Institute of Management Technology Centre for Distance Learning A16, Site 3, UPSIDC Industrial Area, Meerut Road, Ghaziabad - 201 003
Subject Code: IMT-77 Subject Name : E-BUSINESS
Objectives After completing this course successfully, a student should be able to: 1. Understand the e-business framework. 2. Identify right strategies for transforming into e-business. 3. Be familiar to the policies and legal environment of e-business in India.
Contents 1. E-Business Framework Building Blocks of e-business E-Business Framework Architecture 2. E-Commerce Infrastructure Technology Infrastructure required Manpower required Corporate Strategic Infrastructure required 3. Business Models Evolution of Internet Business Models Business Models in practice (Case studies) 4. Security in Electronic Business Cryptography, SSL and other Security Protocols Intranet and Extranet Security Framework 5. Electronic Payments Third Party payment processing Electronic Payment Gateway and Fund Transfer B2B electronic payments 6. Marketing on Internet Retailing in e-business space Internet Consumer and Market Research Advertisement and Display on Internet E-Business for Service Industry 7. Policy and Implementation Legal and Ethical policy issues Protection of Privacy and Intellectual Property E-Business Strategy and Implementation
References 1. 2.
Turban-Lee, Electronic Commerce – A Managerial Perspective, Pearson Education. Whitley, David, e-Commerce – Strategy, Technologies and Applications, Tata McGraw Hill.
Notes: a. b. c. d.
Write answers in your own words as far as possible and refrain from copying from the text books/handouts. Answers of Ist Set (Part-A & Part-B), IInd Set (Part-C, Part-D), IIIrd Set (Short Answer Questions) and Case Study must be sent together. Mail the answer sheets alongwith the copy of assignments for evaluation & return. Only hand written assignments shall be accepted.
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Subject Code : IMT-77 Subject Name: E-BUSINESS A. First Set of Assignments:
Part-A : 5 Marks & Part-B : 5 Marks. Each question carries 1 marks.
B.
Second Set of Assignments:
Part-C : 5 Marks & Part-D : 5 Marks. Each question carries 1 marks.
C.
Third Set of Assignments:
20 Short Answer Questions : 10 Marks. Each question carries ½ marks. Confine your answers to 150 to 200 Words.
D. Forth Set of Assignments:
Two Case Studies : 10 Marks. Each case study carries 5 marks.
ASSIGNMENTS PART– A 1. Differentiate E-commerce and e-business. Support your answer with an example. 2. Discuss the architectural framework of E-Commerce. 3. What is a business model? Discuss how service and manufacturing industry has changed with business model innovations. 4. What is a domain name? Describe how the domain name system manages the addressing on the web. How can you register your suggestion for a new Top Level Domain? 5. Discuss the impact E-commerce is making on the organizations w.r.t. organization structure, controls, material management, marketing and payments.
PART– B 1. What do you understand by Message Authentication? How is this issue addressed in e-transactions? 2. Briefly describe the various types of firewalls. 3. What is a market place? Take at least one real life example to discuss how e-commerce is making Onestop shopping a reality? 4. Differentiate the following: a. Confidentiality and Integrity b. Spoofing and Spamming c. Trozon Horse and Virus 5. What is the difficulty with Traditional EDI? How does Open EDI address it?
PART – C 1. Discuss and compare various options available for token based and non-token based payment systems feasible with electronic transactions. 2. You are the Chief Security Officer of an organization dealing with Office stationary and furnishings. A company wide intranet and extranet allows the entire order process to be automated. Propose a basic Security policy that your company must adopt in order to facilitate secure order and payment transactions over the internet. 3. Describe what is meant by Interoperability, Scalability and confidentiality in an online payment system. Take example of at least 4 online payment systems to clarify your point. Also mention the source of information you use. E-business................................................................ Page 2 of 7 ............................................................................... IMT-77
4. Take up one nationalized (Indian) and one multi-national bank. Compare the facilities they offer in terms of e-transactions between: a. Any two banks b. Bank and its end-customer 5. How do the following help in authentication of a user? a. Kerberos Server b. Biometric systems
PART– D 1. Suggest how IT Laws of our country can be improved? 2. Search the internet or other resources to find at least two examples of the initiatives taken in e-governance. Discuss them in brief, highlighting what is the advantage of those initiatives and how can better leverage be taken out? Mention the source of information you gather. 3. Compare and contrast the e-biz models of value chain integrators and value chain service providers. 4. Consider a business proposal to sell Lucknow hand embroidered material over the internet. Prepare a preliminary proposal highlighting the business model, revenue model and IT infrastructure required for the same. 5. Discuss the issues attached with the adoption of e-business in an organization.
