Transcript Chapter 14

SECOND EDITION
Chapter
14-1
Prepared
by Coby
Harmon
Prepared
by Coby
Harmon
Universityof
ofCalifornia,
California, Santa
Santa Barbara
University
Barbara
Westmont
College College
Westmont
E-Commerce and
E-Business
Chapter
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Study Objectives
1.
An introduction to e-commerce and e-business
2.
The history of the Internet
3.
The physical structure and standards of the Internet
4.
E-commerce and its benefits
5.
The privacy expectations in e-commerce
6.
E-business and the IT enablement
7.
E-business enablement examples
8.
Intranets and extranets to enable e-business
9.
Internal controls for the Internet, intranets, and extranets
10. XML and XBRL as e-business tools
11. The ethical issues in e-business and e-commerce
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Real World
A few years ago, Wal-Mart affected a huge
change in the EDI (Electronic Data Interchange)
approach to business-to-business transactions. Although EDI had been
around for many years, the technology had advanced to allow it to be
conducted for free over the Internet. Yet many were concerned about the lack
of secure transmission over the Internet. By 2002, Wal-Mart felt the new
security standards, called AS2, were adequate. It announced to its 10,000
small and mid-size suppliers that the suppliers had one year to begin using
Internet EDI (EDIINT AS2). This was a tremendous change from its
traditional EDI and value-added networks, and it had a dramatic impact not
only on Wal-Mart’s suppliers but on many other large companies and their
suppliers worldwide. Some call Wal-Mart the market maker for Internet EDI.
Its change to EDIINT led to a revolution of adoption of Internet EDI around
the world. Since the buyer and seller have to use the same EDIINT AS2
protocol, Wal-Mart forced a huge number of companies to switch to EDIINT,
and in turn, those suppliers used EDIINT with other business customers.
Chapter
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Introduction to E-commerce and
E-business
E-commerce - electronically enabled transactions between
a business and its customers.
E-business - includes not only electronic trade with
customers, but also
► servicing customers and vendors,
► trading information with customers and vendors, and
► electronic recording and control of internal processes.
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SO 1 An introduction to e-commerce and e-business.
Introduction to E-commerce and
E-business
Exhibit 14-1
E-business and
E-commerce
The most common method of conducting e-commerce and e-business is
to use the Internet to electronically exchange data.
Chapter
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SO 1 An introduction to e-commerce and e-business.
Introduction to E-commerce and
E-business
Concept Check
Which of the following statements is true?
a. E-business is a subset of e-commerce.
b. E-commerce is a subset of e-business.
c. E-business and e-commerce are exactly the same thing.
d. E-business and e-commerce are not related.
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SO 1 An introduction to e-commerce and e-business.
The History of the Internet
 In 1965, a computer at MIT (Massachusetts) was
connected to a computer in California, using dial-up
telephone lines.
 In 1969, computers at four major universities were
connected via leased telephone lines.
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►
Grew into a network called ARPANET.
►
Purpose was to share military research data among
UCLA, UC Santa Barbara (UCSB), Stanford, and the
University of Utah.
►
Over time, many other universities, NASA, and the Rand
Corporation were connected to this network.
SO 2 The history of the Internet.
The History of the Internet
 Two technologies developed for ARPANET:
►
Packet switching
►
Router
 E-mail was adapted to ARPANET in 1972.
 BBN Technologies,
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►
developed the use of the @ symbol in e-mail address.
►
developed a communication protocol to use in ARPANET.
►
in the 1970s, helped develop the TCP/IP protocol.
SO 2 The history of the Internet.
The History of the Internet

In 1986, the National Science Foundation (NSF) began to
develop a backbone set of servers, gateways, and networks
that eventually became the Internet.

Internet serves as backbone for World Wide Web.

In 1992, commercial enterprises began offering Internet
access to subscribers.

In 1993, first graphical user interface (GUI) browser was
developed.

