Seven Dimensions of Electronic Commerce Strategy

There are seven factors are considered the most important for developing
directional strategy.

Four are positional factors -- technology, market,

market service and brand.
brand These
are also called "the four key pillars of success" in setting strategic
direction in the organizations he studied. Positional factors are linked
together by three bonding factors -- leadership, infrastructure and
organizational learning.
learning

Bonding factors are the glue of e-commerce strategy, without them the four
positional factors stand in isolation.

POSITIONAL FACTORS FOR ELECTRONIC COMMERCE STRATEGY

Technology
• A business must understand the potential application of technologies such as the
web, e-procurement, enterprise resource planning and data warehousing, and
realize their implications for that firm.
• Organizations must ask themselves questions such as "Are we a technology
company? Can the technology be used to create barriers to entry? Can technology
be used to lock in a customer base?" Management must have clearly defined the
answers to these questions and be able to work them into their business plans.
• An organization must determine if it is going to be an advanced technology leader
("bleeding edge") or follow a technology agenda that relies on more stable systems
("leading edge" or "lagging edge" if necessary).
• An organization must assess its internal value chain as well as those of its suppliers
and use technology to minimize costs and maximize efficiencies.
• An organization must determine the relationship between the company's
technology or product strategy and the operational aspects of that strategy.
Market
• A prospective "born-to-the-Net" organization must determine its target market and
whether it is still realistically open to new entrants.
• A "move-to-the-Net" organization must understand what the implications of
e-commerce and technology are for the marketspace in which the organization is to
compete in terms of branding and relationship management.
• Both organizations must understand how the market is going to segment and grow
over the near future due to the impact of the Internet and determine whether the
organization will be able to move rapidly enough to meet those changing needs.
 • Existing organizations must assess the impact born-to-the-Net organizations can
have and use their own traditional core strengths -- market knowledge and product
knowledge -- to offset Internet-based companies' nimbleness.
• New organizations must understand the possible moves from major established
organizations and utilize their own strengths -- entrepreneurial thinking, flat
management structures, lack of legacy systems -- to counter them.
Service
• An organization must know its customers' expectations regarding service level.
• An organization must determine the new service level expectations of the customer.
Customers sometimes "get it" earlier than organizations.
• A non-service organization must reassess that position and probably create a
service value chain.
• An organization must understand its own Internet service value chain, especially
how an organization creates service value during a transaction for a customer.
Brand
• An established organization must understand the basis of its brand. Is it technology
leadership? Service provision? Market positioning? Then, will an e-commerce
strategy require an amendment to that brand? A completely new brand? For
example, ASB Bank decided to create BankDirect as a new brand, rather than try to
rebrand the ASB or FastNet brand.
• A new organization must understand whether it has the ability to create a strong
brand, and what that brand will represent. Companies such as Amazon.com, Yahoo!
and eBay have built strong brands from non-specific names.

BONDING FACTORS FOR ELECTRONIC COMMERCE STRATEGY

If the positional factors establish where the small business stands in

technology, market, brand and service, it is the three bonding factors of
leadership, infrastructure and organizational learning that pull together
and support these factors. These bonding factors can be considered to be a
series of questions an organization must ask itself as it moves to an
e-commerce strategy.

Leadership
• Does the CEO have a vision for e-commerce?
• Does the CEO have a track record of taking technology in stride?
 • Do the senior executives share a technology vision? Also, do they understand its
impact on their functional area and the organization as a whole?
• Is the leadership stable or in a continual state of flux?
Infrastructure
• Can the organization's technology infrastructure support the new model of
e-business?
• Can the organization's technology infrastructure support the move to mass
customization?
• What are the implications for the organizational changes needed to be competitive
in an e-commerce environment?
• Does the organization's infrastructure interface with the infrastructures of their
suppliers and customers in the electronic marketplace?
Organizational Learning
• Does the organization support internal learning?
• Does the firm scan the technology horizon for change and then adopt that change
where appropriate.
• Does self-awareness inside the organization drive practice and process change.
• Can the learning of the organization with respect to markets, product, technology,
processes, etc., be quickly refocused into a new technology-based method of
production?

Technological knowledge is very important for e-commerce, which is

cross-discipline. It foundation lies on Networks. B2B was the first form of
e-commerce to be conducted. The company’s office would be linked to the
customers or suppliers office with EDI-Electronic Data exchange.

