UNIT 4

E-Commerce, Business Networks and Telecommunications

OBJECTIVES:
At the end of this chapter, the students should be able to:
 Discuss the concept of electronic commerce
 Understand internet based business models
 Understand the concept of communication technologies in business
 Discuss videoconferencing and wireless payments
 Understand network protocols and internetworking services

INTRODUCTION:
It is radically changing how people learn, work, play, enjoy and consume. The centre of
revolution is browser technology. The “technology” has moved from the “Back office” to the
front line. Increasingly, technology is shifting the firm’s relationships, with its customers from
“face to face” to “screen to face” interactions. The impact of Internet on business is akin to
previous innovations that transformed not just one business sector but every sector. The Internet
concerns every sector of economy as it changes the way business should sensibly organize its
activities and go to market. In this unit we will study the concept, advantages-disadvantages and
history of e-commerce.
We are in the world of advanced Information Technology where things are moving in such a
fast phase. The availability of information becomes cheaper and faster and the facilities existing
to exchange the information among users all across the world has become more simpler due to
the evolving of Information Super Highway. The internet provides fast and inexpensive
communication channels that range from messages posted on bulletin boards to complex
exchanges among many organizations. It also includes information transfer (among computers)
and information processing. E-mail, chat groups, and newsgroups are examples of major
communication media. Let us see the major components of Electronic Communication System as
follows.

Electronic Commerce
E-commerce is a selling and transfer process requiring several institutes. It is systematic and
organized network for the exchange of goods between produces and consumers. The Net aims to
establish the interconnections between producers and consumers directly and in this, the Internet
embraces all those related activities which are indispensable for maintaining a continuous, free
and uninterrupted distribution and transfer of goods. The Website or portals may be categorized
into commercial and non-commercial.
Any website or portal that offers products and/or services for sale is a commercial website.
There are thousands of commercial web sites on the Internet. Some of them have been
successful, and some weren’t so lucky. What elements make up a good commercial web site? Of
course, web pages should look attractive to a customer. However, even the most attractive web
pages will not make a person come back to a website where it takes too long to find the right
product or where order forms don’t work. In this unit we will discuss what functionality is
needed for a successful commercial web site and what technology implements various web site
elements.
Definition of Electronic Commerce
E-commerce is a general concept covering any form of business transaction or information
exchange executed using information and communication technologies (ICTs). E-commerce
takes place between companies, between companies and their customers, or between companies
and public administration. E-commerce includes electronic trading of both goods and electronic
material.
“e-commerce denotes the use of electronic transmission media (telecommunication) to
engage in the exchange of products and services requiring transportation either physically or
digitally, from location to location”. —M. Greenstein and T.M. Feinman

“e-commerce describes the process of buying and selling (or exchanging) of products,
services and information via computer networks including the internet”.—E. Turban and others.

E-commerce is the means to complete online transaction and integrate the supply chain into
the transaction management process such as receiving orders, making payments and tracking
down the deliveries or order.
“e-commerce can be defined as the technology-mediated exchanges between parties
(individuals, organisations, or both) as well as the electronic based intra or inter organisational
activities that facilitate such exchanges”. —J.F. Rayport and B.I. Jaworski.

According to World Trade Organization (WTO): “E-commerce as a commercial process

includes Notes production, distribution, marketing, sale or delivery of goods and services
electronically.”
E-commerce is used everywhere in everyday life. It ranges from credit/debit card
authorization, travel reservation over a phone/network, wire fund transfers across the globe,
point of sale (pas) transactions in retailing, electronic banking, electronic insurance, fund raising,
political Campaigning, on-line education and training, on-line auctioneering, on-line lottery and
so on.

Many people use the term e-commerce and e-business interchangeably, which is factually wrong.
Task: Discuss the meaning of e-commerce
Self-Assessment
Fill in the blanks:
1. ____________________ is defined as a systematic and organized network for the exchange of
goods between produces and consumers.
2. E-commerce includes _________________ trading of both goods and electronic material.

