E-BUSINESS MANAGEMENT

Course Objectives

To understand various business models of internet firms or dotcoms To understand impact and uses of internet technologies on traditional business To Learn key technologies and infrastructure required for e-business To understand Security and Legal issues in ebusiness

Suggested Readings

Text:

Electronic Commerce A managerial perspective Turban, Lee et al, Pearson Education Introduction to Electronic Commerce: Turban, King, Lang, 2nd edition, Pearson Education. E-commerce: An Indian Perspective Joseph P.T., S.J. Electronic commerce Bharath Bhasker, Tata Mcgraw Hill Appelgate, Austin et al, Corporate Information Strategy and Management: Text and cases, Sixth Edition, Tata McGraw Hill, 2007. Other reading Materials and cases (refer course page at lms.mim.ac.in)

References:

Internal Evaluation

Midterm: 20 Mini Project (Developing a case): 15 (Presentation+Report) Quiz: 15 Total: 50

Case study:

B2C: Guruji.com: Indian Search engine : evaluating business model Flipkart.com B2B: Indiamarkets.com ITC E-choupal Doubleclick.com: Internet Privacy and Legal issue in ebusiness

E-business in India

In 2007, out of 1000 crore e-commerce transactions 800 crore were B2B transactions and the rest were from retail internet. (NASSCOM) Growing users of internet and increase in owners of mobile and personal computers Service sector: BFSI (Banking Finance and Insurance) Travel and Hospitality Retailing sector finally sees some action (Flipkart, Futurebazaar.com) Majors like Telco, Hindustan Motors, Coke, Hindalco save 5 to 10 percent of total cost from e-procurement Focus from the current government (IT Act 2000, Amendment: IT Act 2008)- Legal Foundation for ebusiness in India

Governments Initiatives to promote e-business: Intitial stage

IT Act 2000 & controller of CA(Certifying Authority) Appointed

Telecom Infrastructure Improvement

ISPs given license to setup international gateways and lay under sea cables Permission to access providers to lay optical fiber networks along national highways and other road Decrease in the tariffs in telecom sector and competition With 3G Networks, mobile commerce is the next huge opportunity for business

100% FDI has been allowed in B2B e-commerce Government is moving online

Internet Users Profile: India

Internet Penetation:

As of September 2011, there will be 112 Mn claimed Internet users (88 Mn urban and 24 Mn rural) growth of 13% over last year

Frequency of Usage:

Of 112 Mn claimed Internet users, there are 90 Mn (70 Mn urban and 20 Mn rural) users that use Internet at least once a month Of active Internet users, 87% of Urban Internet users use internet at least once a week.

Source: Internet and Mobile Association of India, Internet in India report (November 2011)

Internet Users Profile: India

Access point:

Home as access point has grown by a large percentage compared to 2009. The usage of Cyber Caf for Internet access has reduced this year. Of the active Internet users in urban cities, 26.3 Mn access Internet through their mobile phones. This has been the most recent change in the access behavior.

Internet Users Profile: India

Demographics:

Youngsters in India continue to drive Internet Usage in India. In usage of School Going Kids (below 18 years) has seen a substantial rise. School going kids 21% College going students- 27% Young men 27% Older men 11% Working women 7% Non-working women 8%

Internet Users Profile: India

Purpose of use : Urban cities,

Emails - 89% , social networking activities- 71% search education-related content- 64% , use Internet for chatting purposes - 55% access videos, music and images - 49%

Rural Internet users

accessing music, videos and images - 46% email and communication activities - 38% , general information - 29% Education related content 27%

Internet Users Profile: India

Income group:

Penetration in Lower Income groups are on rise (25% with people from SEC C status and 11% for the ones with SEC D and E status). Internet usage in Smaller towns continue to spike their dominance over Top 8 metros with a combined usage of more than 60%

What is E-Business ?
E-Business E-commerce E-marketing

E-marketing refers to using internet as channel to market products/services E-commerce refers to buying and selling on the internet. E-business refers to using internet technologies to improve relationship with customers, suppliers, employees and other stakeholders

