Chapter Four
Navigating
the World of
e-Business
Defining e-Business
• e-Business (electronic business)- The
organized effort of individuals to produce
and sell, for a profit, the products and
services that satisfy society’s needs
through the facilities available on the
Internet
• e-Commerce- Buying/selling activities
conducted online- Identifying suppliers,
selecting products or services, making
purchase commitments, completing
financial transactions, and obtaining
service
• Outsourcing- the process of finding
outside vendors and suppliers that
provide professional help, parts, or
materials at a lower cost.
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Combining e-Business Resources
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Satisfying Needs Online
• The Internet has created new customer
needs
• E-business can satisfy those needs as well as
traditional ones
– Global access to information and
entertainment
– Virtually unlimited selections of products
– Opportunities for interaction
– Individually custom-tailored content
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Creating e-Business Profit
• Revenue growth
– Revenue stream
• Source of revenue flowing into a
firm
– Sales of merchandise online
– Intelligent information systems to
suggest purchases to repeat online
customers
– Increased sales in physical stores
because of product information
available online
– Advertising on web pages
– Subscription fees charged for
access to online services and
content
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Creating e-Business Profit (cont’d)
• Expense reduction
– Offering services that
• Reduce transaction costs
• Provide information
• Provide customer assistance
– Reduces the costs of dealing
with customers
– Reduces the need for as many
physical store locations
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Advantages and Disadvantages of
e-Business
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A Framework for Understanding
e-Business
• World Wide Web
– The Internet’s multimedia environment of audio, visual,
and text data
• Digitized data
– Data that have been converted to a type of signal that
the computers and telecommunications equipment that
make up the Internet can understand
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A Brief History of the Internet
and e-Business
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The Three Primary Groups of e-Business
• The activities of most technology firms overlap
into more than one area of e-business
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Opportunities in e-Business
• Global e-Business
– All three primary groups of e-business
firms are competing to capture global
business
– The ability to customize content on the
Internet makes it adaptable for global
business
• Small e-Business
– Challenges
• Security concerns, technology
challenges, products unsuited for
selling online
– Opportunities
• Marketing/advertising, market research,
networking with other entrepreneurs,
managing accounts, low cost, ability to
target a niche, venue for finding an
audience, dealing directly with customers
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Fundamental Models of e-Business
• Business model
– A group of common characteristics and
methods of doing business to generate sales
revenues and reduce expenses
• Business-to-Business (B2B) model
– Firms that use the Internet to conduct
business with other businesses
• Facilitating sales transactions between
businesses
• Elicit bids and offers from suppliers and
potential suppliers; learning about the
customer’s rules and procedures. Cost savings:
reduced labor to enter and track orders and
reduced order entry errors
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Fundamental Models
of e-Business (cont’d)
• Business-to-Consumer
(B2C) model
– Firms that focus on
conducting business with
individual buyers
– Success comes from
understanding how
the customer behaves
online to build good
customer relationships
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Other e-Business Models
Insert table 4.2, 9e with title, p. 127
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Planning for a New Internet Business or Building an
Online Presence for an Existing Business
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Social and Legal Concerns
• Ethics and social responsibility
– Opportunity
• The Internet provides a shelter of
anonymity for both individuals and
firms
– Privacy issues
• Cookie: A small piece of software
sent by a website that tracks an
individual’s Internet use
– Questionable content such as
pornography and hate literature
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Social and Legal Concerns (cont’d)
• Privacy and confidentiality issues
– Monitoring employees
• Log-file records: Files that store a record of the
websites visited
– Using and/or selling customer information
• Data mining: The practice of searching through
data records looking for useful information
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Social and Legal Concerns (cont’d)
• Security concerns and cybercrime
– Computer viruses
• Software codes that are designed to
disrupt normal computer operations
– Fraud and larceny
– Secure electronic transaction (SET)
• An encryption process developed by
MasterCard, Visa, IBM, Microsoft, and Netscape
that prevents merchants from ever actually
seeing any transaction data, including the
customer’s credit card number
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Social and Legal Concerns (cont’d)
• Digital property and copyright concerns
– Copyright
• Legal right to control content ownership
– Ease of copying and distributing content without
permission
– Ease of copying and using company name or
trademark without permission
• Government regulation and taxation
– The Internet is an extension of the traditional business
and workplace
– Online vendors are legally treated like mail-order
companies regarding taxes
– Sale and distribution of restricted products (such as
prescriptions)
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The Future of e-Business: Growth,
Opportunities, and Challenges
• The Internet will continue to expand along with
related technologies
• Opportunity: Only one billion of the world’s 6 billion
people are online
• Americans comprise 20 percent of all users—the
largest group online.
• Of the almost 300 million people making up the
American population, 185 million use the Internet—
140 million actively
• More than 40% of Americans enjoy fast broadband
access at home
• American men spend 6.7 hours online per week; and
American women spend 5.3 hours per week
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Internal and External Forces That
Affect an e-Business
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Environmental Forces Affecting
e-Business
• Globalization
– Positive: Drawing people of the
world together
– Negative: A threat to national
cultures, identities, languages,
ways of life
• Convergence of technologies
– The overlapping capabilities and
the merging of products and
services into one fully integrated
interactive system
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The Future of e-Business: Growth,
Opportunities, and Challenges (cont’d)
• Online communities
– Groups of individuals or firms that want
to exchange
information, products, or services over
the Internet
• Partnering online
– By playing a role with a large entity,
small firms can enjoy competitive
advantage and access to marketable
items, thereby increasing their rate of
market penetration and growth
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