DIT In Information Technology | ECOMMERCE 511

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Registered with the Department of Higher Education as a Private Higher Education Institution under the Higher
Education Act, 1997.
Registration Certificate No. 2000/HE07/008

FACULTY OF MEDIA INFORMATION AND COMMUNICATION TECHNOLOGY
QUALIFICATION TITLE
DIPLOMA IN INFORMATION TECHNOLOGY
LEARNER GUIDE

MODULE: ECOMMERCE 511
PREPARED ON BEHALF OF
PC TRAINING & BUSINESS COLLEGE (PTY) LTD

AUTHOR: AJITH RAMPURSAD
EDITOR: THEMBA CHINOGWENYA
FACULTY HEAD:
ISAKA REDDY

Copyright © 2015
PC Training & Business College (Pty) Ltd
Registration Number: 2000/000757/07
All rights reserved; no part of this publication may be reproduced in any form or by any means, including photocopying machines, without the written permission of the Institution.

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LESSON PLAN ALIGNED TO MOBILE CONTENT [MOODLE]
DIPLOMA
SECTION

SUBJECT MATTER

1

THE INTERNET-PLATFORM FOR BUSINESS

1.1

Defining Internet and its brief History

1.2

IN INFORMATION TECHNOLOGY

Internet Service Provider

Lesson 1
Lesson 2 & 3

Review Questions
2

THE NEW ECONOMY AND E-COMMERCE

2.1

Define E-Commerce

2.2

E-Commerce vs. business

Lesson 4
Lesson 5 & 6

Review Questions
3

E-COMMERCE AND A NEW WAY OF THINKING

3.1

Changing paradigms

Lesson 7

3.2

Portals and Vortals

Lesson 8

3.3

E-Relationships

Lesson 9

3.4

Return On Investment
Lesson 10 & 11
Review Questions

4

BUSINESS OPPORTUNITIES ON INTERENT

4.1

Marketing Research

Lesson 12

4.2

Advertising

Lesson 13

4.3

Supply Chain Management

Lesson 14

4.4

Customer relationship management

Lesson 15

4.5

E-Business
Lesson 16 & 17
Review Questions

5

BUSINESS –TO-CONSUMER E-COMMERCE

5.1

Defining business-to-business e-commerce

5.2

Creating a business-to-consumer e-commerce

Lesson 18
Lesson 19 & 20

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Review Questions
6

BUSINESS-TO-BUSINESS E-COMMERCE

6.1

Define business to business e-commerce

Lesson 21

6.2

Business to business hubs

Lesson 22

6.3

Application service provider
Lesson 23 & 24
Review Questions

Prescribed textbook:


E-Commerce for South African Managers 1st ed 2000 Bothma CH 97806255837
Interactive Reality



E-Business 1st ed 2013 Schneider G. 9781408093672 Cengage

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INTERACTIVE ICONS USED IN THIS LEARNER GUIDE

Learning Outcomes

Study

Read

Writing Activity

Research

Glossary

Key Point

Case Study

Bright Idea

Problem(s)

Think Point

Review Questions

Multimedia Resource

Web Resource

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ONE | THE INTERNET-PLATFORM FOR BUSINESS

Learning Outcomes

ONE ||THE INTERNET-PLATFORM FOR BUSINESS
ONE THE INTERNET-PLATFORM FOR BUSINESS

1.
2.
3.
4.
5.
6.

Define the Internet and what activities can be done on the internet.
Understand the various parts of the Internet and the history of Internet.
Describe the link between the Internet and World Wide Web.
Explain the benefits of the Internet.
Identify the components that make up the Internet.
Describe the structure of web browser.

1.1 DEFINE THE INTERNET
The Internet is a worldwide-interconnected network of computers that lets a computer in one part of the world communicate with a computer or computer network located somewhere else in the world. This is achieved by using either an ordinary telephone line or a special dedicated data line, such as digital telephone line (supplied by Telkom) or a satellite link. The Internet spans tens of millions of computers, covering most countries of the world and is not just about networks and sharing data. It is an international community of people who share information, interact, communicate and, increasingly, do business with each.
From the point of view of its users, the Internet is a vast collection of resources people, information, games, learning programmes, multimedia facilities and business opportunities.
Although some people may consider the Internet to be a single entity, this is not true.
The Internet is transitory, ever changing, reshaping and remoulding itself. More importantly, it is the way people are using this new medium that makes it so powerful.

Another definition for the internet
Some authors feel strongly that efforts should be made at top policy levels to define the Internet. It is tempting to view it merely as a collection of networks and computers.
However, as indicated earlier, the authors designed the Internet as an architecture that provided for both communications capabilities and information services.

LEARNER OUTCOME 1
After reading this section, learners will be able to demonstrate a theoretical understanding of what an Internet is

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Governments are passing legislation pertaining to the Internet without ever specifying to what the law applies and to what it does not apply. In U.S. telecommunications law, distinctions are made between cable, satellite broadcast and common carrier services. These and many other distinctions all blur in the backdrop of the Internet. Should broadcast stations be viewed as
Internet Service Providers when their programming is made available in the Internet environment? Is use of cellular telephones considered part of the Internet and if so under what conditions? This area is badly in need of clarification.
The Internet as a global information system, and included in the definition, is not only the underlying communications technology, but also higher-level protocols and end-user applications, the associated data structures and the means by which the information may be processed, manifested, or otherwise used. In many ways, this definition supports the characterization of the Internet as an “information superhighway.” Like the federal highway system, whose underpinnings include not only concrete lanes and on/off ramps, but also a supporting infrastructure both physical and informational, including signs, maps, regulations, and such related services and products as filling stations and gasoline, the Internet has its own layers of ingress and egress, and its own multi-tiered levels of service.
The FNC definition makes it clear that the Internet is a dynamic organism that can be looked at in myriad ways. It is a framework for numerous services and a medium for creativity and innovation. Most importantly, it can be expected to evolve.

Examples:
You’re a business. Imagine…
 The savings you could achieve by making a catalogue of your products available on the
Internet for customers to order from and then delivering the goods to the customers’ premises – there would be no need for a large physical store and you could, in turn, order stock from your suppliers as and when required, all via the Internet.
 Your secretary planning and booking your entire business trip from his/her desk.
 The PR value for a radio station which enables listeners to peek ‘behind the scenes’ suing the Internet and video streaming technology to watch how things work.


An engineer keeping track of a remote building project in the North West province
(or even overseas) from an office in Cape Town using the Internet and video technology.  Gathering intelligence about your company’s competitors from the comfort of your office.  Researching a new foreign market or industry without leaving South Africa.

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 Selling your company’s products via the Internet in Beijing or Europe or elsewhere,
24 hours a day, 365 days a year.
 Sending a spreadsheet, CAD drawing, photograph, or a new price list to your office in Dubai, all at the press of a button.
 Tightly integrating your suppliers and customers with your order processing, billing and payment systems into one automated whole that allows you to achieve just-in-time supply and delivery efficiencies.


Providing customer support 24 hours a day, 7 days a week.

 Allowing your customers to keep their own records up to date and to access your product catalogues and other information when and where they want.

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 Researching a global market of 512 million people.
 Creating a central procurement hub that allows a number of buyers of similar products to work together on the Internet to gain volume benefits from their suppliers.  Keeping track of the latest developments in a particular industry and having this information sent to you automatically.
 Automatically learning about customer preferences as they have navigated your web site.

You’re an individual. Imagine…
 A video store where you can select and download a video over the Internet for your viewing pleasure on your home satellite TV system.
 Sitting in your lounge and switching over form a television programme to your TVbased e-mail service to quickly send a forgotten reply to an e-mail received earlier that day.
 Watching a TV programme and seeing an item of clothing you like being worn by one of the actors and then switching to the Internet to immediately order and pay for the item from a local (or perhaps international) clothing store and having it

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delivered the next day.
 Watching a rugby or soccer game and switching over to the Internet on your TV screen to see how many goals or tries a particular player has scored this season.
 Ordering your shopping online to have it delivered at home (no queues to fight your way through).
 Planning and booking your entire holiday trip from home.
 Your daughter finding all the information she needs off the Internet for her school project and then collaborating with her classmates to write up the project, all while on the Internet.
 Chatting in real time with your colleague recently transferred to Singapore or a

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family friend in New Zealand or with a newly found cyber pen pal in Russia.
 Listening to a Hong Kong or U.S. radio station or even one closer to home whole at the same time watching the DJ in action on your computer screen.
 Booking a concert ticket form home instead of having to stand in queues at a ticket vending service.
 Sharing experiences, information, or personal problems with like-minded people from around the world.
 Being able to track on the Internet exactly where in the world a parcel is presently located that you recently sent to someone overseas.
 Two Chinese students in Beijing alert the world to a dying girl mysterious illness and thanks to the Internet, doctors from around the world help the Chinese doctors diagnose and save her life.
 Being able to send or receive e-mail and accessing your bank account over the
Internet using your cellular phone.
 Paying all your accounts from home and at your leisure, or applying for a house mortgage using Internet banking.
 Learning a new language, attending school, or studying for a degree over the
Internet.

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 Considering a fresh start and exploring the possibility of living elsewhere in the country – even looking for a new job – without leaving home.
 Locating a long-lost friend now living in Canada
 Finding that hard-to-get book from a bookstore in the U.S. or Europe.
 Downloading the latest song of your favourite band off the Internet in digital format, to be stored on your pocket-sized, solid-state music player so that you can compile your own selection of songs to be played back as and when you want.
 Seeing the surface of mars, or the inside of the space shuttle, or what the traffic is like on the highway, or a watering hole at a near-by game park, or what the weather and crowds are like at the beach, using the Internet and video streaming

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technology.
 Playing chess or some other interactive game simultaneously with several players from around the world, in real-time.
 Just surfing the Net for fun.

Who owns the internet?
The Internet isn’t run by any single organization and it also isn’t owned by any single organization. Instead, people, companies and organizations grow the Internet when they build computer networks (essentially for their own needs) and then link their network(s) to others. The resulting patchwork of inter-connected network of computers creates this global system of communication that we refer to as the Internet. There ar a few organizations, which develop or recommend the development of parameters for the technical aspects of this network and set standards for creating applications on it (one example is the World Wide Web Consortium or W3C – http://www.w3c.org), but no governing body is in control. Private companies own the Internet backbone, through which
Internet traffic flows.

Who runs the Internet?
The Domain Name System
The Internet evolved as an experimental system during the 1970s and early 1980s. It then flourished after the TCP/IP protocols were made mandatory on the ARPANET and other networks in January 1983; these protocols thus became the standard for many other

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networks as well. Indeed, the Internet grew so rapidly that the existing mechanisms for associating the names of host computers (e.g. UCLA, USC-ISI) to Internet addresses (known as IP addresses) were about to be stretched beyond acceptable engineering limits. Most of the applications in the Internet referred to the target computers by name. These names had to be translated into Internet addresses before the lower level protocols could be activated to support the application. For a time, a group at SRI International in Menlo Park, CA, called the Network Information Center (NIC), maintained a simple, machine-readable list of names and associated Internet addresses which was made available on the net. Hosts on the
Internet would simply copy this list, usually daily, so as to maintain a local copy of the table.
This list was called the "host.txt file (since it was simply a text file). The list served the function in the Internet that directory services (e.g. 411 or 703-555-1212) do in the US telephone system - the translation of a name into an address.
As the Internet grew, it became harder and harder for the NIC to keep the list current.
Anticipating that this problem would only get worse as the network expanded, researchers at USC Information Sciences Institute launched an effort to design a more distributed way of providing this same information. The end result was the Domain Name System (DNS) which allowed hundreds of thousands of "name servers" to maintain small portions of a global database of information associating IP addresses with the names of computers on the
Internet.
The naming structure was hierarchical in character. For example, all host computers associated with educational institutions would have names like "stanford.edu" or
"ucla.edu". Specific hosts would have names like "cs.ucla.edu" to refer to a computer in the computer science department of UCLA, for example. A special set of computers called "root servers" maintained information about the names and addresses of other servers that contained more detailed name/address associations. The designers of the DNS also developed seven generic "top level" domains, as follows:
Education - EDU
Government - GOV
Military - MIL
International - INT
Network - NET
(non-profit) Organization - ORG
Commercial - COM
Under this system, for example, the host name "UCLA" became "UCLA.EDU" because it was operated by an educational institution, while the host computer for "BBN" became
"BBN.COM" because it was a commercial organization. Top-level domain names also were created for every country: United Kingdom names would end in “.UK,” while the ending
“.FR” was created for the names of France.
The Domain Name System (DNS) was and continues to be a major element of the Internet architecture, which contributes to its scalability. It also contributes to controversy over

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trademarks and general rules for the creation and use of domain names, creation of new toplevel domains and the like. At the same time, other resolution schemes exist as well.

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One of the authors (Kahn) has been involved in the development of a different kind of standard identification and resolution scheme that, for example, is being used as the base technology by book publishers to identify books on the Internet by adapting various identification schemes for use in the Internet environment. For example, International
Standard Book Numbers (ISBNs) can be used as part of the identifiers. The identifiers then resolve to state information about the referenced books, such as location information (e.g. multiple sites) on the Internet that is used to access the books or to order them. These developments are taking place in parallel with the more traditional means of managing
Internet resources. They offer an alternative to the existing Domain Name System with enhanced functionality.
The growth of Web servers and users of the Web has been remarkable, but some people are confused about the relationship between the World Wide Web and the Internet. The Internet is the global information system that includes communication capabilities and many high level applications. The Web is one such application. The existing connectivity of the Internet made it possible for users and servers all over the world to participate in this activity. Electronic mail is another important application. As of today, over 60 million computers take part in the
Internet and about 3.6 million web sites were estimated to be accessible on the net. Virtually every user of the net has access to electronic mail and web browsing capability. Email remains a critically important application for most users of the Internet, and these two functions largely dominate the use of the Internet for most users.

Refer to your prescribed text book, E-COMMERCE for South African
Managers, 2000 ed. By Cornelius H. Bothma. Study pages 15-16 on the Domain Name
System

History of the Internet
The Internet was started in 1969 as a military project in the US called Arpanet. The purpose behind Arpanet was to connect the then major supercomputer sites in the US with one another in such a way that if any one or more of these computer sites were destroyed, by nuclear explosion for example, the remaining computer sites would continue to communicate with each other.
As the network grew, so its benefits and advantages quickly became apparent.
Academics, government officials and computer scientists could communicate with each other easily and were able to share information. Naturally, the form of this
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communication and the type of information that was shared over this network was very computer-orientated and user-friendly, but still, instead of being restricted to working within a single computer environment, computer users across the country could now share the resources located on other computers on other parts of the country. ONE | THE INTERNET-PLATFORM FOR BUSINESS

Thus, in a similar fashion, large computer sites located outside of the US began connecting to the US network with the agreement to share resources. In this way the Internet was born. Of course, it did not take long before these resources were made available to smaller computer networks and eventually to individuals. Access to the information on the Internet was made easier and more user-friendly and the advantages of having huge amounts of information available at your fingertips attracted the numbers of people to the Internet that we see today, numbering tens of millions. The real driving force behind the growth of the Internet came with the commercialization of the Net. Not only could companies now get access to all of the information on this global network, but they also began to advertise and sell their products and services on the Internet. With the development of secure encryption techniques and the ability to transfer funds across the Net, online transactions are expected to provide the impetus that will ensure the Internet’s long-term future success.
The various parts of the Internet
The Internet is not a single network, computer, database, information repository, or service. Instead, it is a conglomeration of hundreds of thousands of networks, over 120 million computers, and large number of databases, tools and services.

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Internet

Year

Service

Introduced

E-mail (Electronic mail)

1970

A text-based messaging service of the
Internet. E-mail is the most common service of the Internet and can be used on even very old PCs.

Transfer 1973

An Internet service designed for transferring files between computers. Files are archived on FTP servers and available for downloading. FTP
(File
Protocol)

Description

Newsgroups (Usenet)

1979

This Internet service is a public messaging and “bulletin board” system comprised of over 34,000 individual forums, each pertaining to a specific topic. You must actively download newsgroup messages using special newsreader software.

Mailing Lists (Listserv)

1981

Technically a subset of e-mail, mailing lists is a group-based messaging service similar to newsgroups. Once subscribed, you passively receive mailing list messages via a standard e-mail account and regular e-mail software.
There are currently over 90000 active
Internet mailing lists.

Gopher (Gophers pace)

1991

Analogues to a library on the Internet and comprised of text-based documents and searchable databases. Gopher has warned in popularity; most organizations have replaced their Gopher servers with Web sites.

World Wide Web

1992

A hypertext-based service of the Internet that features user-friendly published and multimedia documents and files. Web pages are created using HTML, JavaScript, and Java.
The Web is currently the fastest-growing
Internet service and archives over 5 000 million Web pages.

(Web, WWW, W3)

Table 2: Brief background of the major components of the Internet

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The Internet Standards Process

ONE | THE INTERNET-PLATFORM FOR BUSINESS

Internet standards were once the output of research activity sponsored by DARPA. The principal investigators on the internet research effort essentially determined what technical features of the TCP/IP protocols would become common. The initial work in this area started with the joint effort of the two authors, continued in Cerf's group at Stanford, and soon thereafter was joined by engineers and scientists at BBN and University College London. This informal arrangement has changed with time and details can be found elsewhere. At present, the standards efforts for Internet are carried out primarily under the auspices of the Internet Society (ISOC). The Internet Engineering Task Force (IETF) operates under the leadership of its Internet Engineering Steering Group (IESG), which is populated by appointees approved by the Internet Architecture Board (IAB) which is, it, now part of the
Internet Society.
The IETF comprises over one hundred working groups categorized and managed by Area
Directors specializing in specific categories.
There are other bodies with considerable interest in Internet standards or in standards that must interwork with the Internet. Examples include the International Telecommunications
Union Telecommunications standards group (ITU-T), the International Institute of Electrical and Electronic Engineers (IEEE) local area network standards group (IEEE 801), the
Organization for International Standardization (ISO), the American National Standards
Institute (ANSI), the World Wide Web Consortium (W3C), and many others.
As Internet access and services are provided by existing media such as telephone, cable and broadcast, interactions with standards bodies and legal structures formed to deal with these media will become an increasingly complex matter. The intertwining of interests is simultaneously fascinating and complicated, and has increased the need for thoughtful cooperation among many interested parties.
Managing the Internet
Perhaps the least understood aspect of the Internet is its management. In recent years, this subject has become the subject of intense commercial and international interest, involving multiple governments and commercial organizations, and recently congressional hearings.
At issue is how the Internet will be managed in the future, and, in the process, what oversight mechanisms will insure that the public interest is adequately served.
In the 1970s, managing the Internet was easy. Since few people knew about the Internet, decisions about almost everything of real policy concern were made in the offices of DARPA.
It became clear in the late 1970s, however, that more community involvement in the decision-making processes was essential. In 1979, DARPA formed the Internet Configuration
Control Board (ICCB) to insure that knowledgeable members of the technical community discussed critical issues, educated people outside of DARPA about the issues, and helped others to implement the TCP/IP protocols and gateway functions. At the time, there were no companies that offered turnkey solutions to getting on the Internet. It would be another

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five years or so before companies like Cisco Systems were formed, and while there were no PCs yet, the only workstations available were specially built and their software was not generally configured for use with external networks; they were certainly considered expensive at the time.

