THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

MWANZA CAMPUS
e-Business
ITU 08509
Lecture ONE
Although the terms e-Commerce and e-Business are often used interchangeably, there
are differences. e-Commerce is the commercial transactions carried out using the
electronic means (buying and selling of goods and services on the Internet or other
computer network) in which goods or services are delivered either electronically or in their
tangible or intangible form. Any brick and mortar store can become an e-Commerce
business by adding a virtual storefront with an online catalog. In most cases, e-Business
refers exclusively to Internet businesses (is the conduct of business on the Internet, not
only buying and selling, but also servicing the customers and collaborating with the business
partners. e-Business includes customer service (e-Service) and intra-business tasks.), but it
may also refer to any business that uses Internet technology to improve productivity and
profitability.

Figure1.1 Relationship between e-Business and e-Commerce

What is e-Commerce?

DEFINITION: e-Commerce is an abbreviation used for Electronic Commerce: It is the

process through which the buying, selling, dealing, ordering and paying for the goods and
services are done over the internet is known as e-Commerce.

Note: e-Commerce is widely considered the buying and selling of products over the
computer network (internet), but any transaction that is completed solely through electronic
measures can be considered e-Commerce.

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What is e-Business?

DEFINITION: Electronic business (e-Business) is the conduct of business on the Internet,

not only buying and selling, but also servicing the customers and collaborating with the
business partners. e-Business includes customer service (e-Service) and intra-business
tasks. e-Business is similar to e-Commerce, but it goes beyond the simple buying and
selling of products and services online. e-Business includes a much wider range of
businesses processes, such as supply chain management, electronic order processing and
customer relationship management. e-Business processes, therefore, can help companies to
operate more effectively and efficiently.

Note: e-Business allows companies to link their internal and external processes more
efficiently and effectively, and work more closely with suppliers and partners to better
satisfy the needs and expectations of their customers, leading to improvements in overall
business performance.

Key differences between e-Commerce and e-Business

The points presented below are substantial so far as the difference between e-Commerce
and e-Business is concerned:

 Buying and selling of goods and services through the internet is known as e-
commerce. Unlike e-Business, this is an electronic presence of business, by which
all the business activities are conducted through the internet.

 e-Commerce is a major component of e-Business.

 e-Commerce includes transactions which are related to money, but e-Business

includes monetary as well as allied activities. e-Commerce has an extroverted
approach that covers customers, suppliers, distributors, etc. On the other hand, e-
Business has an ambivert approach that covers internal as well as external
processes.

 e-Commerce requires a website that can represent the business. Conversely, e-

Business requires a website, Customer Relationship Management and Enterprise
Resource Planning for running the business over the internet.

 e-Commerce uses the internet to connect with the rest of the world. In contrast to e-
Business, the internet, intranet and extranet are used for connecting with the
parties.

THE ADVANTAGES AND DISADVANTAGES OF e-Business

Advantages

1. Worldwide Presence - This is the biggest advantage of conducting business online.

A firm engaging in e-Business can have a nationwide or a worldwide presence. IBM
was one of the first companies to use the term e-Business to refer to servicing

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 customers and collaborating with business partners from all over the world. Dell Inc.,
too, had a flourishing business selling PCs throughout the U.S., only via telephone
and the Internet till the year 2007. Amazon.com is another success story that helps
people buy internationally from third parties. Hence, worldwide presence is ensured,
if companies rethink their business with regard to the Internet.

2. Cost-effective Marketing and Promotions - Using the web to market products

guarantees worldwide reach at a nominal price. Advertising techniques, like pay per
click advertising, ensure that the advertiser only pays for the advertisements that
are actually viewed.

3. Developing a Competitive Strategy - Firms need to have a competitive strategy

in order to ensure a competitive advantage. Without an effective strategy, they will
find it impossible to maintain the advantage and earn profits. The strategy that the
firms can pursue can be a cost strategy or a differentiation strategy.

For instance, till the year 2007, Dell Inc. was selling computers only via the Internet
and the phone. It adopted a differentiation strategy by selling its computers online
and customizing its laptops to suit the requirements of the clients. Thus, e-Business
resulted in Dell Inc. managing to capture a chunky segment of the market using the
differentiation strategy.

4. Better Customer Service - e-Business has resulted in improved customer service.

Many a time, on visiting a website, the customer is greeted by a pop-up chat
window. Readily available customer service may help in encouraging the customer to
know more about the product or service. Moreover, payments can be made online,
and products can be shipped to the customer without the customer having to leave
the house.

5. Curtailing of Transaction Cost - The nature of online business is such that, the
costs incurred for every transaction to go through smooth and sound, there is no
acting middleman. Websites are sufficiently loaded with directions to facilitate stress-
free transactions. Simple and succinct instructional tabs, generally, save the
potential buyer from predicaments of any sort.

The mode of payment is predetermined, promising security to the customer. Thus,

online payments are a no-ho-hum affair. All that you are left with, as the proprietor
of your online business, is to download the requirement order and ship it. This
demands effort, too; however, the toil is far less than a tangible business profile.

