ShinnAdolph Melissa #0482558
417.621.5108 [e-mail] Thomas Edison State College August 2011 Creating and Implementing the Electronic Enterprise MAR306OL
Written Assignment #1
Answer the final module question in an essay of 500-850 words (2-3.5 typed double-spaced pages). You are expected to conduct research, which may be print or online, to support this essay. You are expected to provide references in footnotes or endnotes for both print and online sources.
1. Chapter 1 Questions: a. What is a marketspace? A marketspace is the result of liberating the market from the restrictions of being a physical space and made it possible to shop from any internet connected device. A marketplace extends beyond the traditional boundaries and is "removed from a temporal and geographic location". (E-commerce: Business, Technology, Society. Laudon, Kenneth C. and Carol Guercio Traver. 2010, 6th edition. pg.14) b. Discuss the ways in which the early years of e-commerce can be considered both a success and a failure. Successes of e-commerce in the early years include web-only firms who are succeeding, new intermediaries such as Yahoo, MSN, and Amazon, and "e-commerce has grown at an extremely rapid pace in customers and revenues." Failures of e-commerce in the early years include "economists' visions of `friction-free' commerce have not been entirely realized", "prices are sometimes lower on the Web", and "the concept of one world, one market, one price has not occurred." (E-commerce: Business, Technology, Society. Laudon, Kenneth C. and Carol Guercio Traver. 2010, 6th edition. pg.38) 2. Chapter 2 Questions: a. What is a business model? How does it differ from a business plan? A business model is "a set of planned activities designed to result in a profit in a marketplace." A business model is different from a business plan in that a business plan describes a business model and takes into consideration the competitive environment. (E-commerce: Business, Technology, Society. Laudon, Kenneth C. and Carol Guercio Traver. 2010, 6th edition. pg.66) b. Who are the major players in an industry value chain and how are they impacted by e-commerce technology? The major players in an industry value chain are the suppliers, the manufacturers, the transporters, the distributors, the retailers, and the customers. These major players are impacted by e-commerce technology by reducing the cost of information. The internet offers each of them new opportunities to maximize their positions by lowering the costs and/or raising prices. (E-commerce: Business, Technology, Society. Laudon, Kenneth C. and Carol Guercio Traver. 2010, 6th edition. pg.103) 3. Chapter 4 Questions: a. Why is system testing important? Name the three types of testing and their relation to each other. System testing is important because they have to make sure all of the thousands of pathways on each site are working properly. The three types of testing are unit testing, system testing, and acceptance testing. They are related in that they all pertain to testing a site and are tested in part and as a whole. (E-commerce: Business, Technology, Society. Laudon, Kenneth C. and Carol Guercio Traver. 2010, 6th edition. pg.217) b. Name and describe three methods used to treat customers individually. Why are they significant to e-commerce?
Personalize web content if you know the personal background of the customer. i.e., analyze the pattern of clicks and sites visited by every customer to your site. Placement of cookie files on user's client computer which provides a way to access customers prior purchases, ID, so when a customer returns to a site this info is readily available. Customization which is the ability to change the product to better fit the needs of the customer." These methods are significant to e-commerce because they help make e-commerce as powerful as a traditional marketplace. 4. Chapter 5 Questions: Read the Case Study on pages 324-328 in your text. Then answer these questions: a. What is the value proposition that PayPal offers consumers? How about merchants? "Offer innovative electronic payment system utilizing email, bank account information, credit card information, and a proprietary fraud protection system to facilitate ecommerce transactions."
