Contents
Introduction to Study Guide .......................................................................................................... 1
1 Introducing electronic commerce ................................................................................................7
Introduction.....................................................................................................................................7
Student reading ........................................................................................................................7
Learning objectives..................................................................................................................7
Subject summary.............................................................................................................................8
Chapter overview.....................................................................................................................8
The second wave of e-commerce.............................................................................................8
Definition of e-commerce........................................................................................................8
Categories of e-commerce ....................................................................................................... 8
The nature of e-commerce .....................................................................................................10
The historical development of e-commerce...........................................................................11
Electronic data interchange....................................................................................................11
The dot-com boom, bust and rebirth......................................................................................11
The rebirth of e-commerce ....................................................................................................11
The second wave ...................................................................................................................12
Business models, revenue models, and business processes ...................................................13
Traditional commerce and business processes ......................................................................13
Advantages of electronic commerce......................................................................................14
Disadvantages of electronic commerce .................................................................................15
Economic forces and electronic commerce ...........................................................................15
Value chains in electronic commerce ....................................................................................16
Industry value chains .............................................................................................................16
SWOT analysis: evaluating business unit opportunities.......................................................16
International nature of electronic commerce .........................................................................17
Review questions ..........................................................................................................................18
True/False questions ..............................................................................................................18
Multiple choice questions ......................................................................................................19
Essay questions......................................................................................................................20
2 Technology infrastructure: the internet and the world wide web ..........................................21
Introduction...................................................................................................................................21
Student reading ......................................................................................................................21
Learning objectives................................................................................................................21
Subject summary...........................................................................................................................22
Chapter overview...................................................................................................................22
The internet and the world wide web.....................................................................................22
Emergence of the world wide web ........................................................................................23
Packet-switching networks ....................................................................................................23
Transmission control protocol/internetworking protocol (TCP/IP).......................................24
IP addresses and domain names.............................................................................................24
Webpage request and delivery protocols ...............................................................................25
Other internet protocols .........................................................................................................25
Unsolicited commercial e-mail (UCE) ..................................................................................25
Markup languages and the web .............................................................................................26
Internet connection options....................................................................................................27
Connectivity overview...........................................................................................................27
Review questions ..........................................................................................................................29
True/False questions ..............................................................................................................29
Multiple choice questions ......................................................................................................29
Essay questions......................................................................................................................30
3 Selling on the web: revenue models and building a web presence..........................................31
Introduction...................................................................................................................................31
Student reading ......................................................................................................................31
Learning objectives................................................................................................................31
Subject summary...........................................................................................................................32
Chapter overview...................................................................................................................32
1
, Revenue models.....................................................................................................................32
Revenue models in transition.................................................................................................34
Revenue strategy issues .........................................................................................................35
Creating an effective web presence .......................................................................................36
Consumer-centric website design ..........................................................................................38
Connecting with consumers...................................................................................................38
The nature of communication on the web..............................................................................38
Measuring website effectiveness ...........................................................................................39
Review questions ..........................................................................................................................40
True/False questions ..............................................................................................................40
Multiple choice questions ......................................................................................................40
Essay questions......................................................................................................................42
4 Marketing on the web .................................................................................................................43
Introduction...................................................................................................................................43
Student reading ......................................................................................................................43
Learning objectives................................................................................................................43
Subject summary...........................................................................................................................44
Chapter overview...................................................................................................................44
The four Ps of marketing: ......................................................................................................44
Communicating with different marketing strategies..............................................................44
Market segmentation .............................................................................................................45
Market segmentation on the web ...........................................................................................45
Offering consumers a choice on the web...............................................................................46
Beyond market segmentation: consumer behaviour and relationship intensity .....................46
Consumer relationship intensity and life-cycle segmentation ...............................................46
Five-stage model of consumer loyalty...................................................................................46
Acquisition, conversion, and retention of consumers ............................................................47
Consumer acquisition, conversion, and retention: the funnel model .....................................47
Advertising on the web..........................................................................................................48
Banner ads .............................................................................................................................48
Other web ad formats ............................................................................................................48
Sites sponsorships..................................................................................................................49
Effectiveness of online advertising........................................................................................49
E-mail marketing and permission marketing.........................................................................49
Combining content and advertising .......................................................................................49
Outsourcing e-mail processing ..............................................................................................49
Technology-enabled consumer relationship management .....................................................50
CRM as a source of value in the marketspace .......................................................................50
Creating and maintaining brands on the web.........................................................................50
