Business

BusinessBusiness is an economic activity concerned with production and distribution of goods and/or services with the aim to earn profit. It includes all those activities which are directly /indirectly concerned with production, purchase and sale of goods and services. So the production, marketing, advertising, warehousing, insurance, banking, etc. are all business activities.

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E-Business• The Practice of performing and co-ordination

critical business process such as designing products, obtaining raw material from suppliers, manufacturing, selling, fulfilling orders and providing services through the extensive use of computer & communication technologies and computerized data.

– E-business does NOT equal the Internet, though the growth of the Internet acted as a very powerful catalyst

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Work SystemIt is a system in which human participants and /or machines performs a business process using information, technology and other resource to produce products and/or service for internal & external customers

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Information System• An information system is a work system

whose business process is devoted to capturing, transmitting, storing, retrieving manipulating and display information thereby supporting other work systems.

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Business Process• It is a related group of Steps / activities in

which people use information and other resources to create value for internal & external customers.

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The Value Chain

• The set of processes used by a firm to create value for its customers. Includes:– Primary processes – directly create the value as

perceived by the customers– Support processes – indirectly create value by

supporting the primary processes

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EDI – ELECTRONIC DATA INTERCHANGEElectronic data interchange (EDI) was one of the earliest uses of information technology for supply chain management. EDI involves the electronic exchange of business transaction documents over the Internet and other networks between supply chain trading partners (organizations and their customers and suppliers). Data representing a variety of business transaction documents (such as purchase orders, invoices, requests for quotations, and shipping notices) are automatically exchanged between computers using standard document message formats. Typically, EDI software is used to convert a company’s own document formats into standardized EDI formats as specified by various industry and international protocols. Thus, EDI is an example of the almost complete automation of an e-commerce supply chain process. EDI over the Internet, using secure virtual private networks , is a growing B2B e-commerceapplication.

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E-commerce

The process of buying, selling and marketing the Products / Services using internet Technologies. Any internet visitor can access information about a product, place an order, make electronic payments to commit the order, and in some cases can receive products or services using computers. E-commerce is the part of e-business that the customer experiences directly

E-commerce Categories

• Business to Business (B2B)– Sales of goods and services among business

• Business to Customer (B2C)– Retailing products and services

• Customer to Customer (C2C)– Individuals use web for sale and service

• Government to Customer (G2C)

E-Commerce ArchitectureMost of the information technologies and Internet technologies are involved in e-commerce systems as clear from the following figure , which gives an example of the technology resources required by many e-commerce systems. The figure illustrates some of the hardware, software, data, and network components used by a compny to provide business-to-business (B2B) online auction e-commerce services.

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Advantages of E-CommerceThe advantages of e-commerce allow a business of virtually any size that is located virtually anywhere on the planet to conduct business with just about anyone, anywhere. The power of e-commerce allows geophysical barriers to disappear, making all consumers and businesses on earth potential customers and suppliers.

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Advantages of E-Commerce

The advantages of e-commerce allow a business of virtually any size that is located virtually anywhere on the planet to conduct business with just about anyone, anywhere. Imagine a small olive oil manufacturer in a remote village in Italy selling its wares to major department stores and specialty food shops in large metropolitan markets of various parts of the world . The power of e-commerce allows geophysical barriers to disappear, making all consumers and businesses on earth potential customers and suppliers.

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Advantages of E-Commerce

Barrier to Entry are Low Global Presence / Global Choice Improved Competitiveness / Quality of

Service Mass Customization / Personalized Products and

Services Substantial Cost Savings / Substantial Price Reductions Novel Business Opportunities / New Products and

Service

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Confidentiality

Integrity

Availability

Authentication & Nonrepudiation

E-Commerce Risks

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ConfidentialityPotential consumers are concerned about providing unknown vendors with personal, sometimes sensitive information. Connecting to the internet via a browser requires running software on the computer that has been developed by some one unknown to the organization.

IntegrityData, both in transit and storage, could be susceptible to unauthorized alteration or deletion

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AvailabilityThe internet holds out the promise of doing business on a 24-hour, seven days-a-week basis. Hence, high availability is important with any systems failure becoming immediately apparent to customers or business pattern.Authentication & NonrepudiationThe parties to an electronic transaction should be in a known and trusted business relationship, which requires that they prove their respective identities before executing the transaction. Then, after the fact, there must be some manner of ensuring that the transacting parties cannot deny that the transaction was entered into and terms on which it was completed.

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Sabotage or Defacement:Unauthorized access:Degradation of performance:

E-Commerce Risk

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Sabotage or Defacement: All the business transactions and deals going on through online methods, you being a businessman can also face the problem of attacks. There are different malicious attacks like – virus, worms and Trojan horse, that your system can be a pray to. You should always have a good anti-virus and keep it updated to impede any such kinds of attacks.