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In 1983, the small group of roughly twelve ICCB members was reconstituted (with some substitutions) as the Internet Activities Board (IAB), and about ten “Task Forces” were established under it to address issues in specific technical areas. The attendees at Internet
Working Group meetings were invited to become members of as many of the task forces as they wished.
The management of the Domain Name System offers a kind of microcosm of issues now frequently associated with overall management of the Internet's operation and evolution.
Someone had to take responsibility for overseeing the system's general operation. In particular, top-level domain names had to be selected, along with persons or organizations to manage each of them. Rules for the allocation of Internet addresses had to be established. DARPA had previously asked the late Jon Postel of the USC Information
Sciences Institute to take on numerous functions related to administration of names, addresses and protocol related matters. With time, Postel assumed further responsibilities in this general area on his own, and DARPA, which was supporting the effort, gave its tacit approval. This activity was generally referred to as the Internet Assigned Numbers
Authority (IANA). In time, Postel became the arbitrator of all controversial matters concerning names and addresses until his untimely death in October 1998.
It is helpful to consider separately the problem of managing the domain name space and the Internet address space. These two vital elements of the Internet architecture have rather different characteristics that color the management problems they generate.
Domain names have semantics that numbers may not imply; and thus a means of determining who can use what names is needed. As a result, speculators on Internet names often claim large numbers of them without intent to use them other than to resell them later. Alternate resolution mechanisms, if widely adopted, could significantly change the landscape here.
The rapid growth of the Internet has triggered the design of a new and larger address space
(the so-called IP version 6 address space); today's Internet uses IP version 4. However, little momentum has yet developed to deploy IPv6 widely. Despite concerns to the contrary, the
IPv4 address space will not be depleted for some time. Further, the use of Dynamic Host
Configuration Protocol (DHCP) to dynamically assign IP addresses has also cut down on demand for dedicated IP addresses. Nevertheless, there is growing recognition in the
Internet technical community that expansion of the address space is needed, as is the development of transition schemes that allow interoperation between IPv4 and IPv6 while migrating to IPv6.
In 1998, the Internet Corporation for Assigned Names and Numbers (ICANN) was formed as a private sector, non-profit, organization to oversee the orderly progression in use of

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Internet names and numbers, as well as certain protocol related matters that required oversight. The birth of this organization, which was selected by the Department of Commerce for this function, has been difficult, embodying as it does many of the inherent conflicts in resolving discrepancies in this arena. However, there is a clear need for an oversight mechanism for Internet domain names and numbers, separate from their day-to-day management.
Many questions about Internet management remain. They may also prove difficult to resolve quickly. Of specific concern is what role the U.S. government and indeed governments around the world need to play in its continuing operation and evolution. This is clearly a subject for another time.

Internet statistics

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Nobody knows exactly how big the internet is because it is a collection of separately run smaller computer networks. There is no single place where all connections are registered. Table below shows the staggering growth of the internet globally, as measured by the number of internet host sites or domain names.
Internet usage stats

Internet usage and user demographics – South Africa
Various academic institution and private organization had done survey about the internet users in South Africa. The internet first arrived in SA in 1988, through the work of Francois Jacot
Guillarmod, Dave Wilson and Mike Lawrie who were able to establish a link between Rhodes
University and a home in Oregon; USA.After the humble beginning in the late eighties, SA grew

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to become one of the most connected nations on the African continent. According to Alison
Gillwald, director of research ICT Africa, SA is currently lagging behind the rest of the world in terms of internet connectivity. A survey conducted by Research ICT Africa found that 14.7 of SA house hold have a computer, but only 4.7% of household have a working internet connection. Looking at race, 4.6% of black people, 12% of colour, 19.9 of Indians and 33.3% whites access the internet monthly. These percentages of people using the internet is significantly lower than 94.1% of South Africans listening to radio stations and 83.7% watching television. Most of internet users in SA are relatively well-educated and affluent.
The demographic profile of SA web users, 18 years and above, residing in the major metropolitan areas throughout SA. Almost half of SA web users are aged between 25 and
44 years old. However, it is also true that there has been an increase in users over the age of 55 years.

Majority of web users are fluent in English language. Gender ratio for females versus males is approximately 60:40. Forty-five percent of SA web users have access at home only, 25% at work only, and about 31% who have access at both locations. The number of days the web is accessed per month has showed a slight upwards curve since 2002 amongst home users. On average the web is accessed 16.8 days a month. SA web users mainly use the internet for searching for specific information and email purposes most of time.

Banking via the internet
Average percentage of people banking online has increase over the last few years
(from 49% in 2006).Main types of banking transactions done online are as follows:
(a) balance enquiries, (b) transfer of funds, (c) statements, (d) payments to third party
Convenience is still considered to be the main advantage of internet banking.
Approximately one-third of those people do not currently conduct any banking transactions online claimed that: they are scared that unscrupulous people might hack into the system or they do not think internet banking to be secure enough.

Online shopping
Overall 50% of people who access the web at least once a month have made a purchase via the internet.
More males than females have bought online before.
Majority of those people who has shopped online before would do so again.
A credit card is still the most preferred way of paying for online purchases
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Purchasing of airline tickets and electronic devices (like DVD) has increased substantially.

The main benefits of the Internet


Communication – Online communications are cheap and fast (in business today, email is fast becoming the de facto standard for written communications, quickly replacing the fax) and we can expect that Internet telephony (using the Internet to contact and speak to people) will represent a serious challenge to telecommunication companies.
Information – The Internet represents a huge store of information about every possible topic under the sun. Individuals can gather information about DIY hints, medical problems, health issues, recipes, shopping alternatives, educational matters and much more.
Businesses can gather marketing information, learning about new product opportunities or technologies and even keep track of their competitors.



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

Business – The Internet is increasingly being used for business. Individuals use the Internet as a shopping mall, learning about new products, comparing products and buying products
(and of course, services). Businesses are advertising their products online and transacting sales, providing support and linking and integrating their businesses to those of their partners, suppliers and customers in order to ensure faster and more effective reaction to the changing business environment.



Education – online learning is set to represent a major challenge to traditional educational institutions such as universities. You will have access to more learning programmes than ever before and you will be able to do these courses at your convenience and your pace.
Businesses can now make training programmes available at workstations, without their staff having to leave the office.

 Fun – The Internet is a world of games and fantasy. People play chess together, children from around the world are competing against each other in gaming challenges, and individuals are socializing with new friends they have made from all over the world. The Internet and Business

The Internet has not only become an important business tool, but also represents for all companies, a completely new cyber- or virtual-environment.

As a new market environment, companies need to become familiar with it, identifying the opportunities it offers, and to developing strategies to take advantage of these opportunities.
As a business tool, the Internet serves as a means of achieving certain goals (e.g. improved

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communications). These are two different issues requiring different approaches and companies entering the cyber-world need to recognize and acknowledge this.
In general terms, the Internet can be used for:
 Finding information;
 Disseminating information;
 Conducting transactional business – buying and selling;
 Communicating with customers and partners;
 Building relationships between company and customer;
 Forming electronic communities of interest and relationship;
 Interacting with customers and partners;
 Advertising products and services;

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 Undertaking market research;
 Electronic billing;
 E-procurement;
 Customer relationship management;
 Supply chain management;
 Providing customer support;
 Online learning;
 Gathering competitive intelligence.

Technology that makes the internet work
It is important for Internet users to have at least some basic idea of how the Internet actually works. Understanding some of this technology makes the later sections easier to follow. In this section, we briefly discuss the four basic building blocks of the Internet, namely servers or hosts, clients, routers and connections. We also briefly discuss packet switching technology, TCP/IP protocols and Internet addressing.

Networks and Servers
A network is a number of computers that are connected to each other and that share information and computer resources such as software, storage space and peripheral

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equipment. Most businesses, organizations, academic institutions and governments operate networks. These may be small with two or three computers connected to each other, or they may be quite large with hundreds or even thousands of computers connected to one another.
Usually such networks have a central computer through which the other computers in the network communicate with each other. In other words, the computers in a network usually don’t talk directly with each other, but instead they communicate with each other through the central computer, which is called a server.

A server is a powerful central computer that performs actions on behalf of other computers connected to it. It serves up information from databases, software applications and allows these other computers to share its hard-drive and peripheral equipment such as printers and scanners. It often also undertakes certain processing functions for the other computers that are linked to it. The program residing on the server and that controls the operation of the network, is called the server program. The server program is usually written in unfriendly programming code but is designed to do the donkeywork involved in the coordination and functioning of the network and facilitates the quick and effective communication between server and all of the computers connected to it.

Networks that are located within a relatively small area such as a single building or office are called Local Area Networks or LANs. Networks that are located across much bigger areas, such as across the whole country (as are the banks’ auto-teller machines – ATMs), are called
Wide Area Networks or WANs.

Clients and Servers
A client machine is a computer that is part of a network and which the users of a network normally make use of to access the network. Residing on this client machine is a client program which is a software program that presents the user with a network, then you would ask your client program (the program on your machine) to ask the server program (located on the server) for the information (or task) you require (for example, to access information on a database, print a file or access the Internet).

The server software then undertakes the specified task and returns the requested information to the client software. The client program in turn, presents this information to you as user in a user-friendly fashion. This is referred to as a client/server operation and is the basis upon which many Internet applications run. For the most part, you do not have to know much about servers or hosts except that they exist. Unless you are involved on the technical side of the Internet, the computer you will almost certainly be using falls under the “client” category. The most well-known client program that you will have come across, is your web

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browser (e.g. Internet Explorer or Netscape Communicator) and your e-mail program (e.g.
Outlook Express). These are all client programs.

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In general, all of the machines on the Internet can be categorized as two types: servers and clients. Those machines that provide services (like Web servers or FTP servers) to other machines are servers. And the machines that are used to connect to those services are clients.
When you connect to Yahoo! at www.yahoo.com to read a page, Yahoo! is providing a machine, for use on the Internet, to service your request. Yahoo! is providing a server. Your machine, on the other hand, is probably providing no services to anyone else on the Internet.
Therefore, it is a user machine, also known as a client. It is possible and common for a machine to be both a server and a client, but for our purposes here you can think of most machines as one or the other. A server machine may provide one or more services on the Internet. For example, a server machine might have software running on it that allows it to act as a Web server, an e-mail server and an FTP server. Clients that come to a server machine do so with a specific intent, so clients direct their requests to a specific software server running on the overall server machine.
Server
A computer or device on a network that manages network resources. For example, a file server is a computer and storage device dedicated to storing files. Any user on the network can store files on the server. A print server is a computer that manages one or more printers, and a network server is a computer that manages network traffic. A database server is a computer system that processes database queries.
Servers are often dedicated, meaning that they perform no other tasks besides their server tasks. On multiprocessing operating systems, however, a single computer can execute several programs at once. A server in this case could refer to the program that is managing resources rather than the entire computer.

Routers
A router is an electronic device that interconnects two or more computer networks, and selectively interchanges packets of data between them. Each data packet contains address information that a router can use to determine if the source and destination are on the same network, or if the data packet must be transferred from one network to another. When multiple routers are used in a large collection of interconnected networks, the routers exchange information about target system addresses, so that each router can build up a table showing the preferred paths between any two systems on the interconnected networks. A router is a networking device whose software and hardware are customized to the tasks of routing and forwarding information. A router has two or more network interfaces, which may be to different physical types of network (such as copper cables, fiber, or wireless) or different network standards. Each network interface is a specialized device that converts electric signals

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from one form to another. Routers connect two or more logical subnets, each having a different network address. The subnets in the router do not necessarily map one-to-one to the physical interfaces of the router. The term "layer 3 switching" is often used interchangeably with the term "routing". The term switching is generally used to refer to data forwarding between two network devices with the same network address. This is also called layer 2 switching or LAN switching.
Conceptually, a router operates in two operational planes (or sub-systems):


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

Control plane: where a router builds a table (called routing table) as how a packet should be forwarded through which interface, by using either statically configured statements
(called static routes) or by exchanging information with other routers in the network through a dynamical routing protocol;
Forwarding plane: where the router actually forwards traffic (called packets in IP) from ingress (incoming) interfaces to an egress (outgoing) interface that is appropriate for the destination address that the packet carries with it, by following rules derived from the routing table that has been built in the control plane.

A router must be connected to at least two further pathways ( it means two different networks ) in order to route the data packet along the most reliable of the two or more routes.
In this context, the Internet is simply viewed as a very large network and routers work exactly the same way on the Net as they would in a traditional networking environment.
A router maintains a table of available routes and their conditions (whether they are operational, their reliability, etc.) and it then combines this information with distance and cost algorithms to determine the most costeffective and fastest route between two network points. In most cases your data will travel through several routers before reaching its ultimate destination.

Figure 1.1 A demonstration of a router forwarding information to many clients

Types of routers
Routers may provide connectivity inside enterprises, between enterprises and the Internet, and inside Internet Service Providers (ISPs).Routers are also used for port forwarding for private servers.

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Connections
The final building blocks of the Internet are the connections that bind the networks together. A connection essentially describes how you connect from one point to another point on a network or between networks.
As an end user, your only concern is that the connection is good, and you will most probably be using one of the following connection technologies:

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 A dial-up modem connected to a phone line. This is often referred to as a analogue connection and is used by the majority of home users in South Africa. When you want to connect to the Internet, you need to instruct your computer to dial in to your Internet
Service Provider (ISP). Once a connection is made, you can access the Internet and send and receive files over this connection. As soon as you are complete, you disconnect from your ISP. You pay for the phone calls (usually a local call charge) while you are connected to your ISP.
 A digital ISDN dial-up modem. The only difference between this and the standard analogue modem is that it is a digital connection and is a lot faster, more reliable, but also more expensive – it is used by some smaller business or as a back-up by larger firms. You also pay for the calls you make and the charge is the same as with a dial-up modem. The time that it takes to connect to your ISP is also much faster (just a few seconds).
 A satellite link. This is an alternative to the dial-up connection and faster for downloading purposes, but also more expensive and you still need a dial-up connection to send data.
 A wireless link. A new type of connection that is becoming available in South Africa, it is not yet readily available and is faster, reliable but also more expensive.
 A digital link (also referred to as “Diginet”). Diginet is mostly used by medium to larger companies as it is quite expensive. It is essentially a permanent connection between your company network and your ISP. You pay a fixed fee per month and you don’t pay for the amount of time you spend online, as you are permanently connected to the Internet 24 hours per day.

Packet-switching technology
Data is sent from your computer in the form of a “packet”. You can liken a packet to be similar to an envelope; it surrounds your data and contains both a return and destination address. Your computer handles the packets for you; it’s all done in the background, without your knowledge.

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Packet-switching technology is one of the reasons why the Internet has proved to be so successful. What happens is that the sending computer takes the information that is to be sent along the Internet and divides the information into small packets of information. It then adds certain information to each packet of information, including the Internet address of the receiving or target computer and instructions on how that particular piece of information fits in with all the other pieces of information.

Each packet of information is then sent onto the Internet and gets relayed or routed form computer to computer until it eventually reaches the target computer. The computers along the way act as relay stations or routers. When they receive the packet of information, they immediately search out the next best route along which to send the packet of information on its way. Each packet of information may travel a completely different path along the
Internet until it eventually reaches the target computer. If a particular packet of information either does not reach the receiving computer, or reaches the target computer in corrupted form, the receiving computer simply sends an instruction back to the sending computer to retransmit that particular packet of information. This system is thus very reliable and robust, adding to the Internet’s overall attractiveness as a communication and information exchange medium. Transmission control protocol/internet protocol
Another feature of the Internet that contributes to making it as popular as it is, is the fact that there is only one set of communications standards that all computers linked to the
Internet must abide by. This basic communications standard that holds the Internet together is called the Transmission Control Protocol over Internet Protocol (TCP/IP), and is actually two communications protocols put together. These two protocols allow computers of different manufacturers and with completely different specifications to coexist peacefully with one another on the Internet.

Internet addressing
All computers that are permanently connected to the Internet have an address and in some cases, even computers that connect to the Internet on a temporary basis may also be assigned an address. This address is known as the Internet Protocol address. This address is known as the Internet Protocol address (or IP address). Because the address is presented in a particular fashion, it is also often referred to as the dot address or .address.
An IP address has four digits that are separated by dots or periods, such as follows:
196.201.90.0.

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Each set of digits will always be less than 256 (0 - 255). It is this address that the computers on the Internet deal with directly. Every computer on the Internet has its own IP address – not just every site, but every computer that’s part of that site as well.

Fortunately, it is unlikely that you will ever need to know the IP address of a computer, as there is a text version of every IP address for easier reference. This text version of the IP address is known as the computer’s domain name. The domain name looks as follows:
 www.unisa.ac.za
 www.worldonline.co.za
 www.standardbank.co.za

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 www.learnthenet.co.za

The computer, however, does not deal directly with the domain name. When a domain name is entered into the computer, it is converted to an IP address, which the computer uses to target the receiving computer. While all computers on the Net have their own IP address, not every one of these computers necessarily has its own domain name; some of them only have an IP address. Domain Name Servers (DNS) are central computers located in most countries around the world (often run by the ISPs in the countries concerned) that keep massive indexes of domain names. They enable domain names to be converted (or “resolved”) into numerical IP addresses.

These servers (there may be more than one in a particular country) are all exact mirrors of each other and they contain the URLs of every domain name in the web. These servers take the host or domain name and change this text name into an IP address consisting of numbers, which the computer can then understand and work with. Sometimes you may get an error message, which mentions that the server does not have a DNS entry. This suggests that the web address you have entered is incorrect – it cannot be found on any of the domain name servers (DNS) around the world.

1.2 INTERNET SERVICE PROVIDERS
An Internet Service Provider (ISP) is thus a company that maintains a direct, dedicated and permanent connection to the Internet and then allows smaller organisations and individuals to make use of this connection on an ad hoc basis, using a dial-up connection. In South Africa, the ISP normally rents its dedicated connection to the Internet from Telkom. Telkom, thus,

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rents space on its telecommunications link with the rest of the world (mainly to the USA and the UK), to the various ISPs. This ‘space’ is called bandwidth.

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Bandwidth, in the world of the Internet, is commonly taken to mean the amount of data traffic flowing along a particular point, be it a satellite link, a telephone line, a modem, a computer, or the ISPs server. This traffic is usually measured in Hertz. The communications link between computers along which information is sent is often called a ‘pipeline’.
The bigger this pipeline, the more data traffic or bandwidth can be sent along that particular data link.

WEB RESOURCE

http://www.youtube.com/watch?v= eB58givNmYs The link above will open a comprehensive online resource giving details about a complete and illustrated history of computers. This resource makes for very interesting reading and it will be worth your while to visit this page and peruse through its contents The ISP, in turn, offers its registered clients access to the Internet by renting to them part of the bandwidth it in turn has rented from Telkom. A dialup connection means that a user equipped with a computer, modem, telephone and software can dial into the ISP’s Internet server and gain access to the
Internet until the user chooses to break the connection and hang up. For this service, the user pays the ISP either a fixed monthly or hourly fee (in addition to the telephone call).There are several ISPs in South Africa. Most charge a fixed fee per month, which provides you with unlimited Internet access, an e-mail address and access to the Web.

Online service providers vs Internet service providers
A distinction which is more common abroad than is South Africa is the difference between an Internet Service Provider (ISP) and an Online Service Provider (OSP). In fact, in South
Africa you will very seldom find reference being made to OSPs.

Essentially, an ISP is a service provider that only provides a customer with access to the
Internet and with little more. They may have a web site, but the site is used more as a marketing tool than as a service to their customer. The OSP is contrast provides extensive proprietary content to their customers in addition to connecting the customer to the
Internet. The most well-known example of an OSP is America Online or AOL.

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In South Africa, M-Web is perhaps the closest example of an OSP as they have started restricting free outside third-party access to all of their content.
Choosing an ISP
1. The Internet becomes very expensive when you start paying long-distance phone calls.
Make sure that the ISP has a point-of-presence (POP) within a fifty kilometre radius of your house; otherwise the phone rates become more expensive. Within a fifty kilometre radius, phone rates are approximately 35c for every 3 minutes in peak times (from
07h00 to 19h00) an d35c for every 6 minutes during call-more times (19h00 to 07h00).
See Telkom’s rate structure for more information.

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2. What software package does the ISP supply to its users? If you’re not using a PC, does the ISP support your maker of computer? This software should include everything you need to work on the Net, including a web browser, e-mail, and Usenet and FTP software.

3. What sort of support does the ISP offer its users? Will they assist you in setting up your
Internet software if you have a problem and do they offer 24 hour technical support?
This is particularly valuable if you are working on the Net on the weekend or at night, and you are having difficulty getting a connection.

4. What provision does the ISP offer for when things go wrong at their end? Do they have back-up machines in case their system fails?

5. Does the ISP offer web offer space as part of the deal; how is this accessed and what limits are placed on this web space?

6. What do these services cost? There is fairly wide variance between the cheaper and more expensive services. While cost may be an indication of the level of service that you will receive, you should at least make certain that you receive the service that you are paying for.

THINK POINT
7. Do they offer discounts if you prepay the entire year up front? This is a good option, providing

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that it fits into your budget, if you choose a good ISP. It’s a bad option if the ISP turns out to be less than desirable.

8. Do they offer a free trial? Try-before-you-buy is always a good thing.
9. What modem speed do they support? A good ISP will support 56K. You may not have a 56K modem yourself but this will provide some indication of the commitment that this
ISP is willing to make.

LEARNING OUTCOME 2
After reading this section, learners will be able to interpret the advantages of ADSL modem relative to Dial up.

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10.What’s the ratio of modems to users? 6 to 8 users per modem are quite acceptable. Find out what number you would dial in on…and try it a few times. Does your call go through or do you receive busy signals?