Elements of branding:............................................................................................................50
Emotional branding vs. rational branding..............................................................................50
Brand leveraging strategies....................................................................................................51
Brand consolidation strategies...............................................................................................51
Costs of branding...................................................................................................................51
Affiliate marketing strategies ................................................................................................51
Viral marketing strategies......................................................................................................52
Search engine positioning and domain names .......................................................................52
Search engines and web directories .......................................................................................52
Paid search engine inclusion and placement..........................................................................52
Website naming issues...........................................................................................................53
Review questions ..........................................................................................................................54
True/False questions ..............................................................................................................54
Multiple choice questions ......................................................................................................54
Essay questions......................................................................................................................55
5 Business-to-business strategies: from electronic data interchange to electronic commerce.57
Introduction...................................................................................................................................57
Student reading ......................................................................................................................57
Learning objectives................................................................................................................57
Subject summary...........................................................................................................................58
Chapter overview...................................................................................................................58
2
, Purchasing, logistics, and support activities ..........................................................................58
Direct vs. indirect materials purchasing ................................................................................59
Support activities ...................................................................................................................60
E-government ........................................................................................................................61
Network model of economic organization.............................................................................61
Creating network organisations .............................................................................................61
Electronic data interchange....................................................................................................61
Early business information interchange efforts: ....................................................................61
Emergence of broader EDI standards ....................................................................................62
How EDI works .....................................................................................................................62
Value-added networks ...........................................................................................................63
Advantages of using a value added network (VAN) .............................................................64
EDI on the internet ................................................................................................................64
Open architecture of the internet ...........................................................................................64
Financial EDI.........................................................................................................................64
Supply chain management using internet technologies .........................................................65
Value creation in the supply chain.........................................................................................65
Advantages of using supply chain management:...................................................................65
Increasing supply chain efficiencies ......................................................................................65
Using materials-tracking technologies with EDI and electronic commerce ..........................65
Creating an ultimate consumer orientation in the supply chain .............................................66
Building and maintaining trust in the supply chain ...............................................................66
Electronic marketplaces and portals ......................................................................................66
Independent industry marketplaces .......................................................................................66
Review questions ..........................................................................................................................67
True/False questions ..............................................................................................................67
Multiple choice questions ......................................................................................................67
Essay questions......................................................................................................................68
6 Online auctions, virtual communities, and web portals...........................................................69
Introduction...................................................................................................................................69
Student reading ......................................................................................................................69
Learning objectives................................................................................................................69
Subject summary...........................................................................................................................69
Chapter overview...................................................................................................................69
Origins of auctions.................................................................................................................70
Types of auction ....................................................................................................................70
Online auctions and related businesses..................................................................................70
General consumer auctions....................................................................................................71
Specialty consumer auctions..................................................................................................71
Consumer reverse auctions and group purchasing sites.........................................................71
Business-to-business auctions ...............................................................................................72
Business-to-business reverse auctions ...................................................................................72
Auction-related services ........................................................................................................72
Virtual communities and web portals ....................................................................................73
Early web communities .........................................................................................................73
Web community consolidation ..............................................................................................73
Web communities in the second wave of electronic commerce ............................................74
Revenue models for web portals and virtual communities ....................................................74
Web portal revenue models ...................................................................................................74
Review questions ..........................................................................................................................75
True/False questions ..............................................................................................................75
Multiple choice questions ......................................................................................................75
Essay questions......................................................................................................................76
7 The environment of electronic commerce: legal, ethical, and tax issues ................................77
Introduction...................................................................................................................................77
Student reading ......................................................................................................................77
Learning objectives................................................................................................................77
Subject summary...........................................................................................................................78
Chapter overview...................................................................................................................78
The legal environment of electronic commerce.....................................................................78
3
, Borders and jurisdiction.........................................................................................................78
Jurisdiction on the internet.....................................................................................................79
Subject-matter jurisdiction.....................................................................................................80
Ethical issues in electronic commerce ...................................................................................80
Conflict of laws .....................................................................................................................80
Contracting and contract enforcement in electronic commerce.............................................81
Contract enforcement in electronic commerce: .....................................................................81
Use and protection of intellectual property in online business ..............................................81
Website content issues...........................................................................................................82
Domain names, cybersquatting, and name stealing ...............................................................82
Protecting intellectual property online...................................................................................82
Defamation ............................................................................................................................82
Deceptive trade practices.......................................................................................................83
Ethics and web business policies ...........................................................................................83