SHORT ANSWER QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
Differentiate e-Commerce and e-Business. What is TCP/IP. How is it relevant to e-Commerce? What is dual key cryptosystem? Describe PKI and its relevance to business organizations. What is subscription model of e-business? Differentiate SMTP and HTTP. How can message hash ensure integrity of an electronic message? Differentiate metamediary model and infomediary model. What is the role of certification authorities in the conduct of e-business? What is electronic cash? How does it work? What is secure transaction protocol? Differentiate User agent and message transport agent in a mailing system. What is the use of software agent? What are the basic properties a software agent should have? Describe the measurement problem in internet advertising? How does internet offer 2-way advertising channel? What is the mechanism used by search engines for automated collection of information? What is a digital signature? How does an SSL-session take place? What is denial of service attack? How can you avoid it?
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CASE STUDY-1 The first round of the battle in cyberspace saw Indian dotcoms lick their multinational rivals. The second round could throw up very different results. Try this: Run a search on both rediff.com and yahoo.co.in for a ''guide to photography''. Rediff will throw up 7,92,000 matches, and yahoo, 190 sites. The numbers aren't strictly comparable, so look at the content on the first page. Rediff's first match is bang on: ''A beginner's guide to photography''. And Yahoo's is ''Spearmint's Guide to Infrared Photography''. Sure, Yahoo's second match is perfect (Tim's Guide to Photography), but the sites it shows up towards the end of the first page are not very relevant. That in a way is indicative of the lead that desi dotcoms have been able to maintain over their transnational rivals in India. Not only are the local cyber corporates drawing more eyeballs, they are pulling in more moolah too. For instance, Rediff racked up $1.51 million last quarter, followed by Sify.com ($0.70 million). Yahoo India would not reveal its revenue figures. In terms of page views, Rediff led the pack with a count of 965 million between January and March this year, and Sify reported 540 million page views in the same period. While yahoo gets about 650 million page views a month globally, India-specific figures were not made available to BT. Competition is most fierce in the horizontal space, but the fight is intense in other segments too. Take, for example, online job searches. World No. 1 Monster.com, Jobstreet.com, Stepstone.com, and Jobsdb.com are pitted against Naukri.com and Jobsahead.com. In B2B, Freemarkets and Gate2biz are jockeying for leadership with Trade2gain, Sify, and Auctionindia (See Dotkings On the Desi Turf). Again, in each of these segments, it is the Indian dotcom that dominates. Naukri boasts of 400,000 resumes in its databank versus Monster India's 90,000; Trade2gain has conducted 238 auctions in six months whereas Freemarkets has done 100 although the average value of transaction is much higher in the latter's case. Says Ajit Balakrishnan, Chairman, Rediff: ''Being foreign-owned is no guarantee of local success.'' Now, The War Begins Dotkings On the Desi Turf * DOMAIN
GLOBAL
INDIAN
Horizontal
Yahoo, MSN
Rediff, Sify
KEY SUCCESS FACTORS 1. Breaking News and Localising Content 2. Speed of the Page Display 3. Utilities Offered Apart from Plain Vanilla Stuff 4. Adapting to changing Trends in E-shopping Jobs
Monster, JobsDB
Naukri, Jobsahead
KEY SUCCESS FACTORS 1. Extend Reach Beyond the Internet 2. Range of Products Apart from the Regulars 3. Brick & Mortar (Location-based or Print Offerings) B2B