11.Do they charge a “setup” fee? Some do…most don’t. If you live in a city with many ISPs find one that doesn’t charge you for the privilege of bringing your business to them.
12.What additional services can your ISP offer you? Can they offer you design services, for example, or access to FTP sites, domain name registration, IRC access, etc.?

What do you need to get onto the net?
Before choosing an ISP, you will need to get certain equipment.
A computer
Perhaps one of the most important tools that you will need to participate on the Internet is a computer. The Internet remains a digital ‘bits and bytes’ service. A 486- or low-end
Pentium computer is sufficient, and even an old 386 computer will do, although it may be a little slow.

A modem
A modem is a device that is attached to your computer either externally or internally, and whose function it is to convert digital computer signals (i.e. a digital ‘bits and bytes’ message) into a form that allows them to travel over phone lines (this is called analogue form – as opposed to digital). Those are the scratchy sounds you hear from a modem’s speaker. A modem on the other end of the line at your ISP understands these sounds and converts them back to digital information that the computer understands. By the way, the word modem stands for Modulator/ Demodulator (analog to digital / digital to analog).

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Connecting an External Modem
To connect an external modem to your computer, you’ll need a serial modem cable. Most likely, your computer will have a connector on the back labelled serial, or with the IOIOIO icon. This connector comes in two varieties: 9-pin (male) or 25-pin (female). If you only have one of these ports, it will probably be COM1. if you have two, one will be COM1, and the other will be COM2. After you plug in your modem, you can sign up for Internet service.
Usually your set-up program will automatically try and find your modem and its COM port.
If it can’t, it will ask you which COM port your modem is attached to. If you don’t know, the easiest thing to do is try them all. Even if you only have two physical serial ports at the back of your computer, you may be able to select one of four COM ports from the software.

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Software
As always, certain software is necessary on both the sending and receiving computers to enable the message to be sent and received via the modem. In the old days, you needed special connection software called Winsock, but today your operating system (Windows 95 upwards) includes this connection utility as an integral part of the program.
Besides for connecting to the Internet via your modem, you will also want certain software programs loaded on your computer that will allow you to do certain things on the Internet, such as browse the Web, send e-mail, upload and download software and so on.

Five types of software to run the Internet:

Browsers
The best and most popular browser is Microsoft’s Internet Explorer (MSIE). MSIE is available for free, in various languages, in versions for all versions of Windows and for
Mac. MSIE is included in a number of operating systems, including Windows 98 or higher and recent versions of Mac OS. Alternative browsers available include Netscape and
Opera.

E-mail Programs
There are many different mail programs for various platforms. The most popular is
Microsoft’s Outlook Express, which comes with MSIE. Outlook Express is easy to use and has adequate features for most users.

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 Anti-Virus Software
The risk of contamination may be slight, but any connection to the Internet increases the possibility of getting a virus. You should have this software on your system anyway, but using the Internet makes it even more essential to install this software. Virus software usually does not come free and you may have to buy a copy from your local computer store.
A program such as Norton Anti-Virus is a good bet.

 Compression & decompression Software
Many of the files that you will download from the Internet are “compressed” so that they transfer more quickly. You can’t use them until you decompress them. There are many programs that will do this. The most popular are WinZip, PKZip and ZipMagic (for Windows) and Stuffit (for Mac).

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An ISP
The next step is to obtain a link into the Internet; you require the services of an ISP.
There are several ISPs in South Africa. Most ISPs charge a fixed fee per month, which provides you with unlimited Internet access, an e-mail address and access to the Web. The going rate is between R90 and R130 per month, although you can find both more expensive and cheaper services.

A Telephone Line
Finally, you will require a telephone line. You will connect the modem to the telephone line, as well as to the computer. Your computer will dial a local number, which is provided by your
ISP. Once you have logged onto your ISP, you are connected to the Internet.

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Important information to keep at hand
Name of your ISP

This will be something like worldonline.co.za, netactive.co.za, iafrica.com, etc

Support Phone no.

Get the daytime and evening phone numbers of their technical support desk in case there is a difference. Make a habit of calling if you need to. If your e-mail is suddenly not working there may be many others that also have the same problem and the ISP might not know about it.

Accounting dept. Phone no.

From time to time it will be necessary to contact them about your account. The ISP is the same as any other business. They are there to offer you service. Thus there will be the standard monies issues that come up from time to time.

Your e-mail address

This will be the address you tell your friends to e-mail to. It will be something like neels@worldonline.co.za or bizz@intekom.co.za, etc

Your Password

This is your secret password. Be sure to notate the capitalization. Caps and no caps are important. It generally does make a difference. AbcDEf is very different from abcDEF. If you write your password on a printout of this list we recommend you keep the list secure. This is your password. It is more important to you than your credit card number. Don’t give it out.

Your Home Page Address

As a subscriber to an ISP it is your right to expect somewhere between 3 and 5 megabytes of free web space and a homepage. If your ISP does not give you a free homepage get a new ISP. When you get your homepage address will be something like http://www.yourisp.co.za/~myname or perhaps something like http://members.yourisp.co.za/~yourname or even http://homepage.yourisp.co.za/~yourname. Whatever the address is you should get the exact syntax and make a note of it for future reference. If you ever print business cards or put out a Christmas note with your web address you really should make sure it is correct.

POP3 Server IP

This is your incoming e-mail server. The address will be used in various programs to tell the program where to find your incoming e-mail. This address will be something like pop3.yourisp.co.za or mail.yourisp.co.za

SMTP Server IP

This is your outgoing e-mail server. The address will be used in various programs to tell the program where to send your outgoing e-mail. This address will be something like smtp.yourisp.co.za or mail.yourisp.co.za

FTP Server address

The address will be used in various programs to tell the program where to FTP (file transfer protocol) files for uploading or downloading to your web page. You have to get your web pages and graphics into your homepage directory at the ISP somehow.
FTP is the way it is done. This address will be something like ftp.yourisp.co.zo or yourisp.co.za or ftpup.yourisp.co.za

NNTP Servers address

This is your Usenet server address and is used by your news client to get news from the web for your news reader. This address will typically be something like nntp.yourisp.co.za or news.yourisp.co.za

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Electronic mail
Perhaps the most important use that the Internet is put to, is for electronic mail (e-mail), whereby people across the world communicate with each other by sending electronic messages to one another. Using e-mail, it is also possible to send and receive computer files of different types, such as CAD drawings, word processor files or financial spreadsheets.

Today, e-mail is rapidly replacing the facsimile machine as the preferred means of worldwide communication. E-mail is more flexible than fax because complete computer files can be transmitted across the Net and the person receiving the document automatically has the information (i.e. the message or the computer file) available on his/her computer. e-mail is also far superior to the postal service, which is popularly termed ‘snail mail’. If we compare the postal service and facsimiles with e-mail, we find the following:

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With the postal service you;


Write a letter;



Put the letter into an envelope;



Write an address on the envelope;



Put a stamp on the envelope;



Post the letter; and



A few days (weeks?) later the letter (hopefully) arrives.

The fax is considerably better. You:


Write a message either by hand, or on computer which you print out;



Put the hand-written or printed page into the facsimile machine (nowadays, this step can also be computerized);



Enter the receiver’s fax number;



Press the send button; and


Seconds later the fax gets printed on the recipient’s fax machine or stored on the recipient’s computer. Special software is necessary on the computer, however, to recognize the text and graphics or pictures may be lost in the conversion.
With electronic mail you;

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

Write a message;



Add the e-mail address;



Push the send button, and



Seconds later the e-mail arrives at its destination in digital form readable by the receiving computer.

The difference between the fax and e-mail is that when the message arrives on the target fax machine, if the recipient wants the information on computer, he/she must still enter the information onto that computer. But with e-mail, the information is already in a computer-usable (i.e. digital) format. What is more, e-mail is considerably cheaper than either the postal service or the facsimile.

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The benefits of e-mail can be summarized as follows:


It is cheap



It is instantaneous, much like a telephone



It creates a record, like mail or faxes do



It creates for proof of receipt



It can include documents as attachments for editing or revision



It can generally be sent to and from, and accessed, anywhere in the world at any time 

It can be integrated with the Internet (e.g. you can mail links to Internet sites, such as your own home page or the text of a case or statute which is on the
Internet).

E-mail is perhaps the most important communications and marketing tool available to businesses on the Internet.

File Transfer Protocol
One of the most popular features of the Internet is the ability to transfer files to and from other computers. These features, together with e-mail, are amongst the main reasons that the Internet grew so quickly in this early year. Groups of researchers around the world could share data by simply putting it on one computer and allowing other researchers to download the data to their own computers when they wanted to. The basic program that
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is used to transfer files between computers is called File Transfer Protocol (FTP). FTP is thus the traditional way for receiving or downloading files from the Internet to your computer. FTP can also be used to send or upload files from your computer to another computer that may be located in the same building, across the street, in another city or even in another country. When you connect to another computer, you are normally required to provide an account name and password as a security precaution. Many sites, however, want visitors to have access to certain public files such as free software programs or data of a general nature. For this reason, most FTP sites that allow such free access have adopted a standard. In such a case, you use the term anonymous as the account name and your e-mail address as the password. This method is known as anonymous ftp. When you log in as anonymous, the remote system only gives you access to a restricted set of files in a public directory.

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Usenet
During the course of the development of the Internet, another useful facility was created by Tom Truscott and Jim Ellis at Duke University, whereby users in different parts of the world could participate in electronic discussion groups covering a variety of subjects.
These discussion groups are collectively called Usenet. Usenet is actually a separate entity from the Internet and originally functioned apart from the Internet using dial-up e-mail connections. Today Usenet is closely associated with the Internet. Usenet operates in a very similar nature to e-mail communications, where one person ‘posts’ a message in a particular discussion group. This message is then viewable to all persons that log-in to that group. Anyone is also free to post a reply to a specific message if they so wish, or to post a completely new message. Usenet has become extremely popular with more than
30 000 such groups existing today. Participants find these discussion groups useful because they can ask questions, make statements, find information, solve problems and generally share information with other Internet users with similar interests.

Telnet
Telnet allows a remote computer to log-in to a mainframe computer somewhere else in the world using the Internet and to access the files on the mainframe from the remote computer as though the remote computer were located in the same room as the mainframe. Telnet turns the remote computer into a mainframe terminal. In order for the Telnet program to work, both computers (i.e. your computer and the computer you are accessing to), need to use the Telnet protocol. There are many uses for Telnet and among these are:

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1. A multitude of library catalogues become available where access is limited only to direct access to their computers. Telnet allows remote access.
2. Researchers can collaborate by logging into one central computer using Telnet.

Internet Relay Chat
The Internet Relay Chat (IRC) is a network of servers on the Internet that people can connect to in order to ‘talk’ to one another. IRC is an interactive discussion that takes place in almost real time with several people participating simultaneously. It is similar to a walkie-talkie in that you type a comment and then the other person reads your comment and can reply to it if they so wish. It is useful for both entertainment and for serious discussions. Of course, there is not just one discussion group on the go – there may be several hundred discussion groups (called channels) operating at any one time.

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Instant messaging
In our fast-paced world, sometimes even the rapid response of e-mail is not fast enough.
You have no way of knowing if the person you are sending e-mail to is online at that particular moment or not. Also, if you are sending multiple e-mails back and forth with the same person, you normally have to click through a few steps to read, reply and send the e-mail.
This is why Instant Messaging (IM) has gained popularity.

Instant messaging allows you to maintain a list of people that you wish to interact with. You can send messages to any of the people in your list, often called a buddy list or contact list, as long as that person is online. Sending a message opens up a small window where you and your friend can type in messages that both of you can see.
Most of the popular instant-messaging programs provide a variety of features:


Instant Messages – Send notes back and forth with a friend who is online



Chat – Create your own custom chat room with friends or co-workers.



Web links – Share links to your favourites Web sites



Images – Look at an image stored on your friend’s computer



Sounds – Play sounds for your friends



Files – Share files by sending them directly to your friends



Talk – Use the Internet instead of a phone to actually talk with friends



Streaming content – Real-time or near-real-time stock quotes and news

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SMS Messaging
Although SMS is essentially a cell phone feature, it integrates very well with e-mail and with the Web and brings tremendous additional marketing possibilities to the Internet.

The World Wide Web
The World Wide Web (which is also known as the Web) is a way of looking at and organizing the information on the Internet. The Web is discussed in more detail in the next section.

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Video Conferencing
A video conference is a meeting between two or more geographically separated persons using the internet to audio and video data. To participate in video conference using a computer you need video conferencing software, together with a microphone, large TV-like monitors, speakers and video camera all attached to a computer.

As you speak, other participants can see your face and hear the voice. Advantages of video conferencing 

reduces travel expenses and time,



increase managerial effectiveness through access to more people and faster response to problems, and



Less duplication of effort by geographically dispersed sites of delivery.

Video conferencing is used in a variety of business as an easy way to connect work teams.
Members of a team meet in a specially prepared video conference room equipped with sound-sensitive camera that automatically focus on the person speaking, large TV-like monitors for viewing the participants at the remote location, and high-quality speakers and microphones. The World Wide Web
The Web is basically a subset of the Internet and organizes information according to pages more than five billion of them – that lie all over the Internet. These pages are interlinked with each other using hypertext (also called hyperlinks). In other words, each page is connected to other pages, that are connected to other pages that in turn are connected to still more pages and so on, much like a spider’s web – hence the name, the Web. A web

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page is what is visible on your browser window. The Web is about communication. The Web gives a chance for new kinds of roles to exist among people who provide and consume information, communicate and interact. The Web is a unique kind of medium for communication and is another step in centuries of change in the way people use media.

The Web isn’t just technology, although its operation depends on it – the Web does have a technical basis as a client/server system for hypermedia communication. But not all the jazzyinteractive software in the world will convince you or anyone to use the Web and abide its curious unpredictability and chaos – there’s probably not a single compelling reason to use the
Web, but rather a collective set of personal opportunities that each person decides are important. Protocol

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Ethnical Media
DNS Name
Type of web site

Modules

http://www.december.com/web/text/webwhat.html
A brief history of the web
The Web was created in 1989 at the CERN, Switzerland’s nuclear research facility, by Tim
Berners-Lee. Berners-Lee coined the term ‘web’ in 1990 to describe information spanning the planet like a giant spider’s web, with threads linking knowledge and information from all over the globe, available to a world-wide audience.

There have been few developments in the modern world that have grabbed the imagination of people across the globe, as has the World Wide Web. In a complex world of technology, the
Web is easy to use and incorporates pictures, sounds, animations, photographs, video and other multimedia features, adding to its attraction and intuitiveness.

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There are few commands necessary and all that is required are a number of mouse ‘pointsand clicks’ – it’s as simple as that. It also provides access to a greater range of topics from more sources than any other single information system on the planet. It also doesn’t matter whether you’re operating a Macintosh computer, a PC, a UNIX operating system or an Amiga computer, the Web is about compatibility, and the best of all is that the user doesn’t have to worry about how it works! Finally, the Web empowers its users by allowing them to explore different ideas and topics without having to follow a linear train of thought, using the concept of hypertext.

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Web pages
A web page comprises a simple text file that contains not only text, but also a set of instructions called “tags” that describe how the text should be formatted when a web browser displays it on the screen. These tags or instructions form part of an editing or markup language called Hypertext Mark-up Language (HTML). The tags are simple instructions that tell the web browser how the page should look when it is displayed. For example, the tags tell the browser to do things like change the font size or colour, centre text, position graphics, or arrange things in columns. The web browser interprets these tags to decide how to format the text onto the screen. Once a web developer has created a web page using HTML, the file is saved with an .html or .htm extension. It is important to note, however, that this file contains little more than plain text (called an ASCII file). It is saved with an .html extension so that when it arrives at your computer your web browser will recognize it as an HTML file. The file contains the following:

 The textual information that makes up the page
 The HTML formatting instructions called “tags” which are also plain text based
 Pointers, called hyperlinks, to other web pages (also in plain text format)
 “Anchors”, which indicate where graphics must be placed on the page (these anchors are also expressed in plain text format)

The graphics and pictures (called binary files) which you commonly see as part of web pages, are not included in the HTML file, but are sent together with the HTML file to your computer.
In the HTML file are tags called “anchors” which each point to a particular graphic file (usually saved in GIF or JPG/JPEG format) and which position the placing of the graphic file within the context of the overall web page.

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The web and hypertext
Hypertext is a way of linking documents together. by clicking on a word or picture on a web page, you are automatically transported to some point in either the same document or in another document. This other document may be located on the same computer or on a computer situated in another country half-way across the world. On this second document, there may be more hyperlinks to other documents located elsewhere on the Internet.

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Hypertext mark-up language
All of the information on web pages is edited in such a way as to be viewable by web browser software. This editing is done using an editing (or “mark-up”) language, called
Hypertext Mark-up Language (or HTML for short). HTML is a computer language that describes how a page should be formatted and you do this by adding specific “tags” (i.e. instructions) to the information that you intend including on the web page. These tags may include instructions such as bolding text, including page or paragraph breaks, inserting horizontal lines, adding italics to text, to centre text, left or right justifying text, underlining text, including table formats, adding hyperlinks, etc. Hypertext has become the foundation stone of the World Wide Web. Using a web browser such as Netscape Navigator, Microsoft
Explorer or Mosaic, these tags are interpreted by the browser and they control the way the information is presented on your computer screen. You, as user, do not need to know
HTML to be able to use the Web.

Home pages and web sites
We have said that the World Wide Web is made up of web pages that are linked to each other using hyperlinks. Several web pages that are linked together and which cover a common subject area are collectively called a web site. The first page of a web site is termed the “home page”.

Web browsers
A browser is a software program (also known as a web client or HTML client) that provides you with access to the information on the World Wide Web – it is essentially a window through which you can look at the information on the Internet and the Web. The most popular browser is Microsoft’s Internet Explorer, with about 70% market share, followed by Netscape Communicator and others.
Webmasters and web developers
A webmaster is the person who is in charge of the administration of a web site – uploading the new site, maintaining the site and dealing with any issues directly involved with the

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web site. A web developer is a catch-all phrase used to refer to the designers, programmers and other technical people that are involved in creating web sites and web pages.

Web addresses
There is a standardized addressing System for web pages and web sites on the Internet. This address is called the Universal Resource Locator (URL). http://www.dti.gov.za/policy/mission.htm ONE | THE INTERNET-PLATFORM FOR BUSINESS

A URL address associates a unique address to an HTML file representing a web page with respect to its location anywhere on the Internet, just as your complete residential address gives a unique way to locate you anywhere in the world. Thus, URL addresses allow the computers of the Internet to behave at a certain level as if they were a single computer.

The URL is made up of different components. These include the following:
 What tool the web browser uses to get to the target page.
 What computer the web page is on.


Any specific instructions necessary to find the page, such as the directory and subdirectory paths.

 The target file name.

The first part of the URL indicates whether it is hypertext or an FTP(File Text Protocol) link. The second part of the address indicates the target computer where the file is located, while the next part of the address, which may consist of one or more levels, indicates the directory and sub-directories in which the actual target file is located.
The last part of the URL indicates the actual file name. Each part of the URL is separated by a forward-slash (except for the first part which is separated by a doubleslash).

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If we look at the following two examples:
Example 1: http://www.brain.org.za/SUPPORT/industry_sectors/agriculture.html We can identify the following… http:// = a Hypertext Transfer Protocol file which contains hypertext links www.brain.org.za/ = the address (domain name) of the target computer
SUPPORT/industry sectors// = the directories and sub-directories in which the target file is located
Agriculture.html = the name of the target file

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Example 2: ftp://sun.su.ac.co.za/marketing/direct/plans.txt We can identify the following… ftp:// = a File Transfer Protocol file sun.su.ac.za/ = the directory in which the target file is located direct/ = the sub-directory in which the target file is located plans.txt = the name of the target file

HINT:

When entering URLs, be careful of your spelling and punctuation and the case you use (i.e. upper or lower case). Depending on which operating system is involved,
URLs may be case sensitive and it is always wise to treat them as such. For example, on a Windows computer file and File refer to the same file, but on a
UNIX system these would generally be seen as two distinct files.

Also make sure that he spelling and punctuation in your web address is exactly correct.
Another pitfall in web addressing is associated with the fact that different systems deal blank spaces in file or directory names in different ways. For example, Windows file names can have blank spaces, but UNIX systems generally use blank spaces as separators between names. 41

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Thus, a filename Training Reports is a perfectly acceptable filename for Windows, but is a bad choice for a UNIX system because it will interpret this filename as Training because of the trailing blank space unless special actions are taken. (For example, always enclosing the entire filename in double quotes would cause a UNIX system to construe the blank spaces as part of the file name).

