Introduction to MIS
Electronic Business
Introduction to MIS
1
Electronic Business
Small business/
supplier
Orders,
Auctions,
and EDI
Large business
Sales and
CRM
The Internet
Web hosting and
Web-based
services
Service,
orders, and
information
Salesperson
Introduction to MIS
Customer
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Forms of Electronic Commerce
Production Chain and Disintermediation
Dynamic Pricing
Distributed Services
Marketing Phases
Web Advertising: Advertiser
Web Advertising: Publisher
Web Traffic Analyzer
Web Hosting Options
Mobile Commerce
Entrepreneurship: Creating a Business
Industry Research
Business Plans
Forecasting Financial Data
Forming a Corporation
Financing a Startup
E-Commerce Startup
Cases: Travel Industry
Appendix: Business Plans
Introduction to MIS
Outline
3
Forms of Electronic Commerce
Business
Business
Consumer
B2B
EDI
Commodity auctions
B2C
Consumer-oriented
Sales
Support
Consumer C2B
Minimal examples,
possibly reverse
auctions like PriceLine
Introduction to MIS
C2C
Auction sites (eBay)
But many of these are
dominated by small
business sales.
4
parts
supplier
parts
supplier
warehouse
supplier
supplier
tool
manufacturer
Manufacturer
wholesaler
wholesaler
distributor
Production
Chain
warehouse
supplier
workers
retail store
parts
supplier
distributor
retail store
distributor
retail store
retail store
Consumers
Introduction to MIS
5
Disintermediation
Production Chain
Manufacturer
E-commerce
website
Retailer
Consumer
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Dynamic Pricing
P
Price consumer is
willing to pay
S
Perfect competition
price
D
Q
The ultimate goal is to set individual prices for each
consumer to capture the maximum price each is willing
to pay. As opposed to the perfect competition price,
where everyone pays the same price, and some
customers gain because they were willing to pay more.
Introduction to MIS
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Distributed Services
Original
document
Company 1
The Internet
Internet Service
Company 2
Translated
document
Introduction to MIS
e.g., automated
document
translation
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XML: Extensible Markup Language
<?xml version="1.0"?>
<!DOCTYPE OrderList SYSTEM "orderlist.dtd">
<OrderList>
<Order>
<OrderID>1</OrderID>
<OrderDate>3/6/2001</OrderDate>
<ShippingCost>$33.54</ShippingCost>
<Comment>Need immediately.</Comment>
<Items>
<ItemID>30</ItemID>
<Description>Flea Collar-Dog-Medium</Description>
<Quantity>208</Quantity>
<Cost>$4.42</Cost>
<ItemID>27</ItemID>
<Description>Aquarium Filter &amp; Pump</Description>
<Quantity>8</Quantity>
<Cost>$24.65</Cost>
</Items>
</Order>
</OrderList>
Introduction to MIS
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XML In Internet Explorer
Introduction to MIS
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Marketing Phases
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Pre-Purchase
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Static data sites.
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Promotion.
Product specifications.
Pictures.
Schematics.
Pricing.
FAQs.
Interactive sites.
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Configuration.
Compatibility.
Complex pricing.
Purchase
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Transmission security.
User identification.
Product selection.
Payment validation.
Order confirmation.
Post-Purchase
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Service.
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Resolve problems.
Answer questions.
Product evaluation.
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Introduction to MIS
Problem tracking.
Sales leads.
Modifications.
Tracking customers.
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Web Advertising: Advertiser Perspective
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Want viewers to see the ad.
Want viewers to click through to the main site.
Need to match site demographics to target audience.
Monitor response rates.
Cost.
Introduction to MIS
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Web Advertising: Publisher Perspective
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Income
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Cost per thousand viewings ($1 - $50)
Need volume (25,000 or 1,000,000 per month)
Need demographics
Tasks
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Ad rotation software
Tracking and monitoring
Ad sales staff
Billing
Third Party: DoubleClick
Introduction to MIS
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SurfStats pro
Introduction to MIS
Website Log Analyzer
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Web Hosting Options
Web hosting option
Simple website with static pages. Host
on any server—some free.
Simple website with buy me button. Host
on any server—some free.
Web auctions
Amazon.com zShops
Virtual malls
Web commerce servers
Application service provider
Run your own server.
Introduction to MIS
Best use
Prepurchase product information.
Small product line with high margins, easy
setup.
Single products or uncertain value.
