Lead Black Slide
Chapter 12
Electronic Commerce and the
Strategic Impact of
Information Systems
© 2001 Business & Information Systems 2/e
2
Our Agenda
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Providing a Strategic Impact
Electronic Commerce Systems
Interorganizational Information Systems
Global Information Systems
Strategic Information Systems
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Learning Objectives
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Describe how information systems can
have a strategic impact on a business
and give examples of information
systems that create a competitive
advantage for a business.
Describe the main types of electronic
commerce.
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Learning Objectives (cont’d.)
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List the functions provided by electronic
commerce systems.
Explain why interorganizational systems
are used in business alliances.
Describe several ways that a business
can participate in an interorganizational
system.
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Learning Objectives (cont’d.)
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Explain how an electronic data
interchange system functions.
Explain what global information systems
are why international businesses need
them.
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Learning Objectives (cont’d.)
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Describe different forms that global
information systems can take and how
each form relates to international
business strategy.
Explain what a strategic information
system is an what types of information
systems are strategic.
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Learning Objectives (cont’d.)
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Describe how strategic information
system opportunities can be identified
in business.
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Providing a Strategic Impact
Electronic Commerce and the
Strategic Impact of
Information Systems
© 2001 Business & Information Systems 2/e
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Providing a Strategic Impact
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Information systems that have a
strategic impact on a business help
create a competitive advantage for the
business.
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Main Approaches for Gaining
a Competitive Advantage
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Cost leadership – having lower
production and operating costs that the
competitors.
Differentiation – providing products or
services that are unique so the
customer wants to purchase from the
business.
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Main Approaches for Gaining a
Competitive Advantage (cont’d.)
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Focus – focusing on a niche to provides
products or services designed for a
specific segment of the market.
Innovation – means developing new
ways of operating or managing a
business.
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Main Approaches for Gaining a
Competitive Advantage (cont’d.)
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Growth – means expanding the
products or services provided by the
business.
Business Alliances – means forming
groups of businesses that work
together.
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Electronic Commerce
Systems
Electronic Commerce and the
Strategic Impact of
Information Systems
© 2001 Business & Information Systems 2/e
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Electronic Commerce Systems
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An Electronic Commerce System is an
information system that provides
e-commerce capabilities for an
organization.
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The Strategic Impact of
Electronic Commerce
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Electronic commerce can have a strategic
impact on business by:
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Providing an innovative approach for conducting
business.
Providing a reduction in the cost of transactions.
Providing unique, customized products for its
customers.
Providing customer access 24 hours every day.
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Types of Electronic Commerce
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Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)
Intraorganizational
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Business-to-Consumer
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Business-to-consumer (B2C) involves a
business selling its products or services
electronically to the final consumer,
which is usually an individual.
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Business-to-Consumer
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B2C companies operate in several ways:
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E-tailers
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Using others to sell their products
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Called direct marketers
Called indirect marketers
Sell their products electronically
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Called full cybermarketers
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Business-to-Consumer
(cont’d.)
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Selling through traditional means as well as
electronically
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Filling orders from their own stock
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Called partial cybermarketers
Called electronic distributor
Send orders they receive to manufacturers
or wholesalers that fill the orders
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Called electronic brokers
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Business-to-Business
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Three main types of B2B e-commerce:
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Supplier-oriented marketplace – supplier
company provides e-commerce capabilities for
other businesses to order its products.
Buyer-oriented marketplace – buyer requests
quotations or bids from other companies
electronically.
Intermediary-oriented marketplace – acts as
an intermediary between buyer and seller.
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Consumer-to-Consumer
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In consumer-to-consumer (C2C)
electronic commerce, one consumer
sells a product or service to another
consumer usually through an
intermediary e-commerce business.
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Intrabusiness
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Intrabusiness, or organizational,
electronic commerce involves
transactions between departments,
regions, subsidiaries, or other units of a
business.
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Characteristics of Electronic
Commerce Systems
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Product presentation
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Order entry
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Electronic catalog
Electronic shopping cart
Payment
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Electronic payment
Electronic Funds Transfer (EFT)
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Characteristics of Electronic
Commerce Systems (cont’d.)
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Product distribution
Customer service
Product support
Data acquisition
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Interorganizational
Information Systems
Electronic Commerce and the
Strategic Impact of
Information Systems
© 2001 Business & Information Systems 2/e
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Interorganizational
Information Systems
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An InterOrganizational System (IOS) is an
information system shared by one or more
suppliers and customers.
The most familiar example of IOSs are Electronic
Data Interchange (EDI) systems which provide
for the transfer of data between businesses.
Electronic Funds Transfer (EFT) systems provide
for the transfer of money between financial
institutions.
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Business Alliances
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Businesses coordinate some of their operations
or link some of their resources to form business
alliances, which serve the interests of all
businesses in the alliance.
Types of alliances
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Between a business and a competitive business
Between a business and a noncompetitive business
Between a business and its suppliers and customers
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The Strategic Impact of
Interorganization Systems
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Interorganizational systems provide for
the sharing of information and
processing between businesses in a
business alliance.
Ordering products electronically with
and EDI system is less expensive than
ordering other ways.
