MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Economic Success Factors
Mar 26, 2015
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Economic Success Factors
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Economic Success Factors Cost Curves Bundling Critical Mass of Buyers and Sellers Pricing Consumer Characteristics Brokers and Disintermediarisation
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Costs Curves
Quantity
Co
st
Quantity
Co
st
Physical Products Digital Products
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Bundling More opportunities with EC Pricing becomes critical Eg Telstra
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Critical Mass of Buyers and Sellers To overcome initial high costs Size of market depends on demographics National Competitive Advantage
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Pricing Auctions of unused capacity Price searching reverse auctions prices will be determined by buyers’
willingness to pay rather than production costs
convenience versus price
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Consumer Characteristics EC is more suited to analytical rather than
impulse buyers What about patient buyers?
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Disintermediarisation v’s Brokers Brokers
lower search costs Privacy greater information risk reduction matching supply & demand
Disintermediarisation reduces steps in value chain removes wholesalers and brokers
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Winners ISP’s Portals Software Companies Network Owners Mid-size Manufacturers Technology Suppliers
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Winners (Cont.) Security Providers Electronic Payment Gateways Dedicated Online Companies Conventional Retailers that use online
extensively eMarketplaces Niche manufacturers
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Losers Wholesalers Brokers Salespeople Non-differentiated manufacturers
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Virtual Communities Electronic Communities
Replace Geographical Communities Serves the analytical and patient buyer
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Virtual Communities (Cont.) Types
Communities of Transactions Facilitate Buying and Selling
Communities of Interests Specific Topic or Interest
Communities of Relations Organised Around Certain Life Experiences
Communities of Fantasy Imaginary Environments
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Virtual Communities (Cont.) Creating a Virtual Community Creates a
Market Understand a particular niche industry and its
information needs Build a site that provides that information Set up the site to mirror the steps that a user goes
through in the information gathering and decision making process
Build a community that relies on the site for decision support
Start selling products that fir the decision support process
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Globalisation
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Emergence of Globalisation Greater imports by Industrialised Countries Low labour costs in Third World Countries Improved Telecommunications Growth of Networks Free Trade Agreements Growth of Knowledge & Information economy
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Labour Force Composition USA 1990 - 1996
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990
Farming
White Collar
Service
Blue Collar
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Advantages of Globalisation Access to larger markets flexibility to employ workers and manufacture
products anywhere 24/7 trade across time zones
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Barriers to Globalisation Legal issues
Regulation Jurisdiction
Market access Telecommunications Infrastructure
Financial Issues Customs and Taxation Money Exchange Differing Currencies
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Barriers to Globalisation (cont.) Trust, Security & Authentication Language Cultural and Social differences Government Support or Interference
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Competitive Advantage
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Traditional Competitors
The firm
New Entrants
Substitute Products
Suppliers Customers
Porter’s 5 forces
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
EC and Porter’s 5 forces Customers
increase in bargaining power due to increase in sellers and products
Suppliers bargaining power decrease due to global competition
Traditional rivals Greater presence due to virtual store fronts
New entrants many new entrants global marketspace
Substitute products more substitute products
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Business Responses to Competition Product differentiation
focussed differentiation data mining
Tight linkages to customers and suppliers switching costs
Low cost producer lower internal costs lower price \ improved quality to customer
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Porter’s Value Chain Model Production consists of a series of activities that
add a margin of value to a firm’s products or services
The added value increases profits, enhances asset value and competitive position
Primary activities Directly related to production and distribution
Support activities Make delivery possible Include organisational structure, HR, technology and
procurement
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Porter’s Value Chain Model Increase profits by:
Increasing steps that involve primary activities Reducing steps that involve support activities Converting support activities to primary
activities
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Use of EC for Competitive Advantage Strategic Systems
FedEx American airlines
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Use of EC for Competitive Advantage Continuous Improvement
Productivity improvement Just-in-time TQM Improved decision making Managing information and knowledge Innovation and creativity Change management Customer service
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Use of EC for Competitive Advantage Business Process Reengineering
Reduced cycle time Employee empowerment (IT enables
decentralised decision making) Knowledge management Customer focussed approach (mass
production changed to mass customisation) Business alliances (General Motors, Ford
and Chrysler) Virtual corporations
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The Future of EC Improve Transform Redefine
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The Future of EC (cont.) Improve
New markets Customisation Ordering Delivery (digital products) New sales channels (Disintermediarisation) Demand driven supply Reduced cycle time Customer service (dialogue and feedback) Brand image
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The Future of EC (Cont.) Transform
The Horizontal Organisation Strategic Agility (Quick Reactions to
Technological Change) Mobile Workforces Cross Functional Systems
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Strategic Systems
Management Systems
Knowledge Systems
Operational Systems
Sales & Marketing
Production Accounting Human resources
Functional Business applications
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The Future of EC (Cont.) Redefine
New Products Services versus goods The revolution of open source New Business Models (?)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
The Future of EC (Cont.) Redefine (cont.)
Virtual Organisations Integration of the supply chain Human Resource Management Human Capital Online learning Integration
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Business strategy and EC Lead Wait Experiment