OHT 1.

Chapter 1
Introduction to e-business and e-commerce

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Learning objectives
Define the meaning and scope of e-business and
e-commerce and their different elements;
Summarise the main reasons for adoption of
e-commerce and e-business and barriers that may
restrict adoption;
Use resources to define the extent of adoption of the
Internet as a communications medium for consumers
and businesses;
Outline the business challenges of introducing ebusiness and e-commerce to an organization.
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Issues for managers

How do we explain the scope and implications
of e-business and e-commerce to staff?
What are the full-range of benefits of
introducing e-business and what are the risks?
How great will the impact of the Internet be on
our business? What are the current and
predicted adoption levels? How do we assess
the validity of forecasts?
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The impact of Internet on business

Andy Grove, Chairman of Intel, one of the
early adopters of e-commerce, has made a
meteorological analogy with the Internet. He
says:
Is the Internet a typhoon force, a ten times
force, or is it a bit of wind? Or is it a force that
fundamentally alters our business? (Grove,
1996)

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The impact on one industry - banking

Metric

May 1995

Dec. 2002

Financial institutions with Web banking (WW)

6,000

Financial institutions with Web sites (WW)

50

14,000

Total online banking households (WW)

5 million

100
million

Total online banking households (US)

300,000

28 million

Monthly bank and credit card Web traffic (US)

100,000

50 million

Monthly credit apps submitted via Web (US)

1.5 million

Table 1.1 7.5 years of web banking. Source: Online banking report, Number 89, December 10, 2002.
Source: Online Banking Report estimates, +/- 25%, 11/02
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UK adults online?
31%
41%
51%
61%
16-24 year olds online?
50%
60%
80%
90%
Percentage bought groceries online?
6%
16%
26%
36%
Statistics.gov.uk
Source: www.statistics.gov.uk Oct 2002
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The Internets impact on you

How many of you have purchased something
on the Internet in the last 6 months?
How many times have you used the Internet
as an information source, before buying
offline?

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Popularity of online purchases

Source: The Internet Monitor, BMRB, November 2001 (www.bmrb.co.uk)

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Definitions
You are asked to distinguish between ecommerce and e-business at a job interview.
Write down your definitions.
Use examples to illustrate your points.

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E-commerce defined
All electronically mediated information exchanges
between an organization and its external
stakeholders
Examples:
Buying books online (transactional)
Selecting a car online (informational)
Interacting with brand online (relationship building /
experiential, e.g. www.tango.com)
Asking a customer service query, e.g.
www.easyJet.com
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E-business defined
All electronically mediated information exchanges,
both within an organization and with external
stakeholders supporting the range of business
processes
Examples:
Purchasing from suppliers (e-procurement)
A company intranet
Supplying partners with information through an
extranet
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Business drivers to going

online

Driver

Marketing approach

1 Reduced costs

Give real examples

2 Increase reach to new markets

Give examples of SME

3 Customer demand

Data on those researching and

buying online

4 Competitive threats

Ditto

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Business barriers to going

online

Barrier

Marketing approach

1 Security

Reassurance

2 No need

Illustrate with data of businesses

researching and buying online

3 Costs

Illustrate low cost options

4 Skills

Summarise skills alternatives

6
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Drivers for e-commerce

Figure 1.6 Attitudes to benefits of online technologies

Source: DTI (2002)

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Barriers to e-commerce

Figure 1.7 Barriers to development of online technologies

Source: DTI (2002)

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Answer the 7 Ss

Figure 1.9 The McKinsey 7S framework

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