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Unauthorized access: While you may not be aware of and trust your employees the best, you might never know who accesses your data and account illegally. Unauthorized access to your data can also be done by outsiders. Poor configuration of systems and poor encrypted transmission are few factors that can let others access your confidential business data illegally. You must also be careful to choose strong passwords, and avoid hint questions like – ‘maiden name of your mother’ or ‘school you went to’. In most cases you can form your own question. Do that wherever applicable; and if not try choosing your hint questions in a way that will not let anyone guess it or know it. .

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Degradation of performance: Machines make our life easier, and technology makes it luxurious. But even technology is bounded by certain barriers. Busy network, with heavy traffic is a common problem. Hardware and software can also cause you troubles at any time; yes, might also be when you are on a major transaction. Your processor speed and data storage might also pose as a problem for degradation of your system’s performance.

Internet Business Model

• Virtual storefront model• Virtual community• Online marketplace• Portal model• Auction model• Dynamic pricing model

E-Business• The Practice of performing and co-ordination

critical business process such as designing products, obtaining raw material from suppliers, manufacturing, selling, fulfilling orders and providing services through the extensive use of computer & communication technologies and computerized data.

– E-business does NOT equal the Internet, though the growth of the Internet acted as a very powerful catalyst

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E-business VS E-commerce

• e-Business – A company that has an online presence

• e-commerce businesses allow customers to buy, sell, and trade over the Web

E-Business E-Commerce

Internet Technology and Digital Firm

• Information technology infrastructure– easy to use

• Direct communication between trading partner– disintermediation

Advantage of IT and Digital Firm

• Round clock serviced: 24x7• Extended distribution channel• Reduce transaction cost– Cost of searching buyer, seller

E-business

• What do we want– Grow businesses– Improve profitability– Reduce expense– Remain competitive– Attract customer

• But today, there is– Information overload– Too little time– Other priorities– Too many details

Time Effort

Why e-business

• Benefit of bringing a business to the internet– High-quality customer service– Improve personalization– supply-chain management

Business Model Examples

• Type 1 Information only– Reduce expense– Enhance customer

relationships– Support your business(INFORMATIONAL

WEBSITES)

• Type 2: Directly generate revenue (transactional)– Selling products online– Selling advertisement

(TRANSACTIONAL WEBSITES)

Business Model

• Defines an enterprise• Describes how the enterprise deliver products

or services• Shows how the enterprise create worth /

value in the products or services.

Internet Business Model

• Virtual storefront model• Virtual community• Online marketplace• Portal model• Auction model• Dynamic pricing model

Storefront Model

• What many people think of when they hear the word “e-business”

• A basic form of e-commerce in which the buyer and the seller interact directly

• Storefront model enables merchants to sell products on the Web– Transaction processing, security, online payment,

information storage

Storefront Model

• E-commerce allows companies to conduct business 24-by-7, all day everyday, worldwide

• Many leading store front model companies are B2C companies

• An e-commerce storefront should include: – Online catalog of products– Order processing– Secure payment– Timely order fulfillment

Shopping Cart Technology• Shopping Cart– An order-processing technology allowing

customers to accumulate lists of items they wish to buy as they continue to shop

• Shopping cart is supported by – Product catalog– Merchant server– Database technology

• Combine a number of purchasing methods to give customers a wide array of options

Online Shopping Malls• Wide selection of products and services• Offers greater convenience than shopping at

multiple online shops• Consumers can make multiple purchases in one

transaction

Amazon.com

Etoy.com

Eddiebauer.com

Cdnow.com Bestbuy.com

Mall.com

Jcrew.com

Virtual Community

• MSN• Yahoo Messenger• Twitter• Facebook

Marketplace

• Catalog• Sourcing• Automated purchasing• Processing and fulfillment

Auction Model• Online auction sites – Act as forums through which Internet users can

log-on and assume the role of either bidder or seller

– Collect a commission on every successful auction– Sellers post items they wish to sell and wait for

buyers to bid

Auction Model

• Reserve price– The minimum price a seller will accept in a given

auction

• Reverse auctions– Allow the buyer to set a price as sellers compete

to match or even beat it

Portal Model• Portal sites – Give visitors the chance to find almost everything they are looking

for in one place

• Horizontal portals– Portals that aggregate information on a broad range of topics– Yahoo, AltaVista, hotbot, Google, ask jeeves, gomez, sanook

• Vertical portals – Portals that offer more specific information within a single area of

interest– WebMD.com, IMDB.com, FirstGov.com

Dynamic Pricing Models• The Web has changed the way products are priced

and purchased• Comparison pricing model– Web sites using shopping technology to find the lowest

price for a given item– techsbargain, bottomdollar, deja, dealtime

• Demand-sensitive pricing model– Group buying reduces price as volume of sales increase– Mercata, mobshop

Dynamic Pricing Models

• Name-your-price model – Name-your-price for products and services– Priceline

• Bartering Model– Individuals and business trade unneeded items for items

they desire– Allows individual and companies wishing to sell products

to post their listing

Dynamic Pricing Models

• Rebate Model– Sites offer rebates on product at leading online

retailers in return for commission or advertising revenues

– eBates, eCentives

• Free offering model– Free products and services generate high traffic– Freemerchant, Start Sampling, FreeSamples

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Managing the full range of the customer relationship involves two related objectives A single, complete view of every customer of a business at every touch point and across all channels; To provide the customer with a single, complete view of the company and its extended channels .