In 1995, the NSF relinquished control of the Internet. Since
that time, all Internet traffic has been routed through
commercial networks.
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SO 2 The history of the Internet.
The History of the Internet
Exhibit 14-2
Chart of the Number
of Web Servers
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The History of the Internet
Concept Check
An electronic hardware device that is located at the
gateway between two or more networks is a
a. packet switch.
b. URL.
c. router.
d. protocol.
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SO 2 The history of the Internet.
The Physical Structure and Standards of
the Internet
The Network
Types of
organizations
that make up
the Internet.
Exhibit 14-3
Architecture of the
Internet
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SO 3 The physical structure and standards of the Internet.
The Physical Structure and Standards of
the Internet
The Network
The Internet comprises,
► backbone providers,
► network access points,
► regional ISPs,
► local ISPs, and
► Internet subscribers.
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SO 3 The physical structure and standards of the Internet.
The Physical Structure and Standards of
the Internet
The Common Standards of the Internet
► HTML - language to present data on websites.
Exhibit 14-4
A Simple Web Page and
the HTML Source Code
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SO 3 The physical structure and standards of the Internet.
The Physical Structure and Standards of
the Internet
The Common Standards of the Internet
Exhibit 14-4
A Simple Web Page and
the HTML Source Code
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SO 3 The physical structure and standards of the Internet.
The Physical Structure and Standards of
the Internet
The Common Standards of the Internet
► URL - uniform resource locater address.
► Domain Name - http://www.google.com.
Exhibit 14-4
A Simple Web Page and
the HTML Source Code
► Common suffix portions of domain names:
.com - commercial
.edu - educational
.org - nonprofit
.gov - governmental
.mil - military
.net - network
► URL system actually uses IP addresses.
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SO 3 The physical structure and standards of the Internet.
The Physical Structure and Standards of
the Internet
Concept Check
The type of organization that serves as the main trunk line
of the Internet is called a
a. local ISP.
b. regional ISP.
c. global ISP.
d. backbone provider.
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SO 3 The physical structure and standards of the Internet.
E-Commerce and its Benefits
Benefits of E-commerce for the Customer
► Access to broader market for goods and services.
► More convenient times for shopping.
► More choices to the customer.
► Lower prices.
► Exchange information with businesses before, during,
and after the purchase.
► Quicker delivery of the product.
► Receive targeted marketing from businesses.
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SO 4 E-commerce and its benefits.
E-Commerce and its Benefits
Disadvantages of E-commerce for the Customer
► Opportunity for fraud.
► Theft of assets.
► Theft of data.
► Inability to handle or try out the product.
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SO 4 E-commerce and its benefits.
E-Commerce and its Benefits
Benefits of E-commerce for the Business
► Access to broader market.
► Reduced marketing costs.
► Potential for much richer marketing concepts.
► Quickly react to changes in market conditions.
► Likely to experience reduced order-processing and
distribution costs.
► Customer convenience likely to result in higher sales.
► Higher sales with reduced marketing, order processing,
and distribution costs can lead to higher profits.
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SO 4 E-commerce and its benefits.
E-Commerce and its Benefits
Disadvantages of E-commerce for the Business
► IT system usually more complex and costly.
► World Wide Web opens a business to:
 chances for fraud,
 hackers, and
 compromised customer privacy.
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SO 4 E-commerce and its benefits.
E-Commerce and its Benefits
E-commerce and Traditional Commerce
► Brick and mortar.
► E-tailers.
► Clicks and mortar (bricks and clicks).
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SO 4 E-commerce and its benefits.
E-Commerce and its Benefits
Concept Check
Which of the following is not a direct advantage for the
consumer from e-commerce?
a. Access to a broader market
b. More shopping convenience
c. Reduced order-processing cost
d. Information sharing from the company
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SO 4 E-commerce and its benefits.
E-Commerce and its Benefits
Concept Check
Each of the following represents an application of B2C
commerce except
a. software sales.
b. electronic retailing.
c. data exchanges.
d. stock trading.
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SO 4 E-commerce and its benefits.
Privacy Expectations of Business in Ecommerce
Personal information to be protected:
► Name, address, Social Security number, or other
government ID numbers
► Employment history.
► Personal or family health conditions.
► Personal or family financial information.
► History of purchases or other transactions.
► Credit records.
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SO 5 The privacy expectations in e-commerce.
Privacy Expectations of Business in Ecommerce
Ten privacy practices to ensure adequate customer
confidence regarding privacy of information:
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1. Management.
6. Access.
2. Notice.
7. Disclosure to third parties.
3. Choice and consent.
8. Security for privacy.
4. Collection.
9. Quality.
5. Use and retention.
10. Monitoring and enforcement.
SO 5 The privacy expectations in e-commerce.
