Unit I

Introduction to e-Business
CONCEPT OF E-BUSINESS
 Electronic business (e-business) can be defined as the use of the
internet to business processes, electronic commerce, organizational
communication and collaboration within a company and with its
customers, suppliers, and other stakeholders.

 E-businesses utilise the internet, intranets, extranets and other

networks to support their commercial processes

 These electronic business processes include buying and selling

products and services, servicing customers, processing payments,
managing production control, collaborating with business partners;
sharing information; running automated employee services, recruiting
etc.
CONT.

 e-Business is therefore a broader concept and describes

arrangements where organizations have redesigned their business
structures, processes and services to take advantage of Internet
capabilities.

 e-Business can be applied to strategy and operations. For example,

an organization needs an improved e-business strategy (or e-
business technology)

 e-business is used as an adjective to describe businesses that mainly

operate online i.e. they have no physical presence on the high streets
and seek to minimize customer service and support through enabling
web self-service
DEFINING E-BUSINESS
 “The automation of the entire spectrum of interactions between
enterprises and their distributed employees, trading partners,
suppliers and customers” By Aberdeen Group Website

 “The transformation of key business process through the use of

Internet technologies” By IBM

 “Automated business process over computer- mediated network” By

OECD (Organisation for Economic Co-operation and
Development)
ESSENTIAL FEATURES OF AN E-BUSINESS

1. Makes greater use of electronic devices in the processing and

communicating of data.

2. Allows increased integration of databases and hardware devices

(largely to the ‘open protocols’ that govern the transfer of data
between systems).

3. Enables users to engage ‘interactively’ with systems and services –

for instance, to purchase goods, check on orders or collaborate in
virtual teams or communities.
NATURE OF E-BUSINESS

 E-business is used when a company enables its processes to do

business in a more efficient way using Web technologies.

 This might include procuring goods and services, dealing with

customers as well as selling products.

 The exponential growth of the Internet has driven the accelerated

expansion of e-business process.

 The development of the Web has made business-to-business (B2B)

activity possible, leading to the development of Internet exchanges.
SCOPE OF E-BUSINESS
 Technology has helped rigid functional and divisional structures to be
replaced by traditional systems.

 Many business processes are now automated.

 Enterprise Resource Planning Solutions (ERP Systems) are now

widely available providing management with information that is
available almost instantaneously.

 All types of business functions such as production, finance, marketing

etc. are carried out through computer network.

 All types of managerial activities such as planning, managing,

controlling etc. are carried out through computer network.
GOAL OF E-BUSINESS
 Positioning on new markets

 Increasing the quality of products or services

 Prospecting new clients

 Increasing customer loyalty

 Increasing the efficiency of internal functioning

 The overall strategy is to create transparency for the employees and favors a common
culture

 The mode of functioning is that the players assume responsibilities

 Teamwork which favors improvement of competences in employees

CONT.
 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

 Increased relationships with each other

 Increased responsiveness and anticipation

 Resources sharing which is beneficial for clients

IMPACT OF E-BUSINESS

 E-business is fast becoming an important initiative for companies to

consider, one that impacts every aspect of how a business is run.

 Impact of e-business implementation on various aspects of the

organisation such as strategy, human resources, customer
relationship management, the IT department, technology, the
business environment, trust, service management and performance
metrics

 E-business is changing all the rules and models. An organization’s

ability to embrace new technology and business models is key to
increasing the organisation’s productivity.
CONT.

 The Internet economy necessitates a fundamental transformation of traditional

organisations.

 E-business influence on an organisation can impact business efficiency and

should be felt across the organisation from the time the sales force initiates a
transaction, through the manufacturing and service cycles, right up until the
time when the customers pay their bills.

 The impact of e-business on a company’s effectiveness is found in its overall

financial well-being.

 E-business is not just about buying over the Internet, it is about increasing the
value of the organisation by improving the way it operates.
BENEFITS OF E-BUSINESS
• Human resource services such as benefits, retirement planning and
job postings.
• Internal communication.
• An executive information system.
• Purchasing.
• Sales force automation and management.
• Product development teams.
• Knowledge management.
• Improving relationships with partners.
• Improving time to market.
• Reducing operational costs.
• Increasing employee communication and satisfaction.
• Maintaining a competitive edge.
• Improving customer satisfaction.
ADVANTAGES OF E-BUSINESS
 Removes location and availability restrictions

 Reduces time and money spent

 Expedites customer service

 Shows you how to improve

 Keeps your business relevant

E-COMMERCE
 Electronic commerce (e-commerce) is the buying and selling, marketing and
servicing of products and services via computer networks.

 E-commerce can best be conceived as a subset of e-business.