E-business vs. e-commerce

E-Business
E-marketing

E-commerce

Home page On-line catalog On-line order taking

Procurement Manufacturing/Distribution

Logistics Planning and Scheduling

Customer Service HR & Financial Management

E-business: Everyone Online

Employees (Intranet) - book their own travel, enter expenses, get vacation sanctioned, bonus information Customers - Orders, Billing, Service and Support Suppliers - Inventory and supply chain management

TYPES/Business Models OF E-COMMERCE (Based on participants in the transaction)

Business to Consumer (B2C) Business to Business (B2B) Customer to customer(C2C) Business to Employee(B2E) Customer to Business Others like G2C(Government to Citizen)

Customer to Business (C2B)

Reverse auction or demand collection model where buyer sets his own price (often binding) and the highest bid is selected Ex:

Priceline.com(travel) Bid2win.com Reverseauction.com (travel,auto)

Business Model: Key Components

Electronic Commerce Business Strategies

Business Strategies come in one of the following three types. All require a sound business models to be successful

Brick-and-Mortar & Click-andMortar Strategies

Brick-and-Mortar Operate a firm solely in traditional physical markets Approach business activities traditionally by operating physical locations (e.g. stores, offices, manufacturing plants) Click-and-Mortar Operate a firm in physical locations and has added an EC component to their business Requires maximization of business opportunities in both the physical and virtual environments This strategy requires a significant investment in systems and space

Click-Only Strategy

Business transactions are only conducted virtually Can require significant expertise and investment in technology and systems staff There are different revenue models

Benefits of E-business
Business benefits

reduction in sales and marketing costs Increased reach Lower procurement processing costs Reduction in inventories Reduce business cycle times Better customer service Develop new channels to reach customers Develop new business models and alternative sources of revenue

Benefits of E-business contd..

-Consumer benefits

Increased choice of vendors and products Increased price and product comparison capabilities. More competitive prices Convenience Greater information accessibility Greater customization in the delivery of services

Impact of Electronic Commerce on Business

Disintermediation and Re-intermediation (new intermediaries providing value added information services) Direct Marketing (New marketing channel) Means to establish brand or corporate image

Customisation of products: Fords case

One to one marketing: Personalised marketing Leading to development of new business models HR: Changes in Training and Recruitment methods Finance: Newer types of payment instruments/methods

Disintermediation Removal of the intermediary (middleman) in a sale. Companies can sell directly to customers (retail or wholesale) without assistance using the Internet Manufacturer or Service Provider Intermediary (Middleman) Customer (Consumer or Business)

Disintermediation

Sell Direct - Disintermediation

Example Airlines selling directly to flyers without a travel agent or customer service representative

Disintermediation..

Though, Traditional companies cannot completely remove intermediaries, internet provides new channel to reach customers

Commerce (8000 B.C.)

BUYER FINDS SELLER SELECTION OF GOODS NEGOTIATION SALE PAYMENT DELIVERY
INFORMATION PHYSICAL+ INFORMATION

POST-SALE ACTIVITY

eCommerce
SOME TECHNOLOGIES USED:
SEARCH ENGINE ON-LINE CATALOG RECOMMENDER AGENT CONFIGURATOR SHOPPING BOT AGGREGATOR AUTOMATED AGENTS TRANSACTION PROCESSOR DATA INTERCHANGE CRYPTOGRAPHY E-PAYMENT SYSTEMS TRACKING AGENT
INFORMATION PHYSICAL+ INFORMATION

SOME INFORMATION GATHERED: BUYER FINDS SELLER SELECTION OF GOODS NEGOTIATION SALE PAYMENT DELIVERY
ON-LINE PROBLEM REPORTS SEARCH BEHAVIOR BROWSING BEHAVIOR CUSTOMER PREFERENCES EFFECTIVENESS OF PROMOTIONS BARGAINING STRATEGIES PRICE SENSITIVITIES PERSONAL DATA MARKET BASKET

CREDIT/PAYMENT INFORMATION
DELIVERY REQUIREMENTS

ON-LINE HELP CRM

POST-SALE ACTIVITY

CUSTOMER SATISFACTION FOLLOW-ON SALES OPPORTUNITIES

Limitations/Barriers to EC

Security And Lack of trust Telecommunication bandwidth (Developing Countries) Difficulty in Integration with legacy systems Initial cost and justification of benefits User resistance Lack of touch and feel Digital Divide (Urban Vs Rural) Government regulations and legal standards Lack of support services