Chapter 11 EC Strategy and Implementation Justification Globalization

Chapter 11 EC Strategy and Implementation: Justification, Globalization, SMEs, and Regulatory and Ethical Issues

LEARNING OBJECTIVES 1. Describe the strategic planning process. 2. Describe the purpose and content of a business plan in e-commerce. 3. Describe EC strategy implementation including the use of metrics. 4. Describe the need for justifying EC investments, how it is done, and how metrics are used to determine justification. 5. Understand the difficulties in measuring and justifying EC investments. 6. Evaluate the issues involved in global EC. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -1

LEARNING OBJECTIVES 7. Analyze the impact of EC on SMEs. 8. Understand the foundations for legal and ethical issues in EC. 9. Explain privacy, free speech, and defamation and their challenges. 10. Discuss the challenges caused by spam, splogs, and pop-ups. 11. Describe the importance of green EC and the major issues of concern. 12. Describe the anticipated future of EC. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -2

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • strategy A broad-based formula for how a business is going to accomplish its mission, what its goals should be, and what plans and policies will be needed to carry out those goals. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -3

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • STRATEGY AND THE WEB ENVIRONMENT – Porter’s Competitive Forces Model and Strategies 1. 2. 3. 4. 5. Threat of entry of new competitors Bargaining power of suppliers Bargaining power of customers or buyers Threat of substitute products or services Rivalry among existing firms in the industry – e-commerce strategy (e-strategy) The formulation and execution of a vision of how a new or existing company intends to do business electronically. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -4

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -5

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -6

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • strategy initiation The initial phase of strategic planning in which the organization examines itself and its environment. – Specific outcomes: – value proposition The benefit that a company’s products or services are provided to a company and its customers. • Core competencies • Forecasts • Competitor (industry) analysis Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -7

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • strategy formulation The development of strategies to exploit opportunities and manage threats in the business environment in light of corporate strengths and weaknesses. – Specific activities and outcomes: • • Business opportunities Cost-benefit analysis Risk analysis, assessment, and management Business plan Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -8

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • strategy implementation The development of detailed, short-term plans for carrying out the projects agreed on in strategy formulation. – Specific activities and outcomes: • Project planning • Resource allocation • Project management Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -9

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • strategy assessment The continuous evaluation of progress toward the organization’s strategic goals, resulting in corrective action and, if necessary, strategy reformulation. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -10

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • BUSINESS PLANNING IN E-COMMERCE – business plan A written document that identifies a company’s goals and outlines how the company intends to achieve the goals and at what cost. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -11

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -12

STRATEGY, PLANNING, AND IMPLEMENTATION OF E-COMMERCE • business case A business plan for a new initiative or large, new project inside an existing organization. • E-COMMERCE STRATEGY: CONCEPTS AND OVERVIEW – Strategy in the Web 2. 0 Environment and in Social Networking Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -13

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -14

JUSTIFICATION AND COST-BENEFIT ANALYSIS • Companies need to justify their EC investments as part of strategy formulation in order to achieve the optimal level of investment • OTHER REASONS WHY EC JUSTIFICATION IS NEEDED – – – – EC is not necessarily the solution to all problems Formal evaluation of requests for funding mandated Need to assess the success of EC projects after completion Success of EC projects assessed in order to pay bonuses Pressure from top management Large amount of money Weak business conditions exist Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -15

JUSTIFICATION AND COST-BENEFIT ANALYSIS • EC INVESTMENT CATEGORIES AND BENEFITS • HOW IS AN EC INVESTMENT JUSTIFIED? – cost-benefit analysis A comparison of the costs of a project against the benefits. • WHAT NEEDS TO BE JUSTIFIED? WHEN SHOULD JUSTIFICATION TAKE PLACE? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -16

JUSTIFICATION AND COST-BENEFIT ANALYSIS • USING METRICS IN EC JUSTIFICATION – metric A specific, measurable standard against which actual performance is compared. – key performance indicators (KPIs) The quantitative expression of critically important metrics. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -17

DIFFICULTIES IN MEASURING AND JUSTIFYING E-COMMERCE INVESTMENTS AND SUCCESS • THE EC JUSTIFICATION PROCESS • DIFFICULTIES IN MEASURING PRODUCTIVITY AND PERFORMANCE GAINS – Data and Analysis Issues – EC Productivity Gains May Be Offset by Losses in Other Areas – Incorrectly Defining What Is Measured – Other Difficulties Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -18

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -19

DIFFICULTIES IN MEASURING AND JUSTIFYING E-COMMERCE INVESTMENTS AND SUCCESS • DETERMINING E-COMMERCE SUCCESS – Product Characteristics – Industry Characteristics – Seller Characteristics – Consumer Characteristics Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -20

GLOBAL E-COMMERCE • BENEFITS AND EXTENT OF OPERATIONS – The major advantage of EC is the ability to do business at any time, from anywhere, and at a reasonable cost • BARRIERS TO GLOBAL EC – Cultural Issues and Language Translation – Machine Translation of Web Pages – Administrative and Legal Issues – Geographic Issues and Localization – Economic and Financial Issues Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -21

GLOBAL E-COMMERCE • BREAKING DOWN THE BARRIERS TO GLOBAL EC – Be strategic – Know your audience – Localize – Think globally, act consistently – Value the human touch – Clarify, document, explain – Offer services that reduce barriers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -22

E-COMMERCE IN SMALL AND MEDIUM-SIZED ENTERPRISES • Some of the first companies to take advantage of Web-based electronic commerce were SMEs • SMEs consider the Internet to be a valuable business tool Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -23

