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Jan 01, 2016
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Chapter 12
Electronic Commerce and the Strategic Impact of
Information Systems
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Our Agenda Providing a Strategic Impact Electronic Commerce Systems Interorganizational Information
Systems Global Information Systems Strategic Information Systems
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Learning Objectives 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.) 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.) 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.) 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.) 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
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Providing a Strategic Impact 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 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.)
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.)
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
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Electronic Commerce Systems 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
Electronic commerce can have a strategic impact on business by: 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 Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Intraorganizational
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Business-to-Consumer 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 B2C companies operate in several
ways: E-tailers
Called direct marketers Using others to sell their products
Called indirect marketers Sell their products electronically
Called full cybermarketers
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Business-to-Consumer (cont’d.)
Selling through traditional means as well as electronically
Called partial cybermarketers Filling orders from their own stock
Called electronic distributor Send orders they receive to
manufacturers or wholesalers that fill the orders
Called electronic brokers
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Business-to-Business Three main types of B2B e-
commerce: 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 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 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 Product presentation
Electronic catalog Order entry
Electronic shopping cart Payment
Electronic payment Electronic Funds Transfer (EFT)
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Characteristics of Electronic Commerce Systems (cont’d.) Product distribution Customer service Product support Data acquisition
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Interorganizational Information Systems
Electronic Commerce and the Strategic Impact of
Information Systems
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Interorganizational Information Systems
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 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 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 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 Businesses are involved in
InterOrganzational Systems (IOS) as either: 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.)
Business can participate in an IOS in several ways: 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 An Electronic Data Interchange (EDI)
system provides for electronic communication of data between businesses.
Types of data sent include Purchase order data Shipping data Invoice data Product description data Price list data Insurance data
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Traditional versusInternet EDI 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 Benefits of EDI
Speed Data entry errors are reduced
Problems with EDI Organizational participation Technical problems must be solved Can be expensive
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Global Information Systems Electronic Commerce and the
Strategic Impact of Information Systems
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Global Information Systems 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 Businesses engage in international
activities for several reasons. International sales International production International product development
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International Business (cont’d.) International businesses generally
follow one of several basic strategies. 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.)
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 Global information systems differ
from domestic information systems in a number of ways. 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.)
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.)
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 Global e-commerce systems
should: 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.
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Strategic Information Systems
Electronic Commerce and the Strategic Impact of
Information Systems
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Strategic Information Systems A Strategic Information System
(SIS) affects the way a business competes with other businesses, thus giving it an advantage over its competitors.
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Identifying Strategic Information Systems Opportunities
Look at the business’s value chain. Primary activities
Creating product Selling product Servicing product
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Identifying Strategic Information Systems Opportunities (cont’d.)
Support Activities Inbound logistics Operations Outbound logistics Marketing and Sales Service Procurement Human resource management Technology development Firm Infrastructure
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Electronic Commerce and the Strategic Impact ofInformation Systems
Key Terms
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Key Terms Business Alliance Business-to-Business (B2B) Electronic
Commerce Business-to-Consumer (B2C) Electronic
Commerce Competitive Advantage Consumer-to-Consumer (C2C) Electronic
Commerce
Electronic Auction Electronic Business (E-Business) Electronic Catalog Electronic Commerce (E-Commerce) Electronic Commerce (E-Commerce) System Electronic Payment
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Key Terms (cont’d.) Electronic Shopping Cart E-tailer Global (International) Information System Interorganizational Information System Intrabusiness (Organizational) Electronic
Commerce
Strategic Information System (SIS) Transborder Data Flow (TDF) Value Chain
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Summary Providing a Strategic Impact Electronic Commerce Systems Interorganizational Information
Systems Global Information Systems Strategic Information Systems
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