6. Overhead Costs Are Reduced - An e-Business, essentially, is independent of costs

that are incurred due to business having a physical entity. Utility bills and other
expenses are manageable. You also cut back on costs incurred for hiring personnel
and retaining them with competitive incentives topped with abundant facilities.
Running an e-Business is highly convenient as the proprietor does not require rent

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 another site to execute the business.

Disadvantages of e-Business
e-Commerce/Business disadvantages can be broadly classified in two major categories:
 Technical disadvantages
 Non-Technical disadvantages
Technical Disadvantages
 There can be lack of system security, reliability or standards owing to poor
implementation of e-Commerce/e-Business.
 Software development industry is still evolving and keeps changing rapidly.
 In many countries, network bandwidth might cause an issue as there is
insufficient telecommunication bandwidth available.
 Special types of web server or other software might be required by the vendor
setting the e-Commerce/e-Business environment apart from network servers.
 Sometimes, it becomes difficult to integrate e-Commerce/ e-Business software or
website with the existing application or databases.
 There could be software/hardware compatibility issue as some e-Commerce/e-
Business software may be incompatible with some operating system or any other
component.

Non-Technical Disadvantages
 Initial cost: The cost of creating / building e-Commerce/e-Business application
in-house may be very high. There could be delay in launching the e-
Commerce/e-Business application due to mistakes, lack of experience.
 User resistance: User may not trust the site being unknown faceless seller.
Such mistrust makes it difficult to make user switch from physical stores to
online/virtual stores.
 Security/ Privacy: Difficult to ensure security or privacy on online transactions.
 Lack of touch or feel of products during online shopping.
 e-Commerce applications are still evolving and changing rapidly.
 Internet access is still not cheaper and is inconvenient to use for many potential
customers like one living in remote area (villages).

Key Differences between Traditional Commerce and e-Commerce

The following points are noteworthy so far as the difference between traditional commerce
and e-Commerce is concerned:

1. Traditional commerce is a part of business that focuses on the exchange of products

and services, and includes all those activities which encourage exchange, in some
physical presence while e-Commerce means carrying out commercial transactions or
exchange of information, electronically on the internet.

2. In traditional commerce, the transactions are processed manually whereas, in the

case of e-Commerce, there is automatic processing of transactions.

3. In traditional commerce, the exchange of goods and services, for money can take
place, only during working hours. On the other hand, in e-Commerce, the buying and
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 selling of goods can occur anytime.

4. One of the major drawbacks of e-Commerce is that the customers cannot physically
inspect the goods before purchase, however, if customers do not like the goods after
delivery they can return it within the stipulated time. Conversely, in traditional
commerce physical inspection of goods is possible.

5. In traditional commerce, the interaction between buyers and sellers is direct, i.e.
face to face. As against this, there is indirect customer interaction, in the case of e-
Commerce, because it may be possible that the customer is miles away from where
they place an order for the purchase of goods.
6. The scope of business in traditional commerce is limited to a particular area, i.e. the
reach of business is limited to the nearby places where it operates. On the contrary,
the business has worldwide reach in case of e-Commerce, due to its ease of access.

7. As there is no fixed platform for information exchange in traditional commerce, the

business has to rely on the intermediaries for information fully. Unlike e-Commerce,
wherein there is a universal platform for information exchange, i.e. electronic
communication channel, which lessen the dependency on persons for information.

8. Traditional commerce is concerned with the supply side. In contrast, the resource
focus of e-Commerce is the demand side.
9. Payment for transactions can be done by paying cash, cheque or via credit card. On
the other hand, payment in e-Commerce transactions can be done through online
payment modes like credit card, fund transfer, etc.

10. The delivery of goods is immediate in traditional commerce but in the case of e-
Commerce, the goods are delivered at the customer’s place, after some time, usually
within a week.

COMPUTER NETWORKS

What is computer network?

Computer Network is the connection to two or more computers, connected together for
the purpose of sharing resources (resource could be: applications software, data, hardware,
information, files, technology and etc).

TYPES OF COMPUTER NETWORKS

We often define the type of Computer Network depending upon the geographical area
covered by a particular network, and these types are like:
 Local Area Network (LAN)
 Metropolitan Area Network (MAN)
 Wide Area Network (WAN)

1. Local Area Network (LAN) – These types of computer networks connect network
devices over a relatively short distance. Quite often, a networked office building, home
or school contains a single LAN although it is normal to come across a building that
contains a few small LANs. On a few occasions, a LAN may also span over a group of
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 nearby buildings. Such computer networks are usually owned by one organization (In
other word we can say LAN is Private computer network).

Example of LAN:
i. Networking in home, office.
ii. Networking between two computers.
iii. Wi-Fi (When we consider wireless LAN)

Intranet, An intranet is a private computer network that uses Internet Protocol

technology to share information, operational systems, or computing services within an
organization.

