TCT3092-

GLOBAL E-BUSINESS
PUAN FARAH EZORA
ISMAIL

Chapter 1: Introduction to E-business and E-

commerce
CONTENT
 Introduction
 Overview of e-business
 The history of e-business
 Types of e-business
 What is e-commerce?
 Seven unique features of e-commerce
INTRODUCTION
 In the emerging global economy, e-commerce and e-
business have increasingly become a necessary
component of business strategy and a strong catalyst
for economic development.
 The integration of information and communications
technology (ICT) in business has revolutionized
relationships within organizations and those between
and among organizations and individuals.
 Specifically, the use of ICT in business has enhanced
productivity, encouraged greater customer
participation, and enabled mass customization, besides
reducing costs.
OVERVIEW OF E-BUSINESS
 The term "e-Business" therefore refers to the
integration, within the company, of tools based on
information and communication technologies
(generally referred to as business software) to
improve their functioning in order to create value
for the enterprise, its clients, and its partners.
 E-Business no longer only applies to virtual
companies (called click and mortar) all of whose
activities are based on the Net, but also to
traditional companies (called brick and mortar).
E-BUSINESS ARCHITECTURE
EXAMPLE
Here is a simplified example an AUTOMATED eBusiness
system we can
provide at competitive rates:
 A customer wants to order 1000 widgets. They visit
CustomShop - logging on automatically. CustomShop checks
to see whether your customer has any outstanding orders and
their credit worthiness.
 The customer places their order - CustomShop checks to see
whether there is enough stock. If not, a purchase order is sent
to your supplier (according to the "rules" for widgets). Your
Purchase Order information and the Sales Order information
is entered into your existing accounting system (assuming
your system is able to import transactions - most do). 
 Your customer can check the status of their order 24/7.
E- Business strategies provide you with a
wide range of benefits:
 Reduced Administration Costs
 Faster trading cycles
 Inventory Reduction
 Ability to win new business and retain existing customers
 Ability to respond to new competitors quickly
 Personnel Cost Savings
 Cash Flow Improvements
 Improved Order Fulfillment
 Enhanced image
 24/7 operation - it never stops
 Reduced geographic constraints
The goal of e-Business
 As a result of an increase in margins, i.e. a
reduction in production costs or an increase in
profits. E-Business makes it possible to achieve
this in a number of different ways:
 Positioning on new markets
 Increasing the quality of products or services
 Prospecting new clients
 Increasing customer loyalty
 Increasing the efficiency of internal functioning
 As a result of increased staff motivation. The
transition from a traditional activity to an e-
Business activity ideally makes it possible to
motivate associates to the extent that:
 The overall strategy is more visible for the employees
and favors a common culture
 The mode of functioning implies that the players
assume responsibilities
 Teamwork favors improvement of competences
 As a result of customer satisfaction. As a matter
of fact, e-Business favors:
 a drop in prices in connection with an increase in
productivity
 improved listening to clients
 products and services that are suitable for the clients'
needs
 a mode of functioning that is transparent for the user
 As a result of privileged relationships with the
partners. The creation of communication channels
with the suppliers permits:
 Increased familiarity with each other
 Increased responsiveness
 Improved anticipation capacities
 Sharing of resources that is beneficial for both parties
Characterization of the e-Business
 A company can be viewed as an entity providing
products or services to clients with the support of
products or services of partners in a constantly
changing environment.
 The functioning of an enterprise can be roughly
modeled in accordance with a set of interacting
functions, which are commonly classified in three
categories:
 Performance functions, which represent the core of its
activity (core business), i.e. the production of goods or
services. They pertain to activities of production, stock
management, and purchasing (purchasing function);
 The management functions, which cover all strategic
functions of management of the company; they cover
general management of the company, the human
resources (HR) management functions as well as the
financial and accounting management functions;
 The support functions, which support the performance
functions to ensure proper functioning of the enterprise.
 Support functions convert all activities related with sales
(in certain cases, they are part of the core business) as
well as all activities that are transversal to the
organization, such as management of technological
infrastructures (IT, Information Technology function).
The degree of success of an e-business depends on many
factors some of which are:
 Type of Business - it should be suitable for the Internet

 Competition - naturally, the less the competition the better

 Customer Base - how many potential customers do you

have, and are they the kind that is willing to pay money or
not
 Quality of the Website - you need an elegant and friendly

website that is hosted on fast and reliable servers

 Quality of the Service - the satisfied customer will come

again and spend more money

THE HISTORY OF E-BUSINESS
 The concept of an e-Business is a blessing to the
new generation of entrepreneurial individuals. It
offers a cheap and easy way to start a business.
Instead of investing tens of thousands of dollars to
open a store, they can spend less than a thousand
dollars to launch a website that is accessible to
people around the world.
Early Use of the Web for Business
 Business began using websites for marketing
shortly after graphical-based web design became
available in the early 1990s.
 Most of these websites served to provide visitors
basic information about a company's products and
services, and included contact information, such as
phone numbers and email addresses, to assist
consumers in contacting a company for services.
 The move from providing simple business
information to soliciting business via the web
occurred almost as soon as marketing departments
realized that company websites were available to
millions of people.
 Online sales began in 1994 with the ability to
encrypt credit card data.
Early Online Sales
 With the advent of the Secured Socket Layer (SSL), developed
by Netscape in 1994, websites developed the ability to encrypt
sessions, thus making credit card transactions over the Internet
more safe.
 With an encrypted connection between a company's server and
a client computer, credit numbers could be masked so they
could not be intercepted by a third party, thus making theft of
card information less likely. This security led to an increased
number of businesses offering products for sale via the web.
Birth of Modern Web Sales
 Developments in server technology, including the ability to
build websites from product databases, resulted in creation
of large Internet-only businesses like eBay and Amazon. In
previous product-sales websites, each product had to be
manually posted on a web page.
 With database-driven sites, companies could use web-page
templates to display tens of thousands of products on-the-
fly. As the number of available products increased, so did
traffic and sales on these websites.
The Current State of E-Business
 Currently, e-business ranges from simple sites
providing corporate information to sites offering
goods and services for sale online. Innovative uses
for new voice and video communication
technologies include online language tutoring.
 Large commercial information repositories are
growing and use of the Internet for research is now
common.
 Online sales from web-based storefronts continue to
grow. Sales of digital information, in the form of
eBooks and digital music files, are more recent
offerings by e-businesses like Apple, Amazon, and
Barnes & Noble.
TYPES OF E-BUSINESS
A business model is a description of how a company operates.
Some business models are more complicated than others. Like
traditional, bricks-and-mortar businesses, e-businesses also need
to have solid models to generate revenue.

