Part 2
Starting and
Growing Your
Business
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 7
Electronic
Commerce: The
Internet and
Online Business
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Discuss how the Internet provides new routes to
business success.
2. Describe the increasing diversity of Internet users.
3. Summarize the Internet’s four functions and give
examples of each.
4. List the major forms of business-to-business (B2B) and
business-to-consumer (B2C) e-commerce.
5. Describe some challenges associated with Internet
selling.
6. List the steps involved in developing successful Web
sites.
7. Identify methods for measuring Web site effectiveness.
8. Explain how global opportunities result from
technological advances.
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The Internet: A Key to Business Success
Internet—worldwide network of
interconnected computers that lets anyone
with access to a personal computer send and
receive images and data anywhere.
World Wide Web—collection of resources on
the Internet that offers easy access to text,
graphics, sound, and other multimedia
resources.
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The Internet: A Key to Business Success
Website—integrated document composed of
electronic pages that integrate text, graphics,
audio, and video elements, as well as
hypertext links to other documents.
Domain Name—a Web site address
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How Information Travels on the Internet
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How the Internet Works
Internet Service Provider—organization that
provides access to the Internet, via a
telephone or cable television network.
Digital Subscriber Line (DSL)
a cable modem, or a satellite link to the
internet which makes the data move at fast
speeds
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How the Internet Works
ISP’s Server—a larger, special computer that
holds information, providing it to clients on
request
Client—another computer or device that
relies on the resources of other servers to
help with its own processing
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The Internet: A Key to Business Success
Who’s on the Net
Once dominated by men
Gender gap has narrowed
Women users now represent more than ½
in the U.S.
Women users growing rapidly in other
nations
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Top Ten Internet Users
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Four Functions of the Internet
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Using the Net’s Four Functions
Communication
Email—electronic messages sent via the
Internet.
Instant messaging—when a message sent
is immediately displayed on recipient’s
screen
Online communities—a forum (often a chat
room) in which a group of people can share
messages
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Using the Net’s Four Functions
Information
Newsgroups provide a forum for
participants to share information on
selected topics
Portals—sites designed to be a user’s
starting place when entering the WWW
Search Engines
Google
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Using the Net’s Four Functions
Entertainment
Everything from concert Webcasts to
online gaming available online
NFL Game Day a “video game” played on
the Internet.
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Using the Net’s Four Functions
Business Transactions: E-Commerce
Electronic e-commerce—online
marketing of goods and services,
including product information, ordering,
invoicing, payment processes, and
customer service.
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The Scope of Electronic Commerce
E-Commerce and the Not-for-Profit Sector
Girl Scouts use the Internet to streamline
their cookie sales
Girl Scouts also have a online storefront
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Benefits of E-Commerce
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The Scope of Electronic Commerce
Profiting from E-Commerce
Websites catering to business customers,
only a minority of firms report profits from
Web Site Operations
Websites catering to consumers are
making steady progress in becoming
profitable
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The Scope of Electronic Commerce
Business-to-Business Transactions Lead
the Way
Business-to-Business e-commerce—
electronic business transactions between
organizations using the Internet.
Electronic Data Interchange
Electronic Exchanges—Web-Based
marketplaces that cater to a specific
industry's needs
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How Online
Parts
Exchanges
Save Money
for
Automakers
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The Scope of Electronic Commerce
Business-to-Business Transactions Lead
the Way
Extranets—secure networks used for e-
commerce and accessible through the
firm’s Web site by authorized users
Private Exchange—secure Web site at
which a company and its suppliers share
all types of data related to e-commerce
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The Scope of Electronic Commerce
Online Shopping Comes of Age
Business-to-consumer (B2C) commerce:
selling directly to consumers over the
Internet
Electronic Storefront—Web sites where
items are offered for sale to consumers
Electronic Shopping Cart—a file that
displays items that a consumer has
indicated that they wish to buy. consumer
can review cart and make changes if
desired
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Top Products Sold Online
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The Scope of Electronic Commerce
Online Shopping Comes of Age
Developing Safe Online Payment Systems
Encryption: encoding data for security
purposes
Electronic Cash: Buyers register with a bank
to make secure Internet Payment
Electronic Wallet: a computer file containing
electronic cash, credit card information, owner
identification, address, and other information
Smart Cards: plastic cards that store
encrypted information on embedded computer
chips instead of magnetic strips
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Roadblocks to E-Commerce
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The Scope of Electronic Commerce
E-Commerce Challenges
Privacy Issues
Electronic Signatures—a way to enter
into a legal contract
Children’s Online Privacy Protection Act
Firewall—electronic barrier between a
company’s internal network and the
Internet that limits access into and out of
the network.
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The Scope of Electronic Commerce
E-Commerce Challenges
Internet Fraud
Traffic Jams Caused by System Overload
Poor Web Site Design and Service
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The Scope of Electronic Commerce
E-Commerce Challenges
Unreliable Delivery and Returns
Lack of Retail Experience
Competition and Disagreements among
Buyers and Sellers
Protection of Intellectual Property
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Questions to Consider in Developing a Web Site
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Managing a Web Site
Developing Successful Websites
Planning and Preparation
Naming your Web Site
Content and Connections
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Managing a Web Site
Costs and Maintenance
Costs are highly variable
Development Costs
Web Host Costs
Keeping Web Site Current
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Managing a Web Site
Measuring Website Effectiveness
Click-through rates—percentage of
people presented with a Web banner ad
who click it.
Conversion rate—percentage of visitors to
a Web site who make a purchase.
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Measures of Web Site Effectiveness
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The Global Environment of E-Commerce
Internet creates an enormous pool of
potential customers
Firms can market their offerings
internationally and locate distribution sources
and trading partners online
Customers can search for products and
information conveniently
Sites must consider both language and global
cultural variations
E-commerce can heighten competition
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Importance of Considering the Internet’s
Global Population
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