(www.perleybrook.umfk.maine.edu/slides/fall%202005/elc498/PayPal.ppt 28 August 2011)
Person-to-Person. With the introduction of an online system that handles person-to-person payments, PayPal is largely responsible for creating the payment industry's first new category. With more than eight million consumers behind it, PayPal has created enough market demand to be copied by Citibank (c2it), Wells Fargo (BillPoint), and others. To differentiate itself, and to leverage its huge consumer base, PayPal has recently begun to support direct payments to Webbased merchants. Prepaid Card. Prepaid card providers such as InternetCash in the U.S., SplashPlastic in the U.K., and TECHNOCASH in Australia are trying to establish beachheads through the retail distribution of prepaid cards that can be used to make anonymous online purchases. Prepaid card providers generally target teenagers and other non-credit-card-carrying consumers. Electronic Cash. eCash Technologies purchased the assets and patent portfolio of DigiCash and is now in the process of relaunching digital cash as an alternative online payment mechanism. Micropayments. Micropayment vendors, such as Qpass and iPIN, have been building networks of buyers who want access to premium content from the Wall Street Journal and other digital content providers. They have recently started to extend their platforms to support wireless payments through mobile portals. Alternative Currencies. Alternative currency providers such as Beenz gained strong customer uptake, only to be hurt by the recent economic downturn. Gold-backed online currencies such as e-gold and GoldMoney have been finding followers and continue to proliferate."
(<http://www.nuvantage.com/pdfs/NuVantage_Common_Merchant_Toolkit.pdf> 28 August 2011)
Undifferentiated Merchant Value Propositions Access to New Customers. "Our alternative payment system enables merchants to accept online
payments from consumers without credit cards. Merchants gain access to kids, teens, individuals who don't have credit cards, and individuals who have credit cards but have security or privacy concerns." Reduction in Online Fraud Rate. "Our alternative payment system reduces a merchant's online fraud rate by directly authenticating each buyer, securing all transactions, and providing nonreputable transaction integrity. Using our alternative model, merchants no longer have to worry about accepting fraudulent credit cards." Elimination of Credit Card Chargebacks. "Our unique approach eliminates all merchant chargeback risks, lowering a merchant's overall cost to accept online payments and providing better cash-flow control." Immediate Access to Funds. "Our alternative payment system processes all transactions in real time, 24 hours a day, seven days a week. With immediate settlement between accounts, merchants no longer have to wait for online payments to clear." Support for Micropayments. "By eliminating expensive credit card transaction our fees, alternative payment system makes it viable and cost-effective for merchants to sell goods and services costing less than $10."
(<http://www.nuvantage.com/pdfs/NuVantage_Common_Merchant_Toolkit.pdf> 28 August 2011)
b. What are the some of the risks of using PayPal when compared to credit cards and debit cards? The risks are that you may or may not receive your money back on a fraudulent charge, it depends on whether Paypal can get their money back or not. c. What strategies would you recommend that PayPal pursue in order to maintain its growth over the next five years? I would recommend that Paypal continue to do what they are doing. Continue to implement security features and work toward larger merchants to help grow their brand name. d. Why are cell phone networks a threat to PayPal's future growth? Cell phones are a threat to Paypals future growth because companies like AT&T and Verizon are taking P2P payments from cell phones. "The mobile payment company, Obopay, allows subscribers to transfer money and make purchases through their cell phones." (E-commerce: Business, Technology, Society. Laudon, Kenneth C. and Carol Guercio Traver. 2010, 6th edition. pg.329) 5. Module 1 Question: Describe some of the evolutionary forces that acted upon traditional enterprises and the changes firms implemented in order to survive. In your answer, comment on (a) the structure of the firm -- what is a firm (nexus of contracts) and (b) the changes in key environments -- cultural, technological, and economic -- that the firm must face. A firm is defined as any business, such as a sole proprietor, partnership or corporation. "Nexus of contracts" is intended as a description of the firm. "An organization can be structured in many different ways, depending on
their objectives. The structure of an organization will determine the modes in which it operates and performs.
(<http://en.wikipedia.org/wiki/Organizational_structure> 28 August 2011)
"Virtual companies and the internet are changing, traditionally accepted economic practices and making competition even fiercer than it has ever been in the past." They are changing with the times and have to stay up to date with what's new to the industry. If there are a growing number of companies taking payments through Facebook, then it would be to a firms benefit to also start taking payments through Facebook.