 Brokerage Model
Brokerage sites are meant to bring buyers and sellers together. The sellers offer
their goods and services, and the buyers purchase these goods and services.
These sites generally charge a fee for use. Examples of such sites include eBay,
Etsy and Amazon.
 Advertising Model
Like traditional advertisers, businesses that follow the
advertising e-business model provide a combination
of content and ads. This model is most effective when
there is a high level of traffic. One example of such a
model is on-line newspapers, which feature news
content as well as advertisements.
Merchant Model
 Merchants have been selling wares since time

immemorial. E-commerce is simply the latest

manifestation of this trend. Merchant websites sell
their goods and services to buyers. Barnes and
Noble's and Land's End's websites are examples of
this model.
 Community Model
This type of business capitalizes on the trend of online communities.
Members of online communities make new friends, write content or
post photos. The business can earn money through advertising revenue,
selling products or voluntary donations by members. Flickr and
Wikipedia operate under this model.

 Subscription Model
E-businesses that operate under the subscription model charge users a
fee to use their services. Netflix and AOL are two examples.
WHAT IS E-COMMERCE?
 The term e-Commerce (also called Electronic
commerce), which is frequently mixed up with the
term e-Business, as a matter of fact, only covers
one aspect of e-Business, i.e. the use of an
electronic support for the commercial relationship
between a company and individuals.
E-Commerce is not only limited to online sales, but also
covers:
 Preparation of estimates online

 Consulting of users

 Provision of an electronic catalog

 Access plan to point of sales

 Real-time management of product availability (stock)

 Online payment

 Delivery tracking

 After-sales service
Amazon.com:
Before and After

Copyright © 2002 Pearson

Education, Inc.
 Amazon.com: Before and After
 Most well-known e-commerce company
 Conceived by Jeff Bezos in 1994
 Opened in July 1995
 Four compelling reasons to shop
 Selection (1.1 million titles)
 Convenience (anytime, anywhere)
 Price (high discounts on bestsellers)
 Service (automated order confirmation, tracking, and
shipping information)
Online stores
Most electronic commerce sites are online stores which have
at
least the following elements at the front-office level:

 An online electronic catalog listing all products for sale,

their price and sometimes their availability (product in
stock or number of days before delivery);
 A search engine which makes it possible to easily locate a
product via search criteria (brand, price range, key word,
etc.) ;
 A virtual caddy system (sometimes called virtual cart):
This is the heart of the e-commerce system. The virtual
caddy makes it possible to trace the purchases of the client
along the way and modify the quantities for each reference;
 Secure online payment (accounting) is often
ensured by a trusted third party (a bank) via a
secure transaction;
 An order tracking system, which allows tracking
of order processing and sometimes provides
information on pickup of the package by the
shipper.
SEVEN UNIQUE FEATURES OF E-
COMMERCE
E-commerce means business over the Internet. It’s a
new way of doing business without the physical
limitations of business location or operating time. So
why is it different?
Here are 7 unique features of e-commerce:
1. Ubiquitous - it is available just about everywhere
a computer can connect to the internet.
2. Global Reach – permitting commercial
transactions to cross cultural and national
boundaries far more conveniently and cost
effectively than is true in traditional commerce.

3. Universal Standards - it operates according to

universal standards shared by all nations around the
world, whereas most traditional commerce
technologies differ from one nation to the next.
4. Information Richness - enabling an online merchant
to deliver to an audience of millions complex and rich
marketing messages with text, video, and audio in a
way not possible with traditional commerce
technologies, such as radio, television, or magazines.
5. Interactivity - it allows for two-way communication
between merchant and consumer and enables the
merchant to engage to consumer in ways similar to a
face-to-face experience but on a much more massive,
global scale.
6. Information Density - vastly increase the total
amount and quality of information available to all
market participants, consumers, and merchants
alike.
7. Personalization or Customization - merchants
can target their marketing messages to specific
individuals by adjusting the message to a person’s
name, interests and past purchases.
E-commerce vs. E-business
E-commerce involves
 Digitally enabled commercial transactions between
organizations and individuals.
 Digitally enabled transactions include all
transactions mediated by digital technology
 Commercial transactions involve the exchange of
value across organizational or individual
boundaries in return for products or services
E-commerce vs. E-business
E-business involves
 Digital enablement of transactions and processes
within a firm, involving information systems
under the control of the firm
 E-business does not involve commercial
transactions across organizational boundaries
where value is exchanged
The Difference Between E-commerce and
E-Business
CONCLUSION
 The transforming power of this mode of business
extends far beyond the obvious points of
convenience for the customer and cost savings for
the business. The most powerful implementations
of e-business enable a complete restructuring of
business models (Ware, 1999).