MSc in Business Administration and E-business
Strategic and Tactical Tools for E-Business
Session 1
Presentation of the course.
Introduction to e-business.
Ben Eaton
Welcome to the course “Strategic and Tactical Tools for E-Business”
My name is Ben Eaton, and I am an associate professor at the Department of
Digitalization at CBS.
I joined the school some 8 years ago. I teach in a range of areas Master’s and Executive
level
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Strategic and Tactical Tools for E-Business
My teaching
• Cand Merc IT:
•
•
•
Innovation in a Digital World
Designing Digital Business
Internet of Things
• Digital Business:
•
Strategic & Tactical Tools for eBusiness
• Executive MBA:
•
Element on Digital Innovation
Courses I teach include
Innovation in a Digital World, Designing Digital Business & Internet of Things in
the Cand Merc IT masters programme
As well as this course - Strategic & Tactical Tools for eBusiness in the Digital Business
masters programme
As well as Digital Innovation in CBS’s Executive MBA programme
I also teach courses on Digital Platforms and Infrastructures at the masters level at a
Norwegian University in Oslo
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Strategic and Tactical Tools for E-Business
My research
•
•
•
•
Digital Innovation
Digital Innovation Platforms
Digital Infrastructures
eID & digital identification
Find out more at:
www.cbs.dk/en/staff/bedigi
My principle research interest lies in Digital Innovation.
Specifically, I am interested in the innovation of digital services and the digital innovation
platforms and digital infrastructures that support them.
I also have a secondary research interest in systems of citizen electronic identification
such as MitID in Denmark and BankID in Norway.
You can read more about my research and my teaching on my CBS webpage, indicated
here.
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Strategic and Tactical Tools for E-Business
Teachers
Reza Toorajipour
Department of Digitalization (DIGI)
www.cbs.dk/en/staff/redigi
I will be co-teaching this course together with my colleague Reza Toorajipour.
He will introduce himself in the second half of the course.
In the meanwhile, you can read more about Reza’s research and teaching on the link
indicated here.
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MSc in Business Administration and E-business
Strategic and Tactical Tools for E-Business
Presentation of the course
Ben Eaton
I look forward to a great semester together with you.
I hope you will enjoy this journey exploring together the challenges and the potentials of
e-business!
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MSc in Business Administration and E-business
Strategic and Tactical Tools for E-Business
Course approach
In the presentation of the course today, we will pursue a number of goals.
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Strategic and Tactical Tools for E-Business
Today
•
•
•
•
Course approach
Course plan
Some exam information
Introduction to e-business
First, we will introduce the course philosophy: what is the approach this course takes on
the phenomenon of e-business?
Then, we will start introducing some practicalities. This includes presenting the details of
the course plan, and providing some initial information about the exam.
Last, we will start diving into the actual content of the course, when we introduce the
concept of e-business, and provide some examples.
Strategic and Tactical Tools for E-Business
Learning Objectives
1.
2.
3.
4.
5.
Master relevant terminology regarding ebusiness;
Use a group of relevant theories/frameworks;
Reflect on the innovative potential of new IT
for specific organizations;
Assess the implications of new IT for
industry structures;
Identify potential disruptive e-business
technologies and associate business models
with them
The starting and ending point of our course journey are the learning objectives.
Each activity we will carry out in the coming weeks is geared towards making you
achieve these learning objectives.
And in the final examination, you will be assessed against these learning objectives.
The first one is related to mastering relevant terminology regarding e-business.
As e-business is a popular phenomenon in media and in the public discourse, we build a
precise vocabulary to be able to discuss all the management challenges related to this
phenomenon.
The second learning objective concerns using relevant theories and frameworks.
These will be introduced not for their own sake, but as an important tool to make sense
of the rapidly changing field of e-business,
and to reflect on the principles behind management decisions in connection to ebusiness.
The third land fourth earning objectives refer to building your ability to critically assess
the impact of digital technologies
both at the organizational level, and at the industry level of e-business.
Last, we build skills to identify which technologies have the potential to be disruptive,
9
and not just incrementally new.
And to reflect on which business models can be associated with such disruptive
technologies.
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Strategic and Tactical Tools for E-Business
Course overview
E-commerce fundamentals
(network economics, infrastructure, environment)
Strategy and business models
(e-retailing, sharing economy, social media)
Operations
(e-SCM, e-marketing, security, payments)
The course consists of three main areas.
