition 2ObjectivesIn this chapter, you will learn about:•What electronic commerce is and how it is experiencing a second wave of growth with a new focus on profitability•Why companies now concentrate on revenue models and the analysis of business processes instead of business models when they undertake electronic commerce initiativesElectronic Commerce, Seventh Annual Edition 3Objectives (continued)•How economic forces have created a business environment that is fostering the second wave of electronic commerce•How businesses use value chains and SWOT analysis to identify electronic commerce opportunities•The international nature of electronic commerce and the challenges that arise in engaging in electronic commerce on a global scaleElectronic Commerce, Seventh Annual Edition 4Electronic Commerce: The Second Wave•Electronic commerce (e-commerce)–Businesses trading with other businesses and internal processes•Electronic business (e-business)–Term used interchangeably with e-commerce–The transformation of key business processes through the use of Internet technologiesElectronic Commerce, Seventh Annual Edition 5Categories of Electronic Commerce•Five general e-commerce categories:–Business-to-consumer–Business-to-business–Business processes–Consumer-to-consumer–Business-to-government•Supply management or procurement–Departments are devoted to negotiating purchase transactions with suppliersElectronic Commerce, Seventh Annual Edition 6Electronic Commerce, Seventh Annual Edition 7Categories of Electronic Commerce (continued)•Transaction –An exchange of value•Business processes–The group of logical, related, and sequential activities and transactions in which businesses engage•Telecommuting or telework–Employees log in to company computers through the Internet instead of traveling to the officeElectronic Commerce, Seventh Annual Edition 8Electronic Commerce, Seventh Annual Edition 9Electronic Commerce, Seventh Annual Edition 10The Development and Growth of Electronic Commerce•Electronic funds transfers (EFTs)–Also called wire transfers–Electronic transmissions of account exchange information over private communications networks•Electronic data interchange (EDI) –Transmitting computer-readable data in a standard format to another businessElectronic Commerce, Seventh Annual Edition 11The Development and Growth of Electronic Commerce (continued)•Trading partners–Businesses that engage in EDI with each other•Value-added network (VAN) –Independent firm that offers connection and transaction-forwarding services to buyers and sellers engaged in EDIElectronic Commerce, Seventh Annual Edition 12Electronic Commerce, Seventh Annual Edition 13The Second Wave of Electronic Commerce•Defining characteristics of the first wave:–Dominant influence of U.S. businesses –Extensive use of the English language–Many new companies started with outside investor money–Unstructured use of e-mail –Over-reliance on advertising as a revenue sourceElectronic Commerce, Seventh Annual Edition 14The Second Wave of Electronic Commerce (continued)•Second wave: –Global enterprises in many countries are participating in electronic commerce–Established companies fund electronic commerce initiatives with their own capital–Customized e-mail strategies are now integral to customer contactElectronic Commerce, Seventh Annual Edition 15Business Models, Revenue Models, and Business Processes•Business model–A set of processes that combine to yield a profit•Revenue model–A specific collection of business processes used to: •Identify customers•Market to those customers•Generate sales to those customersElectronic Commerce, Seventh Annual Edition 16Role of Merchandising•Merchandising–Combination of store design, layout, and product display knowledgeElectronic Commerce, Seventh Annual Edition 17Product/Process Suitability to Electronic Commerce•Commodity item –Hard to distinguish from the same products or services provided by other sellers–Features have become standardized and well knownElectronic Commerce, Seventh Annual Edition 18Product/Process Suitability to Electronic Commerce (continued)•Shipping profile –Collection of attributes that affect how easily a product can be packaged and delivered•High value-to-weight ratio –Can make overall shipping cost a small fraction of the selling priceElectronic Commerce, Seventh Annual Edition 19Advantages of Electronic Commerce•Electronic commerce can increase sales and decrease costs•If advertising is done well on the Web, it can get a firm’s promotional message out to potential customers in every country •Using e-commerce sales support and order-taking processes, a business can:–Reduce costs of handling sales inquiries–Provide price quotesElectronic Commerce, Seventh Annual Edition 20Advantages of Electronic Commerce (continued)•It increases purchasing opportunities for buyers•Negotiating price and delivery terms is easier•The following cost less to issue and arrive securely and