1. Define the Internet, Intranet and E-Commerce. Discuss the advantage of E-commerce over conventional business. Briefly describe the different generation of E-business.
The network technology had been developed during 1970s. The network hardware and software improved as a result of research and investment. The network became a reality and every organization laid network cables and connected their computers and other resources to the network. Such a network is called Intranet. An Intranet is restricted to an organization. When a network of networks is formed, it is called Internet. In other words, Internet is a global network of computer networks. The Internet connects computing resources of various organizations such as academic institutes, business organizations and government organization. All networks, which are part of the Internet, follow a protocol called TCP/IP protocol for communication. Internet has affected business and people both. The Internet provides fast and inexpensive communication channels. The Internet is used for transferring data files, e-mail messages and for sharing documents and images. Internet is also used for chatting. There are news groups, which use Internet to share ideas. People, sitting miles apart, work on the same project making use of Internet to exchange ideas in real time. The Internet is also used for education and entertainment.
The Internet has changed the way business is done. A new business paradigm termed electronic commerce has come into existence. We will discuss e-commerce in some detail little later. Consumers are able to shop for goods and services from all over the world in the comfort of their homes. The individuals are able to shop, bank, work, and entertain themselves without leaving their homes. The payments are also made through Internet. The organizations, which provide these services, also use Internet. These organizations use Internet to conduct electronic meetings, train employees in many different locations simultaneously. The manufactures and corporate houses directly deal with the producers without going through the retailers. A large percentage of people are still not part of Internet. However, Internet users are increasing rapidly. Internet has facilitated development of workflow systems across networks. As we have already discussed, workflow systems are business process automation tools that place system controls in the hands of user departments. They are very flexible and can be designed to automate almost any information-processing task. The primary purpose of workflow systems is to provide users with tracking, routing, document imaging, and other capabilities designed to improve business processes. Teleconferencing, video conferencing and screen sharing are some of the other Internet applications. Tele-video conferencing save travel time and travel cost. The ideas can be shared quickly and the information flow is much faster. As a result, the product development time and contract negotiation time have reduced. The customer service has improved due to faster and accurate information availability. Many organizations have been able to draw competitive advantage by using Internet.
The Internet connects hundreds of thousands of different networks from more than 200 countries around the world. More than 400 million people from academics, business community and government organizations use the Internet. Uses of Internet vary from being a communication medium to providing a means for collaboration work. The Internet is extremely robust. A system or a network can be added / deleted to the Internet without adversely affecting others on the Internet. The communication media used by Internet can be a telephone line, an Ethernet cable, or a microwave link. The Internet can carry data, images, text, voice, or transactions without any discrimination. The Internet is being used by various organizations for collaborative work. These Networking Technologies organizations use the Internet to send electronic mail, message, to transmit documents and data. The organizations are organizing and participating in electronic conferences. Another popular use of Internet is to access information that others make available in public domain. There are special software package known as search engines, which help users locate the desired document. Large databases, electronic brochures, book details, and manuals are present on the Internet. Organizations advertise their products and services on the Internet. Internet is also being used to participate in online discussions. These discussions are done in real time. An applicant can be interviewed online from a distant location. The candidate does not have to travel to appear for the interview. Apart from these obvious uses, the Internet is inspiring new business models, called digital firms. In digital firms, hierarchy and organizational levels are less compared to a traditional firm. The employees at lower-levels have access to more data and have more decision-making authority. The employees of an organization in a digital firm are not 9 to 5 people. They could be at location A and working for a digital firm at location B. These firms are much leaner and efficient than traditional firms. Internet has immensely helped the field workers. In a traditional environment, a field worker had to go to his office to take orders for the day and report at the end of the day again to provide details of his accomplishments. An employee of a digital firm carries a laptop and enters the data into his laptop, which he transmits to his organization using a dial-up connection. He can attend meetings without actually traveling to his office. The existing business processes have been thoroughly redesigned to take advantage of IT. A loan application in a traditional system takes about 2 weeks to get processed. A workflow system has reduced the time to less than a week. There is no paper movement and everybody can work on an application in parallel.
A company can use global data along with its operational data to respond to changes in the market place. A company works with much less inventory as it may easily coordinate production activities in the light of the orders. The products can be customized. The customization done to cater to the needs a very small segment is referred to as micro marketing. Internet has also been used for electronic commerce. In Electronic Commerce (EC), business transactions take place via telecommunication networks. The business transactions may take place between an organization and consumers or between two businesses or organizations. The major benefits to the company include reduced cost, reduced cycle time, and improved customer service. Following is a list of benefits to an organization using electronic commerce.
· EC decreases the cost of creating, processing, distributing, storing, and reliving information.
· EC allows reduced inventories and overheads.
· EC reduces the time between the payments and receipts of goods and services.
EC enables an organization to operate in the areas much beyond their physical location. E-commerce is the process of buying and selling goods and services electronically using Internet. The activities such as marketing, advertising, customer support, delivery, and payments are also done electronically. An e-business is supported by Internet within the organization. One must keep in mind that e-commerce is a whole new business paradigm which needs fresh thinking. Just creating a web site doesn’t guarantee success. Many people started e-business and failed. A sound e-business model is required. Some of the Internet business models are as follow:
Virtual storefront is an e-business where physical goods or services are sold online instead of an actual retail outlet. An example is www.amazon.com, which sells book and other items online. A customer can select an item from their web site and place an electronic order. He can make payment through credit card and then the company delivers goods to him using traditional means. There are e-businesses whose prime business is to sell items where prices are not fixed. The prices are decided by the customers through auction. There are e-businesses who are content provider and manager. The companies where core competence is not IT, hire an IT company to create web sites and databases for them. Some companies provide portals to other organizations. A portal is a web site that provides an initial entry point to the web site of the company or other services e.g. Yahoo is a portal. The e-commerce can also be classified based on the parties involved in the business. A business-to-consumer e-business involves an electronic retail home and customers. Such a business is also called B2C business, www.amazon.com is an example of B2C business. Business-to-business (B2B) involves transaction among businesses. The main advantage is that a business house can buy raw material and supplies from another business party without going through the retailer. www.Milpro.com/ is an e business, which sells machine tools to other businesses. In a consumer-to-consumer business (C2C), the e-business is a facilitator only. People are able to sell to other people using a C2C facility.
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