Freemarkets
Trade2gain, Indiamart
KEY SUCCESS FACTORS 1. Full-fledged Corporate Commitment 2. Sustaining Capability (Deep Pockets) 3. Technical Expertise for Complex Problems 4. Leveraging Existing Relationships Seach
Lycos, Altavista
123India.com, Khoj
KEY SUCCESS FACTORS 1. Speed of the Search Function 2. Relevance of Results Displayed
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e-learning
Smartforce
Learn At Satyam
KEY SUCCESS FACTORS 1. Level of Customisation of the Content 2. Concept-selling to corporates e-trading
Tata-TDW
ICICI-Direct, Indiabulls
KEY SUCCESS FACTORS 1. Credibility with Stockmarket Customers 2. Constant Product Innovation 3. Understanding of Local Environment 4. Backup Operations & Risk Management Ability * A Representative List May be, but the current equation could change soon. Being late entrants, most of the foreign players have so far been busy getting their content right. But now they are moving up a gear. Yahoo India's initial revenue model depended on ads, but now it is focusing on selling e-solutions to corporates, co-branded tools, 'fusion marketing' (optimises targeting capabilities), 'delivers' (permission-based marketing), and webcasting. Explains Deepak Chandnani, CEO, Yahoo India: ''We have tailored our revenue streams to suit the local conditions.'' Monster India, on the other hand, is adding a brick-n-mortar dimension to its virtual strategy by opening three sales offices in India. Simultaneously, it is expanding its jobs portfolio to include segments such as finance, sales, media, and services. CommerceOne also has modified its global transaction software to suit peculiarities of Indian trade (adding tax and excise components to it). By now it is clear to most dotcommers that to make money on the Net, companies will need to build strong offline capabilities. For example, in the B2B space, factors such as a strong partnership with participating companies, superior logistics service, customer service, and secure payment technology will decide who wins the game. In e-trading, consumer confidence, strong market participants (such as depositories), and scalability are critical issues. To build such unique capabilities, the companies will need deep pockets. Here again, the Yahoos and Commerceones of the world have an edge over the Rediffs and Trade2gains. The difference in financial stamina will get accentuated especially when revenue cyclicality worsens. Then, the players must take a call on whether to cut back on key investments and risk missing market when it takes off, or continue spending and risk going bust. Monster (US), for instance, plans to spend $50 million on product development and enhancement during 2001. Yahoo India is continuing to invest in server farms and hiring people, although revenue is in no way keeping pace with the spend. Not many Indian dotcoms can claim to have a comparable hoard. Says Chandnani: ''We are using technology to make our user experience the best.'' Critics of the high-investment strategy, however, say that Indian dotcoms are being wiser by keeping their cash-burn low. Points out Sanjeev Bhikchandani, CEO, Naukri.com: ''Even if the market is buoyant you should not overspend on infrastructure or personnel.'' In the final analysis, the key to success will lie not in ownership but in dotcoms understanding local customer preferences and balancing their investments with returns. Question Globalization vs. localization is a relevant debate many ambitious organizations have entered into. In the light of discussions placed in the narration above, what should desi companies care about to streamline their future growth?
