Chapter 1.

Introduction

Defining e-business The development of the new economy Types of e-business and related industries The growth of e-business Use of the internet Key people

Defining e-business
e-business:
The use of the internet to network and empower business processes, electronic commerce, organisational communication and collaboration within a company and with its customers, suppliers and other stakeholders.

e-commerce:
The buying and selling, marketing and servicing of products and services via computer networks. Since e-business includes the process of transacting with suppliers and customers there is an overlap in activities with e-commerce.

The relationship between e-business and e-commerce

e-business
Buying and selling electronically Electronic procurement Electronic distribution Online customer service Electronic marketing Secure transactions Automation of processes Electronic collaboration

e-commerce
Sell-side e-commerce Buy-side e-commerce

The development of the new economy

The new economy:
Based on entrepreneurship in knowledge creation and sharing, innovation and creativity, and utilising information technology (IT) for developing and selling new products and services.

Distinct contributions to the economy through use of the internet,

digital technology or information and communications technologies (ICTs).

The new economy has been boosted by the development of the

infrastructure that supports the internet, ICTs and digital technology.

The development of the new economy

High speed internet access = more people are connected
to the internet.

Greater speed of access, flexibility and scope of

activities.

Digital exchanges and fibre-optic networks = increased

convergence of technologies and industries such as the internet, broadcasting and telecommunications.

Modern businesses are part of an integrated network of

organisations.

The development of the new economy

ICTs have transformed business by:

Smoothing the process transactions Increasing collaboration among partners Reducing time or distance constraints Removing boundaries in organisations Integrating global supply chains Emphasising learning in organisations Emphasising change, flexibility and agility.

Old economy v New economy Key differences: Economy factors

Issues
Markets Competition Structure Value driver

Old economy New economy

Stable National Manufacturing Physical capital Dynamic and complex International & global Service Human capital

Old economy v New economy Key differences: Business factors

Issues
Organisation Production Growth driver Technology driver Competitive advantage Relationships

Old economy
Hierarchy Mass Capital & labour Machines Low cost Independent

New economy
Network or virtual Flexible, customised Innovation, knowledge Digital, electronic Speed, quality Collaborative

Old economy v New economy Key differences: Consumer factors

Issues

Old economy

New economy

Tastes Skills Education Work relations Workplace

Stable Specialised Trade orientated Confrontational Stable

Segmented Multiple, flexible Lifelong learning Collaborative Insecure

Types of e-business and related industries

Business-to-business (B2B):
provides e-business services across (or parts of) the supply chain such as e-procurement, logistics, stock control, ordering, payments and distribution.

Business-to-consumer (B2C):
market and sell products or services to consumers

Consumer-to-consumer (C2C):
some websites bring consumers together for specific purposes eg. e-Bay for online auctions

e-Business: Related industries

Internet service providers (Yahoo!, Google, AOL) Applications software (Apple) Hardware such as computers and modems (Dell) Maintenance and support (PC World) Computer analysts IT specialists Software and applications consultants Security consultants (McAfee, Norton) Network infrastructure developers (BT, Cisco)

Growth of e-business
Development of the World Wide Web in the early 1990s extended
the functionality of the internet by linking documents.

WWW and related hypertext mark-up language (HTML) allowed Commercialisation of the WWW and greater public usage led to
the rapid rise of the internet economy.

users to access pages, documents and servers from many different websites creating a network of interconnectivity.

1993 -1996 number of computer users increased from zero to 10

million

By 2004 the number of users stood at 500 million

Growth of the internet: Key advantages

Firms Ease of access Ease of use Access to wider market Potential economies of scale Marketing economies Improved logistics Automated processes Network externalities Improved customer knowledge Lower costs Increased efficiency Consumers Ease of access Ease of use Access to market information Convenience Lower prices Personalisation Customisation Network externalities One-to-one customer service Access to internet community Empowerment

Use of the internet: top ten activities in the UK

(Source: Oxis, 2005)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Check e-mail School material Product information Surfing/browsing Look up facts Plan travel Buy online Local information News Instant messaging

Key people

Tim Berners Lee: Marc Andreeson: Bill Gates: Michael Dell: Jerry Yang: David Filo: Pierre Omidyar: Jeff Bezos:

developed the WWW developed web browser Netscape co-founder of Microsoft founder of Dell computers co-founder of Yahoo! co-founder of Yahoo! founder of e-Bay founder of Amazon.com

Chapter 1: questions and tasks

1. Define e-business.
Answer: Use of the internet to network and empower business processes, electronic commerce, organisational communication and collaboration within a company and with its customers, suppliers and stakeholders.
2. What is e-commerce?

Answer: Buying and selling, marketing and servicing of products and services via computer networks.

Chapter 1: questions and tasks

3. Highlight five functions that companies can carry out using e-business applications.

Possible answers: Buying, selling, procurement, marketing, collaboration, distribution, transaction payments, stock control, supply chain management, customer relations, automation of business processes. 4. What are the three main types of e-business? Answer: Business-to-business (B2B) Business-to-consumer (B2C) Consumer-to-consumer (C2C)

Chapter 1: questions and tasks

5.Identify four key features of the new economy.

Possible answers: Information-based underpinned by technology such as internet and information and communications technologies (ICTs), broadband, mobile telephony. Based on knowledge sharing, innovation and creativity. Convergence of industries such as telecommunications, broadcasting and internet services. Businesses are part of an integrated network of organisations. No time or distance constraints for business. New organisational structures featuring dislocated workers, network and virtual organisations. Key drivers are human intellectual capital, innovation, speed and quality.

Chapter 1: questions and tasks

6. Outline five advantages of using the internet for businesses.

Possible answers: Ease of access Ease of use Access to wider markets Potential economies of scale Marketing economies Improved logistics Automated processes Network externalities Lower costs Increased efficiency

Chapter 1: questions and tasks

7. Outline five advantages of using the internet for consumers.

Possible answers: Ease of access Ease of use Access to market information Convenience Lower prices Personalisation Customisation Network externalities One-to-one customer service Access to the internet community Empowerment

Chapter 1: questions and tasks

8. Match the key people to their company. Bill Gates Jeff Bezos Amazon Pierre Omidyar Jerry Yang Dell Computers Michael Dell Napster

e-Bay Microsoft Shawn Fanning Yahoo!

Answers: Bill Gates: Jeff Bezos: Pierre Omidyar: Jerry Yang: Shawn Fanning: Michael Dell:

Microsoft Amazon e-Bay Yahoo! Napster Dell Computers

Please Go through following websites

http://www.internetworldstats.com/stats.h
tm

http://www.internetworldstats.com/top20.
htm