The common ways that Unix systems name such files without employing blank spaces is to use upper case letters to start words (with no blanks between words), or to use underlines or dashes to indicate where blank spaces would be. For example, Training Reports would all be acceptable UNIX filenames.

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A web browser
A web browser is a software program, which provides you with a way of viewing the information on the World Wide Web – it is essentially a window through which you can look at the information on the web. A web browser is a client program. It is an easy-to-use pointand-click interface to the web and makes browsing around web pages easy and intuitive.
Web browsers, in part, have helped make the web as popular as it is. The first browser, called
NCSA Mosaic, was developed at the National Centre for Supercomputing Applications in the early ‘90s.

The role of web browsers
Besides for making your browsing experience easier, web browsers have a very specific function. They convert the HTML file that is sent to you from a web server somewhere in the world into a visual depiction of the web page that you see on your screen. Web page actually consists of text, links to graphics as well as hypertext information brought together with a bunch of instructions using the HTML editing language. A web page is saved as an HTML file
(saved with an .html extension) which is little more than a text file containing the information in question and the HTML instructions (called “tags”). Your web browser translates these
HTML tags into the visual presentation of a web page that you see on your screen. When type in a URL (or web address) or click on a link of link of a particular web page, your web browser sends a request for that page over the Internet. The Internet network uses the URL to find the web server that has the page and asks it for a copy. That server receives the request, finds the page (which is actually an HTML file), and then sends a copy of the page (or HTML file) back over the Internet to your computer. When the data arrives at your computer, your browser translates the HTML file and displays the page and any images associated with it in your browser window. Most of the time, this happens in just a few moments.

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Netscape versus Internet Explorer
Both Netscape and Microsoft’s Internet Explorer (MSIE) come out in different versions, the latest are version 6.2 in the case of Netscape and version 6.0 in the case of MSIE. The later versions are capable and can use an increasing number of the latest features that the Internet has to offer, such as Dynamic HTML (DHTML), Virtual Reality Mark-up Language (VRML), Java and ActiveX.
Java consists of a new class of powerful network mini-applications called Java Applets. These allow expert graphics rendering, animation, interaction and updating of information. One of the main strengths of Java lies in the fact that it is cross-platform (although, in recent years
Microsoft has shunned Java in favour of its own new language called .net). ActiveX consists of advanced browser technology used by Microsoft’s Internet Explorer 3. It allows interactive controls to be included in Web pages.

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Which browser should you use?
Where possible, you should attempt to use the latest possible version of a browser. If you use older versions of Netscape or Explorer, there may be many features built into a particular web site that your browser will not be able to access.
Don’t be disappointed if you visit a web site and there is a message informing you that it has special features built into it that your version of the browser would not be able to display.

Other web browsers
There are several other browsers available with which to browse the web. These browsers usually cater to a niche market, but we mention two of them here so that anyone taking an interest in alternative software or needing a smaller browser for small hard drives or slower computers can get an introduction.

 Opera
Opera Software, based in Kjeller, Norway, develops an Internet web browser and client of the same name. Opera is the newest of the browsers and promises to be the smallest yet fastest browser on the market. Currently, Opera is only available for Windows ’95, NT, and
’98, but Opera Software is developing Opera for Macintosh, OS/2, Amiga, BeOS, and OSX systems. Opera is very small (a little more than 1MB to download). And extremely fast on slow
(386/8MB) as well as fast machines. Opera Software also promises to strictly adhere to HTML

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standards, so web designers writing web sites need not design specifically for Opera. The software can be downloaded from http://www.opera.com.


iCab

ICab promises fast downloads and a “trim” browser without the extras offered in MSIE or
Netscape. ICab is only available for Apple Macintosh computers, but they are developing for Win’95, ’98 and NT. For those with slower modems or small hard-drives, iCab offers a very stable, usable alternative to the larger packages. ICab can be downloaded from http://www.icab.de. ONE | THE INTERNET-PLATFORM FOR BUSINESS

The browser wars
Many independent statistical surveys claim that Netscape continues to dominate the browser market. It is clear, however, that Microsoft’s Internet Explorer has gained major ground. The Browser Statistical Wars are resulting in the release of conflicting information.
The most respected independent browser survey, Browser Watch, as of August 4, 1998 finds Netscape Navigator as the preferred browser of 46.8 percent of the browser using population and Internet Explorer is used by around 35.1 percent. The Microsoft Web site highlights a study conducted by the Positive Support Review, Inc. and released on January
8, 1998. in the PSR study, Microsoft Browsers were used in 63.3% of all Internet sessions versus Netscape’s browser which were used by only 35.6%.

In October 1997, the US Justice Department accused Microsoft of unfair marketing practices in regards to its Internet Explorer. The Justice Department argues that Microsoft requires PC Original Equipment Manufacturers (OEMs) to license and distribute Internet
Explorer with every PC shipped with Windows 95 and that this practice is a violation of the
Final Judgment, US Versus Microsoft Corporation, Civil Action No. 94-1564 (a994) issued
August 21, 1995. Microsoft was ordered to cease this practice. Microsoft is appealing the decision. In December, the Department of Justice filed a motion in Federal Court to hold
Microsoft in civil contempt for not obeying the October injunction that barred Microsoft from typing Windows 95 to Internet Explorer. The legal wars continue for Microsoft.

The structure of web browser
Your web browser comprises five major parts. These are:


The title bar



The main menu bar



The button bar

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

The location or address bar



Link bar and radio bar



The main browser window



The information/status bar

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The title bar
The title bar is right at the top of your browser (the blue strip). It contains the title of the web page. This title is extremely important because it is often referred to in your browsing activities – generally unbeknownst to you. For example, search engines place considerable weighting on a keyword that matches a word in the page title and a page title also gives a user – you – a good idea of what the web page is all about. The title is chosen or decided on by the web page developer and occasionally the web page developer forgets to give a web page a title and you will see the title as “Untitled” (a bad mistake on the part of a web developer). The main menu bar
The main menu bar comprises the following commands; File, Edit, View, Favourites, Tools and Help. These all activate drop-down menus which contain a host of additional commands that you can use to control your browser functions and browsing activities.

File

Edit

View

Go

Favourites

Tools

Window

Help

The button bar
The button bar is probably your main control for the browser and the most important features that you need to know about are available as buttons on this bar.

The location or address bar
The location or address bar is perhaps the most important bar, because this is where you type in the web address (URL) of the web page you wish to go to. If you have clicked on a hyperlink, then when the web page loads, its URL will appear in this address/location box.

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Link bar and radio bar
Sometimes visible, sometimes not, the links bar and the radio bar are two additional control features that provide you with quick access to specific links (the links bar) and to web radio features (the radio bar). Web radio is a new feature available on the later versions of MSIE browsers. Generally these features are switched off, but sometimes they may be visible to you. It is possible that the location bar, links bar and radio bar may all appear on one line, instead of one below the other.

The main browser window

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The main browser window is where the web page loads.

The information/status bar
The information or status bar is the bar that appears right at the bottom of your web browser.
It displays certain useful information. For example, as your web page opens up in your browser, the status bar tells you what is happening and how much of the web page has already downloaded. When the web page is finished downloading a “Done” instruction appears in this information bar. It also tells you about the security features of your web browser and whether you are on a secure web site of not (you will see a closed padlock or whole key appear). The status bar can be activated/deactivated from your “View > Status
Bar” option on the main menu bar.

Basic browser functions
The main functions that you need to know about your web browser.

Loading a specific web page into the web browser
When you open your browser (most likely by double-clicking on the MSIE or Netscape browser icon on your desktop), the browser will usually open with a default web page already loaded into the main browser window. It might be a blank screen if the page cannot be found because you are offline (i.e. you are not connected live to the Internet) or if the server on which the page is located is down (i.e. it is not responding). It could also be an error message page suggesting that there is a problem with the page. If you are connected to the Internet, a web page will generally load into the main browser window. This is your default Home
Page.
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If you want to load a new web page into the browser window all you need to do is to type the new web page address (URL) into this location box and press the “Enter” (or “Return”) button on your keyboard. This assumes that you know the web address of the web page concerned.

Navigating from web page to web page using hyperlinks

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We mentioned earlier that hyperlinks can be added to almost any element on a typical web page including to text, graphics, animations, etc. By clicking on any hyperlink, you will be transported to another web page containing information related to the hyperlink in question.
You will almost always know when an element on a web page is a hyperlink because your normal arrow cursor changes into a pointing hand. What is more, text hyperlinks are generally blue in colour and underlined (no, no, this is not an actual hyperlink, it’s just an example). This does not have to be the case; however, it depends to some extent on the person designing the web page in question.

The back and forward buttons
The Back and Forward buttons allow you to move backwards or forwards, one web page at a time, along your navigation path from one web page to the previous page and back again. It is like paging back and forth through a book. The small little arrow next to each Back and
Forward button is quite a useful feature. If you click on this arrow, a drop-down menu appears, containing a list of the web pages you have just come from. So, instead of having to step back or forward, one page at a time, you can now jump several pages to the exact web page you want to go to.

The stop and refresh/reload buttons
It happens quite often that when a page starts downloading, you will decide that either you don’t want or don’t need the page anymore, or that you have got all the information from the first few lines on the page and that there is no need for the page to continue downloading until the end. You would then press the “Stop” button, thus halting the downloading process, thereby not wasting time. Alternatively, the page may be taking a long time to download and may appear “stuck”. By pressing the Refresh button (or Reload in the case of Netscape), the downloading process is stopped and a new download process is started. The download process often goes quicker the second time round (it’s not clear why – perhaps it’s just psychological). If you want to ensure that a new web page is downloaded from off the web
(and not from your temporary storage folder on your hard drive), then you need to hold down the “Shift” key and press the Refresh button at the same time. This reloads a new version of

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the web page from the server and not a previously loaded version from your computer’s memory or cache (caching – the temporary storage of downloaded files).
The home button and home page

When you start up Internet Explorer or Netscape for the first time, the browser loads a default page into the browser’s main window. In the case of Internet Explorer, it is
Microsoft’s Home page, while with Netscape, its Netscape’s Home page.

It is possible to change the home page that loads when you press the ‘Home’ button.

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Select the ‘Internet Options’ command in the View pull-down menu (or in the case of Netscape, the ‘Preferences’ command under the Edit pull-down menu) and a smaller window opens up, offering a number of additional options. In Explorer, select ‘General’ (the first option) and you will see three further sub-sections, namely ‘Home Page’, ‘Temporary Internet Files’ and ‘History’.
It is only the ‘Home Page’ section that you are interested in.

You will see an address box under this section which contains the URL of your existing default home page. Should you wish to change your default home page then all you need to do is to change the URL in this address box. With Netscape, you select the ‘Navigator’ option from the list on the left of this Preferences window, and then ‘Home Page’. Because this is the first page that is loaded into your browser’s main window and because it is also quickly accessible using your browser’s ‘Home’ button, it is worthwhile changing the default home page to a web page that is meaningful to you, such as the Home page of a web site that represents a valuable gateway to information of interest to you, or the Home page of one of the main search engines, or to a web page of your own creation.

The search button
This is a bit of self-marketing on the part of Microsoft. This button opens up Microsoft’s own
MSN Search facility on the right of your browser window, which is but one of many search services available on the Internet. If you enter a keyword, the search will activate an online search and return the results to you.

The favourites/bookmarks feature
In your web browsing activities you will often come across web pages, the addresses (i.e. the
URLs) of which you will be interested in keeping on record so that you can go back at some later stage to visit the page again. This is what the Favourites files (Bookmark files, in the case of
Netscape) are for. When you are at a web page that you want to keep the address of for future

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reference, simply select the Favourites (or Bookmarks) pull-down menu from the Main Menu bar and choose ‘Add to Favourites’ (or ‘Add to Bookmarks’).

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The address of the web page presently in your browser window is then added to your Favourite’s file. When you want to visit that particular site again, you simply select the Favourites pull-down menu again, search through the list of web sites reflected in the menu and double-click on the description representing the web page you are interested in. Presto, you are taken to the page in question. This feature is one of the most important you will use in your Internet travels. After a while you will find that your bookmarks are overflowing, and it will get difficult to find what you want. When this happens you know that it’s time to start filing your bookmarks or into folders. This is possible by organizing your Favourite (or Bookmark) files into folders by selecting
“Organize Favourites” (or “Edit Bookmarks” in Netscape). You can create folders relating to the topics of your choosing and then store the URLs in the relevant folders. This is a very, very important feature of your browser and it will do you well to spend some time getting the hang of organizing your Favourites.

The history function
The history function is another useful feature found in both Explorer and Netscape. When you select the History function you are presented with a list of web pages that you have visited. This is different to Favourites or Bookmarks where you decide what web pages you want to keep track of until you delete them. The History function is a more transient or temporary facility lasting anywhere from a single session to several weeks based on your choice. It keeps a more comprehensive list of the sites you visited during this period.

To get to the History function you simply select the History button on the browser window in
Explorer (or by selecting the ‘History’ command from the Communicator > Tools option from the Main Menu bar in Netscape). A History frame opens up on the left-hand side of the window
(a separate window opens in the case of Netscape). You will find a list of all the web pages you have visited during the period in question, organized according to the days involved (Monday,
Tuesday, Wednesday, Today, etc.).

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The mail button
If this is available to you, it will link to Microsoft’s default e-mail package which is probably Outlook
Express. Clicking the button will launch an e-mail message window allowing you to compose and send an e-mail message.

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Printing web pages and the print button
Some Net users prefer to print out the web pages they are interested in and to read these pages offline at their leisure. The print button will print the web page that is currently open in your web browser. Printing out web pages has another benefit in that you are able to keep a record of the web page which may be very useful, especially as these pages change on a regular basis. Imagine using the information from a web page for research purposes and then finding that the information has changed a few days later.

IDEA
From what we have learnt so far, though it may not be clear, the first networking system consisted of people carrying messages or parcels form one person in some location to yet another in a different location, more like the postal system.
Nowadays, that postal system has been obsoleted in many respects by electronic mail, the telephone system and electronic Short Message
Services [SMS] for chatting or simple texting.

If you want to change your print set up, you need to go to File on the Main Menu bar and select “Page Setup”. A small window opens up which allows you to change your printing functions.

Saving web pages
If there’s something on the web page you are interested in keeping, you can save the web page displayed on the screen to your hard drive either in the page’s original HTML format (i.e. exactly as it appears on your screen) or as a text document, by selecting the “Save As” command from the File pull-down menu on the Main Menu bar (at the top of the browser window). The latter
(i.e. saving it as a text file) is particularly useful, because this means that you can call it up in your word processing package and cut and paste the information as you like. Of course, all the formatting and graphics will be lost to you. If you want to save the page in its original HTML format, you need to select “Web Page, complete” from the “Save as type:” field in the small window that appears. Make sure you know where you are saving the file! Note that it saves the HTML page (with an .html extension, as well as a folder containing the graphics associated with the web page in question. Now, using your browser (it’s an HTML file, after all) use the
“Open” option under File on the Main Menu bar and browse to find the HTML file you have

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just saved. Once you have found it, open it up. It opens up in your web browser just as before, but the only difference is, is that the web address (URL) shows that the web page is coming from your hard drive and not off the Internet – http://…). You have “ripped” the page from the web server – this is often referred to as “page ripping” (be careful of copyright violations, however).Alternatively, if you want to save or use selected information on a web page, you can simply highlight the information or text you want to save, then select ‘Copy’ from the Edit option on the Main Menu bar and finally paste the copied text into a document where you want to use it.

ONE | THE INTERNET-PLATFORM FOR BUSINESS

Similarly, if you come across a graphic, picture, graph, illustration on a web page that you would like to use in report or for some other purpose, then you simply move your mouse over the item in question, click on the graphic with the right-hand button on your mouse and select the
“Copy” option. Once you have done this, you can return to your word processing or graphics application program and select “Paste” from the “Edit” option and the graphic will be pasted into your document.

Finding words on individual web pages
You may want to find a particular word or phrase within a page presently loaded in the web browser. For example, you may have searched for a specific word and been presented with a web page that is said to contain the word concerned. However, when a web page is loaded it is not always immediately apparent where on the page the word is located. Using the “Find
(on this page)” option in Explorer or “Find…” option in Netscape, both under the Edit pull-down menu on the Min Menu bar, a small “Find” window is launched which provides you with the ability to search for a particular word or phrase on the web page presently loaded in the browser. Using the Find feature will not find words on the other web pages even though they may be part of the same web site.

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.
Writing Activity

Now that you are familiar with basic network terminology, you are ready to appreciate the many uses of computer networks:
You have been requested to recommend a solution to a scenario in which a small company which makes use of one floor open plan architecture wants to achieve connectivity and resource-sharing among fifteen members of its staff. Do a small write up recommending all the hardware devices that they should acquire to make their resource-sharing goal possible. Also recommend the software requirements that you think will make the small project a success. Give reasons for all aspects and elements of your recommendations. 52

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Apranet
The Advanced Research Projects Agency Network (ARPANET) was the world's first operational packet switching network and the progenitor of what was to become the global Internet.
Browser
A browser is a software application for retrieving, presenting and traversing information resources on the World Wide Web.
Catalog
List of items that can be purchased it displays unit cost
Domain Name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control on the Internet.
Email
Electronic mail, commonly referred to as email or e-mail, is a method of exchanging digital messages from an author to one or more recipients. Extensible Markup Language (XML)
Extensible Markup Language (XML) is a markup language that defines a set of rules for encoding documents in a format that is both humanreadable and machine-readable.
File Transfer Protocol
File Transfer Protocol (FTP) is a standard network protocol used to transfer files from one host or to another host over a TCP-based network, such as the Internet.
Global
Relating to, or involving the entire earth; worldwide
History
A usually chronological record of events, as of the life or development of a people or institution, often including an explanation of or commentary on those events
Home Page
The opening or main page of a website, intended chiefly to greet visitors and provide information about the site or its owner.
Internet
The Internet (or internet) is a global system of interconnected computer networks that use the standard Internet protocol suite (often called
TCP/IP, although not all applications use TCP) to serve billions of users worldwide
Internet
The Internet (or internet) is a global system of interconnected computer networks that use the standard Internet protocol suite (often called
TCP/IP, although not all applications use TCP) to serve billions of users worldwide

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Altron targets ISP services through Autopage
JSE-listed Allied Electronics Corporation Limited (Altron) says that its struggling third-party service provider,
Altech Autopage, is in the process of repositioning itself to offer increased ISP services targeted at enterprise clients.Altron on Wednesday announced its interim results for the six months ended August 2014. Revenue increased by 6% to R14.2 billion supported by revenue growth from the Altron TMT division.Normalised EBITDA showed a decline of 10% from R871 million to R784 million, and operating profit before capital items declined
14% to R525 million, from R614 million.
Diluted headline earnings per share (HEPS) and normalised diluted HEPS declined by 12% and 20% respectively, to
71 cents per share.“The combination of Altron’s telecommunications, multi-media and IT businesses under the
Altron TMT division has delivered a positive contribution to the group results with more significant successes anticipated as the integration process runs its course,” said Altron chief executive, Robert Venter.
“Against this performance, the highly disruptive labour environment prevalent during the period had a particularly negative impact on Altron Power. If one adjusts for the financial impact of the four week long NUMSA strike in July, Altron’s earnings would have been broadly in line with the prior year.”Altron said its Altron TMT division grew revenues by 8% to R10 billion and EBITDA by 10% to R702 million.
The group said it achieved significant cross sell successes as a result of collaboration between the Altech and
Bytes businesses, including the Gauteng Broadband Network tender, and the launch of the new Altech Node smart home console which integrates the capabilities of eight different Altron group businesses.The integration process is operating through five different workstreams, and is expected to be completed by the end of the 2016 financial year.On a consolidated total operations level, Altron TMT increased revenue by 8% to R10 billion and normalised EBITDA by 3% to R702 million.
Read the complete version http://businesstech.co.za/news/it-services/70527/altron-targets-isp-services-through-autopage/ Question
From the above case study will autopage develop into a stronger Internet service provider , discuss your answer

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Unit 1 Review Questions

ONE | REVIEW QUESTIONS
GLOSSARY OF OF TERMS
ONE | GLOSSARY TERMS

1. Explain the term Internet.
2. Mention at least five general uses of the internet for each category of individual an company/business
3. Briefly explain the background of the Internet, or its history.
4. Explain with your own examples the main benefits of the Internet.
5. How can the Internet be used as a business tool?
a. There are five technologies or building blocks of the
Internet, discuss them full.
6. Discuss the use of the following on the Internet:
a. Packet – Switching
b. Transmission Control Protocol/Internet Protocol

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TWO | THE NEW ECONOMY AND E-COMMERCE

Learning Outcomes
1. Define E-Commerce.
3. Compare e-commerce and e-business.
4. List the categories of e-commerce.
5. Explain how the New Economy will impact on management thinking.
6. Explain a link between the New Economy and e-commerce.