Internet based Business Models

The last thing you want to do is throw up a Website or a Web page, include an email
address, and call it done! Regardless of the type of business, you have to determine what you’re
going to do behind the scenes and how your electronic commerce efforts will fit in with your
regular business processes.
There is no simple step-by-step list of things you need to do to establish an E-commerce
process, no “one size fits all” method. But remember these facts:
 It’s not cheap.
  It’s not easy.
 It’s not fast.
Some companies have spent millions of dollars only to fold up their E-commerce operations
because they just weren’t working. Some companies have built a Website without thinking
through the entire process; only to find out they have seriously hurt their normal operations.
Some companies have realized that E-commerce was simply not the Holy Grail it was made out
to be.
You need to analyze what you want the mission of the Website to be. Are you going to have
a Website that simply offers information about your company and its products? Are you going to
sell only to consumers? What impact will that have on your current retail outlets? How are you
going to get people to your Website in the first place? How are you going to keep them coming
back? If you sell business-to-business, do you have the back-end processes in place to handle the
increased sales? Who will host the Website: your company internally? a Web host service?
Who’s going to create the Website, what services will you offer on it, and how are you going to
Notes keep your information secure?
We don’t mean to discourage you from electronic commerce; just the opposite. Thousands of
businesses are finding new opportunities to connect to customers, suppliers, and employees.

The above table shows some ways companies use the Internet to conduct business. Even
more intriguing is the disruption new, upstart companies are causing in traditional industries.
MP3.com introduced the Rio music appliance, which uses music downloaded for free from Web
sites. Recording companies are jumping through hoops trying to respond to this threat to their
business.
Note that no business can afford to rest on its laurels and assume its business or industry is
safe from changes caused by the Internet.

How Internet Business Models Work

While there are many e-commerce business models, most depend on two fundamental
building blocks: businesses (B) and consumers (C). From this foundation, you can derive four
basic models: B2B, B2C, C2B, and C2C. Somehow, most businesses (both online and off) fall
into one or more of these categories, although they use a wide variety of ways to link buyers,
sellers, and manufacturers. A business might sell goods it has manufactured itself, resell those
made by another company, or simply act as a middleman, connecting the buyer and seller. The
revenue streams flowing between these parties is potentially even more complex, because one
company might (and should!) have numerous sources of revenue, ranging from product sales to
affiliate commissions and advertising income.
The various model of Internet business are:
Business-To-Consumer
The business-to-consumer (B2C) business model is perhaps the most familiar e-commerce
model. Vendors sell goods and services over the Web to connected consumers.
Example: Gear.com, Barnes&Noble.com, and Gateway.com
Business-To-Business
Business-to-business (B2B) commerce is less in the public eye than B2C but is a rapidly
growing segment of the Internet economy. In this model, businesses offer goods and services to
other businesses over the Internet. For instance, Safetylogic.com provides corporations with an
easy way to distribute safety materials to satellite plants and fill out OSHA reports online. We
will discuss B2B in detail later in the unit.
Example: Extensity.com, StaplesLink.com, Lexis-Nexis

Consumer-To-Business
Consumer-to-business (C2B) describes a system where consumers use an online agent to
look for a product or service that suits their needs. Priceline.com is a prime example of the C2B
model.
Example: ShopBot.com, AutobyTel.com

Consumer-To-Consumer
Consumer-to-consumer (C2C) businesses act as agents between consumers with goods and
services to sell. Online auction site eBay is perhaps the most prominent online C2C company.
Example: Excite classifieds, Yahoo! Auctions

Peer-To-Peer
Peer-to-peer (P2P) is a relatively new e-commerce model. Not unlike C2B and C2C, online
agents assist in P2P transactions. P2P businesses transact exchanges of information (such as files
or dollar amounts) between PCs or hand-held computing devices.
Example: 1. Napster is currently the most prominent example of an online P2P business.
2. PayPal, ProPay, Ecount.

Self-Assessment
Fill in the blanks:
1. While there are many e-commerce business models, most depend on two fundamental
building blocks: businesses (B) and ________________________.
2. ____________________ describes a system where consumers use an online agent to look for
a product or service that suits their needs.
3. __________________ businesses transact exchanges of information (such as files or dollar
amounts) between PCs or hand-held computing devices.

Telecommunication
Telecommunication implies the transmission of information from one point to another
through a communication medium. In today’s dynamic business environment, people, in order to
perform their work activities and to compete successfully, need to communicate electronically
within and outside the organization. As a result, telecommunication takes on a significant role in
an organization. Sometimes, the term data communication, which is a narrow term and refers to
the transmission of data, is also used and thus data communication is a more specific term.
 A telecommunication system may be represented by way of a simple conceptual model as
shown below.