Privacy rights and obligations ...............................................................................................83
Taxation and electronic commerce ........................................................................................84
Online crime, terrorism and warfare......................................................................................84
Online crime ..........................................................................................................................84
Review questions ..........................................................................................................................85
True/False questions ..............................................................................................................85
Multiple choice questions ......................................................................................................85
Essay questions......................................................................................................................86
8 Web server hardware and software ..........................................................................................87
Introduction...................................................................................................................................87
Student reading ......................................................................................................................87
Learning objectives................................................................................................................87
Subject summary...........................................................................................................................87
Chapter overview...................................................................................................................87
Web servers ...........................................................................................................................88
Types of websites: .................................................................................................................88
Choosing a web server...........................................................................................................88
Web client/server communication .........................................................................................89
Two-tier client/server architecture:........................................................................................89
Three-tier and n-tier client/server architectures:....................................................................89
Dynamic content....................................................................................................................89
Software for web servers .......................................................................................................89
Operating systems for web servers ........................................................................................89
Web server software ..............................................................................................................90
Apache HTTP server .............................................................................................................90
Microsoft internet information server....................................................................................90
Sun Java system web server ..................................................................................................90
Electronic mail (e-mail).........................................................................................................91
E-mail benefits.......................................................................................................................91
E-mail drawbacks ..................................................................................................................91
Spam......................................................................................................................................91
Solutions to the spam problem ..............................................................................................91
Web site and internet utility programs...................................................................................92
Finger and ping utilities .........................................................................................................92
Tracert and other route-tracing programs ..............................................................................92
Telnet and FTP utilities .........................................................................................................92
Indexing and searching utility programs ...............................................................................92
Data analysis software ...........................................................................................................93
Link-checking utilities ...........................................................................................................93
Remote server administration ................................................................................................93
Web server hardware .............................................................................................................93
Server computers ...................................................................................................................93
Web server performance evaluation ......................................................................................93
Web server hardware architectures........................................................................................94
Review questions ..........................................................................................................................95
True/False questions ..............................................................................................................95
4
Introduction to Study Guide .......................................................................................................... 1
1 Introducing electronic commerce ................................................................................................7
Introduction.....................................................................................................................................7
Student reading ........................................................................................................................7
Learning objectives..................................................................................................................7
Subject summary.............................................................................................................................8
Chapter overview.....................................................................................................................8
The second wave of e-commerce.............................................................................................8
Definition of e-commerce........................................................................................................8
Categories of e-commerce ....................................................................................................... 8
The nature of e-commerce .....................................................................................................10
The historical development of e-commerce...........................................................................11
Electronic data interchange....................................................................................................11
The dot-com boom, bust and rebirth......................................................................................11
The rebirth of e-commerce ....................................................................................................11
The second wave ...................................................................................................................12
Business models, revenue models, and business processes ...................................................13
Traditional commerce and business processes ......................................................................13
Advantages of electronic commerce......................................................................................14
Disadvantages of electronic commerce .................................................................................15
Economic forces and electronic commerce ...........................................................................15
Value chains in electronic commerce ....................................................................................16
Industry value chains .............................................................................................................16
SWOT analysis: evaluating business unit opportunities.......................................................16
International nature of electronic commerce .........................................................................17
Review questions ..........................................................................................................................18
True/False questions ..............................................................................................................18
Multiple choice questions ......................................................................................................19
Essay questions......................................................................................................................20
2 Technology infrastructure: the internet and the world wide web ..........................................21
Introduction...................................................................................................................................21
Student reading ......................................................................................................................21
Learning objectives................................................................................................................21
Subject summary...........................................................................................................................22
Chapter overview...................................................................................................................22
The internet and the world wide web.....................................................................................22
Emergence of the world wide web ........................................................................................23
Packet-switching networks ....................................................................................................23
Transmission control protocol/internetworking protocol (TCP/IP).......................................24
IP addresses and domain names.............................................................................................24
Webpage request and delivery protocols ...............................................................................25
Other internet protocols .........................................................................................................25
Unsolicited commercial e-mail (UCE) ..................................................................................25
Markup languages and the web .............................................................................................26
Internet connection options....................................................................................................27
Connectivity overview...........................................................................................................27
Review questions ..........................................................................................................................29