The fundamentals, including network economics, infrastructure, and the external
environment.
The focus on strategy and business models, when we will talk about online retailing, the
phenomenon of the sharing economy, and social media in relation to e-business.
And the focus on operations, where we zoom in on electronic supply chain
management, e-marketing, managing security in e-business, and digital payments,
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This is not a technical
course!
The overall approach taken by this course is that we are not interested in technology per
se.
In fact, this is not a technical course.
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Strategic and Tactical Tools for E-Business
Organizing Themes
Technology:
– Development and mastery of digital computing
and communications technology
Business:
– New technologies present businesses with new
ways of organizing production and transacting
business
Society:
– Intellectual property, individual privacy, public
welfare policy
Instead, we combine a focus on three dimensions.
The one of technology: we cannot understand the e-business phenomenon without
grasping what existing technology can and cannot do.
The one of business: we focus on the business transformations that are necessary to
extract value from new digital technologies.
And the one of society:
E-businesses do not operate in a vacuum
but, instead, their possibility to thrive depends on how they interact with the external
environment, including social norms, culture, and legal requirements.
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The underlying philosophy and the way we look at technology and business in our course
can be illustrated by a point made by management expert Peter Drucker.
This picture shows a steam engine.
According to many the steam engine was the technological device that kickstarted one of
the most important events in human history: the industrial revolution.
1770s
The simple idea of attaching a steam engine to a loom, lead to an instantaneous
multiplication of production output never seen before.
A steam-powered mechanical loom could now outproduce any traditional workshop by
multiple order of magnitude.
The steam engine allowed faster production, in larger quantities, and cheaper to boot.
According to Peter Drucker, however, that is not the essence of a real revolution.
After all, this application of the steam engine technology was only geared at doing and
old thing cheaper and faster.
The real revolution cam about with another invention: rail transportation.
The steam engine and the
industrial revolution
1770s
1830s
Rail transportation not just enabled humanity to carry out an old task, such as weaving
fabric, cheaper and faster.
It radically transformed the very understanding of space and time.
It enabled the creation of global markets, of modern administrations, and of a new pace
of existence.
By applying the steam engine technology to a completely new activity, the real industrial
revolution took off.
In this course, we look at digital technology in its potential to radically transform the way
business value is created.
Think about e-book readers.
You can look at them as just a cheaper and faster way of getting access to books: a way
of doing an old thing cheaper and faster.
Or you can look at this technology by focusing on the new phenomena it enabled. New
business models
This involves the possibility to create time-bounde subscriptions to unlimited content; or
to sample book chapters for free.
As well as disruption tosupply chains, such as the possibility to disintermediate the links
between authors and readers, and the bypassing of publishing houses.
16
The same can be said for what streaming technology has meant for the music industry:
not just a cheaper and faster way of accessing music, but a disruption of supply chains
and business models.
17
Now think about artificial Intelligence, blockchain, and digital payments:
in what way can any of these be considered the railroad technology of this century?
… Our course will tackle these fundamental questions as its philosophy.
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MSc in Business Administration and E-business
Strategic and Tactical Tools for E-Business
Course plan
We now move on to presenting the details of the course plan
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Strategic and Tactical Tools for E-Business
Course plan
1
2
3
4
5
6
Presentation of the course;
Introduction to e-business
L
E
L
E
L
E
L
E
L
E
E-business infrastructure
E-business strategy and
business models
Network economics and ebusiness lock-in
L= lecture videos; E= on campus exercises
7
8
9
10
E-retailing and Services
E
L
E
L
E
L
E
L
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Innovative e-commerce
models: the sharing economy
L
12
E
E-marketing and eadvertising
Social commerce and social
marketing
E-business security and
payment systems
Mobile and intelligent ecommerce
Business-to-business ecommerce and e-Supply
Chain Management (SCM)
Wrap-up, Q&A
As you can see from this slide, each session will tackle a different topic area, and will be
divided between lecture videos, and on campus exercises sessions.
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Strategic and Tactical Tools for E-Business
Course plan – calendar.cbs.dk
The video lectures will be pre-recorded and uploaded on Canvas on the time and dates
indicated on calendar.cbs.dk.
The exercises will be held physically on campus.
You will find all the details you need on Canvas for both the online video lectures as well
as the on campus exercise sessions,
Along with all the information you need about the course.
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Course readings
Mandatory readings
Students are strongly
recommended to prepare
before each session
Come prepared to class or
expect to quickly fall behind
Textbook:
Laudon, K. and Traver, C.