TWO | THE NEW ECONOMY AND E-COMMERCE

Introduction
In data networking, the term “transmit” means to issue signals along a network medium such as a cable. Transmission refers to either the process of transmitting or the progress of signals after they have been transmitted. In other words, you could say, “My NIC transmitted a message, but because the network is slow, the transmission took 10 seconds to reach the server.” In fact, NICs both transmit and receive signals, which means they are a type of transceiver. Long ago, people transmitted information across distances via smoke or fire signals. Needless to say, many different methods of data transmission have evolved since that time. The
LEARNING OUTCOME 1 transmission techniques in use on today’s
After reading this section, learners will networks are complex and varied. In the be able to demonstrate the ability to following sections, you will learn about some distinguish between different forms of categories of e-commerce fundamental characteristics that define today’s data transmission. In later chapters, you will learn about more subtle and specific differences between types of data transmission.

2.1 DEFINE E-COMMERCE
E-commerce stands for electronic commerce
There are many definitions of e-commerce. Some of these are listed below:
 The use of computer, network technologies and other related electronic means to assist in the performance of daily business processes.

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Doing business over the Internet.



The use of computers and telecommunications in the routine business.



The use of computers and telecommunications in the routine business relationships that most affect the basics of an organisation’s operations, everyday relationships with suppliers, banks, insurers, distributors and other trading partners.



The conducting of business communications and transactions over networks and through computers. 

The buying and selling of goods and services and the transfer of funds through digital means. 

TWO | THE NEW ECONOMY AND E-COMMERCE



All inter-company and intra-company functions (such as marketing, finance, manufacturing, selling and negotiation) that enable commerce and which use e-mail, EDI
(Electronic Data Interchange), file transfer, fax, video conferencing, interaction with a computer, or any other electronic means.



It is the ability to for a Web site to conduct business electronically.



It is the ability for a Web site to transact sales.

Figure 2.1 Relationships between the enterprises and its customers
“E-commerce is a dynamic set of technologies, applications and management systems that enable and manage relationships between an enterprise, its functions and processes and those of its customers, suppliers, value chain, community and/or
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industry.”

TWO | THE NEW ECONOMY AND E-COMMERCE

E-commerce also includes business-to-business interactions and transactions (also known as B2B e-commerce) where raw materials and spare parts may be ordered and paid for over the Internet. Information sharing between suppliers, partners and customers and electronic billing, electronic procurement and electronic funds transfer are all elements of business-to-business-to-business e-commerce. Boeing, for example, has recently created an online system whereby its customers (the airlines) can order and pay for spare parts via the Internet. E-commerce between businesses is expected to outstrip consumer-oriented e-commerce (known as B2C e-commerce) by a factor between ten and twenty.

Figure 2.2 Compare e-commerce and e-business

Refer to your prescribed text book (E-COMMERCE FOR
SOUTH AFRICAN MANAGERS, edition 2000, Cornelius H. Bothma). Study pages 37-38 on the Benefits of Ecommerce

Benefits of e-commerce include:


Reducing the cost of creating, moving, managing and processing individual documents and other forms of information exchanges that make up the relationships between enterprises.
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

The savings that can be achieved are often extremely high.



Transforming relations between trading organizations to their mutual benefit, because their information flows are more timely, coordinated and accurate when sent and processed electronically, facilitating faster and better decision-making by management.

LEARNING

OUTCOME 2

After reading this section, learners will be able to demonstrate the ability to distinguish between differences B2B AND
BC2

Opening up additional channels through which to market and sell for many organizations.



TWO | THE NEW ECONOMY AND E-COMMERCE



Business-to-business electronic links have opened up many opportunities to reach out to customers through new levels of convenience, location-independent services and the lean organisational structures often termed the virtual organization. The lower cost of electronic channels can also reduce costs, while at the same time increasing profitably, compared to other, less efficient channels.



Simplifying and streamlining the business processes, removing administration delays, errors and overheads.



Directly and almost immediately contributing to shareholder value through reductions in working capital that has a direct carrying cost, such as inventories accounts and receivables and in-transit goods.

2.2 E-COMMERCE VS E-BUSINESS

E-commerce and e-business are terms that are often used interchangeably. Ecommerce is generally considered to have a narrow focus than e-business and is about creating, for example, an online transaction system or perhaps an e-procurement system (i.e. an online buying system). E-business, on the other hand, is more about integrating online all of the activities of the organization with those of its suppliers, customers and partners so that it functions as an automated whole. E-business is therefore a more comprehensive, integrated view of online business.

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Broad categories of e-commerce
There are three different types of business groupings on the Net. These are:
 Business-to-Consumer (B2C) e-commerce B2C e-commerce is largely concerned with selling to the end-user – the consumer. It is the online version of retailing (and is commonly referred to as e-tailing).

TWO | THE NEW ECONOMY AND E-COMMERCE

 Business-to-Business (B2B) e-commerce B2B e-commerce is all about businesses doing business with other businesses online. It includes online procurement, supply chain management and fully integrated inter-company e-business systems.
 Consumer-to-Consumer (C2C) e-commerce C2C e-commerce is where one consumer does business or interacts with other consumers online. This interaction is usually facilitated by an independent third-party. An example of a C2C ecommerce sit would be Junk mail. An individual places an ad with junk mail through its online services and other customers can visit the Junk mail Website, see the ad and then contact the seller to arrange to buy the item in question. The third-party facilitator – in this case, Junk mail – might or might not offer some sort of payment or auctioning service as part of their Web site. An individual that creates his/her
Web site aimed at reaching other consumers could also be classified as a C2C Web site. The New Economy
Over the centuries, humankind has gone through several reformations. During this time from the earliest days of civilization, through the many empires and revolutions, until today – technology has played a role in what we do and how we live. Every time a new technology comes into play, civilization turns the corner on the road to a new era. This was the case with fire, the wheel, the printing press, the industrial revolution, the motor car, the aero plane, the computer revolutions, and is also the case today with the e-revolution embodies in the New
Economy.

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Figure 2.3 Drivers of the new economy

The Personal Computer
It is probably fair to say that the New Economy had its origins in the desktop revolution. As the PC took its place in society in the early ‘80s, it freed people from mundane tasks, it increased the rate of workflow, it opened the door to the information age and knowledge, and it put power in the hands of entrepreneurs and innovators. Not only was the PC perhaps the most important initial catalyst for the New Economy putting computing power in the hands of individuals, but the incredible growth in desktop computing power has provided the impetus for its continued pivotal role in driving the New Economy. Today, new PCs are in fact supercomputers that are integrated with intuitive and easy-to-use, point-and-click graphic interfaces. What is more, they have become smaller in size and it is now possible to carry a fully-fledged computer in your jacket pocket. These continuing trends - increasing computing power and a reduction in size - are empowering users to store, crunch, interface with and share vast quantities of information at lightning speed and within a mobile environment. This allows users to focus on putting this information to work in new and creative ways, instead of wasting time on manually gathering, storing and processing information.

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The Networked Age
One PC alone is a powerful tool, but two PCs able to share information and resources between them are clearly much more powerful. Imagine then an organization with large numbers of computers all connected to each other, allowing managers and staff not or, to perform their required tasks more efficiently, but also able to communicate with each other and to share information and ideas. By networking powerful computers, organizations have been able to leverage additional value out of these computers and networks.

T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t w h a t Te l e co m m u n i c ati o n r e a l l y m e a n s a n d e x p la i n h o w i t i s l i ke l y t o a f fe c t t h e p e r fo rm a n c e , o r n o n p e r f o rm a n c e o f a n organization. TWO | THE NEW ECONOMY AND E-COMMERCE

Telecommunications
During this time, there has been a tremendous growth in the global telecommunications infrastructure. The telephone, the telex and the fax have all played a significant role in bringing people together, thereby facilitating the sharing of ideas and information. The role of television has been equally
WEB RESOURCE important in this regard. Today, fiber optics, satellites cellular phones and related tele-technologies (such as video conferencing) are ensuring that people and https://www.youtube.com/watch?v organizations communicate faster, wider and further
=9hIQjrMHTv4
afield than ever before.
The link above will open a comprehensive online resource giving details about the internet
This resource makes for very interesting reading and it will be worth your while to visit this page and peruse through its contents Globalization

Globalization has been with us for some time already.
The motorcar and the aero plane probably played the most important roles in physically bringing people together from different nations. The television, in its own right, has opened up a window to other countries and cultures. In so doing, it has encouraged a propensity among people to travel abroad to visit new countries, experience new cultures and to explore new business opportunities and in this way has contributed to globalization. The growth in the telecommunications infrastructure we mentioned above has also had a dramatic impact on globalization by enabling people around the world to communicate with each other more economically and easily than before.

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The Internet
The Internet has been another major driver behind the New Economy. Closely aligned with the concept of networked PCs and globalization, the Internet, we said in Chapter 1, is nothing less than a global network of computer networks. It puts the information and resources available on the millions of networks around the world that are connected to the Internet, at your disposal. It is perhaps the most powerful communications tool yet available and is also a vast store of information, knowledge and ideas.

E-commerce

TWO | THE NEW ECONOMY AND E-COMMERCE

We also argued in the previous chapter that it has been the commercialization of the Internet that has been the main driving force behind its incredible growth. This online commercial activity is commonly referred to as e-COMMERCE (or e-business) and is discussed in more detail in the rest of this book.

The new economy vs. the internet economy vs. the e-economy

The terms “e-Economy” and “economy” are simple snazzy words for “electronic economy” which is akin to the term “Internet Economy” except that they have a slightly broader meaning to incorporate other non-Internet electronic technologies such as smart cards, electronic kiosks, etc.

Challenges and opportunities of the new economy

The networked economy opens the doors to information and knowledge. Used properly this knowledge will impact on productivity and incomes. But today business is simply not about information or even knowledge, but about skills – knowing something is not enough; to do something and to do it well is what is required.

It is fair to say that as with the Old Economy, people remain a crucial factor in the impact that the New Economy will have on business and society. People, both as individuals and as a key resource within firms, need to be equipped, therefore, to meet the challenges of this brave new world. As individual players in the New Economy, we will have to commit ourselves to learning new skills, and we may have to reinvent ourselves and our skills-base several times again over our working lives as the world around us changes. No longer can we afford to learn a particular skill and then expect an employer to provide us with a long-term outlet for our skill in the form of career.
Long term employment is out. Job security is gone. Instead, we will become migrant
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workers, sharing our skills with firms and where needed for a fee. We are entering a new area of life-long learning and a churning job environment involving flexible and dynamic employment.

In the online environment, access is crucial and if countries are to succeed in the
New Economy, their citizens must be provided with ready and affordable access to the virtual world. A lack of access will translate into a growing number of
“have-nots’. In particular, the following areas of focus, adapted from NGA Online, are required to steer countries into the new millennium.



Building workforce skills and educating and promoting lifelong learning to ensure a competitive workforce



TWO | THE NEW ECONOMY AND E-COMMERCE



Enhancing the transportation and communications infrastructure needed to support burgeoning knowledge-based industries and electronic commerce



Facilitating access to the virtual world by means of a competitive telecommunications service and partnerships with the private sector to connect the workforce with the Internet



Reengineering government to deliver services more efficiently using technology, privatization and partnerships with the private sector



Developing more uniform regulatory and tax structures to reduce complexity and eliminate market distortions



Supporting entrepreneurs, business start-ups and exporters by streamlining business regulations, providing timely decisions and assisting firms in their search for venture capital



Promoting university policies that encourage research and development, build intellectual infrastructure and facilitate R & D partnerships between universities and businesses



Addressing quality-of-life issues to attract new business and workers

Staying competitive in the new economy
As the environment around us changes, so we need to develop strategies and attitudes that will help keep us competitive, both as individuals and firms. As Individuals:

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Reskilling
The key to the New Economy is reskilling and this clearly has to be a major focus for individuals. For many of us, this is a daunting prospect. We may have spent a large portion of our lives preparing ourselves for a particular career. Add to this years of experience gained through hard work, and then we may feel justified having reached a level of competency that places us in a position of seniority and control. If we wish to stay here, however, we will need to embrace new ideas and learn new skills or we will find ourselves displaced. It may mean going back to the classroom, or it may simply mean being open-minded to the changes that are happening around us.

TWO | THE NEW ECONOMY AND E-COMMERCE

Open-Minded
Too often when change threatens us, we take a defensive approach. We fight the change and look for arguments why it is not right for us. We refuse to entertain the ideas being put forward and may turn away from reading related articles or the proposals put to us by colleagues. The right way, however, is to be open-minded.
Accept that we are going through a period of dramatic change and that every idea being put forward is not necessarily a bad one. But be positive rather than negative.
Seek out the good about ideas and find solutions to what we see the inherent problems being. By being a ‘player’, you are likely to get much further in the New
Economy than a ‘nay-sayer’.

Embracing Change
Change has always been a part of life. We grow up from being children to becoming teenagers and eventually to become adults.
We start jobs and change jobs, our children grow up and leave home, our loved ones pass away, our friends change, the policies of our countries change, and we move into the new millennium. The fact that change is part of our lives, however, does not make it easier to deal with. But we need to reconcile ourselves with the reality that as we enter the new century, the changes that are happening around us are

T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t w h a t Em b r a c i n g C h a ng e r e a l l y m e a n s a n d e x p la i n h o w i t i s l i ke l y t o a f fe c t t h e p e r fo rm a n c e , o r n o n p e r f o rm a n c e o f a n organization. 65

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perhaps more dramatic than ever before. This is probably because they are happening at a faster rate and are happening in different areas of our lives. Not only are the business rules changing, but technology is changing faster as well, we are moving towards a global village at warp speed, we’ve entered the new millennium, and we’re experiencing dramatic changes at the socio-political levels, particularly in
South Africa. To succeed in the New Economy, we need to embrace these changes; we need to sit down and plan our reaction to these changes. We cannot afford to let the changes happen without thinking about them. They require deliberation and a planned response.

TWO | THE NEW ECONOMY AND E-COMMERCE

Becoming your own boss
When competing in the New Economy, companies need to become leaner and meaner. They require more skilled staff, while simultaneously downsizing their total staff numbers and outsourcing many of their business requirements. This impacts on the individual directly.

The future lies in small virtual businesses that provide essential skills and services on an as-required basis. These small operations will consist of one or more individuals with specific skills that a company may require on a regular, but not on a full-time basis. It provides the firm with flexibility, cut costs and is more efficient than before.

For the individual, there is a need to consider whether you’re your skills will be required on a full-time basis and what the chances are to resell your services to your present employer on a part-time, contractual basis. If not, maybe there other areas or other businesses where you can put your skills to work. In South Africa, a number of individuals have already taken this route into self-employment, generally quite successfully. It is certainly a better option compared with retrenchment and unemployment. The Firm
The changes taking place around us are no less dramatic for the firm than for the individual. What is more, the New Economy cannot be avoided. There are people,

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TWO | THE NEW ECONOMY AND E-COMMERCE

companies and countries that are setting new rules. Dealing with these changes is essential if the company is to succeed in the New Economy.

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Keys to the old and new economies
ISSUE

OLD ECONOMY

NEW ECONOMY

Economy-Wide Characteristics:

Stable

Dynamic

Markets

National

Global

Scope of Competition

Hierarchical, bureaucratic

Networked, entrepreneurial

Organizational Form

Low

High

Potential Geographic Mobility of
Business

Low

High

Industry:

Mass production

Flexible production

Organization of Production

Capital/labour

Innovation/Knowledge

Key Factor of Production

Mechanisation

Digitisation

Key Technology Driver

Lowering cost through Innovation, quality, time-toeconomies-of-scale market and cost

Competition Between Regions

Source Of Competitive Advantage

Moderate

High

Go it alone

Alliances and collaboration

Workforce:

Full employment

Higher wages and income

Principal Policy Goal

Job-specific skills

Broad skills, cross-training

Skills

A skill

Lifelong learning

Requisite Education

Adversarial

Collaborative

Labour-Management Relations

Stable

Marked by risk, opportunity and selling skills to companies on a short-term, contractual basis

Government:

Impose requirement

Business-Government Relations

Command and control

Assist firms’ innovation and growth Importance of Research Innovation
Relations With Other Firms

Nature of Employment

Regulation

Market tools, flexibility

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Ultimately, there are five key policy strategies that companies must face. These are:
1) Co-investing in the skills of the workforce
2) Co-investing in an infrastructure for innovation
3) Promoting innovation- and customer-oriented business
4) Fostering the transformation to a digital economy
5) Fostering civic collaboration

TWO | THE NEW ECONOMY AND E-COMMERCE

The New Economy and E-commerce
It is important to understand that neither e-commerce nor the Internet can be equated to the New Economy. Earlier in this chapter we said that are not the only ones. We identified that computers, network, telecommunication, television, globalisation, information and knowledge, it will as other factors have all played a role. As ecommerce grows in importance, it will certainly drive the New Economy well into the new century, but only as one of several forces (and new ones may also come into play).
Often, however, you will read or hear the terms “new Economy” and “e-commerce” being used synonymously.

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GLOSSARY
Acquisition
Procurement, the acquisition of goods and/or services at the best possible total cost of ownership
Acquisition
Procurement, the acquisition of goods and/or services at the best possible total cost of ownership
Business-to-Business (B2B)
B2B e-commerce is all about businesses doing business with other businesses online. It includes online procurement, supply chain management and fully integrated inter-company e-business systems.
Business-to-Consumer (B2C)
B2C e-commerce is largely concerned with selling to the end-user – the consumer. It is the online version of retailing (and is commonly referred to as e-tailing).
Consumer-to-Consumer (C2C)
C2C e-commerce is where one consumer does business or interacts with other consumers online. This interaction is usually facilitated by an independent third-party.
E-Business
E-business (electronic business), derived from such terms as "e-mail" and "e-commerce," is the conduct of business on the
Internet, not only buying and selling but also servicing customers and collaborating with business partners.
E-Commerce
E-commerce is a dynamic set of technologies, applications and management systems that enable and manage relationships between an enterprise, its functions and processes and those of its customers, suppliers, value chain, community and/or industry. Economy
An economy consists of the economic systems of a country or other area; the labor, capital, and land resources; and the manufacturing, production, trade, distribution, and consumption of goods and services of that area.
Electronic Data Interchange
Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means, which is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention
Electronic Data Interchange

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Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means, which is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention
Globalization
Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.
Government
Government is broadly defined as the administrative organization with authority to govern a political state.

E-commerce boom: Goldman, CLSA, Credit Suisse, HSBC, others join hunt for India's Alibaba
MUMBAI: As the Indian e-commerce story begins to play out and the hunt is on to find India's next Alibaba, brokerage houses are quickly doing a mid-course correction and rushing to cover e-commerce stocks such as Just Dial and Info Edge.
Foreign brokerages such as Goldman Sachs, CLSA, Credit Suisse, HSBC, JPMorgan and UBS have all started tracking these stocks, as they sense the potential of the e-commerce space, and its big-bang impact on Dalal Street.
Read more at: http://economictimes.indiatimes.com/articleshow/45053373.cms?utm_source=contentofinterest&utm_medium =text&utm_campaign=cppst

Questions
Explain in detail the ecommerce boom in India and focus on the advantages towards the economy.

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Unit 2 Review Questions

TWO| REVIEW QUESTIONS

1. Discuss the benefits of e-COMMERCE.
2. Explain the following in contrast to each other:
a. Business-To-Consumer e-COMMERCE VS Consumer-ToConsumer e-COMMERCE b. Business-To-Business e-COMMERCE VS Government-ToConsumer e-COMMERCE 72

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Learning Outcomes
1. Explain the strategies needed to survive in New Economy.
2. Compare Portals and Vortals
3. Define E-Relationships and Return on Investment

3.1

CHANGING PARADIGMS IN A CHANGING WORLD

As we enter the new millennium, the new century and the new Economy, It makes sense that we need a new way of thinking. The cyber-revolution has brought with it a number of new paradigms and it is important that managers understand what these paradigms are, or they will surely find themselves at a disadvantage as the business environment around them changes.