Privacy Expectations of Business in Ecommerce
Concept Check
Before forwarding customer data, an organization should receive
explicit or implicit consent of the customer. This describes which
of the AICPA Trust Services Principles online privacy practices?
a. Consent
b. Use and retention
c. Access
d. Onward transfer and disclosure
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SO 5 The privacy expectations in e-commerce.
E-Business and IT Enablement
The supply chain is the set of linked processes that take
place from the,
► acquisition and delivery of raw materials,
► through the manufacturing,
► distribution,
► wholesale, and
► delivery of the product
to the customer.
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SO 6 E-business and the IT enablement.
E-Business and IT Enablement
B2B: A Part of E-Business
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Exhibit 14-6
E-commerce B2C vs.
E-Business B2B4
SO 6 E-business and the IT enablement.
E-Business and IT Enablement
Concept Check
Which of the following processes within a supply chain can
benefit from IT enablement?
a. All processes throughout the supply chain
b. Only internal processes within the supply chain
c. Only external processes within the supply chain
d. Exchange processes between a company and its
suppliers
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SO 6 E-business and the IT enablement.
E-Business Enablement Examples
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SO 7 E-business enablement examples.
Intranets and Extranets to Enable
E-Business
Three levels of network platforms
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Exhibit 14-7
Internet, Extranet,
and Intranet
SO 8 Intranets and extranets to enable e-business.
Intranets and Extranets to Enable
E-Business
Concept Check
Intranets are used for each of the following except
a. communication and collaboration.
b. business operations and managerial monitoring.
c. Web publishing.
d. customer self-service.
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SO 8 Intranets and extranets to enable e-business.
Internal Controls for the Internet, Intranets
and Extranets
Exhibit 14-8
Controls to Limit
Access to Intranets
and Extranets
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SO 9 Internal controls for the Internet, intranets, and extranets.
Internal Controls for the Internet, Intranets
and Extranets
Exhibit 14-8
Controls to Limit
Access to Intranets
and Extranets
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SO 9 Internal controls for the Internet, intranets, and extranets.
Internal Controls for the Internet, Intranets
and Extranets
Concept Check
Which of the following IT controls would not be important in an
extranet?
a. Encryption
b. Password
c. Antivirus software
d. Penetration testing
e. All of the above are important IT controls.
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SO 9 Internal controls for the Internet, intranets, and extranets.
XML and XBRL as Tools to Enable
E-Business
Two languages as tools to enable e-business:
► XML (eXtensible Markup Language)
► XBRL (eXtensible Business Reporting Language)
XML In Internet EDI
► Internet EDI is alternative to traditional EDI.
► Uses the Internet to transmit business information
between companies.
► XML allows data exchange over Internet in a rich format.
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SO 10 XML and XBRL as e-business tools.
XML and XBRL as Tools to Enable
E-Business
Traditional EDI and VAN versus Internet EDI
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Exhibit 14-9
SO 10 XML and XBRL as e-business tools.
XML and XBRL as Tools to Enable EBusiness
XBRL for Financial Statement Reporting
Major advantages:
Easily used in several formats.
► Printed in paper format.
► Displayed as an HTML web page.
► Sent electronically to the SEC.
► Transmitted to banks or regulatory agencies.
► Computer program can extract pieces of information from the
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XBRL file.
SO 10 XML and XBRL as e-business tools.
XML and XBRL as Tools to Enable EBusiness
Concept Check
An extensible markup language designed specifically for
financial reporting is
a. Internet EDI
b. XML
c. XBRL
d. XFRL
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SO 10 XML and XBRL as e-business tools.
Ethical Issues Related to E-business and
E-commerce
Online privacy policies of the AICPA Trust services Principles
represent ethical obligations to customers.
Ethical obligations would dictate that companies take
adequate care to guard the security and privacy of data
collected through e-commerce.
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SO 11 The ethical issues in e-business and e-commerce.
Gateway Learning Corporation, the company
behind Hooked on Phonics®, was charged by
the Federal Trade Commission with deceptive and unfair practices.
Starting in the year 2000, Gateway disclosed a privacy policy on its
www.hop.com Website stating that it would not share customers’
personal information with any third parties without explicit consent
from the customer.
Real World
In April 2003, Gateway allegedly began violating this policy by
renting to telemarketers customer information such as name,
address, phone number, age, and gender of children. A retroactive
change was posted to the company’s privacy statement on its
Website.
To settle this charge out of court, Gateway was required to pay a
fine, was restricted from using deceptive claims regarding its privacy
policy, and cannot materially change its privacy policy without
customers’ consent.
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Copyright
Copyright © 2013 John Wiley & Sons, Inc. All rights reserved.
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programs or from the use of the information contained herein.
Chapter
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