After several year of closed networks, the public network were established
were by existing networks were linked together. And individual were allowed
to lease a line for e-mail and related services.
Plus the power of the computer made e-commerce reality, Network is actually
the necessary for e-commerce development.

Infrastructure for Electronic Commerce

Internet is a network of hundreds of thousands interconnected networks, it
is a global network connecting millions of computers

Network Service Providers (NSPs)

Runs the internet backbones, it is a company that provides Internet access
to ISPs. Sometimes called backbone providers

Internet Service Providers (ISPs)

Provide the delivery subnetworks; it is a company that provides access to
the Internet. For a monthly fee, the service provider gives you a software
package, username, password and access phone number, In addition to serving
individuals, ISPs also serve large companies, providing a direct connection
from the company's networks to the Internet

INTERNET NETWORK ARCHITECTURE: INTERNET PROTOCOLS

Protocols
Is a set of rules that determine how two computers communicate with one
another over a network
It embody a series of design principles
Interoperable— the system supports computers and software from different
vendors. For e-commerce this means that the customers or businesses are not
required to buy specific systems in order to conduct business.
Layered— the collection of Internet protocols work in layers with each layer
building on the layers at lower levels.
Simple— each of the layers in the architecture provides only a few functions
or operations. This means that application programmers are hidden from the
complexities of the underlying hardware.
End-to-End— the Internet is based on “end-to-end” protocols. This means
that the interpretation of the data happens at the application layer and not
at the network layers. It’s much like the post office.

TCP/IP ARCHITECTURE: TCP/IP

Consists of two main components: Transmission Control Protocol (TCP) which
Ensures that 2 computers can communicate with one another in a reliable
fashion and Internet Protocol (IP) which formats the packets and assigns
addresses, packets are labeled with the addresses of the sending and
receiving computers
• 1999 version is version 4 (IPv4)
• Version 6 (IPv6) has just begun to be adopted

DOMAIN NAMES
Reference particular computers on the Internet, it is an alternative way to
find a computer on the internet without using cumbersome internet number (IP
address). It is divided into segments separated by periods
For example, in the case of “www.microsoft.com”
• “www” is the specific computer
• “com” is the top level domain
• “microsoft” is the subdomain
Internet Assigned Numbers Authority (IANA)
controls the domain name system
Network Solutions, Inc. (NSI)
Issues and administers domain names for most of the top level domains

New World Network: Next Generation Internet

Next Generation Internet (NGI) is US Government initiated and sponsored
Started by the Clinton Administration, this initiative includes government
research agencies, such as:
• The US Defense Advanced Research Projects Agency (DARPA)
• The US Department of Energy
• The US National Science Foundation (NSF)
• The US National Aeronautics and Space Administration (NASA)
• The US National Institute of Standards and Technology
Aim of the NGI
• To support next generation applications like health care, national
security, energy research, biomedical research, and environmental
monitoring

WEB-BASED CLIENT/SERVER
Web browsers servers need as way to:
Locate each other so they can send requests and responses back and forth,
and communicate with one another

Uniform Resource Locators (URLs) solve this problem. A new addressing scheme
Complete syntax - access-method://server-name[:port]/directory/file

Hypertext Transport Protocol (HTTP)

A new protocol
Lightweight, stateless protocol that browsers and servers use to converse
with one another
Statelessness - every request that a browser makes opens a new connection
 that is immediately closed after the document is returned
• Represents a substantial problem for e-commerce applications
• An individual user is likely to have a series of interactions
with the application
MIME (Multipurpose Internet Mail Extension)
• Describes the contents of the document
• In the case of an HTML page the header is “Content-type:
text/html”

WEB BROWSERS

IE suite of components consists of the browser along with the following tools:
• Outlook Express for e-mail reading
• FrontPage Express for authoring of HTML Web pages
• Net Meeting for collaboration
Netscape Navigator suite consists of the browser plus the following
components:
• Messenger for e-mail reading
• Composer for authoring HTML Web pages
• Collabora for news offerings
• Calendar for personal and group scheduling
• Netcaster for push delivery of Web pages

WEB SERVERS: A SOFTWARE PROGRAM

http daemon in UNIX; http service in Windows NT

Functions:
1. Service HTTP requests
2. Provide access control, determining who can access particular
directories or files on the Web server
3. Run scripts and external programs to either add functionality
to the Web documents or provide real-time access to database and
other dynamic data
4. Enable management and administration of both the server
functions and the contents of the Web site
5. Log transactions that the user makes
Distinguished by: platforms, performance, security, and commerce

