Master of Business Administration in Information System MBA- Semester IV MI0030-e-Commerce 2 Credits

(Book ID: B0899)

Assignment Set- 1 (30 Marks)

Note: Each question carries 10 Marks. Answer all the questions 1. What are the developments that have contributed to the emergence of the internet as an electronic commerce infrastructure? [10 marks]

2. Explain the various E-commerce applications in industry. [10 marks ] Answers:

Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well. A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web. Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is no intermediary service. The sale and purchase transaction is completed electronically and interactively in real-time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase transaction is called electronic commerce such as eBay.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions

E-Commerce Applications: Issues and Prospects

Various applications of e-commerce are continually affecting trends and prospects for business over the Internet, including e-banking, e-tailing and online publishing/online retailing. A more developed and mature e-banking environment plays an important role in e-commerce by encouraging a shift from traditional modes of payment (i.e., cash, checks or any form of paper-based legal tender) to electronic alternatives (such as e-payment systems), thereby closing the e-commerce loop. a) Benefits of e-Commerce Expanded Geographical Reach Expanded Customer Base Increase Visibility through Search Engine Marketing Provide Customers valuable information about your business Available 24/7/365 - Never Close Build Customer Loyalty Reduction of Marketing and Advertising Costs Collection of Customer Data b) Basic Benefits of e Business e-Commerce o increase sales - this is the first thing that people consider
when dealing w e-commerce o decreasing costs o increase profits o understanding that profits is not the same as sales o Expands the size of the market from regional to national or national to international o Contract the market o reach a narrow market o target market segmentation allows you to focus on a more select group of customers o and therefore have a competitive advantages in satisfying them

3. Describe the rules of thumb for designing good websites? [10 marks ]

Master of Business Administration in Information System MBA- Semester IV MI0030-e-Commerce 2 Credits

(Book ID: B0899 ) Assignment Set- 2 (30 Marks)

Note: Each question carries 10 Marks. Answer all the questions

1. What are the advantages and disadvantages of E-commerce? [10 marks] Answer: Electronic commerce or e-commerce, has completely revolutionized the traditional concept of doing business by enabling a presence in the global market. Here are some of the important advantages and disadvantages of electronic commerce. Advantage of E-Commerce Some of the key strengths of using the Internet for businesses include the following: 1. 24 x 7 operation. Round-the-clock operation is an expensive proposition in the 'brickand-mortar' world, while it is natural in the 'click-andconquer' world. 2. Global reach. The net being inherently global, reaching global customers is relatively easy on the net compared to the world of bricks. 3. Cost of acquiring, serving and retaining customers. It is relatively cheaper to acquire new customers over the net; thanks to 24 x 7 operation and its global reach. Through innovative tools of 'push' technology, it is also possible to retain customers' loyalty with minimal investments. 4. An extended enterprise is easy to build. In today's world every enterprise is part of the 'connected economy'; as such, you need to extend your enterprise all the way to your suppliers and business partners like distributors, retailers and ultimately your endcustomers. The Internet provides an effective (often less expensive) way to extend your enterprise beyond the narrow confines of your own organization. Tools like ERP, SCM and CRM easily deployed over internet, permitting amazing efficiency in time needed to market, customer loyalty, on-time delivery and eventually profitability. 5. Disintermediation. Using the Internet, one can directly approach the customers and suppliers, cutting down on the number of levels and in the process, cutting down the costs.

6. Improved customer service to your clients. It results in higher satisfaction and more sales. 7. Power to provide the 'best of both the worlds'. It benefits the traditional business sideby-side with the Internet tools. 8. A technology-based customer interface. In a brick- and-mortar business, customers conduct transactions either face-to-face or over the phone with store clerks, account managers, or other individuals. In contrast, the customer interface in the electronic environment is a 'screen-to-face' interaction. This includes PC based monitors, ATM machines, PDAs, or other electronic devices such as the DoCopMo iMode in Japan and the Nokia 7100 in Europe. Operationally, these types of interfaces place an enormous responsibility on the organization to capture and represent the customer experience because there is often no opportunity for direct human intervention during the encounter. If the interface is designed correctly, the customer will have no need for a simultaneous or follow-up phone conversation. Thus, the 'screen-to- - customer' interface has the potential to both increase sales and decrease costs. When the interface does not work, not only is the revenue lost but the organization also incurs the technology costs. Thus, a poorly designed customer interface has both negative revenue and cost implications. 9. The customer controls the interaction. At most websites, the customer is in control during screen-to-face interaction, in that the Web largely employs a 'self service' model for managing commerce or communitybased interaction. The customer controls the search process, the time spent on various sites, the degree of price/product comparison, the people with whom he or she comes in contact, and the decision to buy. In a face-to-face interchange, the control can rest with either the buyer/seller or the community member. At a minimum, the seller attempts to influence the buying process by directing the potential buyer to different products or locations in the store, overcoming price objections and reacting in real item to competitive offering. The virtual store can attempt to shape the customer experience with uniquely targeted promotions, reconfiguration of storefronts to reflect past search behaviour, recommendations based on previous behaviour of other similar users, and access to proprietary information. 10. Knowledge of customer behaviour. While the customer controls the interaction, the firm has unprecedented access to observe and track individual consumer behaviour. Companies, through a third-party measurement firm such as Vividence and Accrue, can track a host of behaviors on web sites visited, length of stays on a site, page views on a site, contents of wish lists and shopping carts, purchases, dollar amounts of purchases, repeat purchases behaviour, conversion rates of visitors who have completed transactions and other metrics. This level of customer behaviour tracking, in contrast with tracking consumer attitudes, knowledge or behavioral intentions, is not possible in the brick-and-mortar world. Armed with this information, companies can provide one-to-one customization of their offerings. In addition, companies can dynamically publish their storefronts on the Web to configure offerings to individual customers. In a tactical embellishment, electronic retailers can welcome a user back by name. In more strategic terms, an online business can actually position offers and merchandise in ways that uniquely appeal to specific customers. 11. Network economics. In information intensive industries, a key competitive battleground centres on the emergence of industrystandard products, services, components, and or architecture. Network effects, as described by Metcalfe's law, can best be expressed as the situation where the value of a product or service rises as a function of the number of other users who are using the product. A classic example is the fax machine of other people who adopt the technology.