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -24

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -25

INTELLECTUAL PROPERTY AND OTHER REGULATORY ISSUES • LAWS ARE SUBJECT TO INTERPRETATION • PERSONAL AND PROPERTY RIGHTS – civil litigation An adversarial proceeding in which a party (the plaintiff) sues another party (the defendant) to get compensation for a wrong committed by the defendant. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -26

INTELLECTUAL PROPERTY AND OTHER REGULATORY ISSUES – regulatory compliance Systems or departments in an organization whose job is to ensure that personnel are aware of and take steps to comply with relevant laws, standards, policies, and regulations. – compliance data All data belonging or pertaining to an enterprise included in the law, which can be used for the purpose of implementing or validating compliance. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -27

INTELLECTUAL PROPERTY AND OTHER REGULATORY ISSUES • intellectual property Creations of the mind, such as inventions, literary and artistic works, and symbols, names, images, and designs, used in commerce. – copyright An exclusive right of the author or creator of a book, movie, musical composition, or other artistic property to print, copy, sell, license, distribute, transform to another medium, translate, record, perform, or otherwise use. – infringement Use of the work without permission or contracting for payment of a royalty. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -28

INTELLECTUAL PROPERTY AND OTHER REGULATORY ISSUES – digital rights management (DRM) An umbrella term for any of several arrangements that allow a vendor of content in electronic form to control the material and restrict its usage. • fair use The use of copyrighted material for noncommercial purposes. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -29

INTELLECTUAL PROPERTY AND OTHER REGULATORY ISSUES – patent A document that grants the holder exclusive rights to an invention for a fixed number of years. – trademark A symbol used by businesses to identify their goods and services; government registration of the trademark confers exclusive legal right to its use. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -30

ETHICS IN E-COMMERCE • ethics The branch of philosophy that deals with what is considered to be right and wrong. • privacy The right to be left alone and free of unreasonable personal intrusions. • ETHICAL PRINCIPALS AND GUIDELINES – Example: Who Owns User-Generated Content at Facebook? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -31

ETHICS IN E-COMMERCE • business ethics A form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment. • EC ETHICAL ISSUES – Nonwork-Related Use of the Internet – Codes of Ethics Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -32

PRIVACY, VIOLATION AND PROTECTION, AND THE CONFLICT WITH FREE SPEECH • PRIVACY RIGHTS AND PROTECTION – opt-out Business practice that gives consumers the opportunity to refuse sharing information about themselves. – opt-in Agreement that requires computer users to take specific steps to allow the collection of personal information. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -33

PRIVACY, VIOLATION AND PROTECTION, AND THE CONFLICT WITH FREE SPEECH • FREE SPEECH ONLINE VERSUS PRIVACY PROTECTION – Free Speech Online Versus Child Protection Debate • Children’s Internet Protection Act (CIPA) U. S. law that mandates the use of filtering technologies in schools and libraries that receive certain types of federal funding. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -34

PRIVACY, VIOLATION AND PROTECTION, AND THE CONFLICT WITH FREE SPEECH • THE PRICE OF PROTECTING AN INDIVIDUAL’S PRIVACY – Example: Sheriff Sues Craigslist to Curb Prostitution • HOW INFORMATION ABOUT INDIVIDUALS IS COLLECTED – – Web Site Registration Cookies RFID’s Threat to Privacy of Employees • darknets Private online community that is only open to those who belong to it. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -35

PRIVACY, VIOLATION AND PROTECTION, AND THE CONFLICT WITH FREE SPEECH • PRIVACY ISSUES IN WEB 2. 0 TOOLS AND SOCIAL NETWORKS – Presence, Location, and Privacy – Free Speech via Wikis and Social Networks • PRIVACY PROTECTION USING ETHICAL PRINCIPLES – Platform for Privacy Preferences Project (P 3 P) A protocol allowing Web sites to declare their intended use of information they collect about browsing users. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -36

PRIVACY, VIOLATION AND PROTECTION, AND THE CONFLICT WITH FREE SPEECH • USA PATRIOT Act Uniting and Strengthening America by Providing Appropriate Tools to Intercept and Obstruct Terrorism Act passed in October 2001, in the aftermath of the September 11 terrorist attacks. Its intent is to give law enforcement agencies broader range in their efforts to protect the public. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -37

EC AND GREEN COMPUTING • green computing The study and practice of ecofriendly computing resources; is now a key concern of businesses in all industries—not just environmental organizations. • green IT Green IT begins with manufacturers producing environmentally friendly products and encouraging IT departments to consider more friendly options like virtualization, power management, and proper recycling habits. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -38

EC AND GREEN COMPUTING – How to Operate Greener Businesses, Data Centers, and Supply Chains – Global Green Regulations – Electronic Product Environmental Assessment Tool (EPEAT) A searchable database of computer hardware that meets a strict set of environmental criteria. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -39

THE FUTURE OF ELECTRONIC COMMERCE • INTEGRATING THE MARKETPLACE WITH THE MARKETSPACE • SOCIAL NETWORKS • FUTURE TRENDS – Security concern – Lack of Net neutrality – Copyright complaints – Choppy connectivity Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -40

MANAGERIAL ISSUES 1. What is the strategic value of EC to the organization? 2. Who determines EC strategy? 3. What are the benefits and risks of EC? 4. What metrics should we use? 5. How do we measure the value of EC investment? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -41

MANAGERIAL ISSUES 6. How can we go global? 7. Can we learn to love smallness? 8. What legal and ethical issues should be of major concern to an EC enterprise? 9. What are the most critical ethical issues? 10. How shall we approach EC green computing? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11 -42