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Characteristics of
Interorganizational Systems
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Businesses are involved in
InterOrganzational Systems (IOS) as
either:
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Sponsors – a business that sets up and
maintains an IOS
Participant – a business that uses an IOS
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Characteristics of Interorganizational
Systems (cont’d.)
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Business can participate in an IOS in several
ways:
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A business simply enters input and receives output
by using an IOS sponsored by another business.
A business accesses data storage or processing
capabilities of another business in the IOS.
A business can participate in an IOS by using the
capabilities of the IOS received from the sponsor
for managing internal operations.
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Electronic Data Interchange
Systems
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An Electronic Data Interchange (EDI) system
provides for electronic communication of data
between businesses.
Types of data sent include
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Purchase order data
Shipping data
Invoice data
Product description data
Price list data
Insurance data
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Traditional versus
Internet EDI
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An EDI system, like all IOSs, requires a
data communications link between
businesses.
Internet EDI systems require special
software to send encrypted
standardized data.
EDI data is generally input directly into
the system upon receipt.
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EDI Benefits and Problems
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Benefits of EDI
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Speed
Data entry errors are reduced
Problems with EDI
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Organizational participation
Technical problems must be solved
Can be expensive
© 2001 Business & Information Systems 2/e
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Global Information Systems
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Electronic Commerce and the Strategic
Impact of
Information Systems
© 2001 Business & Information Systems 2/e
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Global Information Systems
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Global (international) information
systems provide communication
between business locations around the
world, transfer of data between
international locations, and use of
system functions at different locations
worldwide.
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International Business
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Businesses engage in international
activities for several reasons.
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International sales
International production
International product development
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International Business
(cont’d.)
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International businesses generally
follow one of several basic strategies.
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Multinational strategy – the business allows
its foreign operations to function largely
independently.
Global strategy – the central headquarters
coordinates the activities of the foreign
operations closely.
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International Business
(cont’d.)
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International strategy – involves
transferring knowledge and skills from the
central headquarters to the foreign
operations.
Transnational strategy – involves using
knowledge and skills from both the central
headquarters and the foreign operations.
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Characteristics of Global
Information Systems
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Global information systems differ from
domestic information systems in a
number of ways.
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Data communications technology
Cost of data communications
Concern for cultural differences between
countries
Political and legal factors – Transborder
Data Flow (TDF)
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Characteristics of Global
Information Systems (cont’d.)
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Businesses that follow a multinational
strategy tend to have decentralized, or
independent, information systems for their
central headquarters and different foreign
operations.
Businesses that follow a global strategy
ten to have highly centralized GIS
determined by the central headquarters.
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Characteristics of Global
Information Systems (cont’d.)
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Businesses that follow an international
strategy tend to have distributed GIS in
which systems in the central headquarters
are connected to those in the foreign
operations.
Business that follow the transnational
strategy require complex, integrated GIS
in which the central headquarters and all
the foreign operations participate equally.
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Global Electronic Commerce
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Global e-commerce systems should:
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Offer sites in several languages, with a
feature that allows the user to select the
preferred language.
Allow customers to pay in several different
currencies.
Be sensitive to cultural differences in
various countries.
© 2001 Business & Information Systems 2/e
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Strategic Information
Systems
Electronic Commerce and the
Strategic Impact of
Information Systems
© 2001 Business & Information Systems 2/e
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Strategic Information Systems
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A Strategic Information System (SIS)
affects the way a business competes
with other businesses, thus giving it an
advantage over its competitors.
© 2001 Business & Information Systems 2/e
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Identifying Strategic Information
Systems Opportunities
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Look at the business’s value chain.
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Primary activities
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Creating product
Selling product
Servicing product
© 2001 Business & Information Systems 2/e
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Identifying Strategic Information
Systems Opportunities (cont’d.)
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Support Activities
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Inbound logistics
Operations
Outbound logistics
Marketing and Sales
Service
Procurement
Human resource management
Technology development
Firm Infrastructure
© 2001 Business & Information Systems 2/e
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Electronic Commerce and
the Strategic Impact of
Information Systems
Key Terms
© 2001 Business & Information Systems 2/e
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Key Terms
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Business Alliance
Business-to-Business
(B2B) Electronic
Commerce
Business-to-Consumer
(B2C) Electronic
Commerce
Competitive Advantage
Consumer-to-Consumer
(C2C) Electronic
Commerce
© 2001 Business & Information Systems 2/e
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Electronic Auction
Electronic Business (EBusiness)
Electronic Catalog
Electronic Commerce
(E-Commerce)
Electronic Commerce
(E-Commerce) System
Electronic Payment
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Key Terms (cont’d.)
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Electronic Shopping
Cart
E-tailer
Global (International)
Information System
Interorganizational
Information System
Intrabusiness
(Organizational)
Electronic Commerce
© 2001 Business & Information Systems 2/e
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Strategic Information
System (SIS)
Transborder Data Flow
(TDF)
Value Chain
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Summary
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Providing a Strategic Impact
Electronic Commerce Systems
Interorganizational Information Systems
Global Information Systems
Strategic Information Systems
© 2001 Business & Information Systems 2/e
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Final Black Slide