INTERNET SECURITY
Cornerstones of Security are
Authenticity
The sender (either client or server) of a message is who he, she or it claims
to be
Privacy
The contents of a message are secret and only known to the sender and receiver
Integrity
The contents of a message are not modified (intentionally or accidentally)
during transmission
Non-repudiation
The sender of a message cannot deny that he, she or it actually sent the message
Digital Envelope
Combination of symmetrical and public key encryption

DIGITAL CERTIFICATES AND CERTIFYING AUTHORITIES

Digital Certificates
Verify the holder of a public and private key is who he, she or it claims
to be
Certifying Authorities (CA)
Issue digital certificates, verify the information and creates a certificate
that contains the applicant’s public key along with identifying information,
Uses their private key to encrypt the certificate and sends the signed
certificate to the applicant

SECURE SOCKET LAYER (SSL)

A protocol that operates at the TCP/IP layer
Encrypts communications between browsers and servers
Supports a variety of encryption algorithms and authentication methods
Encrypts credit card numbers that are sent from a consumer’s browser to a
merchants’ Web site
Secure Electronic Transactions (SET)
A cryptographic protocol to handle the complete transaction
Provides authentication, confidentiality, message integrity, and linkage
Supporting features
• Cardholder registration
• Merchant registration
• Purchase requests
• Payment authorizations
• Payment capture
ACCESS CONTROL
PASSWORD PROTECTION
Passwords are notoriously susceptible to compromise

Users have a habit of sharing their passwords with others,
writing them down where others can see them, and choosing
passwords that are easily guessed.

Browser transmits the passwords in a form that is easily
intercepted and decoded. By making sure that even if the
passwords are compromised the intruder only has restricted
access to the rest of the network; which is one of the roles of
a firewall.

FIREWALLS
o A network node consisting of both hardware and software that isolates a
private network from a public network
o Make sure that even if the passwords are compromised the intruder only
has restricted access to the rest of the network
o Two types
Dual-homed gateway

Bastion gateway connects a private internal network to outside
Internet

Proxies (software programs) run on the gateway server and pass
repackaged packets from one network to the other
Screen-host gateway

Screened subnet gateway in which the bastion gateway offers access to
a small segment of the internal network

Demilitarized zone is the open subnet

SCREENED SUBNET FIREWALL

VIRTUAL PRIVATE NETWORKS (VPN)
A VPN combines encryption, authentication, and protocol tunneling to
provide secure transport of private communications over the public
Internet. It’s as if the Internet becomes part of a larger enterprise
wide area network (WAN). In this way, transmission costs are drastically
reduced because workers can access enterprise data by making a local call
into an ISP rather than using a long distance phone call.

Real challenge of a VPN: To ensure the confidentiality and integrity of the

data transmitted over the Internet
Protocol tunneling
o Support multi-protocol networking
o To encrypt and encapsulate the data being transmitted
o Types of protocol — being used to carry out protocol tunneling

protocols are aimed primarily at site-to-site VPNs (e.g. IPV6)

Protocols are used to support VPNs that provide employees, customers,
and others with dial-up access via an ISP (e.g. Microsoft’s
Point-to-Point Tunneling Protocol (PPTP))

SELLING ON THE WEB

Function Requirements for an Electronic Storefront

Search for, discover, and compare products for purchase

Select a product to be purchased and negotiate or determine its total
price

Place an order for desired products

Have their order confirmed, ensuring that the desired product is
available

Pay for the ordered products (usually through some form of credit)

Verify their credit and approve their purchase

Have orders processed

Verify that the product has been shipped

Request post-sales support or provide feedback to the seller

Electronic storefront must contain:

A merchant system or storefront that provides the merchant’s catalog
with products, prices and promotions

A transaction system for processing orders and payments and other
aspects of the transaction

A payment gateway that routes payments through existing financial
systems primarily for the purpose of credit card authorization and
settlement

OUTSOURCING VS. INSOURCING

Insourcing— build and run the electronic storefront inhouse

Large companies wanting:
To “experiment” with e-commerce without a great investment
To protect their own internal networks
To rely on experts to establish their sites
Outsourcing— contract with an outside firm
Smaller or medium sized companies with few IT staff and smaller budgets
Three types of providers
Internet Malls— offers cross-selling from one store to another and
provides a common payment structure
Internet Service Providers— focused on operating a secure
 transaction environment; not on store content
❙ Telecommunication Companies— includes the full range of
e-commerce solutions