This is perhaps the most important and fundamental question you will need to ask about your company as it begins to embrace e-commerce.

It is easy to say that you must rethink the business that you’re in, but it is much more difficult to put this thinking into practice. Having the vision is one thing, but having the culture to change is quite another- culture, after all, determines action. In fact, it is not uncommon for culture to undermine vision, particularly when managers and their staff face such a dramatically new way of thinking as is embodied in the online environment. In an attempt to bring company culture in line with the new vision, the Boston Consulting Group proposes the following path to alignment:

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Ground the vision in value creation and make it measurable. Something that is measurable is no longer rhetoric and provides a firm basis for planning.

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Decouple incentives from business plans. Linking compensation with planning performance encourages modest near-term goals and ambitious long-term goals.

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Instead, reward executives on the basis of total stakeholder return or its equivalent. THREE | E-COMMERCE AND THE NEW WAY OF THINKING

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Segment the plan. The solution is to insist on a base-case plus overlays. The basecase is a forecast of what will happen if the present momentum remains unaffected by new initiatives or investments. The overlays are separate scenarios describing the effects of different planned initiatives. This approach allows a company to evaluate initiatives not as a single set, but as alternatives to one another or as sequential priorities. It makes the plan more visible and forces business-unit executive to think through the specific consequences of each strategic undertaking.

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Subordinate budgeting to the plan. There needs to be a close link between plan and the budget, otherwise they will be out of sync with each other.

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Commit to regular reviews. There need to be a regular re-alignment process steered by a senior executive and supported by a cross- functional team.

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Be single-minded. The strategic vision needs to be consistent and must be pursued with a single-minded sense of purpose. Aligning a culture to support a new vision is all about aligning management processes to support value creation.

Example
Servicing a large number of small retail outlets in the Northern Cape, a local transport company found that these retailers were buying small quantities of products from a number of different suppliers mainly in the Gauteng province.
Because this transport company was one of the main firms serving this region, either the supplier or buyer would normally contact the company to have the order collected from the supplier and delivered to the respective retail outlet. From the transport documents, the firm was aware of what products were being bought in this way. Using Internet technology, the transport firm then established a Web site where they created a single gateway (or storefront) for the buyers to order the majority of their products from. Thus the shop-owner could now visit the Web site of the transport company, and, instead of contacting several different firms to place individual orders, could place one single order at their convenience, any time of the day or night. The transport company now consolidates the orders for the various suppliers and places a single order with each respective supplier. In this way, the transport company could achieve purchasing economies of the scale, thereby obtaining cheaper prices, part of which was passed on to the buyers to encourage them to use this service. In addition, because the transport firm could plan and consolidate orders more efficiently, they were also able to offer the customer a better freight rate.
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From the buyer’s perspective, this one-stop-shop, combined with lower prices and better freight rates, proved a very attractive service. Suppliers no longer had to deal with many different orders and now only had to contend with a single large consolidated order.
Payments collection for suppliers was also easier, quicker and less risky compared with collecting payments from a number of small outlets. Clearly, the transport company benefited from this arrangement as well. They could plan their trips more accurately ensuring that their trucks were always full with consolidated orders, rather than half empty with a number of smaller, fragmented deliveries. They were also able to enjoy a small margin on all purchases made. This initiative now placed the transport company in the role of a trading intermediary. As this service grew, so their knowledge of their customer’s needs also grew and they have been able to offer additional and better services. The transport company now finds itself in a very powerful position, able to exert influences over this trading environment. For the unsuspecting suppliers, however, they are a step further away from their customer base and are dependent on the transport company for business
– they have been disinter mediated. The transport company has become a trading hub and essentially the nature of their business has changed.

Value chains, vertical disintegration, re-intermediation and cybermediaries

Reaching the market has been an expensive exercise. Previously firms often turned to intermediaries to help reach customers and 500 complex vertical networks – value chain – developed in the physical market place to facilitate goods getting from supplier to buyer.

These value chains are today being dismantled and reassembled as the internet makes it possible:
a)

To by-pass traditional value chain members.

b)

To create new value chains

The main feature of this new chain is that they are generally smaller, by-passing traditional intermediaries such as wholesalers and retailers. In addition, they facilitate the osmosis of information to all channel members, unlike in the traditional value chain where only certain information is shared between members further up the chain. In the Old Economy, suppliers and manufactures were frequently kept removed from the end customer by intermediaries protecting their channel position

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– transparency to customers and business partners is an important feature of these new virtual value chains.

Figure 3.1 changing value chains

Refer to your prescribed text book(E-COMMERCE FOR SOUTH
AFRICAN MANAGERS, edition 2000, Cornelius H. Bothma). Study pages 4950 on the Changing The Value Chains
As the internet puts all customers within reach of a single computer screen, this has meant that manufactures can now reach a growing number of their ultimate customers via the
Net, without the use of long, complicated and expensive vertical channels as described above. This, in turn, has resulted in the disintegration of channel members (i.e. the middlemen or intermediaries) and the disintegration of vertical value chains. By cutting out traditional bricks-and-mortar intermediaries, the manufacturer can offer lower prices to the customer and may enjoy larger margins at the same time. Obviously, this form of disintegration is not without its problems. The manufacturer must be capable of offering the same level of personal service the customer would expect from a retail outlet. The manufacturer’s delivery logistic must also be capable of handling a number of smaller orders and they should be prepared to offer after-sales support.
Because all markets and suppliers are now only a computer screen away, there is the opportunity for a new breed of entrepreneur to put together virtual marketing gateways or portals that address the needs of customers in new and creative ways. These portals

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bring a range of the ‘best-of-breed’ suppliers together-virtually- to meet these needs. The focus is now on creating a new type of online intermediary, called a cybermediary that can offer customers value in terms of flexibility, variety, quality, speed of delivery and price. In
South Africa, McCarthy Call-a-Car, Mega shopper, Kalahari. Net and Computicket are examples of this new type of cybermediary.

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3.2

PORTALS AND VORTALS

The term portal is commonly used to refer to a virtual gateway that leads to a range of related or focused services and information; they commonly represent one-stop information stores. Portals are essentially online intermediaries and, in some cases, may represent an end-point in them where you can go to transact business.

Vortals-or vertical market portals-are business-tobusiness marketplace hubs or cybermediaries that are usually built around a specific industry focus (a portal that represents a window on the entire automotive industry in South Africa, for example, would be classified as an automotive vortal), or business process focus (a gateway to a wide range of human resource information and services would represent a process vortal.

T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t w h a t P o rt a l r e a l ly m ea n s a n d e x p l a i n h o w i t is l i k e l y t o a f fe c t t h e pe r f o rm a n c e , o r n o n - p e rf o rm a n ce o f a n organization. WEB RESOURCE

https://www.youtube.com/watch?v
=OaJFJ4vxt2M

The link above will open a comprehensive online resource giving details about the value chain .This resource makes for very interesting reading and it will be worth your while to visit this page and peruse through its contents Portals and vortals tend to facilitate any-to-any transactions among business within their area of focus. They aggregate buyers and sellers, create market space liquidity (i.e. a critical mass of buyers and sellers), reduce transaction costs and tend to encourage a ‘community’ feeling amongst their users. 77

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From passive to active to interactive

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Passive Web Sites-and there simply too many of them- are Web sites that remain uncharged perhaps for weeks or even months. The information has been put together in a static way and the owner of the Web sites hasn’t bothered to update the information, possibly because the day-to-day operations in the physical world are taking precedence.
This is the quickest way to lose customers in the New Economy- you wouldn’t watch the same episode of your favourite TV programme again and again, would you?(OK, so maybe you would?). A customer that visits your Web site and finds outdated information is hardly likely to come back.

Active Web Sites are those that are regularly maintained and where the content is updated on a daily or even hourly basis. Builders of Web sites today tend to integrate their company databases with their Web site, or at least create a database filled with the database changes, so this is reflected on the Web page. This is a very powerful tool for companies that have very dynamic information – see the FedEx example below.

It is easier, after all, to update a record in a database than it is to change statistic information on a Web page. In the former instance, you can create a database input form which allows non-technical persons to add data to the database, while in the latter case; someone with technical experience is required to update the information on the static
Web page. Active and dynamic Web sites are crucial for success, but today another feature has become an essential part of a successful Web site – interactivity. Using hyperlinks, the customer can interact with the Web site and navigate from one page to another, depending on their specific needs. Furthermore, using electronic forms (eforms), the company can also solicit information from the customer. This might be registration information that is required before sending them something or making services or features available to them over the Net (for example, FedEx would require customer to complete a registration form the first time they accessed the FedEx database).
E-forms are also powerful tools for collecting market research information, but remember that the customer is unlikely to complete the form unless there is something of value for them in the exercise.

E-mail is another interactive feature of the Web and it is possible today to automatically activate a reply to a customer that has sent an e-mail to your firm (using auto responder software). Discussing forums are another interactive feature available on the Web.
Customers can come together online to discuss a problem or selected issues they have with other customers in user’s forum. Similar to the discussion forum is a real-time chat service where the customers can enter into a two-way discussion with a sales or support person or with a participant in a user’s group on a real-time basis.

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Collaborative browsing

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This is an application which allows the other person to take control over your browser while you are connected to the Internet. It is being used very successfully by software help-desk to assist customers with problem they may have (a technician half-way across the globe can take control of the customers computer and program to see what the problem is and perhaps to show the customer something (s)he’s doing wrong).

A second party, who can see the same screen as the customer, presents tremendous marketing opportunities. Let’s take the above scenario a little further. If a customer is shopping online and contacts an online customers support representative to ask, for example, if a particular laptop comes preloaded with an operating system, the representative can not only provide the customer with an immediate answer, but can then take control of the customer’s browser to show him/ her other software or hardware options. By “pushing” new and relevant information to the customer, the representative has the opportunity to cross-sell and up-sell other products.

The interactive, multimedia environment of the Web enhances this communication and sales process, as does the real-time capability of collaborative browsing. It gives the customer the feeling of “talking” to someone and “sharing” and experience. In so doing, it helps build a stronger customer relationship with the client.

Moving from supplier-push to customer-pull

Before the advent of the commercial Internet, companies advertised (and of course, still do advertise) their products on television, in newspapers, on billboards, on the radio, as well as elsewhere. In the case of all of these types of advertising, the advertising message is “published” to the customer, the customer has little choice as to whether they want to receive the message or not.

With the internet, however, when you create your Web site, it is not to say that the customer will visit your site to receive your online message. Even if you advertise your Web site elsewhere, say on a banner ad on a major local portal or on the radio, the customer may still choose not to visit your Web site. The power of choice lies with the customer. In other words, the customer pulls the massage to them, than you pushing the message to them. 79

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A mass market of one

A mass market
The Internet represents a global market of some 305 million users-certainly a mass market and one that most companies would like to tap into. At the same time, attracting customers and potential customers to your web site is not easy. There are one billion web pages competing for the customer’s attention. Your task is to ensure that your web site reaches those customers that you wish to target.

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A market of one
Every visitor that visits your Web site is not interested in other visitors; only in what value you can offer them. From the customer’s perspective, they are all that matter and your
Web site must be designed in such a way that it caters on a one-to-one basis to their specific needs.

Cookies
Creating cookies involves a server-side script that tracks a visitor’s login information and navigation through a particular Web site. This information (which is considered to be a reflecting of the user’s interests and preferences in what is available on the site) is then stored in a small passive data file which is saved on the user’s computer, on the hard drive. The next time the user visits the Web site in question, the program peeks onto the relevant cookie file to see what the user was interested in the last time (s)he visited the site. Depending on these apparent interests and preferences, the Web site is then adapted on-the-fly to serve up information that best matches these interests and preferences.

Cookies represent a powerful marketing tool and have become a valuable way of keeping track of a visitor’s movements on a particular Web site or page, as well as a convenient source of can also be used to “recognize” and “remember” individual visitors which enhances the customization process. For site requiring a login, for example, a cookie makes it unnecessary to login each time. Many users, however, view cookies as an invasion of privacy, so over-user or abuse of cookies should be avoided at all costs.

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Personalization

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Personalization is another way of meeting the needs of individual customers. It enables the customer to decide how the Web site should look. The customer can choose what information items should appear on the home page and what should not.

Personalization is a little difference from customization in the sense that the power to change the Web interface lies with the user, whereas in the case of customization it is done automatically based on the perceived needs of the user
(by, for example tracking the customer’s previous interactions with the Web site using cookies). Many of the major search engines and large portals allow users to personalize the home page interface according to their individual likes and dislikes. Usually customers first have to register with the Web site in order to change the layout as they would like it to be.

Immediate globalization
One of the unique features of the Internet is that once you have established a presence on the Net, you are essentially visible to global audience of some 305 billion users. Some of these visitors may be interested in what you have to offer.
Yes, it may not be many initially, but if you take the effort to target these foreign visitors specifically, the numbers will grow. The internet provides the easiest and fastest way for companies to go ‘global’, but a special effort is required to ensure that your web site and the logistics that you put in place to deal with enquiries and to deliver the product or service, is adapted to serving the international market. E-speed – the speed of blur
On the internet, everything happens at the click of a mouse button. The customer can enter your company, walk around the firm, see what you’re up to, maybe meet people, choose a product, purchase the product, and walk out again, in less time than it takes to pull the car out of the garage.

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The 10 attributes of Blurred offers
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Does your offer provide anytime customer access and response?
Am I real-time?
Is your offer Online?
Is your offer interactive?
Is your offer available to customers wherever they are?
Does your offer get smarter with use (does it learns)?
Does your offer anticipate your customer’s needs
Does your offer deliver only the information your customer’s desire?
Is your offer customizable?
Is your offer scalable and upgradeable?

No longer are suppliers and customer’s separate, remote entities. Today they are an integral part of the company, all connected by the Internet – distance has disappeared. As one part of the business changes, so this information is instantly available to all the stakeholders. This allows suppliers to react at e-speed to changing circumstances and to deliver the right goods, in the right volume and the right moment to meet the firm’s manufacturing needs. Inventory is reduced, efficiency is increased and the customer benefits all the way.

Return on intangibles
The focus of physical assets, so important for so long for so many companies, is becoming increasingly obsolete in business today. Certainly, businesses have always competed on the strength of their intangibles. Over the years, great product design, technological innovation, market insight, management know-how and strong customer relationship have helped companies carve competitive advantages for themselves. But these intangible assets are generally considered meaningless in isolation and of little value when separated from a business’s physical core.

In the physical world, a company could focus on an intangibles-based strength like branding, and collaborate with others in the business of manufacturing. But it wouldn’t happen very often. Intellectual property was a cost of doing business and an ultimate source of value, but not a source of revenue on itself.

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Intangible assets can be divided into three types, suggests Karl Sveiby, namely:
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External structures, which refers to the customer and supplier relationships and the organization’s image.
Internal structure, which includes patents, concepts, models and the computer and administrative systems that form part of the organization.
Employees’ competence, which refers to the capacity of employees to act in a wide variety of situations.

E-commerce has allowed firms to do is to bring intangible assets to the fore, to tease out the value they add and even to make a business of them. Furthermore, by making inter-firm collaboration easy and inexpensive, e-Commerce allows intangible assets to be leveraged across a much larger buyer base.

Working with the enemy
Many industries, the Internet is changing the way they function. Take the insurance sector, for example. On the one hand, there are a number of insurance providers and each of these offers a range of different insurance products. On the other hand, there are customers that have a variety of insurance needs. These range from medical insurance to retirement annuities, household insurance, disability insurance, car insurance, personal liability insurance, life insurance, etc.
It is seldom the case that one approaches a broker to advise them of their best options. However, even for the broker there are so many insurance companies and so many insurance products available, that they are unlikely to know much about every product on the market and so typically they will represent only a handful of insurance companies that they are most familiar with. Applying for insurance is a nightmare. Each company has its own procedures and forms, and may even have different forms for the different products they offer. The customer ends up with a cabinet full of paper. When it comes to claims, it becomes even more complex – more forms and more procedures. Along comes the Internet and offers a very viable solution. Insurance companies are now making their products available on the Internet in collaboration with their competitors and a third-party facilitator.
This third-party, essentially a business-to-business cybermediary, creates a virtual online portal or hub. It is a central gateway through which the insurance companies make their products available and through which the brokers can assess

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insurance information, register customers, make claims and see their customers’ portfolios. The insurance companies agree to standardize their application and claim forms as for as possible, as well as their portfolio details and although the companies. All this information is available online in a secure environment and although the companies may be collaborating with each other, their individual information remains their private domain. The benefits of such co-operation are far-reaching and everyone is ultimately a winner.

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Size is irrelevant
In the world of cyberspace, your web site represents your company. This is the main interaction that your customers have with you - what they see on their computer screen. Your competitors, however, are also only a mouse – click away. This could be good or bad (bad if your web site does not offer customers what they want – they’ll simply leave). For the small entrepreneur, this could also be very good.

Create an effective, dynamic and interactive web site that satisfies the customer’s needs and back this up with an administrative and logistical system that gets the product to the customer quickly and cheaply, and you’re in business.

Size doesn’t matter on the net, a recent study undertaken by the London School of
Economics in the U.K., concludes that “the world’s largest and best established ‘brick and mortar’ organisation have proved themselves to be better performers than start-up companies in applying themselves to e-business.”

Increasing returns

T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t w h a t I n c r e as i n g R e t ur n r e a l l y m e a n s a n d e x p la i n h o w i t i s l i ke l y t o a f fe c t t h e p e r fo rm a n c e , o r n o n p e r f o rm a n c e o f a n organization and the o v e r a l l ec o no m ic s ec to r

Traditional marketplace economics talks about the concept of diminishing returns to scale. Basically, it argues that there is a point beyond which becomes more expensive for a firm to produce an additional unit of a particular product because the factory is operating at maximum capacity. To produce additional units of the

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product in question would consequently require additional capital, and so your return on investment diminishes.

In cyberspace, argues Melnicoff, the situation is different; especially in the case of digital information and products (diminishing returns to scale obviously still apply to physical products). as a digital information is measured in bits and bytes, once the initial technology infrastructure has been installed and a product – such as software program- developed, each unit sold thereafter cost no more than the last to deliver and the variable cost approach zero. In addition, the more products that are sold, so the fixed cost component falls. Price normally remains fairly constant and so the return on investment increases dramatically.

Even more important, businesses that rely on connectively can enjoy so-called network effects, where the value of a unit actually rises with the number of units sold. Customers locked into a particular technology or system, translate into increased community size, increased sales, increased attractiveness for community members and ultimately in reduced risk.

What does the law of increasing returns mean for your e-COMMERCE strategy?
Most likely, it means that in any given business, one player, maybe two, will come to dominate the market. Moreover, the die is often cast early on. Once a strong lead is established, that leader will pick up momentum and will stand to gain an insurmountable advantage, unless the leader makes serious mistake or until a competitor finds a way to change the game plan again (or at least a better way to appeal to a subset of customers). This is why Wall Street is so tolerant of some currently unprofitable Internet companies – analysts realize that for companies pursuing increasing returns to scale, every dollar must be ploughed into winning market share.

Open all hours
In the new on line economy, your business is open 24 hours each every day, including weekends. Add to this the fact that your web site has the potential to reach a much larger and wider global audience, and then you will need to develop new operational strategies to deal with this 24-hours business.

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The danger is, if you neglect this issue and fail to deal with customer enquiries or purchases quickly and efficiently, customers will quickly turn away from you.
Indeed, some large companies have found that even when their online systems crash for a few hours, it immediately impacts negatively on their stock price.

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Patent protection for your business model
The court of Appeals in the U.S. has recently overturned a lower-court ruling that a business model for data processing could not be patented. Traditionally, U.S. patent law has not considered business methods for patent protection, so the ruling represents a shift in thinking. Priceline.com, an internet-based retailer, also recently received a patent for its buyer-driven ‘name-your-price’ e-commerce model, as has Amazon.com with its ‘one-click ordering’. This development could have a dramatic effect on how e-commerce develops in the future. Such patents could become extremely valuable competitive advantages and one could expect to see a stream of companies filling applications for patent protection for their respective business model. Companies with patents could license out their business models and patents should have a positive impact on corporate value in their own right. For other, this could put a damper on e-commerce innovation and force online companies into expensive litigation cases. The question also needs to be asked, of course, as to whether other countries will respect such patents?