(2021). E-commerce 20212022. Global Edition, 17th
Edition. Pearson (ISBN-10:
1292409312)
Each session will have its mandatory readings.
The core textbook will be E-commerce 2020-2021 by Laudon and Traver, Global Edition.
It is very important that you do all the mandatory readings for each session before
watching the lecture videos and participating in the exercises.
This will allow you to better understand the contents, and to engage more fruitfully in
the interactive sessions
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Course readings
Mandatory readings
Students are strongly
recommended to prepare
before each session
Come prepared to class or
expect to quickly fall behind
Textbook:
Laudon, K. and Traver, C.
(2023). E-commerce 20232024. Global Edition, 18th
Edition. Pearson (ISBN-10:
1292449721)
Each session will have its mandatory readings.
The core textbook will be E-commerce 2023-2024 by Laudon and Traver, Global Edition.
It is very important that you do all the mandatory readings for each session before
watching the lecture videos and participating in the exercises.
This will allow you to better understand the contents, and to engage more fruitfully in
the interactive sessions
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Strategic and Tactical Tools for E-Business
Course readings – Articles & book chapters
Downloadable links available on Canvas
Session 1
• Taneja, H. and Maney, K. (2018) The End of Scale, MIT Sloan Management Review, 59
(3).
Session 2
• O’Reilly, T. (2007). What is Web 2.0: Design patterns and business models for the next
generation of software. Communication & Strategies, (65), 17-28.
• Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. (2011). Cloud
computing—The business perspective. Decision Support Systems, 51(1), 176-189.
Session 3
• Weil, P. and Woerner, SL. (2013) Optimizing Your Digital Business Model, MIT Sloan
Management Review, 54 (3): 71-78.
• Weil, P. and Woerner, SL. (2015) Thriving in an Increasingly Digital Ecosystem, MIT
Sloan Management Review, 56 (4): 27-34
Besides the textbook readings, there will be article readings.
Articles provide a more in-depth investigation into some specific aspects of the
curriculum.
For instance, the classic article by Tim O’Reilly discusses the concept of Web 2.0,
while the Sloan Management Review pieces by Weil and Woerner will provide special
focus on digital business models and ecosystems.
The articles also allow you to cut the middlemen:
why read about an author’s analysis of e-business phenomena through the summary of
a textbook,
when you can read, and possibly challenge, the original article by that very author?
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Strategic and Tactical Tools for E-Business
Course readings – Articles & book chapters
Downloadable links available on Canvas
Session 4
• Shapiro, C. and Varian, H.R. (1999). Information rules: a strategic guide to the
network economy, Chapter 5 – Recognizing lock-in.
• Shapiro, C. and Varian, H.R. (1999). Information rules: a strategic guide to the
network economy, Chapter 7 – Networks and Positive Feedback.
• Shapiro, C., & Varian, H. R. (1999). The art of standards wars. California
Management Review, 41(2), 8-32.
Session 5
• Bell, D. R., Gallino, S., & Moreno, A. (2018). The Store Is Dead-Long Live the
Store. MIT Sloan Management Review, 59(3), 59-66.
• Hagiu, A., & Wright, J. (2013). Do you really want to be an eBay?. Harvard
Business Review, 91(3), 102-108.
Session 6
• Constantiou, I., Marton, A., & Tuunainen, V. K. (2017). Four Models of Sharing
Economy Platforms. MIS Quarterly Executive, 16(4). 231-251.
As you can see, there are both readings chosen for their novelty, and timeless classics.
For example, the chapters by Shapiro and Varian provide a timeless, solid understanding
of how the digital economy radically departs from traditional economics
because it draws on the principles of network economics and positive feedback.
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Strategic and Tactical Tools for E-Business
Course readings – Articles & book chapters
Downloadable links available on Canvas
Session 7
• Olson, E.M., Olson, K.M., Czaplewski, A.J. and Key, T.M. (2021). Business
strategy and the management of digital marketing. Business Horizons, 64(2),
pp.285-293.
• Whitler, K.A. (2019). What Western Marketers Can Learn from. Harvard
Business Review, p.81.
Session 8
• Lee, I. (2018). Social media analytics for enterprises: Typology, methods, and
processes. Business Horizons, 61(2), 199-210.
