MIS4
Internet Technology and the Digital Firm
In the past it was basically done with proprietary systems. In our modern Age of the internet this does not make sense. Compares need to be able to communicate with each other. Handing transactions electronically reduces transaction cost. Internet technology provides for this at lower costs. By using the technology managers can deal with many employees in multiple parts of the world.
New Business Models and Value Propositions
The interest has made it to send information in large quantities basically at little cost. For example, in stead of a customer having to go to many stores to get information, comparison shopping Can be done online. Because of the Changes new business models must be developed. A business model is the way a company does business.
The changing Economics Of Information
The internet has brought about an information asymmetry, one side of An transaction has more information than they need) giving them An advantage. It has also allowed firms to not have to worry about the tidiness, the quality of the information, or the reach which is how many people am be dealt with. Technology has changed that.
Internet Business Models
The internet allows for extra value to be added to products and services. This works with not only business to consumer but with business to business model as well. Businesses can focus on advertising to community web sites that have the groups they want to torus on easily. Social networking sites allow for people to network together. Portals provide Content people need along with ads focused to what they are looking at giving a benefit to the firm advertising. Content can be syndicated giving the firm making the content wider known as well as giving the site content people want. Application service providers make applications available over the internet. There are a few business models available:
· Pure play- Ones that exist only on internet
· Brick and mortar - ones that exist only physically
· Click and mortar - both online and physically
4.2 Electronic Commerce
Contractual channels will be the way most business is done but e-commence is quickly growing.
Categories of Electronic Commerce
· Business to Consumer (B2 C)
· Business to Business (B2B)
· Consumer to Consumer (C2C) - E-Bay for an example.
An emerging model is m-commence which is selling through mobile units like phones.
Customer-Centered Retailing
On line retailing provides many companies to provide service after the sale At a lower Cost.
Direct Sales Over the Web
A virtual Store front does not have large expenditures like rent that a physical location does. Since traditional channels and there markups are bypassed so Consumers pay less. This is called disintermediation.
Interactive Marketing And Personalization
The internet allows for easy collection of Customer information. Clickstream tracking allow for collection of information of where a customer has been on a web site web personalization allows for sites to be made to order for a customer offering them information And products thy would have interest in. Collaborative filtering lets a firm Compare information about the current customer to similar ones and offer other products that they could be interested in. Blogs have offered a way for consumers to vent but also for a firm to let its customers know about what is goings on. Tracking a customer on a web site can show where problems are. Online feed back is much cheaper than normal ways.
Customer Self-Service
Rather than take up a person's time a customer Can find information they need online at a fraction of the cost.
Business-to-Business Electronic Commerce: New Efficiencies and Relationships
80% of B2B is based on Electronic Data Interchange (EDI). This allows for a paperless and therefore less costly transaction process. Though it is still possible to use private Edi Services many firms have set up there own through the Internet. In doing prominent, the whole process of getting goods from ordering to payment can be done On-line. Because it is on the internet you are not limited to suppliers as you would be with EDI. Like EDI private industrial networks have been set up for B2B. They are also called private exchanges. There are also Net Marketplaces also known as e- hubs and provide a place where buyers and sellers can meet. They are often sorted by the types of goods they deal with. Direct goods would be those that are used in the production process. Indirect are those that not used in the production like office supplies. Often a net marketplace will deal with long term Contracts. Many focus on vertical markets. Exchanges are independently owned third- party marketplaces. The problem with many of them is that suppliers would not participate because the people who purchase would drive pieces down by bidding for a lower price and they would make less money.
Electronic Commerce Payment Systems
Special systems have been created to take payment over the internet. 80% of online payments are done by credit Card. Digital credit card payment systems Allow for secure transaction to be made, and a digital wallet can store important credit information in an online location for quick entry. Micropayment systems are for low cost purchase. These are just some of the many ways of doing payments on line.
4.3 Electronic Business and the Digital Firm
How Intranets Support Electronic Business
An important use of intranets is as a repository of information for a company.
Intranets And Group Collaboration
Intranets can provide a place for central collaboration to take place. This need not be from people in the same office but all over the world.
Intranet Applications for Electronic Business
Finance and Accounting
Transaction Processing systems allow for collecting financial information and management information for finance.
Human Resources
Corporate policies, benefits information and enrollment, training and job postings are things that can be set up on a corporate intranet.
Sales and Marketing
Sales tools can be made available on a corporate intranet as well as marketing information.
Manufacturing and Production
Information about the various stages of production can be shown on an intranet so that workers can know what is expected. Quality control information along with that data can be useful for management.
Business Process Integration
The use of digital technologies to enable multiple organizations to design, develop, move, and manage products collaboratively through their life cycles called collaborative commerce. This used to happen among several departments in a single firm. Now it takes place among several firms.
4.4 Management Opportunities, Challenges, and Solutions
Opportunities
Firms are using this technology to create new products, services, new ways to sell and even new business. They have also helped traditional businesses by keeping costs of products low in the supply chain.
Management Challenges
Finding a Successful Internet Business Model
Only a fraction of the businesses that were created as Internet based models have survived. Low cost is not necessarily true in internet based business either if you think about having to warehouse the products that you are selling. Mixed businesses have to worry that they do not cannibalize there other sales chains.
Organizational Change Challenges
E-business and e-commerce require that a firm change the way that the organization is designed. Often traditional boundaries will get in the way when collaboration needs to be done.
Trust, Security, and Privacy
Trust needs to be available to do transaction either live or on the net, but the internet often seems impersonal and so trust has to be earned. The internet was designed to be an open system so it is constantly under attack when security is so important to doing business. Lastly, we can collect so much information about people who visit a web site by not only following their traffic through a site, but by information that they may give willingly. Is it right to profit from the information that is collected?
Solutions
Determining How Internet Technology Can Provide Value for the Business
Management needs to have a carefully designed business model for how they intend to use the Internet/Intranet in the business. They need to understand how it will work within their organization.
Managing Business Process Changes
Managers need to have in place plans for how to deal with change and the impacted people both internal and external to the firm. Also, plans must be made to see where and how data is exchanged with other organizations including what format it is to be in.
Safeguarding Security and Privacy
While keeping a site open to customers, a firm needs to keep hackers away. A firm must also develop a policy for respecting the privacy of their customers.
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