ELECTRONIC CATALOGS AND MERCHANT SERVERS

The virtual equivalents of traditional product catalogs

Commonly include:
• Templates or wizards for creating a storefront and catalog pages
with pictures describing products for sale
• Electronic shopping carts that enable consumers to gather items of
interest until they are ready for checkout
• Web-based order forms for making secure purchases (either through
a SSL or a SET)
• Database for maintaining product descriptions and pricing, as well
as customer orders
• Integration with third party software for calculating taxes and
shipping costs and for handling distribution and fulfillment

Two of the best known products in this category

ICat Electronic Commerce Suite
Standard edition includes:
Catalog templates
Shopping carts
Product searching
Professional edition provides support for:
High-end databases
Integration with ISAPI and Netscape's NSAPI
Options for third-party plug-ins for searching, user tracking, sale
pricing, discounting, etc.

Microsoft’s Site Server Commerce Edition

Features of this product are:
• Commerce Sample Sites providing templates for complete
applications
• Microsoft’s Wallet supporting a variety of digital currencies
• Site Builder Wizard for stores with multi-level departments
• Commerce Server Software Development Kit (SDK) for developing
custom-order processing
• Order processing pipeline for managing orders according to
 specified business rules
• Microsoft’s Wallet Software Development Kit (SDK) for supporting
a variety of digital payment schemes
• Promotion and Cross-selling Manager for administering a range of
specialized promotions, discounts,cross-selling opportunities
• Integration with Microsoft’s Web site development (e.g. Visual
InterDev) and administrative tools (e.g. NT Security Support)

ELECTRONIC COMMERCE SUITES

Offer merchants greater flexibility, specialization, customization and

integration in supporting complete front and back-office functionality

Open Market (www.openmarket.com)

One of the market leaders in the electronic commerce software segment

Provides a compete set of end-to-end transaction services including:
Analysis and Profiling
Demand Generation
Order Management
Fulfillment
Payment
Self-Service
Customer Service
Reporting
CHATTING ON THE WEB
Varied uses of the forums and chat groups
Communication Centers
A virtual meeting place where communications can take place among the
participants
Customer Service
Offer online support where customers can converse with help-line staff
and receive advice
Community Discussion
Provide forums and chat services with a marketing eye toward developing
a community of loyal users, followers and advocates

MULTIMEDIA DELIVERY
Webcasting— describes Internet-based broadcasting of audio and video
content
Types of Webcasts
 Text Streams— Text-only wordcasts and datacasts
To deliver constant news and stock price updates
Ambient Webcasts— Video content
Is captured from a Webcam and delivered as single-frame updates that
are transmitted at periodic intervals
Streaming Audio— Web equivalent of radio
To deliver everything from talk radio to sports broadcasts to music
previews to archived music and radio shows
Streaming Video
To deliver videoconferences where high quality images are not
required and there is not much movement among participants

WEBCASTING

Multicasting
• Stream a Webcast from a central server to other media servers which
are distributed to different locations
• When a listener or viewer clicks on a Webcast link they are
automatically routed to the closest server

BANDWIDTH REQUIREMENTS FOR STREAMING AUDIO AND VIDEO

Bandwidth [1 mbps = 1 million kbps]

• The speed with which content can be delivered
• 14.4 kbps to 56 kbps for connecting to the Internet over the
telephone through modems
• 128 kbps for connecting to the Internet over ISDN telephone lines
• 1 - 1.5 mbps for connecting to the Internet over digital subscriber
line (DSL)
• 10 mbps for downloading over cable wires

INTERNET TELEPHONES

Internet phones
• Programs that let you talk with other people using the Internet
• The added cost to the end user is at best zero and at worst a
substantially lower total charge than a standard telephone call
• PC-to-PC; PC-to-phone; and phone-to-phone
• Vendors who dominate the Internet telephone market space
• VocalTec ( www.vocaltec.com )
 • IDT ( www.met2phone.com )
• Delta Three ( www.deltathree.com )

ANALYZING WEB VISITS

Access logs file
Telling you which pages are most popular, which times are most popular,
which geographical regions make the most requests, and other interesting
tidbits that help site administrators maintain and refine their sites.

PREPARED BY:

SOLANGE
KYOMO
MUNKHE
MASEGESE

INTERNATIONAL BUSINESS STUDENTS YEAR 98 INTAKE

ZHONG SHAN UNIVERSITY

LING NAN COLLEGE