A key characteristic of network's economic is positive feedback, that is, as the installed base grows, more and more users are likely to adopt the technology because of the installed base. Many commercial wares in the digital economy revolve around setting a standard, growing the installed base and attempting to 'lock-in' customers to the standard because of rising switching costs. This applies to both hardware (e.g. cable modems versus DSL lines) and software (e.g. MP3 versus streaming audio). A key result of network effects and positive feedback is 'increasing return' economies as compared to the traditional decreasing-returns model often associated with the brick-and-mortar world. It also means that the traditional realities of marketing such as the importance of word-of-mouth (WOM) among potential customers, become greatly magnified in this new environment. It is this turbo charged WOM phenomenon that makes viral marketing a reality for consumeroriented e-commerce business such as ICQ in instant messaging system. The greatest and the most important advantage of e-commerce, is that it enables a business concern or individual to reach the global market. It caters to the demands of both the national and the international market, as your business activities are no longer restricted by geographical boundaries. With the help of electronic commerce, even small enterprises can access the global market for selling and purchasing products and services. Even time restrictions are nonexistent while conducting businesses, as e-commerce empowers one to execute business transactions 24 hours a day and even on holidays and weekends. This in turn significantly increases sales and profit. Electronic commerce gives the customers the opportunity to look for cheaper and quality products. With the help of e-commerce, consumers can easily research on a specific product and sometimes even find out the original manufacturer to purchase a product at a much cheaper price than that charged by the wholesaler. Shopping online is usually more convenient and time saving than conventional shopping. Besides these, people also come across reviews posted by other customers, about the products purchased from a particular e-commerce site, which can help make purchasing decisions. For business concerns, e-commerce significantly cuts down the cost associated with marketing, customer care, processing, information storage and inventory management. It reduces the time period involved with business process re-engineering, customization of products to meet the demand of particular customers, increasing productivity and customer care services. Electronic commerce reduces the burden of infrastructure to conduct businesses and thereby raises the amount of funds available for profitable investment. It also enables efficient customer care services. On the other hand, It collects and manages information related to customer behavior, which in turn helps develop and adopt an efficient marketing and promotional strategy. Disadvantages of E-commerce Some business processes may never lend themselves to electronic commerce. For example, perishable foods, and high-cost items (such as jewellery, antiques, and the like), may be difficult to inspect from a remote location. Most of disadvantages are from the newness and rapid pace of underlying technologies, which would disappear as e-commerce matures and becomes more and more available to and gets accepted by the general population. Many products and services require a critical mass of potential buyers who are well-equipped and willing to buy through the Internet. Businesses often calculate the return-on-investment before committing to any new technology. This has been difficult to do with e-commerce, since the costs and benefits have been hard to quantify. Costs,