Session 9
• McWaters et al. 2017 "The future of financial infrastructure", In World Economic
Forum White Paper - Read key findings pages 17-31 (presentation format)
• Zachariadis, M., Hileman, G. and Scott, S.V., 2019. Governance and control in
distributed ledgers: Understanding the challenges facing blockchain technology
in financial services. Information and Organization, 29(2), pp.105-117.
On Canvas you can find the readings in the modules for each session, with active links to
download them.
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Strategic and Tactical Tools for E-Business
Course readings – Articles & book chapters
Session 10
• Faulds, D. J., Mangold, W. G., Raju, P. S., & Valsalan, S. (2018). The Mobile
Shopping Revolution: Redefining the Consumer Decision Process - Harvard
Business Publishing. Business Horizons, 61, 323–338.
• Brynjolfsson, E., & Mcafee, A. (2017). The Business of Artificial Intelligence:
What It Can -- and Cannot -- Do for Your Organization. Harvard Business
Review Digital Articles, 3–11
Session 11
• Iansiti, M., & Lakhani, K. R. (2017). The Truth About Blockchain. Harvard
Business Review, 95(1), 118–127.
• Cottrill, K. (2018). The Benefits of Blockchain: Fact or Wishful Thinking? Supply
Chain Management Review, 22(1), 20–25.
Remember that to be able to download the articles for free you need to be either
physically on campus,
or you will have to first log in into the campus VPN.
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“What I hear, I forget.
What I see, I remember.
What I do, I understand.”
– Confucius (孔子)
The course, however, will not consist of passive consumption of reading material.
We will follow the principles of active learning, well summarized by the Chinese
philosopher Confucius’ maxim:
what I hear, I forget.
What I see, I remember,
what I do, I understand.
This means that the real learning will happen not just by listening to the teacher speak,
or watching some videos, but by doing actual work.
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Strategic and Tactical Tools for E-Business
Active learning
•
•
•
•
•
Cases
Role-playing
Student presentations
Live quizzes
Etc.
This will happen through a number of activities,
including case discussions, role-playing, student presentations, live and asynchronous
quizzes, and so on.
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Strategic and Tactical Tools for E-Business
Exercises = active learning sessions
• Reinforce an understanding of the
areas covered in the lecture videos
• Provide students with skills of critical
reflection and problem-solving
• Prepare for the examination
Active learning is in fact the purpose of the exercises that are scheduled in the course.
The exercises have three goals:
first, to reinforce an understanding of the areas covered in the lecture videos;
second, to enable critical reflection and problem solving;
and third, to prepare for the examination.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
1
Presentation of the course; Introduction to e-business.
2
E-business infrastructure
“The Powers that Be”:
Google, Apple,
Facebook, Amazon,
and Microsoft
3
E-business strategy and business
models
Spotify
4
Network economics and e-business Facebook fake news
lock-in
5
E-retailing and services
Amazon Go
6
Innovative e-commerce models:
the sharing economy
Airparking
Key to achieving these goals are the case discussions that will occur in the on-campus
exercise sessions.
These case discussion that are planned every week, starting from next week.
As you can see, each session will have a case that is related to its topic.
The mix of cases you will work with include American giants like Google, Apple, or
Amazon, or Asian startups such as Airparking.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
7
E-marketing and e-advertising
Hubble Contact Lenses
8
Social commerce and social
marketing
AccorHotels
9
E-business security and
payment systems
Ripple
10 Mobile and intelligent ecommerce
Voice War: Hey Google
vs Alexa vs Siri
11
Can Blockchain Help
Château Lafite?
B2B commerce and e-Supply
Chain Management (e-SCM)
12 Course wrap-up, Q&A
They will also include companies from diverse industries, such as shipping, finance, or
hospitality.
The cases can be download for a fee from the Harvard Business Publishing following the
link available on Canvas.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
• All students are required to read the
cases every week.
• Each case is accompanied by four
case questions, available on Canvas
• Every week two groups present the
answers and discuss the case
• Groups of max. 4 students
Reading the cases is required for all students, in order to be able to participate in the live
discussions.
Each case is accompanied by four case questions, which you can now find on Canvas.
Groups of max 4 students each will have to present and discuss their answers to the
case questions to the rest of the class.
Every week two groups will have to work on the case planned for that week’s session.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
FIRST PART
1. Each group has to prepare a
presentation of max. 15 minutes
that answers the four case
questions.
2. During the live exercise session, the
teacher will pick TWO questions
(out of the four) for each of the two
groups.