True/False questions ..............................................................................................................29
Multiple choice questions ......................................................................................................29
Essay questions......................................................................................................................30
3 Selling on the web: revenue models and building a web presence..........................................31
Introduction...................................................................................................................................31
Student reading ......................................................................................................................31
Learning objectives................................................................................................................31
Subject summary...........................................................................................................................32
Chapter overview...................................................................................................................32
1
, Revenue models.....................................................................................................................32
Revenue models in transition.................................................................................................34
Revenue strategy issues .........................................................................................................35
Creating an effective web presence .......................................................................................36
Consumer-centric website design ..........................................................................................38
Connecting with consumers...................................................................................................38
The nature of communication on the web..............................................................................38
Measuring website effectiveness ...........................................................................................39
Review questions ..........................................................................................................................40
True/False questions ..............................................................................................................40
Multiple choice questions ......................................................................................................40
Essay questions......................................................................................................................42
4 Marketing on the web .................................................................................................................43
Introduction...................................................................................................................................43
Student reading ......................................................................................................................43
Learning objectives................................................................................................................43
Subject summary...........................................................................................................................44
Chapter overview...................................................................................................................44
The four Ps of marketing: ......................................................................................................44
Communicating with different marketing strategies..............................................................44
Market segmentation .............................................................................................................45
Market segmentation on the web ...........................................................................................45
Offering consumers a choice on the web...............................................................................46
Beyond market segmentation: consumer behaviour and relationship intensity .....................46
Consumer relationship intensity and life-cycle segmentation ...............................................46
Five-stage model of consumer loyalty...................................................................................46
Acquisition, conversion, and retention of consumers ............................................................47
Consumer acquisition, conversion, and retention: the funnel model .....................................47
Advertising on the web..........................................................................................................48
Banner ads .............................................................................................................................48
Other web ad formats ............................................................................................................48
Sites sponsorships..................................................................................................................49
Effectiveness of online advertising........................................................................................49
E-mail marketing and permission marketing.........................................................................49
Combining content and advertising .......................................................................................49
Outsourcing e-mail processing ..............................................................................................49
Technology-enabled consumer relationship management .....................................................50
CRM as a source of value in the marketspace .......................................................................50
Creating and maintaining brands on the web.........................................................................50
Elements of branding:............................................................................................................50
Emotional branding vs. rational branding..............................................................................50
Brand leveraging strategies....................................................................................................51
Brand consolidation strategies...............................................................................................51
Costs of branding...................................................................................................................51
Affiliate marketing strategies ................................................................................................51
Viral marketing strategies......................................................................................................52
Search engine positioning and domain names .......................................................................52
Search engines and web directories .......................................................................................52
Paid search engine inclusion and placement..........................................................................52
Website naming issues...........................................................................................................53
Review questions ..........................................................................................................................54
True/False questions ..............................................................................................................54
Multiple choice questions ......................................................................................................54
Essay questions......................................................................................................................55
5 Business-to-business strategies: from electronic data interchange to electronic commerce.57
Introduction...................................................................................................................................57
Student reading ......................................................................................................................57
Learning objectives................................................................................................................57
Subject summary...........................................................................................................................58
Chapter overview...................................................................................................................58
2
, Purchasing, logistics, and support activities ..........................................................................58
Direct vs. indirect materials purchasing ................................................................................59
Support activities ...................................................................................................................60
E-government ........................................................................................................................61
Network model of economic organization.............................................................................61
Creating network organisations .............................................................................................61
Electronic data interchange....................................................................................................61
Early business information interchange efforts: ....................................................................61
Emergence of broader EDI standards ....................................................................................62
How EDI works .....................................................................................................................62
Value-added networks ...........................................................................................................63
Advantages of using a value added network (VAN) .............................................................64
EDI on the internet ................................................................................................................64
Open architecture of the internet ...........................................................................................64
Financial EDI.........................................................................................................................64
Supply chain management using internet technologies .........................................................65
Value creation in the supply chain.........................................................................................65
Advantages of using supply chain management:...................................................................65
Increasing supply chain efficiencies ......................................................................................65
Using materials-tracking technologies with EDI and electronic commerce ..........................65
Creating an ultimate consumer orientation in the supply chain .............................................66
Building and maintaining trust in the supply chain ...............................................................66
Electronic marketplaces and portals ......................................................................................66
Independent industry marketplaces .......................................................................................66
Review questions ..........................................................................................................................67
True/False questions ..............................................................................................................67
