1. Introduction of Amazing Trading Co. Ltd.. ………………………………………………………………………
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2. What is Electronic Commerce 2.1 Types of Electronic Commerce……………………………………. 2.2 Information Technology utilize for Electronic Commerce……… 2.3 Securing Network Transaction…………………………………….
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3. How information system(IS) improve the competitive position of an organization……………………………...
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4. The impact of Electronic Commerce affected to gain the competitiveness…………………………………………………….........
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5. Conclusion …………………………………………………………..
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1. Introduction of Amazing Trading Co. Ltd.
Page |2 Amazing Trading Co. Ltd. was founded in July 1942 which is the Hong Kong based company located in Kwun Tong, and over 15 operation offices located in South East China includes factories with over 3,500 employees. Amazing conduct the business from manufacture to export the finished goods of plastic related products, such as toys, household products, medical products, industrial collection, etc. to over 900 customers in 25 countries in Europe, Russia, India and South America . The annual revenue is $5.2 million in 2010. Introduction As the manager of the Information Technology department of Amazing, this is a report to explain the importance and advantage to the top management of an organization to state the important of develop the Information System (IS) of Electronic Commerce. Electronic Commerce is the innovation of Information System, which conduct the business transaction on the platform of electronic network. By utilize the Electronic Commerce of an organization, it could help to improve and gain higher competitive position of a business firm and gain the competitive advantage in market.
2. What is Electronic Commerce? ‘Electronic Commerce is the information system technology for business transaction for difference market segment which conduct by the electronic network platform. It means available through the public electronic network to do the buying and selling goods, and
Page |3 exchange information and services online, such as, Internet, Intranet and Value Added Network. Electronic Commerce conducts the business activities automatically similar with the traditional business. It includes the supply chain management; inventory management system; electronic data interchange (EDI); delivery service; marketing; pricing; automatic data collection system and online payment transaction, etc. It could help to improve the effectiveness of daily operation, lower the cost and enhance the customer service.’ Figure 2.1.1 A Business-to-consumer (B2C) e-commerce configuration. ISP refers Internet service provider.
ISP
ISP Firewall The Virtual Store Payment Processor
Electronic Catalogs ISP Product Recommendation Account Status 2.1 Types of Electronic Commerce Help Desk
There are four types of Electronic Commerce which are Business-to-Business(B2B), Business-to-Consumer(B2C), Consumer-to-Business(C2B) and Consumer-toConsumer(C2C).
Page |4 Business-to-Business (B2B) E-Commerce is doing the business of buy and sell product between one or more organization by the electronic network, such as Intranet and Extranet. Business-to-Consumer (B2C) E-Commerce is doing the business of buy and sell product or services by organization to the general public through electronic network such as Value Added Network.(Please see figure 2.1.1 for reference.) Consumer to Consumer (C2C) E-Commerce is the transaction between two individual for exchange or buy and sell goods, service, share information though internet service. Consumer to Business (C2B) E-Commerce is doing the business transaction between consumer and organization. It means the consumer determine the price of product or service and specify requirement to organization which they could afford or willing to buy, than the requirement of consumer to be match to the best price by the process of electronic commerce. 2.2 Information Technology utilize for Electronic Commerce For Electronic Commerce, there are some network systems for support the business transaction flow to be performed smooth and security. It includes the information exchange and payment transaction systems between trading partner or individual. For exchange data, Electronic Data Interchange (EDI) is a network system for exchange data in a structured, machine-readable form between any two organizations. It enables the data document exchange between different companies in the same format of document by the EDI system. Such as, invoices, purchase order, payment of bill, and other document related to business. On the other hand, EDI system could also exchange the fiscal information and settle the bill in electronic form. It could help to save the cost for buy the paper for official document use, and more effective of save the time and money for apply the banking procedure for payment transaction. For payment transaction, there are many kind of electronic payment by E-commerce. Such as Electronic money includes e-Wallet, Credit Card, or PayPal, etc. Electronic money is the money or scrip of electronic for doing the payment by electronic network, the scale of money is low. For example, the Hong Kong’s Octopus card system which could be used to buy the goods in shop by network in a small limit amount of money. Credit card is the electronic payment similar to electronic cash and encrypted representation which popular use by consumer for purchase goods in shop or online. The credit card company may charge a range of service charge from 1.5% - 3% of the value of goods. PayPal is the online payment transaction which enable debit fund from a bank account or credit to the payer by electronic payment. The amount of payment is higher than the electronic money and credit card. The PayPal may charge the fee for the money transaction process includes receive or transmit the money to receiver. It is popular use for online auction sites and trading company. 2.3 Securing Network Transaction
Page |5 For doing business transaction in the global network environment by E-commerce, it may need to concern the security of protect the company confidential document and message, customer privacy, and money transaction. There are some systems for security control for customer and organization while doing business online. Digital signature is the authorization which is for identify or verify the customer and seller while doing business online. It could ensure the identification of user and receiver. The signature is in bit pattern and unique to the sender. Secure Sockets Layer(SSL), Secure Electronic Transaction(SET), S-HTTP and SHEN are the security network system for protect the user and organization by ensure the business transaction during online browsing, data retrieve and update, privacy will not be achieve by others in an encrypting and decrypting type.