Point to understand: through different scholars used intranet as example of LAN,

there slightly difference between the two terms: as we said LAN is the computer network
span a room or building mean if you have a campus like IFM Mwanza we have several
buildings, means each building can has its own LAN. But when we speak in term of
Intranet: since all LAN of different building are connected to form IFM network and the
network is only accessed in IFM Mwanza Campus, which is Intranet. So please don’t be
confused by the two terms

2. Metropolitan Area Network (MAN) – This is a network that spans over a physical area
like a city or state that is smaller than a WAN but larger than a LAN. Quite often, such
computer networks are owned and operated by single entities such as government
bodies or large corporations (MAN is also private computer network since its own by
someone).

Example of MAN:
i. Networking between banks in a city.
ii. Used in air reservation.

IFM is one institution with several campuses (Dar es Salaam & Mwanza), so if you have
the network that extends the functionality of other College’s business partners (like
NMB, CRDB, NACTE) we say “you are using extranet”. Extranet may be taken as
example of MAN: Speaking about Extranet, Extranet is a private network that uses
Internet technology and the public telecommunication system to securely share part of a
business's information or operations with suppliers, vendors, partners, customers, or
other businesses. In other words we can say Extranet, is the private computer network
that can be accessed by the outside part of the organization.

3. Wide Area Network (WAN) – As the name suggests, a WAN spans over a continents to
continents (globally). It may be regarded as a collection of LANs dispersed over a
geographical area. The internet is a very good example of a WAN. Most WANs exist
under distributed or collective ownership and management and unlike the LANs, are not
necessarily owned by one organization (in other word, we can say: is the public
computer network since no one has full mandate of the network).
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INTERNET
What is internet?
Internet is a public global computer network that connects different networks for the
purpose of sharing resources (Data/Information, Hardware, Software, User and etc.).

What is a history of internet?

The Internet developed from the ARPANET, which was funded by the US government to
support projects within the government and at universities and research laboratories in the
US – but grew over time to include most of the world's large universities and the research
arms of many technology companies. Use by a wider audience only came in 1995 when
restrictions on the use of the Internet to carry commercial traffic were lifted.

Who own the internet?

Answer: No one actually owns the Internet, and no single person or organization controls
the Internet in its entirety. The Internet is more of a concept than an actual tangible entity,
and it relies on a physical infrastructure that connects networks to other networks.

How do we get internet services?

Answer: we always have internet services from Internet Service Providers (ISPs). If you
want to access the internet at home, you'll need an Internet Service Provider (ISP) and a
modem to connect to the ISP.
The Internet service provider (ISP) is an organization that provides services for
accessing, using, or participating in the Internet. List of ISP in Tanzania: Africa Online,
Powernet by Powercomputers, SimbaNET, RAHA - Internet Services, TTCL Broadband,
Zanzibar Datacom Limited and etc.

INTERNET SERVICES
There variety of services offered by internet, some of them are:
 World Wide Web - the WWW is a system of interlinked hypertext documents that are
accessed via the Internet. With a web browser, one can view web pages that may
contain text, images, videos, and other multimedia and navigate between them via
hyperlinks.
 Telnet–is the network protocol that allows a user on one computer to log into another
computer that is part of the same network.
 Electronic Mail (E-mail)-messages distributed by electronic means from one computer
user to one or more recipients via a computer network (often internet).
 File Transfer Protocol (FTP)-is a standard network protocol used to transfer computer
files from one host to another host over a TCP-based network, such as the Internet. FTP
is built on client-server architecture and uses separate control and data connections
between the client and the server.
 Newsgroups-A newsgroup is an Internet-based discussion about a particular topic.
These topics range from sports, cars, investing, teen problems, and some stuff you
probably don't want to know about. Users post messages to a news server which then
sends them to a bunch of other participating servers. Then other users can access the
newsgroup and read the postings. The groups can be either "moderated," where a
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 person or group decides which postings will become part of the discussion, or "un-
moderated," where everything posted is included in the discussion.
 Chat-is the Real-time communication between two users via computer. Once a chat has
been initiated, either user can enter text by typing on the keyboard and the entered text
will appear on the other user's monitor. Most networks and online services offer a chat
feature.
 Video conference –is a conference in which participants in different locations are able
to communicate with each other in sound and vision.
 Streaming video is content sent in compressed form over the Internet and displayed
by the viewer in real time. With streaming video or streaming media, a Web user does
not have to wait to download a file to play it. Instead, the media is sent in a continuous
stream of data and is played as it arrives.
 Electronic Business and Electronic commerce (e-Commerce and e-Business) – is
the buying and selling of products and services by businesses and consumers through an
electronic medium, without using any paper documents. E-commerce is widely
considered the buying and selling of products over the internet, but any transaction that
is completed solely through electronic measures can be considered e-commerce.

Home work
1. Differentiate e-Business from e-Commerce
2. Compare e-Commerce to e-Business
3. Discuss the similarities and dissimilarities of e-Commerce and traditional commerce.
4. What are some of the products and services that can be purchased online?
5. What are some of the advantages of e-commerce? What are some of the
disadvantages

Assignment
1. Discuss why the adoption/ adaption of e-Commerce in most of the third world
countries is the point of discussion.
2. Corporate vulnerability is a disadvantage of e-Commerce, Discuss
3. e-Commerce is the mainly offered in the platform of the presences of computer
network (Primary Internet). The brief explains the capabilities and limitations of the
internet.

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