CRM

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CRM uses information technology to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes in sales, marketing, and customer services that interact with a company’s customers.CRM systems include a family of software modules that provides the tools that enable a business and its employees to deliver fast, convenient, dependable, and consistent service to its customers.

CRM

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CRM

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• Acquire. CRM software help to acquire new customers by doing a superior job of contact management, sales prospecting, selling, direct marketing, and fulfillment. The goal of these CRM functions is to help customers to perceive the value of a superior product offered by an outstanding company.

THREE PHASES - CRM

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• Enhance . Web-enabled CRM account management and customer service and support tools help to keep customers happy by supporting superior service from aresponsive networked team of sales and service specialists and business partners. In addition, CRM sales force automation and direct marketing and fulfillment tools also help companies in cross-selling and up-selling to their customers, thus increasing their profitability to the business. The value the customers perceive is the convenience of one-stop shopping at attractive prices.

THREE PHASES - CRM

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• Retain . CRM analytical software and databases help a company proactively identify and reward its most loyal and profitable customers to retain and expand their business via targeted marketing and relationship marketing programs. The value the customers perceive is of a rewarding personalized business relationship with “their company.”

THREE PHASES - CRM

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BENEFITS - CRM•CRM allows a business to identify and target its best customers—those who are the most profitable to the business so they can be retained as lifelong customers for greater and more profitable services. •It makes possible real-time customization and personalization of products and services based on customer wants, needs, buying habits, and life cycles. •CRM can also keep track of when a customer contacts the company, regardless of the contact point. •In addition, CRM systems can enable a company to provide a consistent customer experience and superior service and support across all the contact points a customer chooses. All of these benefits would provide strategic business value to a company and major customer value to its customers.

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CRM - FAILUREThe common wisdom of why CRM systems fail includes:

• Lack of senior management sponsorship

• Improper change management

• Elongated projects that take on too much, too fast

• Lack of or poor integration between CRM and core

business systems

• Lack of end-user incentives leading to poor user adoption

rates

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A successful SCM strategy is based on accurate order processing, just-in-time inventory management, and timely order fulfillment.

supply chain management helps a company get the right products to the right place at the right time, in the proper quantity and at an acceptable cost. The goal of SCM is to manage this process efficiently by forecasting demand; controlling inventory; enhancing the network of business relationships a company has with customers, suppliers, distributors, and others; and receiving feedback on the status of every link in the supply chain.

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To achieve this goal, many companies today are turning to Internet technologies to Web-enable their supply chain processes, decision making, and information flows.

Supply Chain Management is a cross-functional inter-enterprise system that uses information technology to help support and manage the links between some of a company’s key business processes and those of its suppliers, customers, and business partners. The goal of SCM is to create a fast, efficient, and low-cost network of business relationships, or supply chain , to get a company’s products from concept to market.

Supply chain management software and Internet technologies can help companies reengineer and integrate the functional SCM processes that support the supply chain life cycle.

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ERP – ENTERPRISE RESOURCE PLANNINGERP serves as a cross-functional enterprise backbone that integrates and automates many internal business processes and information systems within the manufacturing, logistics, distribution, accounting, finance, and human resource functions of a company.Enterprise resource planning is a cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company.

ERP gives a company an integrated real-time view of its core business processes, such as production, order processing, and inventory management, tied together by the ERP application software and a common database maintained by a database management system.

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The major application components of enterprise resource planning demonstrate the cross functional approach of ERP systems.

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The business processes and functions supported by the ERP system implemented by the Colgate- Palmolive Company.

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ERP – BENEFITS

• Quality and efficiency . ERP creates a framework for integrating and improving a company’s internal business processes that results in significant improvements in the quality and efficiency of customer service, production, and distribution.

• Decreased costs . Many companies report significant reductions in transaction processing costs and hardware, software, and IT support staff compared to the nonintegrated legacy systems that were replaced by their new ERP systems.

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ERP – BENEFITS

• Decision support . ERP provides vital cross-functional information on business performance to managers quickly which significantly improve their ability to make better decisions in a timely manner across the entire business enterprise.

• Enterprise agility . Implementing ERP systems breaks down many former departmental and functional walls of business processes, information systems, and information resources which results in more flexible organizational structures, managerial responsibilities, and work roles, and therefore a more agile and adaptive organization and workforce that can more easily capitalize on new business opportunities.

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Typical costs of implementing a new ERP system.