The case discussion will work as following.
At home, each group assigned to a specific case has to prepare a presentation of
max. 15 minutes
that answers the four case questions available on Canvas.
During the live exercise session, the teacher will pick TWO questions (out of the
four) for each of the two groups.
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Strategic and Tactical Tools for E-Business
First case questions
Amazon, Apple, Facebook, Google, and Microsoft
1.
2.
3.
4.
Define the contested boundaries among Amazon,
Apple, Facebook, Google, and Microsoft.
When and where would the Five from the United
States. and B.A.T. (Baidu, Alibaba, Tencent) from
China begin to compete?
Identify an e-business company that you know
about. Which, if any, of the Big Five firms does it
currently rely on? Might that reliance change?
Given the recent challenges in consumer data
protection and cybersecurity, which of the five
companies would continue to thrive, and which
would be displaced by fierce competition, advancing
technology, and increasing regulation?
For instance, here are the four questions for next week’s case on the Big Five: Amazon,
Apple, Facebook, Google, and Microsoft.
The case questions can all be answered using the case document only.
If you wish, you are welcome to do additional research and find more documentation to
answer the questions, but this is not needed.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
FIRST PART
3. The first group will present the
answer to the two questions in max
10 minutes. After the presentation,
the second will act as discussants,
and provide feedback on the
answers presented by the first
group.
4. The two groups switch roles
(=second group presenter, first
group discussants).
The first group picked by the teacher during the live exercise session on Zoom will then
take the floor
and present their answer to the two questions in maximum 10 minutes.
After the presentation, the second group will act as discussants,
and provide feedback on the answers presented by the first group.
The rest of the class will then have the opportunity to comment and engage in
discussion with the group.
Afterwards, the two groups will switch roles,
with the second group resenting their answer to the remaining two questions,
and the first group acting as discussants.
This whole process will finish again with the rest of the class being able to
intervene in the discussion with comments, suggestions or questions.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
SECOND PART
1. The teacher will reveal a new, 5th
case question (or a debate point) in
class.
2. All the other groups in class will
then have 15 minutes to prepare a
5-minute presentation answering
this new question on the spot.
The second part of the case discussion exercise will involve all the class.
The teacher will reveal a new, 5th case question (or a debate point) in class.
This question is unknown to everybody before the class.
All the groups in the class will then have 15 minutes to prepare a 5-minute
presentation during the live session to answer this 5th new question.
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Strategic and Tactical Tools for E-Business
Case discussion exercises
SECOND PART
3. One of the groups will be randomly
picked to present their answer and
argue for it.
4. After this 5-minute presentation, the
rest of the class will then give
feedback on the group’s argument.
Of all groups, the teacher will pick one randomly and ask them to present their answer.
The session will end with the rest of the class giving feedback and asking questions to
the group.
39
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MSc in Business Administration and E-business
Strategic and Tactical Tools for E-Business
Course examination
We now move on to presenting the details of the course examination
41
Mandatory assignment
• Group case report
– Answer the four case questions
– Max. 8 pages
– Write in groups of max. 4 students
• Submit via Digital Exam
• Deadline: 2 May 2023
• Notification (approved/not approved): 5
May
the case discussion exercise forms the groundwork for the written mandatory assignment
of this course
each group will have to write a report of maximum eight pages
describing their answer to the four case questions that they have work with
please note that the fifth question revealed during the live session will not have to be
included in the report
the written report will be evaluated as approved or not approved
it will not be graded
you can see how doing a good job in the case discussion during the course will help you
write a good manner to your report
having the report approved is a requirement to get access to the final examination
Final exam information
• 24 May 2023 09:00-13:00
• Written sit-in exam
• Answer 12 questions in writing on
the syllabus readings
• At CBS’ computers
• 4 hours
• Closed book
• No page limitations
the final examination will be a written sit in closed book exam
the exam will consist of answering 12 open questions that can cover any part of the
course mandatory readings
the cases will not be included in the questions
each question will weigh equally towards the final grade
Mandatory
assignment
Strategic and Tactical Tools for E-Business
Fall 2023– Exam process
(27 Nov)
Results
(1 Dec)
Approved
Not
approved
(or illness)
Individual
4-hour written
sit-in exam
(3 Jan)
Results
Pass (2-12)
(31 Jan)
Fail
Pass (2-12)
Re-exam
Assignment
re-submission
(11 Dec)
Individual 4-hour
written sit-in
(19 Feb)
Results
(18 Mar)
Fail
Results
Approved
(15 Dec)
Not
approved
Try next
semester
in this flowchart you can see all the deadlines related to the assignment exam
you can also notice that you will have a second chance in case your mandatory
assignment is not approved
or you have a documented reason for not being able to submit it
You can also see the most up to date version of this flowchart on the course canvas
pages.