3.3

E-RELATIONSHIP

E-business gauge online customer relationships/ e-relationships in terms of:
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Loyalty
Customer acquisition
Retention
Pre-transaction value

Building communities
There are basically five sorts of electronic communities, namely:

Communities of Transaction
These facilitate the buying and selling of products and services, and which deliver supporting information related to these transactions. Visitors to communities of transaction may want to buy a house or used computer and they may want to

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consult with other community members before doing so. Examples of communities of transaction abound. Amazon and Virtual Vineyards are well-known international examples. In South Africa, Computicket and McCarthy Call-a-Car are examples of a transactions community. Not only can customers buy a ticket or a car via the respective Web sites, but they can also find out about movie ratings, future films to be screened and other movie related information in the case of Computicket, or car specifications, financing options, buyer’s advice, etc. from McCarthy.

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Community of Interest
This community brings together participants who interact with one another on specific topics. Garden Web is one such example where visitors can share ideas with other gardeners Runner’s World, a Web site for the running community, and Power zone, for the local music scene, represent further examples.

Communities of Fantasy
Communities of fantasy allow visitors to create new environments, personalities or stories. Communities of Relationship
Communities of relationship allow groups of people to come together around certain life experience, as does the Cancer Forum. The difference between Communities of
Relationships and Communities of Interest is that in the case of the former, users are more proactively involved in providing support to each other, while with the latter; users usually keep an arms-length relationship between themselves and other users.

Communities of Learning
There is a little doubt that the multimedia interactive nature of the World Wide Web makes it an extremely effective learning tool.

The value and nature of communities
Communities developers should strive to offer visitors the greatest range of services by addressing all five needs within the same community. While this may not always

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be possible, developers should attempt to meet as many of the five needs as they can. By doing so, argue Armstrong and Hagel, developers will be able to develop new and stronger relationships with participants.

Figure 3.2 Using communities to reach markets

Community-building, as with relationship –building, represents an opportunity for the astute company. After all, belonging to a physical – or cyber – community is an important benefit for most companies and individuals. It is from the likeminded community (whether it is an industry community, a retail community, a regional community, a special interest community, or a global community), where the company or individual receives valuable information, support a value-added services. 88

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In Net Gain, Armstrong and Hagel also provide a useful model of the dynamism of virtual communities. This model depicts four main dynamics of virtual communities that interact to create increasing returns, namely:

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Contents attractiveness (offer something of value)
Member loyalty (building close relationships with members)
Member profiles (personalizing and customizing member interactions)
Transaction offerings (encourage community members to become customers) 3.4

RETURN ON INVESTMENT (ROI)

When entrepreneurs start a business or companies expand into new commercial ventures, they strive to achieve a return on their investment (ROI) as quickly as possible. This makes sense. After all, business is about making money and companies are not likely to invest money if they can’t pay it back and continue earning an adequate return on their initial investment.

This approach hasn’t worked so far on the Net. Companies are investing heavily on online infrastructure and services with no idea as to how they will generate a return on their Internet investment. Even some of the world’s most “successful” cyber – concerns, such as Amazon, have invested billions of dollars without yet having turned a profit. In fact, the number of profitable Internet concerns is very small indeed.

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Active Web Sites
Active Web Sites are those that are regularly maintained and where the content is updated on a daily or even hourly basis.
Active Website
Active Web Sites are those that are regularly maintained and where the content is updated on a daily or even hourly basis. Brick n Motar
The term brick and mortar business (bricks and mortar business or B&M business) is often used to refer to a company that possesses a building or store for operations. The name is a metonym derived from the traditional building materials associated with physical buildings — bricks and mortar.
Business
A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers Collaborative Browsing
This is an application which allows the other person to take control over your browser while you are connected to the Internet.
Cookies
A cookie is information that a Web site puts on your hard disk so that it can remember something about you at a later time. (More technically, it is information for future use that is stored by the server on the client side of a client/server communication.) Typically, a cookie records your preferences when using a particular site.
Culture
Culture is the set of meanings, values, beliefs and rules for living shared by groups and societies as the source of their identity. Your cultural puzzles…We belong to many different cultures.SchoolEthnic/National/ReligiousWork
Cybermediaries
An individual or organization who retains a fee for negotiating or conducting transactions over the Internet as a third party, where the cybermediary does not take possession of or own the goods or services. Examples of a cybermediary include online insurance or real estate brokers.
Disintermediated
Disintermediation is the removal of intermediaries in a supply chain, or "cutting out the middleman

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E-forms
An e-form (electronic form) is a computer program version of a paper form.
FAQ
Frequently asked questions are listed questions and answers, all supposed to be commonly asked in some context, and pertaining to a particular topic. "FAQ" is usually pronounced as an initialism rather than an acronym, but an acronym form does exist.
New Economy
The New Economy is a term to describe the result of the transition from a manufacturing-based economy to a service-based economy.
Mass Market
The mass market is the group of consumers who occupy the overwhelming mass of a bell curve for common household products, i.e. they could be tagged as being "average".

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KEY FINDINGS
-- Among customers who rate overall satisfaction 10 (outstanding) on a
10-point scale, 79 percent say they "definitely will" purchase another multi-function inkjet printer from the brand they currently own in the future, compared with the report average of 49 percent.

THREE | E-COMMERCE AND THE NEW WAY OF THINKING

-- More than two-thirds (67%) of customers purchase multi-function inkjet printers in a store, followed by 31 percent who purchase online.
-- Overall satisfaction among multi-function inkjet printer customers is
857 on a 1,000-point scale.
-- Price is the primary reason for choosing a multi-function inkjet printer brand (70%).
-- The average price paid for a multi-function inkjet printer is $154.

Unit 2 Review Questions
1. Explain the terms:
a. E-COMMERCE
b. Vortal
c. Portal
2. Why is the use of Return on Investment in the company, explain how is it implemented.

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FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

Learning Outcomes

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

1. Understand the importance of promoting a firm’s online activities for its longterm success.
2. Explain the various promotional tools at their disposal.
3. Describe framework for managing their promotional activities.
4. Define Market Research.
5. Describe the categories of Advertising

INTRODUCTION
What business can we do on the net?
There are many areas of commercial opportunity on the Internet and every day creative minds are finding new ways of putting the Internet to work. These fall into the following broad categories:
 Those opportunities that enables your company to do more business (such as reaching new markets or transacting additional sales online).
 Those opportunities that enables your company to save costs (such as reducing the need for paper documents or speeding up invoicing and payment processing).
 Those opportunities that enables your company to improve its business processes
(such as integrating systems across the firm or automating replies to e-mails).

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Figure 4.1 Communicating in the marketplace

Communicating in the market space
Internet provides a global standard for information exchange. The open standard of the internet offers greater flexibility for the growth and expansion of a company’s communications activities than a closed environment.

Spanning the globe, internet represents an extensive and powerful communication network, which in turn, is an important business tool for all types of firms. After all, the most important factor that contributes to business is an effective communications.
The main online tools at your disposal for communicating with the customer are:

Web Sites

A Web site contains information in the form of text, sound, video, graphics and animations that is conveyed to any visitor to that particular site. In addition to this outgoing form of communication, it is possible to create reciprocal communication channels and to get the customer to return information to the company in question via the Web site. This can be done by way of reply forms and/ or questionnaires

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that the customer must complete in order to obtain additional information, to make enquiries, or to supply data to the company concerned for further processing.

E-mail

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E-mail is a method of sending an electronic message in the form of a computer file from one computer to another. One of the problems with e-mail is embodied in its ease of use.
A large portion of these e-mails consists of junk mail (or spam), that is sent as unsolicited and inappropriate e-mail. One of the major decisions major companies will have to make in the near future is how to deal with this deluge of e-mail. It is essential to put in place a way of (a) handling the huge volumes of email received, and (b) ensuring that legitimate e-mails are dealt with quickly and appropriately. WEB RESOURCE

https://www.youtube.com/watch?v
=qXlgOX95Q0U

The link above will open a comprehensive online resource giving details about the email.
This resource makes for very interesting reading and it will be worth your while to visit this page and peruse through its contents Benefits of e-mail


E-mail has certain benefits not found in other forms of communication.
These include:



Affordability – e-mail is considerably cheaper than the telephone, fax or post



Place – the recipient does not have to be tied to a particular physical place as with a postal address or physically-bound fax machine; the recipient can access his/her e-mail from anywhere in the world



Format – e-mail is in digital format which allows the recipient to cut and paste contents as is required without having to retype it; it can also be printed or saved in a file for archiving purposes



Avoid the gatekeeper – whereas with telephone calls, faxes and post, these are all normally channelled through a secretary, but in the case of e-mail,

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managers often still access their own e-mail so it enables you to by-pass the
‘gatekeeper’ and to get directly to the person you want to make contact with
Communication processing – it allows recipients to decide when and if they want to read a particular message; if they are busy with a particular report, they don’t have to stop to receive an e-mail when they have time available



Mailing lists – e-mail allows you to create mailing lists and to send a standard letter to a number of people at the same time (batch processing)



FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET



Interactivity – while there may be more interactive forms of communication such as the telephone, e-mail does provide a degree of interactivity and allows you to include multimedia elements and links to Web sites, in the email.



Management – filing and storing e-mail message is easy and efficient as everything is in electronic format; follow-up correspondence is also more efficient as old messages can be re-accessed from appropriate file folders and replied to whenever the recipient wishes, knowing that (s)he has the correct e-mail address and the original correspondence at hand



Critical mass – today, e-mail is fast becoming the preferred means of communication companies and even for different industries. It is essential that your firm clearly defines what the value is that you will be offering your customers. From a promotional perspective, the objective is then to inform your customers this value. Why should they come to your Web site in the first place and why they return?

E-newsletters
An electronic newsletter uses the same technology as e-mail. The difference is, that e-mail is usually a short, specific and directed message, whereas an e-newsletter is more ‘newsy’ in nature. E-newsletters can be very powerful tools if they address a topic of interest to their readers.

They should not be too long because of the information overload we are presently experiencing, they need to be highly focused and they need to provide useful information to the reader. Layout and presentation of e-newsletters is important in order to enhance readability. E-newsletters are generally sent out using mail servers

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(called list servers), that operated automatically and that dispatch large number of emails or e-newsletters at the same time.
E-zines

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An electronic magazine is similar in concept to an e-mail newsletter. E-zines are usually Web based rather than e-mail-based and they are much more graphic, involving multimedia features; they more closely mimic their physical counterparts.
E-zines may appear as highly dynamic and newsy Web sites. E-zines are generally devoted to a particular subject. They tend to be independent, broader in outlook, contain much more personal content and are passionate about the topics they cover.
Some so-called ‘e-zines are little more than online companions to their print versions or are off-shoots of online stores. They do serve as a powerful way of reaching a particular market segment and in this regard are useful marketing tools.

E-Forms
Electronic forms are extremely popular in the Web world and are used for gathering information for a wide variety of purposes, from registering for seminars or to receive e-newsletters, or as business order forms, questionnaires and database query forms.
Forms represent an important design element
Web pages. They bring with them a degree of interactivity, they open up a communications channel between the customer and the company, and they are dynamic in nature.
Equally important to the company is the fact
T H I N K P OI N T that forms represent a valuable marketing tool.
F i n d o u t o n t h e i n te rn e t
The data they gather can be added to the w h a t E - Fo r m s r e a l ly m e a n s company’s marketing- and customer database, a n d e x p l a i n h o w i t is l i k e l y which, in turn can be used for database t o a f fe c t t h e pe r f o rm a n c e , o r n o n - p e rf o rm a n ce o f a n marketing purposes. In addition, developing an organization. in-depth understanding of the wants and needs of a customer is a prelude to developing a closer relationship with that customer.

Auto responders
An auto responder is becoming a critical- part of any e-COMMERCE business. It is server software that filters incoming e-mails and then sends automated responses to

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the sender based on the information contained in the originating e-mail. Auto responders are generally very expensive facilities and may cost several hundred thousand Rands to install, although they are cheaper, less powerful ones available.
But for a company receiving thousands of e-mails every day, an auto responder is as important as a call centre.

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

Newsgroups
Usenet is a service that can be accessed using your browser, but you will need to login to a dedicated news server generally hosted by your ISP. Once in, you can then visit the newsgroup of interest to you and can read what the participants are saying.
There are newsgroups for every conceivable topic, as well as for many business topics, such as importing and exporting, advertising, local events, exhibitions, etc.
Usenet and newsgroups can be a useful tool in communicating with customers and potential customers and a lot of valuable information is shared on the Usenet network. The problem with Usenet is the ‘noise’. A lot of spam can be found in these newsgroups and you to wade through a lot of articles before finding those relevant to you.
FAQs
A frequently asked question consists of a commonly asked question and a corresponding reply. The reply may not only provide the required answer, but may contain links to a wealth of supporting information, perhaps highlighting other services and products available from your company. The FAQ list is important because it helps overcome common problems your customers may be experiencing. Providing a swift answer to a problem helps bind the customer closer to you.

Discussion Forums
These are asynchronous communication tools. One person will normally make a statement and others may (or may not) post a reply, or may choose to initiate a different discussion topic altogether. The posting of the initial statement and of any replies may occur hours, days or even weeks out of each other and for this reason it is considered an asynchronous form of communication (i.e. they are not ‘talking’ to each other at the same time). It is generally a text-based service and all the discussion messages are listed one beneath the other (with any replies they might

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have received) and readers can browse through the list choosing to read those messages they are interested in and replying to them, if they wish.
Discussion forums are useful in the case where a strong community exists, such as between programmers that use a particular programming language, where members may want to share ideas and discuss issues amongst themselves.

Bulletin boards

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

A bulletin board generally functions along the same lines as a discussion forum, except that communication is one-way, directed at readers and customers. It’s a useful service if there are regular events or developments that you want to keep your customers informed of.

Internet Relay Chat
IRC is a form of synchronous, text-based, interactive chat service. Participants access a chat server, using the Web browser or some proprietary chat software, and can chat with other people in real-time. It is a confusing environment at first, because there may be several people chatting to each other in the same environment, called a chat room or channel, at the same time. You need to keep track of your own conversation amongst a list of other discussions happening simultaneously. These types of highly specific discussions are often extremely powerful, especially if the topic requires interactive discussion.

Refer to your prescribed text book E-COMMERCE FOR SOUTH AFRICAN
MANAGERS, edition 2000, Cornelius H. Bothma). Study pages 83 on the
Internet Rely Chat

Instant Messaging
This is a service that enables you to know when your colleagues or friends are online, and makes it easy to contact them. The best known instant messaging services are
ICQ, AOL Instant Messenger and Excites’ Pager.
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ICQ, as one example of an instant messaging service, is a proprietary facility which allows you to register with them and then enables you to keep track of other people using ICQ that are online at the same time as yourself. When you go online, you will be informed of who else is online at that moment (but you need to tell the
ICQ program who you want to keep track of). When the person that you have indicated that you want to keep tabs on, comes on line, you are informed of this and you can then send a message to them if you wish. The message pops up on their screen while they are online, or it is kept in a ‘post box’ until they come online again. If you know someone’s ICQ number you can send them a message that they will receive when they are next online.

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

It is more often used for social interaction.

The internet and the marketing mix
Product
The Internet can be used to gather market information that will help shape how the product should be adapted to meet customer needs. It can also be used to keep product developers abreast of up-to-date information on the latest developments in other companies and in other parts of the world, on both the product and the technology front.

Price
The Internet is an extremely affordable marketing and advertising tool allowing you to reach a global audience at a fraction of the normal cost. As a communications tool, e-mail can generate more than 1 300-fold saving compared with other communication media such as telephone and fax.

Promotion
The multimedia nature of the Net combined with its capacity to deliver huge amounts of information to users, means that it is the perfect medium of advertising and promoting products. Managers can not only publicise their companies over the Net, but can also advertise their products and services to a global audience at a fraction of cost of traditional advertising. Internet advertising

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is easy to update and easy to expand – there is no limit on how much information can be made available. Furthermore, the exporter can focus in on the product, providing video footage, audio clips, detailed graphics, photographs, and animation, in addition to text. This enables the export firm to provide a level of detail not possible with other advertising media.

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

Distribution
The Internet has been used quite successful a distribution medium for products such as software, books, magazines, certain consulting services, engineering designs, language translation and graphic designs, any other type of product that can be transmitted in electronic form. Many users today would rather download the latest software off the Internet than go to the local software store to buy a copy of the software.

4.1

MARKET RESEARCH

Market research is the task of locating information that will gain the company a business advantage. Online market research is the practice of using online databases and information sources to conduct market research.

With respect to market research on the Net, you can:


Conduct research on the Web



Conduct focus groups via the Web



Conduct consumer surveys via the Web



Send out questionnaires using e-mail

Advantages of using the Internet for market research
Online market research delivers the following advantages to your company:



It enables you to be the first to know



Get control of the information flow



Make customer presentations

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

Create tighter marketing plans



Save valuable staff time



Cut research costs



Gain access to broader range of information

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The Internet has some weaknesses too
Accurate statistics and other market information are not always available. Anyone can post information on the Net and there is little control over the quality and reliability of information. The availability of information is also inconsistent sometimes there is a lot of information available while other times there is very little available. What is more, there is still a lot of ‘static’ on the Net; that is useless information and sites to wade through to get to what is useful. Some researchers access potential participants by posting invitations to participate in survey on discussion group or chat rooms. However members of online communities often find this behaviour rude or offensive or consider this type of posting to be “span”.
Researcher may be inundated with e-mails from irritated members of online community. Planning your online market research:

The following steps are recommended



Determine what you need to know



Formulate your questions carefully



Be aware of spelling and grammar



Choose suitable sources of information



Make sure that you know how a particular search engine works



Study the results that you get from the search engine for relevant Web sites When you identify a potentially informative site, explore the site for further information and possible links to other useful sites




If you find a useful site, bookmark and print the site



Evaluate the information you have obtained

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

Keeping down your research costs:

The following tips are useful in keeping down your research costs


Narrow your research before you begin



Make use of special price offers if you are using online commercial databases Keep your search focused



Make use of the fastest equipment possible



Make use of an ISP that offers a fixed monthly rate and sufficient bandwidth



FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET



Use the Internet when it is quietest



Use the Internet when your telephone rates are lowest

Surfing the web in anonymity
The web provides information about businesses to consumers and other interested parties. Many businesses use the web to keep track of their competitors. For example SA airways might use competitor’s web site to learn about its rates and routing strategies.

Some businesses have automated this form of competitive intelligence gathering with software that continuously monitors competitor’s website for the latest pricing information. Just as the web is used for competitive intelligence, so to can internet technologies be used for counterintelligence. Each computer connected to the internet is assigned a unique IP address. This means that visitors to websites can be tracked through address. Any IP address that is behaving suspiciously can be blocked from accessing a website. For example, if the competitor of SA Airways notices 1000 queries coming from the same IP address over a short period, it might suspect automated intelligence gathering from SA Airways and block that IP address. Some software tools are capable of disguising the IP address of any user who visits websites. The Anonymizer
Company provides a service called Enterprise Chameleon that distributes dummy IP addresses to users within an enterprise to use when they want to visit a website anonymously. The service works by establishing an encrypted connection to Anonymizer’s own secure virtual private network. Web activities are then routed through the
Anonymizer network before being routed to the actual destination address. The
Anonymizer network assigns temporary IP address that cannot be traced to the company that originated the request.

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Disseminating information
Companies often store useful information that they would like to distribute to their customers, except that this can be very expensive in the physical world. TV and radio ads are restricted in the amount of space or time they have available and even product brochures are expensive to produce and again they can only contain a limited amount of information. FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

In contrast, with the internet it is very cheap to disseminate information and for many organizations the internet server as a means of getting useful information that would otherwise be stored away in filing cabinets, to customers and to interested stakeholders.
It is also useful way of disseminating breaking news and other critical marketing or PR information to the marketplace quickly.

Corporate publicity and branding
Positive publicity can be a powerful weapon in bringing awareness, acceptance and desirability the way of a company. In this regard, the Internet is a useful medium for promoting and publicizing a company and its activities. The Internet is a lot like the grapevine – it is the rich soil in which the seed of a publicity massage can germinate very quickly. It is an environment where people eager for information and interaction come to share ideas, information, interests and news. Publicizing and branding your company’s activities on the web is certainly a lot faster than the more traditional publicity machinery such as mail-shots and press releases, and you also have more control over the message, whereas a magazine editor may cut your PR message to fit on a particular page. In addition, as more and more people in a growing number of industries turn to the web for relevant market and industry information, so the web grows in its effectiveness as a means of promoting the company and its activities. It is also relative cheap.