3. How information system(IS) improve the competitive position of an organization E-commerce provides a platform for exchange goods and service by the World Wide Web page globally in 24 hours a day, 7 days a week. The company could utilize the e-commerce webpage for display the company product portfolio and advertising, so no need to rent an office for display a lot of physical product and employ the staff for manage the office. It could save the media advertising fee, labor cost, office equipment and rental fee for office. On the other hand, for B2C business, the customer could order the product or service any time and any place on e-commerce webpage while connecting to internet. It will not have the problem of time distance, holiday or after office hour. For B2B business by E-commerce could utilize the various information systems such as EDI system and electronic payment. For example, an organization could place order to
Page |6 supplier by EDI system and the supplier will confirm receive the order by e-contract at the same time. After that, the supplier contacts the local office by e-mail to arrange deliver goods to customer within a short period of time. In the meanwhile, the customer could monitor the order tracking information by internet and do the payment transaction online after confirm received the goods. It could enhance the effective of distribution channel, inventory control and customer service. Besides, save the cost for telephone line, office equipment and payment transaction between trading partners. In education situation, the E-commerce provides a platform for customer to gain the knowledge in world. For example, some of the academy or universities provide a longdistance learning service for students in world, for studying online in their located countries. It also allows the student FAQ after lesson by online chat with the lecturer. It is convenience the customer gain the knowledge in globe and save a lot of money for travel to different countries where is the famous academy located. The flexibility and convenience for shopping online for customer is the most important advantage of E-commerce. The customer no need to go to the shop by carrying their child or elderly, and could buy their favor product online in different countries which they do not need to travel to other countries for shopping. It helps the company reaching the narrow market segment through internet and gain higher profit. In view of the advantage of E-commerce, high cost for develop the Information System innovation consider the barrier of entrants in segment industry and barrier of imitation by competitor. The customer could receive information and place order in 24 hours a day globally by the internet service. It could help to promote the company service and increase the sales amount of an organization. As of the large amount of order quantities and many suppliers identify by internet easily is the high bargaining power of company with supplier. On the other hand, the cost which saved by utilized the Information System innovation could help to reduce the product price for customer. It could avoid the customer shopping around, and the distribution channel and instant online order service is high bargaining power of company with customer. Besides, it increased high market share which the company could reach narrow market segment by internet. Thus, the company could extend their business globally by internet and utilize the experience of curve and economies of scale to produce the standardized product to global. It could help to lowest the product price for gain the cost leadership in segment industry. Conclusively, an organization putting the resources to develop the Information System innovation could enhance the competencies of an organization. Also, gain the higher competitive advantage in segment industry, increase the market share and profit. On the other hand, the company could gain the high profit of first entrant in segment industry by develop the new IS innovation.
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4. The impact of Electronic Commerce affected to gain the competitiveness For E-commerce is the global environment for customer doing business by internet. The global environment will be the threat to avoid the company gain the competitiveness and may not be sustained for long by develop the Information System (IS) project of Electronic Commerce. The barrier of Global customer because of languages difference, the human behavior and culture in different countries will affect the common use to electronic commerce. People are used to buy the goods with the sense of touching physical goods. The English language interface of e-commerce website may not familiar use for every people in different countries. The complex application procedure for online payment of the payment confirmation in different countries will be the barrier for customer to purchase goods by ecommerce. By the way, in the developing countries, the acceptance of e-commerce of people and the bandwidth capability will be the barrier of customer to use the e-commerce. Meanwhile, the customer will concern whether the personnel information provided to the e-
Page |8 commerce organization could be protected the privacy, and the payment transaction by electronic network could be confirm received by the trading partner or receiver, but not stole by a third-partly. All of these concerns will less the sales amount of an organization. As of the increase of Global competitor, the difficulty to recruit a technical specialist to operate and perform excellence service of the e-commerce system in 24 hours a day, 7 days a week. The existing software may not be capable of other system which needs to implement the e-commerce. It will be the high threat of competitor to imitate the company product and service by the internet. The products for buy and sell by e-commerce need to consider the Global government policy. For example of C2C business by e-commerce, the product which imitates the brand license product selling by e-commerce. It will be against the copy right of government. Or, for B2B business, some countries which the government regulation may include the taxation, quota of import and export product or electronic payment transaction by ecommerce. The order quantity may be limited and the cost will be higher for export goods. On the other hand, for e-commerce are not available for the perishable foods, easy broken product and luxury goods which will spoiled or stole while delivery to customer. It will be limited the product portfolio for company to do the business by e-commerce. Furthermore, the security of e-commerce is very concern by the customer in market. There is one news about the Hong Kong Stock Exchange has been hacked by the hacker and cause the suspension of stock exchange to some firms. It affected the reputation of Hong Kong Stock Exchange and caused the lost around HK$1.5 trillion. Thus, the barriers of customer; the government policies; and the increase of competitor in Global will affect the demand and supply of an organization. It will consider the threat of an organization putting the resources for develop the Electronic Commerce may not gain the competitiveness and may cause the lost or less the profit of develop the e-commerce. 5. Conclusion In this report explained the important, advantage and example of develop an information technology of Electronic Commerce. An organization could consider the advantage and impact of the Electronic Commerce stated above, and to develop the Electronic Commerce to gain the higher competitive advantage and increase the market share and profit in segment industry. Reference: Bhasker, B., (2009) Electronic Commerce : Framework, Technologies and Applications. 3rd ed. In.: Introduction to Electronic Commerce, What is Electronic Commerce. pp.2-3 Hossein, B., (2002) Electronic Commerce : Principles and practice. In.:Electronic Commerce Fundamentals, Advantages and disadvantages of E-commerce. pp.56-59 Masaaki, K., Kristiaan, H., (2011) Global Marketing Management. 5th ed. In:Global Marketing and Internet, Barriers to Global Internet Marketing. pp.627-633.
Page |9 Gough, N., Yiu, E., Perez, B., (2011) ‘Hacker crash the HKEx Website’, South China Morning Post, Aug 11, [online]. Available at : <http://topics.scmp.com/news/hk-newswatch/article/Hackers-crash-the-HKEx-website> [Access 12th October 2011].