Small product line, medium-value.
Fast setup, high margin products.
Many products, Web server separate from
company database.
Custom services.
Tight integration with other data, high
security, custom applications.
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Simple Static HTML Website
Main Web Page
Categories
…
Category 1
Category 2
Category 3
Product
…
Product
…
Product
…
Product 1
Description
Price
Photo
photo
…
Product 2
Description
Price
Photo
Introduction to MIS
photo
…
Product 3
Description
Price
Photo
photo
…
Product n
Description
Price
Photo
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Simple Website with Buy Me Button
Merchant Web site
Card Processor Site
Buy Me
Product
Description
Price
Shopping Cart
Item
Price
…
…
Total
Check Out
Credit Card Data
Name
Address
Phone
Card Number
Submit
Notify merchant
Customer
Notification
(Accept/Reject)
Introduction to MIS
http://www.goemerchant.com/buymebutton.htm
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Visa
MasterCard
Settlements
-$
Validation
CC
Data
+$
Issuing
Bank
Merchant
Bank
Credit Card Processing
Online
Card
Processor
Pay registrar
(Verisign) $35/year for
domain name.
CC Confirm
Data
Pay CA (Verisign)
$250/year for
certificate
Web Server
Digital
Certificate
Pay card processor
(Verisign) and
Merchant bank fixed
fee and value fee:
2%-5%
CA: Verisign
Introduction to MIS
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Web Auctions
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Uncertain price
Can set reserve price
Good for unique items
Efficiency depends on
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Full information
Adequate number of
participants
Introduction to MIS
19
Amazon.com zShops
zShop Products
Cameras, Digital, Brand
Vendor 1
Vendor 2
Vendor Transfer
Description
Price
Scanned image
Contact info
Introduction to MIS
Vendor 3
Transaction Processing
Amazon.com handles credit
Sends order info to merchant
Merchant ships item to consumer
Consumer
Product search
Choose vendor
Pay for item
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Web Commerce Servers
Your Web site
Products
Shopping cart
Sales
Customers
Merchants
Commerce Server Shell
Load database
Images
Database
Descriptions
Prices
Customize site
Web servers
Web/Commerce Hosting Company
Introduction to MIS
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Application Service Provider
Business Application
e.g., Accounting
Store data
Analyze data
Facilitate company
interaction
Businesses that lease the use of the application
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Web Hosting Questions
(1) Will you have your own URL or just a
subdirectory under someone else’s name?
(2) How much disk space will you have?
(3) How much data transfer are you allowed? This
number is critical as your traffic grows and is
usually expressed in gigabytes per month.
(4) How fast is the host’s connection to the Internet?
And have they oversold the capacity?
(5) Will your site be on a shared server with other
applications? If so, how many?
(6) Will the company allow you to write server
program code? What type of server and what
limitations exist?
(7) Will your application have database access?
(8) Do you need a merchant server system?
(9) What backup procedures are used?
Introduction to MIS
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Mobile Commerce
Fujitsu’s tablet computer
Prototype Nokia 3G
Palm VII wireless PDA
As PDAs, cell phones, and tablet computers converge;
people will ultimately be able to connect to any
business every place they go.
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Creating a Business
Idea
Plan
Implementation
Introduction to MIS
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Expand Your Focus
Big competitor
customers
Introduction to MIS
It might be better to
sell your innovation
as a service to the
dominant firm or to be
an intermediary for
consumers.
You might try to
compete
directly.
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Industry Research
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Competition
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Size of the market
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Number of customers
Amount of revenue
Growth rate
Market comparison for substitute products
Consumer focus group interviews
Production costs
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Number
Concentration ratios
Sales by firm
Technology plans
Startup/fixed costs
Operating costs
Legal environment
Introduction to MIS
28
Business Plans
Executive Summary
Strategy, Competition, and
Market Analysis
Forecasts, Cash Flow, and
Investment Budget
Marketing
Organization and Timetable
tasks
time
Introduction to MIS
29
Forecasting Financial Data
Balance Sheet
Income Statement
Profit and Loss
Cash Flow
Customers
and Sales
estimate
Sales revenue
Marketing costs
Infrastructure
scale
Employees
Operating
and selling
costs
Salary
costs
Introduction to MIS
Financial
statement
estimates
Financial
statements and
ratios
30
Breakeven Analysis
Revenue
Cost
Breakeven point
Introduction to MIS
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Forming a Corporation
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State Forms
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Articles of Incorporation
Corporate Bylaws
Registered Agent (self)
Business Registration Form
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State Employer Number
Withholding ID
Sales Tax ID
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Commercial
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Bank Account
DUNS Number
Accounting System
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Purchase software
Hire accountant
Define chart of accounts
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Additional licenses
Federal Forms
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Standards
Additional detail
Define processes
SS-4 Application for
Employer Identification
Number
2553 Election by a Small
Business Corporation
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Financing a Startup
Venture Capital
Become owners
with some
control over
management.