which are a function of technology, can change dramatically even during short-lived ecommerce implementation projects, because the underlying technologies are changing rapidly. Many firms have had trouble in recruiting and retaining employees with technological, design, and business process skills needed to create an effective ecommerce atmosphere. Another problem facing firms that want to do business on the Internet is the difficulty of integrating existing databases and transaction-processing software designed for traditional commerce into a software that enables e-commerce. In addition to technology and software issues, many businesses face cultural and legal obstacles in conducting e-commerce. Some consumers are still somewhat fearful of sending their credit card numbers over the Internet. Other consumers are simply resistant to change and are uncomfortable viewing merchandise on a computer screen rather than in person. The legal environment in which e-commerce is conducted is full of unclear and conflicting laws. In many cases, government regulators have not kept up with the trends in technologies. Electronic commerce is also characterized by some technological and inherent limitations which has restricted the number of people using this revolutionary system. One important disadvantage of e-commerce is that the Internet has still not touched the lives of a great number of people, either due to the lack of knowledge or trust. A large number of people do not use the Internet for any kind of financial transaction. Some people simply refuse to trust the authenticity of completely impersonal business transactions, as in the case of ecommerce. Many people have reservations regarding the requirement to disclose personal and private information for security concerns. Many times, the legitimacy and authenticity of different e-commerce sites have also been questioned. Another limitation of e-commerce is that it is not suitable for perishable commodities like food items. People prefer to shop in the conventional way than to use e-commerce for purchasing food products. So e-commerce is not suitable for such business sectors. The time period required for delivering physical products can also be quite significant in case of e-commerce. A lot of phone calls and e-mails may be required till you get your desired products. However, returning the product and getting a refund can be even more troublesome and time consuming than purchasing, in case if you are not satisfied with a particular product. Thus, on evaluating the various pros and cons of electronic commerce, we can say that the advantages of e-commerce have the potential to outweigh the disadvantages. A proper strategy to address the technical issues and to build up customers trust in the system, can change the present scenario and help e-commerce adapt to the changing needs of the world. 2. What do you understand by solicited targeted mail and unsolicited targeted mail? [10 marks] Solicited, Targeted E-mail E-mail marketing has become a popular medium because of its relatively low-cost and the ability to send HTML messages containing full-color pictures of products, as well as links to order form pages. The transmittal of an e-mail message to a solicited, targeted list is a method used to attract visitors to a web site that requires acts by both the web site and the visitor. This mechanism allows a business to maintain regular contact with customers and drive traffic to web sites or other products. These types of

arrangements are mutually beneficial and can be a great information source for customers/users and a wonderful advertising mechanism to help businesses unload unwanted inventory or notify interested parties of requested information. These types of relationships are typically initiated by the business offering an information service to its visitor. If the visitor is interested, he/she can sign-up for the service. The amount of information required to register can vary by site. Typically, the more information required, the fewer interested parties a site can expect to receive. Because the user requests the information, this type of Internet marketing technique is considered to be "pulled" by the consumer with the help of the web site. From the web sites perspective, it can also be considered to be a "softpush," since the site encourages the distribution of information and provides it. Examples of these types of activities can be e-mail reminding the user of a family member's birthday, an alert from an on-line stock broker of a specific stock position, and notification that a specific merchandise item has gone on sale from your spouse's registered wish list. Unsolicited, Targeted E-mail Another method of on-line advertising that entails the web site business taking initiative is unsolicited, targeted e-mail advertising to past visitors or customers. This type of advertising is somewhat aggressive in that the visitor or customer does not specifically request additional sales or promotion items. When conducted properly, these methods can be effective; for example, sending only a few advertisements to past customers and discontinuing the e-mails if the former customer does not return to the site during that period. The use of cookies enables the tracking of customers' responses to such e-mail advertisements. When abused, these methods can result in an irritation factor. For example, if a previous customer is continuously bombarded with e-mail sales promotions, he/she may find it annoying and even begin to block such incoming messages. The challenge is to send e-mail that will get attention and not to send too much of it.

3. Compare and contrast the website of P&G and HUL. [10 marks]
It may have been a rough ride for Hindustan Unilever (HUL) these past few years, but detergents are adding that extra sheen to the company's portfolio. HUL's wheel of fortune is turning. And, the company's detergent business is growing at 13.6% this year versus the industry average of 8.4%. And all that is happening by increasing its focus on semi urban and tier-II cities and by giving its brands Wheel, Surf Excel and Rin that extra push. Category Head - Home Care, HUL said that 55% of the consumption is coming out of urban India. "Urban India is growing at 7%, rural demand is growing at 10%, which is much faster. But if you look at specific clusters, it is the small town urban that is growing rapidly," he added.

That small town urban growth has made HLL not only retain but also grow its leadership position in the detergent market in the past quarter. Its value market share is up at 37.8% vs 35.3% in the same period last year. HUL is followed by P&G, which has also grown from 7.1% to 7.6%. But the detergent price warrior Nirma seems to have had some tough luck. Its market share has fallen by 1.7%, a fall that is significant with the changing times. Experts say that with income levels rising, consumers are willing to spend a few extra bucks on upgrading their detergent brands. And that is what HUL and P&G are cashing in on. Both HUL and P&G have steadily hiked prices by 2-4% over the past two years. Vats said, "Cost pressures continue to be significant, but we are managing them both in terms of innovation and ability to pass on some of the cost pressures to consumers. And so, HUL is now tailor-making products for modern trade formats, which curently account for less than 3% of the company's detergent sales. It has recently launched washing powders for washing machines, a liquid variant of Surf Excel, a fabric conditioner - and is now all set to storm the market with more liquid detergents and pre-wash and post-wash products.