4,Chapter,The Digital Firm: Electronic Business and Electronic Commerce,OBJECTIVES,Analyze how Internet technology has changed value propositions and business models Define electronic commerce and describe how it has changed consumer retailing and business-to-business transactions,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,Compare the principal payment systems for electronic commerce Evaluate the role of Internet technology in facilitating management and coordination of internal and interorganizational business processes Assess the challenges posed by electronic business and electronic commerce and management solutions,OBJECTIVES (Continued),Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,Challenge: trillions of product configurations, short lead times, many competitors Solution: Web extranet for order entry, customization, inventory, change orders, and shipping Demonstrates how IT and the Web coordinate the flow of information about orders, production, inventory and shipment Illustrates how systems in the digital firm connect demand, supply, and fulfillment to achieve operational excellence,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,Corrugated Supplies Case,ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,Internet Technology and the Digital Firm,Information technology infrastructure: The Internet provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations. Direct communication between trading partners: Disintermediation removes intermediate layers and streamlines processes.,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,Round the clock service: Web sites available to consumers 24 hours Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize a firm Reduced transaction costs: Costs of searching for buyers declines,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,Internet Technology and the Digital Firm (Continued),ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,Business Model: Defines an enterprise Describes how the enterprise delivers a product or service Shows how the enterprise creates wealth,New Business Models and Value Propositions,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,Information asymmetry: One party in a transaction has more information than the other. The Internet decreases information asymmetry. Increases richness: The Internet increases the depth, detail, and scope of information. Increases reach: The Internet increases the number of people who can be contacted efficiently.,The Changing Economies of Information,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,The Changing Economics of Information,Figure 4-1,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,Virtual storefront: Sells goods or services online (Amazon.com) Information broker: Provides information on products or services (Edmunds.com) Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com) Online marketplace: Provides a trading platform for individuals and firms (eBay.com),Internet Business Models,Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING DIGITAL FIRM,Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com) Online service provider: Provides online services, including search service. (Google.com, Xdrive.com) Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com) Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com),Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce,Internet Business Models (Continued),ELECTRONIC COMMERCE,Categories of Electronic Commerce,Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com) Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com) Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com ),Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electr