 Electronic commerce or e-commerce refers to a wide range of online business

activities for products and services

 E-commerce is usually associated with buying and selling over the Internet,
or conducting any transaction involving the transfer of ownership or rights to
use goods or services through a computer-mediated network
CONT.
1. The terms e-business and e-commerce are often used interchangeably.
When electronic medium is used in all the day-to-day activities, then it may be
termed as e-business. When a commercial transaction takes place over
electronic network, then it is termed as e-commerce.

2.E-business is a very broad concept that involves a business organization to

use electronic medium to carry out all specialized or overall business activities.
In e-business, information and computing technologies are used to enhance
one’s business. It includes any process that a business organization conducts
over electronic and computer enabled network.

3.E-business deals with recruiting, training employees and sharing any internal
information to enhance business process. In e-commerce, information and
computing technologies are used in inter business and intra-business
transactions and in business to consumer transactions.
CONT.
4.Some experts consider when business is completely carried on through an
electronic medium, it may be referred to as e-business. E-business does not
have physical presence in a market. When a business organization physically
owns an office and along with its physical presence carries out a business
transaction over internet, it may be referred as e-commerce.

5.Amazon (Amazon.com) and eBay (ebay.com) are considered to be the

world’s two biggest e-business units. When Nalli Stores along with its physical
presence sells textiles through its web site (nalli.com), then it may be referred
as e-commerce.
ADVANTAGES OF E-COMMERCE
 The possibility of the small companies to compete with the large
companies

 Permanent contact with customers for 24 hours and 7 days

 International markets penetration facilities

 The decrease of the functioning costs

 New possibilities for performing a direct marketing (one-to-one)

DISADVANTAGES OF E-COMMERCE
 The Fraud

 The Security

 Launch and integration costs

 Absence of human contact

E-Business Model
■ A business model is the method of doing business by which a company can sustain
itself, that is, generate revenue.

■ The business model spells out how a company makes money by specifying where it is
positioned in the value chain.

■ In the new economy, companies are creating new business models and reinventing old
models.

■ Presently, there is no single, comprehensive and cogent taxonomy of Web business

models that one can point to.

■ Although there are many different ways to categorize e-business models, they can be
broadly classified as follows:
1. E-Business models based on the relationship of Transaction Parties

2. E-Business models based on the relationship of Transaction Types

E-Business Model Based on Transaction Partners:

E-business Models :

BUSINESS

C2C B2B
B2C

CONSUMERS

GOVERNMENT
G2G
What is Business to Consumers (B2C) ?
■ B2B stands for transaction activities involving two business entities (business-to-
business transaction). B2C stands for transaction activities involving a business and a
consumer (business-to-consumer transaction).

■ Electronic commerce comprises commercial transactions, involving both organizations

and individuals.

■ From the technical point of view e-commerce is the processing and transmission of
digitized data.

■ Example: Flipkart,
Amazon etc.
What is Consumer to Business (C2B) ?
■ C2B stands for transaction activities involving customer (being the seller) and business
(being the buyer) (Customer-to-business transaction).

■ It is similar to the B2C model, however, the difference is that in this case the consumer
is the seller and the business organization is the buyer.

■ In this kind of a transaction, the consumers decide the price of a particular product
rather than the supplier.

■ E.g. – Naukri.com,
Monster.com.
What is Consumers to Consumers (C2C) ?
■ C2C stands for consumer to consumer electronic commerce.

■ The Internet has facilitated new types of C2C although it is important to note that this kind
of commerce -- in the form of barter, yard sales, flea markets, swap meets, and the like --
has existed since time immemorial.

■ Notably, most of the highly successful C2C examples using the Internet actually use
some type of corporate intermediary and are thus not strictly "pure play" examples of
C2C.

■ Example: OLX,
QUIKR etc.
What is Business to Business (B2B) ?
■ B2B stands for "business-to-business," as in businesses doing business with other
businesses.

■ The term is most commonly used in connection with e-commerce and advertising, when
you are targeting businesses as opposed to consumers.

■ Business-to-business electronic commerce (B2B) typically takes the form of automated

processes between trading partners and is performed in much higher volumes than
business-to-consumer (B2C) applications.

■ E.g.:
Industrybuying.com,
Urjakart etc.
What is Government to Government (G2G) ?

■ Government to government (G2G) is the electronic sharing of

data and/or information systems between government agencies,
departments or organizations.

■ The goal of G2G is to support e-government initiatives by

improving communication, data access and data sharing.
What is Business to Government (B2G) ?

■ B2G is the idea that government agencies and businesses can

use central Web sites to conduct business and interact with
each other more efficiently than they usually can off the Web.

■ Example for B2G are e-procurement websites (dhi.nic.in) and

trade facilitation websites (investindia.gov.in) etc.
What is Government to Customer (G2C) ?

■ The e-Governance scenario has come a long way since

computers were first introduced.
■ The focus now is on extending the reach of governance to have
a major impact on the people at large.