The data source is the originator of information while data transmission is the receiver of
information. The channel is the path through which the information is transmitted to the
destination from the source. Before the information is sent through the communication channel it
is converted into coded symbols by transmitted encoder, only to be decoded at the receiver’s end
by receiver decoder. The encoded data is transmitted through the channel by an electronic signal
or waveform

Self-Assessment
Fill in the blanks:
1. __________________ implies the transmission of information from one point to another
through a communication medium.
2. The _______________ is the path through which the information is transmitted to the
destination from the source.

Communication Technologies in Business

Most traditional business communications rely on telephone and paper-based processes.
These resources do not readily support the level of productive interaction that growing
businesses need to excel, and can be easily overwhelmed in periods of rapid growth.
“Organizations are looking to increase productivity by focusing on the interactions between
Notes colleagues, partners, and customers, says John Chambers, Cisco Chairman and CEO.
“Productive interactions also help improve profitability and customer satisfaction, and they
create new opportunities for corporate growth and success.”
Today, successful companies around the world achieve that efficiency with network-based
communications tools such as e-mail and a Web presence. These tools support the high levels of
productivity and customer support that growing companies need to compete in larger and more
lucrative markets. A sound network foundation will also support the new technologies and
applications necessary to sustain ongoing competitiveness.
What is different about human communication in business organizations when it takes place
via the new communication technologies like electronic mail? The most distinctive quality of
these new technologies is that they are interactive in nature, in that they allow the participants in
a communication process to have control over, and exchange roles in, their mutual discourse.
Interactive communication technologies usually spread among the members of a system rather
slowly until a critical mass of adopters is reached, as the case of Internet illustrates. After the
critical mass occurred, the rate of adoption of Internet took off suddenly. Interactive
communication provides a relatively high degree of flexibility, which in turn allows the user to
have a high degree of control over the technology and the communication that takes place via the
new interactive technologies.
Every successful business needs to have the best communication equipment available on the
market. It’s just a simple fact. If you can’t properly communicate with your different branches,
then your efficiency will take a big hit. Communicating isn’t that hard though. There have been
many advances in the past few years that grant great advantages to your efforts.
One of the easiest would be in the form of a simple teleconference through something like
the polycom sound station. You probably already know what this is. It’s basically just one big
conference, except you don’t need to pack everyone into one board room. There are a number of
advantages to this setup. The first is that you are in a perfect position to take full advantage of
telecommuting. Any of your remote workers can just press a few buttons and log into the
conference from their home phone. This also works for any remote branches who want to be
involved. There are nearly countless benefits to having one installed. You will have greater
function in your meetings and you’ll be able to include everyone without annoying travel plans.
There is also the usual ability to tape the conference for better archiving. Avaya IP office phones
will work in this capacity to make everything function a bit better.
It is important that you take the time to setup the connection properly though. There is no
reason to buy an inferior product for your teleconference. If you go cheap and don’t have it
professionally installed, then the static and poor pickup will effectively ruin any good
conference. The good news is that you have a lot of options. The Polycom system works to give
you a large microphone range which should be able to handle any small or medium room. There
are other options though. Just a basic search online will show a number of companies who want
your business.
You could go with a phone system through Avaya partner ACS. They offer similar setups
for your conference needs. It’s really just about getting what you want from a reputable
company. Check to see who has local branches and then see whether one of their products fits
your capacity needs better. It’s hard to tell you what’s the best without understanding your exact
situation. These two companies should be a good place to start though. Just one phone call could
let you start having teleconferences that make everything run smoother and more efficiently. The
main communication technologies in business are:
1. Videoconferencing
2. Wireless Payments

Videoconferencing
A videoconference is a live connection between people in separate locations for the purpose
of communication, usually involving audio and often text as well as video. At its simplest,
videoconferencing provides transmission of static images and text between two locations. At its
most sophisticated, it provides transmission of full-motion video images and high-quality audio
between multiple locations.
Videoconferencing software is quickly
becoming standard computer equipment.
For example, Microsoft’s NetMeeting is
included in Windows 2000 and is also
available for free download from the
NetMeeting homepage. For personal use,
free or inexpensive videoconference
software and a digital camera afford the user
easy - and cheap - live connections to
distant friends and family. Although the
audio and video quality of such a minimal
setup is not high, the combined benefits of a video link and long-distance savings may be quite
persuasive.
The tangible benefits for businesses using videoconferencing include lower travel costs and
profits gained from offering videoconferencing as an aspect of customer service. The intangible
benefits include the facilitation of group work among geographically distant teammates and a
stronger sense of community among business contacts, both within and between companies. In
terms of group work, users can chat, transfer files, share programs, send and receive graphic
data, and operate computers from remote locations. On a more personal level, the face-to-face
connection adds non-verbal communication to the exchange and allows participants to develop a
stronger sense of familiarity with individuals they may never actually meet in the same place.
A videoconference can be thought of as a phone call with pictures – Microsoft refers to that
aspect of its NetMeeting package as a “web phone” – and indications suggest that
videoconferencing will some day become the primary mode of distance communication.