44
Examination
• Always rely on my.cbs.dk for
exam dates, location,
submission mode, etc.
We will provide more information on the exam format, requirements, processes and other
details as we move on with the course.
However, you can always rely on the information posted on my.cbs.dk for information
related to exams.
46
Strategic and Tactical Tools for EBusiness
Introduction to e-business
In this video we will introduce and contextualize the concept of e-business
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Strategic and Tactical Tools for E-Business
Session 1 – Learning Objectives
1. Critically reflect on the
definitions of e-business and ecommerce
2. Understand the concept of
economies of unscale
The learning objectives of this video are to critically reflect on the definitions of ebusiness and e-commerce,
and to understand the concept of economies of unscale.
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Strategic and Tactical Tools for E-Business
What do we call this ‘e-thing’?
“e-commerce”
“eGovernment”
“Internet marketing”
“Digital Marketing”
“eBusiness”
“e-procurement”
“e-tailing”
Let’s start by looking at some of the terms out there.
Media coverage and public discourse is often full of mentions of terms such as digital
marketing, internet marketing, e-tailing, e-government, and so on.
It is very way to get confused in such a scenario, and to consider all these terms either
unclear, overlapping, or simply meaningless.
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Strategic and Tactical Tools for E-Business
What do we call this ‘e-thing’?
E-commerce = ‘buying and
selling things using the
Internet’?
If we take a step back in time, historically, a term such as e-commerce has been
synonym of simply buying and selling things on the internet.
This term is a product of the dot.com boom era of the late 90s,
an era symbolized by the myth of the possibility for everyone,
including a kid in a garage with a PC and an internet connection,
to magically become millionaires by selling stuff on a global market.
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Strategic and Tactical Tools for E-Business
What is e-business
• Use of Internet and Web to transact
business
• More formally:
– Digitally enabled commercial
transactions between and among
organizations and individuals
We now have matured a more complex view on what is e-commerce, and we also use
the term e-business.
We know that a fundamental part e-commerce, or e-business,
is not only transactions between organizations and between individuals,
but also the digitalization of processes within an organization.
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Strategic and Tactical Tools for E-Business
E-commerce and e-business
Note that some authors prefer the term e-commerce, some prefer the term e-business.
Some would consider them as different but overlapping, as in (a).
Some would consider them completely synonyms as in (b).
Some others would consider e-commerce a subset of e-business,
for instance, in the way that e-commerce includes transactions between companies,
but not the use of digital tools within the organizational boundaries.
For the purpose of our learning experience,
we take note of these different perspectives, but we don’t really focus on them.
You can use the two terms interchangeably,
provided that you are aware that e-business (or e-commerce) are a complex
phenomenon
that goes well beyond “buying and selling things on the internet”.
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Strategic and Tactical Tools for E-Business
Why study e-commerce?
• E-commerce brings fundamental
changes to commerce
• Traditional commerce:
–
–
–
–
Consumer as passive targets
Sales-force driven
Fixed prices
Information asymmetry
Whatever the term we use, that are key reasons for studying e-commerce as a unique
phenomenon.
E-commerce is not just traditional commerce, but cheaper and faster.
It brings fundamental changes to commerce as we know it.
Which was characterized by a passive role of consumers,
strategies based on sales-force pushing products to market,
fixed prices, and large information asymmetries between consumers and firms.
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Strategic and Tactical Tools for E-Business
Eight Unique Features of
E-commerce
1.
2.
3.
4.
5.
6.
7.
8.
Ubiquity
Global reach
Universal standards
Information richness
Interactivity
Information density
Personalization/customization
Social technology
There are at least eight unique features of e-commerce,
and you can read about them in detail in the textbook chapter assigned for this session.
These include Ubiquity, Global reach, Universal standards, Information richness,
Interactivity, Information density, Personalization/customization, and Social technology
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Here I want to summarize them with one key concept,
Which is illustrated in a scene of the movie “Her”, that came out in 2013 starring
Joaquin Phoenix and Scarlett Johansson.