■ e-Governance is an important tool to enhance the quality of

government services to citizens, to bring in more transparency,
to reduce corruption and subjectivity, to reduce costs for citizens
and to make government more accessible.
E-Business Models Based on TransactionTypes:
■ Based on transaction type, different types of transactions can be identified as listed
below:
■ Brokerage
■ Aggregator
■ Info-mediary
■ Community
■ Value chain
■ Advertising
■ These transaction types take place in a variety of ways.
■ Moreover, any given firm may combine one or two of these as part of its web business
strategy.
Brokerage Model
■ Brokers are market-makers: they bring buyers and sellers together and facilitate
transactions.
■ Brokers play a frequent role in business-to-business (B2B), business-to-consumer
(B2C), or consumer-to-consumer (C2C) markets.
■ Usually a broker charges a fee or commission for each transaction it enables.
■ Types of Brokerage Models are:
– Marketplace Exchange
– Buy/Sell Fulfillment
– Auction
– Transaction
– Search
– Virtual Marketplace
Aggregator Model
■ Electronic commerce business model where a firm (that does not produce or
warehouses any item) collects (aggregates) information on goods and/or services
from several competing sources at its website.

■ The firm's strength lies in its ability to create an 'environment' which draws visitors to
its website, and in designing a system which allows easy matching of prices and
specifications.

■ Aggregator model includes:

■ Virtual Merchant

■ Catalog Merchant

■ Bit Vendor

■ Subscription model
Info-mediary Model
■ Data about consumers and their consumption habits are valuable, especially when that
information is carefully analyzed and used to target marketing campaigns.
■ Independently collected data about producers and their products are useful to consumers
when considering a purchase.

■ Some firms function as info-mediaries (information intermediaries) assisting buyers

and/or sellers understand a given market.

■ Info-mediary model includes:

■ Advertising Networks

■ Audience Measurement Services

■ Incentive Marketing
Community Model
■ The viability of the community model is based on user loyalty; Users have a high
investment in both time and emotion.

■ Revenue can be based on the sale of ancillary products and services or voluntary
contributions; or revenue may be tied to contextual advertising and subscriptions for
premium services.

■ The Internet is inherently suited to community business models and today this is one of
the more fertile areas of development, as seen in rise of social networking.

■ Types are :

– Open Source

– Open Content

– Public Broadcasting

– Social Networking Services

Value Chain Model
■ Value chain selling is supported through two business models: demand chain and a
supply chain; E-Commerce supports the transactions through both the demand chain
business model and supply chain business model.

■ Products, goods, services, or information are delivered through the parties of the value
chain from producers to end users.

■ A value chain also has relationship and administrative aspects, that is, you can manage
the relationship of the partners or enterprises in your value chain, as well as offer some
administrative services to those parties.

■ As a result, value chain business models must manage the two sides of their businesses:
their customers and direct sales, and their channel partners and suppliers; each requires
its own management channels and practices.
Advertising Model
■ The web advertising model is an extension of the traditional media broadcast model.

■ The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for
free) and services (like email, IM, blogs) mixed with advertising messages in the form of
banner ads.

■ The banner ads may be the major or sole source of revenue for the broadcaster.The
advertising model works best when the volume of viewer traffic is large or highly
specialized.

■ Advertising model includes:

– Search Engine Portals
– Classifieds
– User Registration Content-based sites
– Contextual Advertising / Behavioral Marketing
E-Business Application
■ E-Business application can be sub-categorized as :

1. Internal Business Systems

2. Enterprise Communication & Collaboration

3. Electronic Commerce
Internal Business Systems
■ These include the internal systems and processes of a business like :

o customer relationship management

o enterprise resource planning

o document management systems

o human resources management.

Enterprise Communication and Collaboration
■ These include the communication systems and collaboration
processes that the business uses or might use :

o VoIP

o content management system

o e-mail

o voice mail

o Web conferencing

o business process management.

Electronic Commerce
■ These include the transactional part of e-business i.e. e-commerce :

o internet shop

o supply chain management

o online marketing

o Other e-marketing
 E-Business and the Internet
• Effect of the Internet on the marketplace:
–Reduces information asymmetry
–Offers greater flexibility and efficiency because of:
•Reduced search costs and transaction costs
•Lower menu costs
•Greater price discrimination
•Dynamic pricing
–May reduce or increase switching costs
–Increased market segmentation
–Stronger network effects
–More disintermediation
The Benefits of Disintermediation to the Consumer
Internet-based Business sector
 Internet-based Business sector
•Digital goods
–Goods that can be delivered over a digital network
•For example: music tracks, video, software, newspapers,
books
–Cost of producing first unit is almost entire cost of product
–Costs of delivery over the Internet very low
–Marketing costs remain the same; pricing highly variable
–Industries with digital goods are undergoing revolutionary
changes (publishers, record labels, etc.)