Multiple choice questions ......................................................................................................67
Essay questions......................................................................................................................68
6 Online auctions, virtual communities, and web portals...........................................................69
Introduction...................................................................................................................................69
Student reading ......................................................................................................................69
Learning objectives................................................................................................................69
Subject summary...........................................................................................................................69
Chapter overview...................................................................................................................69
Origins of auctions.................................................................................................................70
Types of auction ....................................................................................................................70
Online auctions and related businesses..................................................................................70
General consumer auctions....................................................................................................71
Specialty consumer auctions..................................................................................................71
Consumer reverse auctions and group purchasing sites.........................................................71
Business-to-business auctions ...............................................................................................72
Business-to-business reverse auctions ...................................................................................72
Auction-related services ........................................................................................................72
Virtual communities and web portals ....................................................................................73
Early web communities .........................................................................................................73
Web community consolidation ..............................................................................................73
Web communities in the second wave of electronic commerce ............................................74
Revenue models for web portals and virtual communities ....................................................74
Web portal revenue models ...................................................................................................74
Review questions ..........................................................................................................................75
True/False questions ..............................................................................................................75
Multiple choice questions ......................................................................................................75
Essay questions......................................................................................................................76
7 The environment of electronic commerce: legal, ethical, and tax issues ................................77
Introduction...................................................................................................................................77
Student reading ......................................................................................................................77
Learning objectives................................................................................................................77
Subject summary...........................................................................................................................78
Chapter overview...................................................................................................................78
The legal environment of electronic commerce.....................................................................78
3
, Borders and jurisdiction.........................................................................................................78
Jurisdiction on the internet.....................................................................................................79
Subject-matter jurisdiction.....................................................................................................80
Ethical issues in electronic commerce ...................................................................................80
Conflict of laws .....................................................................................................................80
Contracting and contract enforcement in electronic commerce.............................................81
Contract enforcement in electronic commerce: .....................................................................81
Use and protection of intellectual property in online business ..............................................81
Website content issues...........................................................................................................82
Domain names, cybersquatting, and name stealing ...............................................................82
Protecting intellectual property online...................................................................................82
Defamation ............................................................................................................................82
Deceptive trade practices.......................................................................................................83
Ethics and web business policies ...........................................................................................83
Privacy rights and obligations ...............................................................................................83
Taxation and electronic commerce ........................................................................................84
Online crime, terrorism and warfare......................................................................................84
Online crime ..........................................................................................................................84
Review questions ..........................................................................................................................85
True/False questions ..............................................................................................................85
Multiple choice questions ......................................................................................................85
Essay questions......................................................................................................................86
8 Web server hardware and software ..........................................................................................87
Introduction...................................................................................................................................87
Student reading ......................................................................................................................87
Learning objectives................................................................................................................87
Subject summary...........................................................................................................................87
Chapter overview...................................................................................................................87
Web servers ...........................................................................................................................88
Types of websites: .................................................................................................................88
Choosing a web server...........................................................................................................88
Web client/server communication .........................................................................................89
Two-tier client/server architecture:........................................................................................89
Three-tier and n-tier client/server architectures:....................................................................89
Dynamic content....................................................................................................................89
Software for web servers .......................................................................................................89
Operating systems for web servers ........................................................................................89
Web server software ..............................................................................................................90
Apache HTTP server .............................................................................................................90
Microsoft internet information server....................................................................................90
Sun Java system web server ..................................................................................................90
Electronic mail (e-mail).........................................................................................................91
E-mail benefits.......................................................................................................................91
E-mail drawbacks ..................................................................................................................91
Spam......................................................................................................................................91
Solutions to the spam problem ..............................................................................................91
Web site and internet utility programs...................................................................................92
Finger and ping utilities .........................................................................................................92
Tracert and other route-tracing programs ..............................................................................92
Telnet and FTP utilities .........................................................................................................92
Indexing and searching utility programs ...............................................................................92
Data analysis software ...........................................................................................................93
Link-checking utilities ...........................................................................................................93
Remote server administration ................................................................................................93
Web server hardware .............................................................................................................93
Server computers ...................................................................................................................93
Web server performance evaluation ......................................................................................93
Web server hardware architectures........................................................................................94
Review questions ..........................................................................................................................95
True/False questions ..............................................................................................................95
4