Partners
Funding for
development and
operations.
Successful firm IPO:
Additional funds
Reward to original
investors
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Additional Setup Steps for E-Commerce
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Additional risk and challenge
of obtaining funding.
Website development.
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Programming cost.
Time and management.
Purchase or lease merchant
software if possible.
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Site complexity.
Internet connectivity.
Costs.
Host site yourself.
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Time to get leased line.
Choose site location based
on Internet access.
Introduction to MIS
Obtain digital security
certificate (Verisign).
Find bank that will provide
merchant account services to
accept credit card payments.
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Find a web hosting ISP.
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Setup fee.
Monthly fee.
Transaction fee.
Find a credit card processing
firm that works with your bank
and your software.
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Setup fee.
Monthly fee.
Transaction fee.
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Cases: Package Delivery Industry
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Cases: United Parcel Service
Federal Express
www.ups.com
www.fedex.com
What is the company’s current status?
What is the Internet strategy?
How does the company use information technology?
What are the prospects for the industry?
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Appendix: Business Plan
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Purposes
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Help managers identify strategies and plan for future
Identify goals and concrete objectives
Provide measurement of success and identify problems
Provide detailed information to investors
Outline budget needs
Introduction to MIS
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Business Plan Structure
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Introduction
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Marketing
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Structure of the firm and management
Financing
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Sales, profits, structural changes
Organization
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Competitors
Market analysis
Advertising
Sales Management
Product Management: prices and costs
Historic Analysis
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Outline and summary of the company and the plan
Detailed cash needs
Projections
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Estimates of sales, costs, growth with detailed data and forecasts
Introduction to MIS
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Marketing Plans
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Products
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Costs
Prices
Profits
Competition
Strategy
Sales Goals and Forecasts
Promotional methods
Sales Management
Distribution and Service
Introduction to MIS
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Rolling Thunder Bicycles Example
Year
Increase
1
2
3
4
5
Year
1
2
3
4
5
10%
10%
10%
10%
Hybrid
Mountain
250
275
302
332
365
250
275
302
332
365
$1,000
$1,500
Hybrid
Mountain
$250,000
$375,000
$275,000
$412,500
$302,000
$453,000
$332,000
$498,000
$365,000
$547,500
Rolling Thunder Estimated Sales
Number of Bicycles
Race
Road
Tour
350
200
385
220
423
242
465
266
511
292
Average Sale Price of a Bicycle
$2,500
$2,000
Track
350
385
423
465
511
50
55
60
66
72
$1,000
$2,000
Annual Total
1450
1595
1752
1926
2116
Estimated Sales Value
Race
Road
Tour
Track
Annual Sales
$875,000
$400,000
$350,000
$100,000
$2,350,000
$962,500
$440,000
$385,000
$110,000
$2,585,000
$1,057,500
$484,000
$423,000
$120,000
$2,839,500
$1,162,500
$532,000
$465,000
$132,000
$3,121,500
$1,277,500
$584,000
$511,000
$144,000
$3,429,000
Sales estimated while the firm was being formed.
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Rolling Thunder Bicycles Estimated Sales
Estimated Sales
$4,000,000
$3,500,000
$3,000,000
Track
$2,500,000
Tour
Road
$2,000,000
Race
$1,500,000
Mountain
$1,000,000
Hybrid
$500,000
$0
1
2
3
4
5
Year
Introduction to MIS
41
Projected Income Statement
Interest rate on borrow
Interest rate on short term investments
Depreciation, 5 years, straight line
Tools purchases
$250,000
Introduction to MIS
8.00%
3.00%
0.2
$50,000
$50,000
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Projected
Balance
Sheet
Assumptions
Receivables as
percent of sales:
10%
Payables as
percent of material
costs: 10%
Inventory as
percent of material
costs: 12%
Introduction to MIS
43
Projected
Cash Flow
Introduction to MIS
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