Basic Videoconferencing Technology

A videoconferencing system requires the audiovisual equipment, which includes a monitor,
camera, microphone, and speaker, and a means of transmission.
Rather than an Internet-based connection, such as that used by webcams, which have to share
bandwidth with other Internet data, a compressed video system on a dedicated bandwidth
provides smooth audio and video.
The compressed videoconferencing may be transmitted via an ISDN (Integrated Services
Digital Network) line or over IP (Internet Protocol) lines. It is an economical solution for high-
quality videoconferencing.

Wireless Payments
Payment system refers to a service to pay the
charges using credit card, debit card or mileage
when we purchase service and product on and
off lines. The processing procedure of the
payment system is generally divided into
customer security, payment at POS, imposition
and request of payment and liquidation between
payment service provider and consumer. Most
of the payment systems take similar procedure
regardless of its technical method. The small
sum payment system, an early model of
payment system, can be said to be the method to
purchase products using wired internet and
mobile device.

Procedure of Payment System

Summary and Additional Information

 E-commerce is a general concept covering any form of business transaction or
information exchange executed using information and Communication technologies
(ICT’s).
  Electronic Commerce is a term popularized by the advent of commercial services of the
Internet.
 E-commerce is a selling and transfer process requiring several institutes. It is systematic
and organized network for the exchange of goods between produces and consumers.
 Any web site or portal that offers products and/or services for sale is a commercial
website.
 E-commerce is highly economical. Doing e-business on the Internet is extremely cost
effective.
 E-commerce emphasizes better and quicker customer service. There are some problems
and drawbacks of e-commerce like security, shortage of e-literate people, data protection
and the integrity of the system, etc.
 E-commerce takes place between companies, between companies and their customers, or
between companies and public administration.
 E-commerce includes electronic trading of both goods and electronic material. Today the
largest electronic commerce is Business-to-Business (B2B). The four types of e-
commerce are: Business to Business (B2B), Business to Consumer (B2C), Consumer to
Consumer (C2C), Consumer to Business (C2B).
 Telecommunication implies the transmission of information from one point to another
through a communication medium.
 Most traditional business communications rely on telephone and paper-based processes.
These resources do not readily support the level of productive interaction that growing
businesses need to excel, and can be easily overwhelmed in periods of rapid growth.
 A videoconference is a live connection between people in separate locations for the
purpose of communication, usually involving audio and often text as well as video.
 Payment system refers to a service to pay the charges using credit card, debit card or
mileage when we purchase service and product on and off lines.

Keywords
 Business to Business (B2B): B2B indicates to the full spectrum of e-commerce operation
that can occur between two organisations.
 Business to Consumer (B2C): It refers to exchange between business and consumer.
 Consumer to Business (C2B): Consumers can band together to form and present
themselves as a buyer group to business in a consumer-to-business (C2B) relationship.
 Consumer to Consumer (C2C): It refers to exchanges involving transactions between and
among consumers.
 E-commerce: It is a general concept covering any form of business transaction or
information exchange executed using information and communication technologies.
 Electronic Mail: Sending and receiving text messages between networked PCs over
telecommunications networks. E-mail can also include data files, software, and
multimedia messages and documents as attachments.
 Client/Server Network: A computing environment where end user workstations (clients)
are connected to network servers and possibly to mainframe super servers.
 IT Architecture: A conceptual design for the implementation of information technology
in an organization, including its hardware, software, and network technology platforms,
data resources, application portfolio, and IS organization.
 Local Area Network (LAN): A communications network that typically connects
computers, terminals, and other computerized devices within a limited physical area such
as an office, building, manufacturing plant, or other worksite.
 Network: An interconnected system of computers, terminals, and communications
channels and devices.
 Protocol: It is the special set of rules that end points in a telecommunication connection
use when they communicate.
 Telecommunications: Pertaining to the transmission of signals over long distances,
including not only data communications but also the transmission of images and voices
using radio, television, and other communications technologies. Teleconferencing: The
use of video communications to allow business conferences to be held with participants
who are scattered across a country, continent, or the world.