(<http://www.synaxiom.com/synaxiom_knowledge_base/general_website_resources/impact_of_ecommerce_in_tod ays_business_world.html> 28 August 2011)
These firms have a barrier to entry which "means that competitors cannot easily enter the industry to copy what the industry incumbents are doing." These barriers to entry are: Economics of scale - "Industries that are characterized by large economies of scale are difficult for
new firms to enter, unless they are willing to accept a cost disadvantage. " This "occurs when massproducing a product results in lower average costs." Product differentiation - Industries that are characterized by having strong brand names are hard to go up against without a major amount spent on advertising. Capital requirements - "The need to invest large amounts of money to gain entrance to an industry." Cost advantages independent of size - Companies who have been in business for awhile will have
cost advantages over new entrants into the industry. Some of these are because they purchased land or equipment at a lower rate or have contracts for lower pricing than the new entrants. Access to distribution channels - Its hard for manufacturers to break in to the market sometimes.
For a new item to be placed on the shelves, other items have to be displaced or it quantity downsized.
Government and legal barriers - "In knowledge-intensive industries, such as biotechnology and software, patents, trademarks, and copyrights form major barriers to entry."
(Entrepreneurship: Successfully Launching New Ventures, 2nd ed., by Bruce R. Barringer and R. Duane Ireland. pg 136-137)
"Being an industry leader today is in no way a security blanket to confirm tomorrow's success. In order to maintain competitive advantage and emerge as an industry leader tomorrow, established old school companies must be ready to take on the challenge of some difficult and painful changes. Not only in leveraging IT to its limit but also to change the way employees and administration think and work to a whole new level. "
(<http://www.synaxiom.com/synaxiom_knowledge_base/general_website_resources/impact_of_ecommerce_in_tod ays_business_world.html> 28 August 2011)
One change in key environments is marketing. "Every day, marketing managers face a barrage of economic news. They must digest it, assess its impact, and alter marketing plans accordingly. Sometimes (but not recently), the news is cause for optimism--the economy's improving, unemployment's declining, consumer confidence is up. At other times (like today), the news makes them nervous--we're in a recession, industrial production is down, jobless claims are rising, consumer confidence has plummeted, credit is hard to get. Naturally, business thrives when the economy is growing, employment is full, and prices are stable. Marketing products is easier because consumers are willing to buy. On the other hand, when the economy is slowing (or stalled) and unemployment is rising, people have less money to spend, and the marketer's job is harder." "Then there's inflation, which pushes interest rates upward. If you're trying to sell cars, you know that people facing higher interest rates aren't so anxious to take out car loans. Sales will slip, and to counteract the anticipated slowdown, you might have to add generous rebates to your promotional plans." "New technologies also transform the marketing mix in another important way: they alter the way companies market their products. Consider the revolutionary changes brought about by the Internet, which offers marketers a new medium for promoting and selling a vast range of goods and services.
Marketers must keep abreast of technological advances and adapt their strategies, both to take advantage of the opportunities and to ward off threats." Marketers also have to "stay tuned to social and cultural factors that can affect sales. The values and attitudes of American consumers are in a state of almost constant flux; what's cool one year is out of style the next. The key to successful marketing is meeting the needs of customers. This means knowing what they want right now, not last year."
(<http://www.web-books.com/eLibrary/NC/B0/B66/077MB66.html> 28 August 2011)
A new threat to traditional enterprise has arrived and established vertically integrated companies are caught off guard on how to defend successfully and win the war to retain exiting market share while expanding to new markets. Brick and mortar companies are still strategizing to win according to old rules that do not apply in today's eMarket. Today's truly successful companies must embrace Information Technology and leverage it in order to achieve great results."
(<http://www.synaxiom.com/synaxiom_knowledge_base/general_website_resources/impact_of_ecommerce_in_tod ays_business_world.html> 28 August 2011)