The movie is set in a not so distant future and is about a man, played by Joaquin
Phoenix,
falling in love with the operating system of his mobile device, whose voice is played by
Scarlett Johansson.
The voice-operated operating system is so advanced, so personalized that knows its
users’ most intimate feelings, secrets, and emotions.
The main character establishes an emotional bond with this system
that gives him happiness and a feeling of being loved that he has never experienced
before.
Until one day, during one of the very close conversations between the two of them,
the voice of Scarlett Johansson takes a strangely longer time than usual to respond to
one of the man’s questions.
The man feels the operating system is becoming a bit distant,
as if she is not listening with attention, even though the voice of Scarlett Johansson
denies that there is any issue.
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Pressed by the man, who feels she is growing cold and fears she is hiding something,
she admits that yes, she is also corresponding with other users at the same time.
When asked how many, by the heartbroken man, she responds a figure in the millions.
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Strategic and Tactical Tools for E-Business
The trade-off between richness and
reach
Richness
• bandwidth
• customisation
• interactivity
The Internet
SalesPostal TV advertising
person Tele
mailing
marketing
Reach
• Number of
people
interacting
This movie scene is an example of the key capability of digital technology when applied
in commerce:
breaking the age-old trade-off between richness and reach.
In a physical store, for example, the mom-and-pop grocery store around the corner,
you can have a very rich relationship as a customer, because the owners can know you
by your name
and remember your preferences and entertain you with personal conversation.
The downside of this, however, is that such a store can only have a limited market size.
On the opposite side of the trade-off spectrum there is,
for instance, a TV advertisement during the final game of the UEFA Champions League.
It has millions in its audience,
but the relationship it can establish with each individual audience member is not very
rich:
the message is the same regardless of age, gender, or customer profile of the receiver.
E-commerce breaks this trade-off: you can have richness of relationship and reach at the
same time.
For instance, my account with Amazon means not only that it greets me by my first
name,
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but that it recommends me books or music that I might like,
knowing me almost better than I know myself.
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Strategic and Tactical Tools for E-Business
Economies of «unscale»
From a company strategy point of view, this leads to the new possibilities of economies
of unscale.
In traditional manufacturing, a way to win market dominance was by creating
economies of scale:
producing large quantities of similar products in order to reduce the proportion of fixed
costs,
meaning costs that are not dependent on the amount of units produced.
These large quantities had to be pushed to mass markets, where there is a large
demand.
The capabilities of digital tools in e-commerce, instead, allow entrepreneurs to profitably
reach niche markets too,
because they enable them to provide personalized products and services at a lower cost.
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Strategic and Tactical Tools for E-Business
B2B and B2C interactions
E-commerce can be also distinguished depending on the type of stakeholders it involves.
We talk about B2C e-commerce when referring to companies that are mostly dealing
with individual customers.
And of B2B e-commerce when referring to businesses that mostly deal with other
businesses by using digital tools.
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Strategic and Tactical Tools for E-Business
Buy-side and sell-side e-commerce
In the supply chain, we distinguish between buy-side e-commerce and sell-side ecommerce.
Buy-side e-commerce refer to digitally enabled interactions between a company and its
upstream supply chain:
first, second, third tiers of suppliers and of suppliers’ suppliers, for instance.
Sell-side e-commerce, on the other hand, refers to the downstream of a supply chain.
The relationship between a company, its end customers, and all the intermediaries
between them such as distributors and retailers.
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Strategic and Tactical Tools for E-Business
These principles of e-commerce are the result of a layering of technologies
Starting from the birth of the commercial internet in the 90s, until the present day.
Such technologies evolve at a breath-taking pace, and they following cycle where they
are first hyped, and then dismissed as quickly.
Some of them eventually reach a stage where they are looked at in a more balanced
way,
that considers its advantages and its disdvantages.
How will each emerging technology really impact the potentials of e-commerce?
Which technologies will end up only being hyped, and which ones will have a lasting
impact?
In the rest of the course we will try to obtain the tools to be able to answer such
questions.
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Strategic and Tactical Tools for E-Business
Today
•
•
•
•
Course approach
Course plan
Some exam information
Introduction to e-business
Wrapping up …. today we have first discussed the philosophy of this course and its
approach to e-business.
Then we have provided details on practicalities such as the course plan and the
examination process.
And finally, we have introduced and contextualized the concept of e-business, providing
the ground for the work to be done in the coming weeks.