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CASE STUDY-2 STOCKHOLM--Infuriated by deteriorating service and rising charges, many Swedes have grown tired of big banks and are taking their business to financial start-ups, some on the Internet, others at the grocery store. Having dominated the sector for decades, the big four--Nordea, Handelsbanken, SEB and Swedbank--must now compete for a new breed of customers less loyal than older generations, for whom, as the saying goes, it is easier to divorce than to change banks. The Internet-based banking arms of two insurance companies have emerged as respectable players and today's fierce competition will heat up further when two big grocery chains launch bank services at supermarkets this year. In the past decade, niche banks have grown their share of household lending to 16.5 percent from 3.6 percent, and of deposits to 14.3 percent from 2.1 percent, official data show. Banking analysts say the inroads made by small players pose no major threat to the big four's earnings. Consolidation in the sector is likely to continue, keeping the number of upstarts in check, they say. With nearly three million people, or one third of the population, accustomed to web-based bank services, "Sweden leads the world in the use of online banking facilities," says the Swedish Bankers' Association. Internet banking is by no means unique to Sweden, but the tech-savvy Scandinavian country's high webpenetration, above 60 percent of households, means its banks have been among the first to try to come to grips with changes in customer preferences. "Banks are seeing traditional relationship banking gradually being ousted by transaction banking focusing on terms advantages," Deutsche Bank said in a report. In Sweden such advantages, trumpeted aggressively by some niche players in big advertising campaigns, include low or no charges for giro transfers and cash withdrawals--services that cost far more when performed by the leading four. SkandiaBanken, an arm of insurance and mutual funds group Skandia, was recently rated Sweden's overwhelmingly best Internet bank by readers of Privata Affarer, a magazine targeting private investors. SkandiaBanken's pool of Internet customers grew 103 percent from January to September 2001 to 290,000 to make up half of its total client base, which has grown on average by 39 percent annually over the past five years. Lansforsakringar Bank, another insurance company offshoot, saw its customer base grow 25 percent in the first nine months of 2001. Deposits increased 40 percent to $1.17 billion (12.3 billion crowns) and lending by 30 percent to 4.3 billion. "Our strategy to challenge the big banks by offering a full range of competitively priced banking services is bearing fruit," Lansforsakringar Bank President Soren Ericson said. Cost Edge A government report said deposits held by insurance company banks were low but made up a significant share of niche banks' advance into the household market over the past three years. "Dispensing with expensive branch networks and extensive consultancy, they have a significant cost edge," Deutsche Bank noted. The imbalance between deposits and lending highlighted in Lansforsakringar Bank's numbers reflected Credit Suisse First Boston's observation of "a massive build-up of liquidity." Its November 2001 global financial market liquidity report said people were holding money in anticipation of a further decline in asset prices. With the burst of the tech bubble, the Stockholm bourse all-share index slumped 58 percent between March 1999 and September 2001 as investors scrambled to liquidate holdings. By offering higher interest on deposits than the big four, niche banks have won market share and put pressure on the majors, whose margins were already squeezed by subdued economic growth, accompanied inevitably by slower demand for credit. E-business................................................................ Page 6 of 7 ............................................................................... IMT-77
"On the personal banking side, the room for increasing margins appears to be very tough," Morgan Stanley said after autumn meetings with top executives of Sweden's four big banks. Credit rating institute Moody's noted in a report that Nordic banks' margins were already among the lowest in Europe due to intense competition and high pricing transparency. Chasing costs, the big banks have closed one third of their branches in the past decade. Margins will remain under pressure and banks must strive to win market share in savings products, Moody's said, noting these offered high growth potential but also entailed risks. No Frills ICA Banken President Lennart Kall is convinced that supermarket banking will be popular among the majority of Swedes who would rather spend their excess cash on a trip to the sun than worry about investments--a lowrevenue client segment that critics say the big banks would just as happily get rid of. "The big four dominate and there are no really good alternatives," Kall said. ICA and KF already offer customers the possibility of depositing limited amounts into individual accounts and paying for groceries with a card linked to the account. ICA has 3.6 million card holders, of whom 2.7 million are using their cards regularly and one million have some kind of savings or credit arrangement, Kall said. A fully fledged authorized bank, ICA Banken intends to become the first-choice financial outlet for a "considerable" number of ICA grocery store customers by focusing on no-frills services such as deposits, giro transfers and simple credits. Working together with one of Sweden's established housing financiers, ICA Banken will also offer mortgage loans. It may, however, face an uphill struggle if one is to believe a new Bankers' Association survey, which found that 83 percent of Swedes had no plans to switch to another bank.
Question Analyze the situation narrated above and discuss it in light of Indian scenario.
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