4.2

ADVERTISING

Advertising is similar to publicity, except that it deals with the product, whereas publicity deals more with the company’s overall image.
It is important to note that advertising on the Net can be grouped several categories.

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Web sites whose main purpose is to advertise a company and its products. In this instance, the company doing the advertising also owns the Web site.



Banner advertising that is hosted on third-party Web sites. The company wanting to advertise would approach the third-party – possibility a cybermediary – and would pay to have a small banner ad placed on the cybermediary’s Web site. Customer’s visiting the cybermediary’s site would view the ad and click on the ad to link to more information (more information about banner ads in Chapter 11).



Pop-up ads that open a smaller browser window whole a page is loading. Used by both cybermediaries and stand-alone corporate Web sites, the user can simply close the window if they are not interested. Pop-up ads can be quite intrusive and irritating



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

Online advertorials. These are fairly comprehensive Web pages that are lighted by independent third-party Web sites about companies or products related to their area of interest. Thus, a company that runs a Web site about motor vehicles, for example, might host a Web page about a new car model. The information about this model will probably be supplied by the automaker or may be written independently by the
Web site hosting the page. The automaker may or may not sponsor the page. This is very similar to a trade magazine in the physical world



Interstitial ads are splash pages that flash for several seconds before a selected site is fully loaded; clicking on it takes the user to the advertiser’s Web site.

Advantages of advertising Online
There are a number of advantages of advertising on the Web. These include the following:


Rapid presentation



Easy modification



Affordable



No space or time limits



Multimedia elements



Buyer involvement



The advertising benefit of electronic newsletters



E-mail signatures

Transacting sales

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The ultimate goal of marketing is to maximize profitability. Therefore a comprehensive
Internet market plan, whether local or international, should focus on three objectives, namely, increasing sales, decreasing the cost of doing business and improving communications with all stakeholders, the last of which should help achieve the first two objectives. FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

There are several reasons why the Web has not yet proved so successful at increasing sales.
The first hurdle is the question of payment. Users have been reluctant to give credit and other banking details over the Web for the fear of these being compromised. This situation is being remedied with powerful encryption programmes being developed.

Secondly, the creation of electronic cash is another development that seems to be receiving favourable consideration and, if eventually supported by the banking community, will go a long way towards increasing selling activity on the Internet.

There are a number of points to remember when building Web sites intended to sell. These include: 

Make it clear to users what you are selling and if you are selling something



Tell visitors to your Web site who you are



Make sure it’s easy for users to find and use your order page



Give readers more than one way to buy



Include comments from satisfied customers



Promote your Web site effectively

Customer service and support
Benefits of online support services:



Automate routine procedures



Offer 24 hour support

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

Keep technical information accurate and up-to-date



Slash hard-copy distribution costs



Give the customer more control



Get closer to the customer



Develop a relationship with the customer



Turn paper manuals into digital documents



Position your customer for the future

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

Value-added services
Companies are now leveraging the unique features of the Internet to provide their customers with values-added services. Often this involves integrating their database with their web site thus giving customers access to their personal information or to other dynamics information. By building knowledge management features into these databases, data can know be converted into intelligence for the customer and for the company.

Exporting the Internet
The Internet can be used as:

A communications tool, enabling cheaper, faster and more effective communication. The power of e-mail is embodied in the fact that it is an extremely cheap means of exchanging digital information and other communications with your customers abroad.
For the cost of a local telephone call, an exporter can send and receive e-mail messages, word processing documents, spreadsheets and even
CAD files to or from one part of the globe to another. Furthermore, it is possible today to use the Internet for video conferencing across cities and nations, again all for the cost of a local telephone call.



T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t what Value Added
S e r v i c e r e a l ly m e a n s a n d e x p l a i n h o w i t is l i k e ly t o a f fe c t t h e c u s t o m er l o y a l ty .

An information tool. To succeed in exports, as with the local market, it is essential that the exporter (a) identifies the wants and needs of its potential foreign customers, and (b) puts together a marketing mix – consisting of a product, its price,

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a promotional campaign and a distribution mechanism – that will satisfy these wants and needs profitability. The Internet can be used to source the required information.

A marketing tool the Internet can be used to advertise products in detail never known before, transact sales, brand the company, research markets and customers, gather market and marketing intelligence, and much more.



As a business tool, an exporter can use the Internet just as effectively as by any other company as a tool to:



Providing customers support



FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET



Integrate suppliers into the supply chain



Bringing about cost savings



Improve customer relationships



Enable electronic procurement



Facilitate electronic billing and payments

The Internet – lowering trade barriers
The Internet has a direct role to play in lowering the barriers to international trade that have for so long kept companies out of the international trade arena. Such barriers include culture, language, religion, beliefs, politics, the legal environment, as well as trade barriers such as import duties and quotas. Secondly, the Web is a gateway to a large and growing global market. Thirdly, the Web tends to be race, gender, religion, disability and size blind. Finally, the lack thereof in international trade has always been seen as a barrier to successful exporting. This is what the Web does best – provide the exporter with a wealth of information.

The Internet - a new way of doing international trade

The web will also impact on the entire international sales/marketing process by creating awareness, generating leads, transacting sales and offering immediate customer support. Most importantly, the web encourages disinter mediation by allowing companies to target customers directly, thereby eliminating intermediaries. This alone is likely to have a significant impact on global trade.

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As the internet fast approaches its critical mass, exporters will find it possible to send out pro forma invoices, receive orders from customers, establish letters of credit, clear the goods through customs, pay customs duties, obtain insurance and make and receive payment across the internet, all without leaving the office or even form home. There is little doubt that the Internet well revolutionizes the entire trading cycle.

The web not only offers unique opportunities for the international trader, but also likely to change the way that international trade is approached. The successful exporter, therefore, requires a new approach – that is a paradigm shift is needed.
For South Africa exporters who see the benefits that the web offers them and who are prepared to embrace this new technology and the paradigm shift it brings with it, the opportunities are tremendous. The ‘internetrepreneur’ will have a head start on other companies and will surely carve out a competitive advantage for itself in this new cyber world.

Internationalizing your Web Site
For those companies that already have their own Web site, the next step is to ensure that
Web site is able to service foreign customers. There are a number of issues to keep in mind in this regard. These include:



LANGUAGE



INTERNATIONAL FORMS



CULTURAL ISSUES



DIMENSIONS



CREDIT CARDS AND ALTERNATIVE PAYMENT MECHANISMS



LOCAL COLLOQUIALISMS



LOCALISED CONTENT



SPEED OF REPLY



UPDATING INFORMATION



TIME AND DATE CONVENTIONS



CURRENCIES



SYMBOLS, ICONS AND DESIGN ELEMENTS



USE E-MAIL TO FACILITATE COMMUNICATIONS

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4.3 SUPPLY CHAIN MANAGEMENT (SCM)
Supply chain management focuses on the integration, automation and synchronization of four major flows - physical, financial, information and decision-making.

The goods and services purchased by an organisation will generally fall into two categories: 

Those that are essential for the organisation’s success, such as the raw materials and sub-assemblies are generally supplied by a select number of suppliers

FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET



Non-essential goods, such as paper, pens, printer ink, etc. – these items are necessary but not crucial in the manufacturing process and can often be purchased from a variety of suppliers

Figure 4.2 Supply chain management

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If accompany is able to integrate the back-end systems of its suppliers with its own over the Internet, a number of important benefits can be realized. Just-in-time supply can be achieved, reducing the stock of raw materials that is required to be on hand, thereby decreasing warehousing overhead and increasing overall efficiency.
Automating the supply chain results in lower costs, less paperwork, fewer errors and reduced staff overhead. Effective supply chain management also means that the company can spend more time on strategic supply issues, rather than on day-to-day issues. Figure 4.3 Back-end systems
The Internet is essentially a tool to facilitate the integration of the back-end systems of your suppliers and your own company. The Internet is also a means of improving the communication from customer through your company to the supplier. No longer is the supplier the last cog in the communications wheel, but instead, as changes in the marketplace (or market space) are identified, so these are communicated to the supplier as quickly as to your own company. This allows your suppliers to react as fast to market changes as your own company.

Supply chain management is not just the systems integration between two companies.
Instead, it involves all your suppliers and may include inter-co—operation between several suppliers and your firm. The structure suggested in figure below would be extrapolated across several organizations and possibly even between the suppliers they when their raw

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materials are closely linked (especially when the design of one might affect the design of another). Figure 4.4 Co-operative SCM

The benefits of effective supply chain management include the following:


Reduces product implementation costs and risks



Reduces inventory requirements



Lowers product maintenance burdens and costs



Speeds up time to market



Increases access to market information and suppliers



Improves negotiating power



Automates, streamlines and reduces cost of order and fulfilment processes



Ultimately enhances customer service by maintaining adequate stock, keeping it fresh and attuned to marketplace trends and changes



Delivers new information/services



Provides new revenue-stream opportunities



Maximizes delivery of product and related information

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 Increases business volumes and enhances service levels to existing customers
 Improves management of excess inventory
 Provides access to new business
 Improves productivity through better data integrity, fewer order entry orders and less rework FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

E-Procurement
E-procurement can be seen as a subset of supply chain management. It is more commonly used when large volumes of items of a generic nature, such as business consumables (e.g. paper, pens, printer ink), standard raw materials or maintenance, repair and operating (MRO) supplies, are purchased on a regular basis (e.g. metal pipes, screws and nails, etc.). Strategic purchases of highly customized product inputs, such as injection-moulded plastics or products purchased only very occasionally, are generally not suitable for e-procurement.

The value of e-procurement is that it shifts the emphasis away from mundane purchasing tasks, most of which can be automated, to strategic issues such as negotiating broad buying contracts within which the daily purchasing activities will fall. Automating the day-today purchasing tasks while at the same time spending more time on the strategic issues, results in the following benefits to the organization:


Purchasing process cost reduction – it is not uncommon for the cost of a purchase order to be greater than the cost of the goods

T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t w h a t E -P r o c u r em e n t r e a l l y m e a n s a n d e x p l a i n ho w i t i s l i k e l y to a f f ec t t h e p e r f o rm a n c e , o r n o n p e r f o rm a n c e o f a n organization. 

Vendor consolidation – the more volume that can be achieved, the more leverage the organization has enabling end-user self-service through automation, thereby allowing greater emphasis to be placed on strategic purchasing issues 

Seller self service – reduced cycle times and costs



Vendor performance analysis – enabling the procurement organization to manage their vendor better

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

By automating and consolidating purchases means that there is less chance for
‘maverick’ purchases to take place



By automating purchasing rules, better consistency can be achieved in purchasing matters FOUR | BUSINESS OPPORTUNITIES ON THE INTERNET

Catalogue Consolidation

An important task in supply chain management and e-procurement is the conversion, consolidation, integration and synchronization of supplier and buyer catalogues (i.e. their databases). Suppliers will inevitably have their own catalogue of products available for sale together with their prices, and these will differ from supplier to supplier. Efficient supply-side operations will only occur if these catalogues are merged into a single buying catalogue; disparate catalogues simply don’t facilitate customization and consolidation. In the case of a single buying organisation, the conversion of catalogues into a common format can either be undertaken on the supplier or buyer-side.

Figure 4.5 Single buying organisations

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Where there is an ASP that facilitates the procurement of several different organisations but with similar buying needs, this third-party organisation will convert and consolidate the catalogues of sellers in a way that works for each of the different buyers.

Figure 4.6 Multi Buying organisations

4.4

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

The online environment can be developed in such a way that it adds value to the customer in its own right. An adaptive, intelligent customer front-end can go a long way in personalizing the online experience for the customer. Secondly, the product or service that the company sells must add value in itself. It’s no use having a great
Web site with lots of useful features and that is easy and fun to navigate, but the product that is being sold is undesirable. Finally, the staff and physical business processes of the organization must be geared towards enhancing the customer’s experience with the company.

Behind the scenes, however, it is important that the company’s front-end and underlying systems facilitate customer interaction and two-way communication at any time or place; every suitable communications channel – from e-mail to discussion forums – should be used to this end. The system should be able to track
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customers and their preferences, habits and buying patterns, and to remember them when they return. This knowledge must be actionable and repeatable. The front-end and content will be customized or personalized based on the knowledge that has been gathered about each customer, thereby facilitating a one-to-one selfservice approach.

The broad objectives behind implementing an online CRM system include the following: Segmenting customers into different value and profile groups



Improving two-way, anytime, anyplace communication with customers



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

Involving customers in improving the firm’s service levels by soliciting constant feedback from them



Ensuring that customers receive consistent service



Reducing the cost of getting customers, particularly the second time round



Increasing your share of customers



Reducing the prospect-to-sale cycle time and enhancing speed and immediacy



Leveraging value from cross-selling and up-selling



It enables a company to harness value of their customers as an actionable, durable asset



To encourage speed, agility and real-time responses to customers and markets 
To provide customers with an integrated, real-time, secure environment to interact with the firm

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Figure 4.7 CRM System
The IDC suggests that the CRM system must be flexible enough to adjust constantly and regularly to changing business rules. Customer interactions with the Web frontend will be tracked and online trends analysed in order to understand why certain events have happened. This knowledge will ultimately yield actionable results. A predictive model is then built to address alternative future scenarios, before putting the changes into place. These new changes or ‘adjustments’ start the process rolling again. In this way, a self-sustaining closed loop is created to optimize the customer’s relationship with the firm.

The system must be scalable as the organization grows and the various customer interfaces merge into a symbiotic whole, and an increasing amount of data and knowledge is generated. It must be available 24 hours a day. Large organisations that experience significant downtime are finding their share value dramatically affected as a result.

Online auctions
Auctions can be used by businesses to get rid of goods they have in stock or by customers looking for a bargain.

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When building an auction site, you will need to consider the following:
A way for bidders to register with your service



A means of handling their credit card or payment details (you need to be assured that they can afford to pay for what they have bid; almost like a refundable deposit) 

A search facility for them to find what they are after



A detailed level of information that bidders can link in order to get more information about the product on sale



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

Setting sales and payment requirements and options, as well as participation policies 

Setting a start time and end time for bidding, with the highest bid at the end of the period winning; bidding will usually increase in preset increments



There must be an easy way for customers to submit their bids



A feedback facility to inform customers when they have been outbid or when they’ve been successful



Don’t forget to include delivery costs for getting the product to the customer

Electronic funds transfer and online banking
Online banking describes the full spectrum of banking activities that a company can do online such as accessing accounts, making inter-account transfers, obtaining account updates, ordering cheque books, arranging finance and paying bills. A major benefit of online banking is that it is cheaper than conventional banking and can result in significant cost savings for the big corporation. It is also easy, convenient, reliable, and secure to use. Most importantly, these services are available 24 hours a day – online banking can be compared to using an ATM without fear of muggers.

E-billing
Traditionally, companies generate bills electronically, print them and send them by post to their customers. The customer may pay by cheque, which they post back to the company in question. This is a lengthy and expensive process. Much easier would be to generate the electronically, send it to the customer online and encourage the

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customer to pay directly into your account via an online payment system. This cuts costs and speeds up the generation of income, thereby reducing cash flow problems and allowing the company to generate interest on monies earned or to reduce interest on overdrafts.

Electronic bill presentation and payment involves four distinct processes, namely:
Bill data extraction and transformation – this involves extracting data from legacy sources and readying it for presentation in a Web-based format



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

Bill presentment – a system is necessary to allow the customer to actually pay the bill by electronic means, to confirm this payment on both sides and to send the payment to the biller’s bank and the payment data to the biller



Bill payment administration – the legacy accounting systems are then updated with this post payment information

Keeping abreast
For many companies involved in high-tech, research orientated industries; the internet serves as a way for their engineers and scientists to keep abreast of what is happening in their respective fields. Quality control is one such example. Companies can use the web to learn more about quality control, ISO9000 and the quality standards applied in countries and industries around the world.

4.5

E -BUSINESS

E- Business takes the business one step closer to enterprise-wide integration and automation using Internet-based technologies. It is not about either customer relationship management or about or about supply chain management, but about both. It is also about synchronizing the supply and sales activities of the company with the firm’s existing back-end systems and between customers, suppliers and business partners. A sale on one side, for example, should generate a purchase order
(PO) for raw materials on the other if the stock is low. It is about coordinating transactions, funds transfer and accounts. A truly e-business firm will know the impact of every single sale on every part of the organistion almost instantly.

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Advertising
Advertising is a form of communication for marketing and used to encourage or persuade an audience (viewers, readers or listeners; sometimes a specific group) to continue or take some new action.
Auto Responders
Server software that filters incoming e-mails and then sends automated responses to the sender based on the information contained in the originating e-mail.
Competitive Intelligence
A broad definition of competitive intelligence is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors and any aspect of the environment needed to support executives and managers in making strategic decisions for an organization.
E-Forms
An E-form (electronic form) is a computer program version of a paper form. Aside from eliminating the cost of printing, storing, and distributing pre-printed forms, and the wastage of obsolete forms, e-forms can be filled out faster because the programming associated with them can automatically format, calculate, look up, and validate information for the user.
E-mail
E-mail is a method of sending an electronic message in the form of a computer file from one computer to another.
E-newsletters
An eNewsletter or e-Newsletter is an HTML email that allows companies to submit corporate announcements, press releases, product launches, coupons, and much more to their clients on a continual basis using an email or eNewsletter system.
Extensible Markup Language (XML)
Extensible Markup Language (XML) is a markup language that defines a set of rules for encoding documents in a format that is both human-readable and machine-readable.

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Google Finds Ways To Profit From Booking Sites’ TV Advertising

Google executives likely aren’t big fans of William Shatner as Priceline.com’s The Negotiator, the Trivago Guy or
Hotels.com’s Captain Obvious of television advertising notoriety.
Or maybe they are on a personal level, but see potential revenue from these online travel agency TV advertising campaigns leaking out the door.
Major online travel sites such as Booking.com, Expedia, Hotels.com, Trivago, TripAdvisor, and Priceline have been heavily advertising on TV over the last couple of years, and TripAdvisor and the Priceline Group revealed in the past week that they intend to increase their spending on TV advertising in 2015.
All of these companies have finite marketing budgets, of course, so money spent on TV is dollars, euros or reals not spent on Google paid search or Google Hotel Finder ads.
All of this occurs as Priceline Group CEO Darren Huston revealed this week that he sees TV advertising as a breakthrough that reduces the dependence of the company, one of Google’s largest customers, on paid search.
Don’t Shed Tears for Google
Google generated nearly $14.7 billion in total advertising revenue in the third quarter, and that included a 17% year over year increase in paid clicks, so its search empire will not crumble because a handful of online travel agencies are taking to the airwaves and cable wires like never before.
Read more at http://skift.com/2014/11/06/google-finds-ways-to-profit-from-booking-sites-tv-advertising/ Question
Discuss Googles campaign to provide better service using TV advertising.

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Unit 4 Review Questions

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1. How does one plan an online market research? 2. Is there a difference between marketing and advertising? 3. Discuss the categories of Advertising on the
Internet.

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FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

Learning Outcomes
1. Define Business to business E-commerce.
2. Explain business to consumer e-commerce model.

FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

5.1.

DEFINING BUSINESS-TO-CONSUMER E-COMMERCE

Business-to-consumer e-COMMERCE, often referred to as e-tailing, is about marketing and selling to individual consumer online. Amazon, Dell, Computicket,
Kalahari.net and Mega shopper are all examples of business-to-consumer Web sites.
This is in contrast to business e-COMMERCE, which is about the co-operation and online integration of the many electronic systems underlying a company’s business activities (such as design, order processing, billing and payment) with those of its suppliers, customers and partners. Business-to-consumer e-COMMERCE is also different from consumer-to- consumer e-COMMERCE, which has to do with one consumer dealing with other consumers online usually through means of an online intermediary; junk mail is an example of a consumer-to-consumer e-COMMERCE site.

An e-commerce development model

The first stage, often referred to as a publishing stage, is focused on creating an online presence. During this stage, it’s all about getting the firm online and digitizing company information for online delivery. The resulting Web sites tend to be fairly simple and static.

In the second stage, the company becomes more e-enabled and may create a transactional e-commerce site as part of its development cycle. The company begins to conduct business electronically and allows customers to browse its product catalogue, place orders and to pay for them online. Web sites are more dynamic and are often database-driven.

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FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

Soon the company begins to integrate its Web front-end with its back-end systems.
The transaction interface, for example, may be linked to the firm’s inventory management system thereby facilitating a “hands-off” approach. The firm has thus moved to a more integrated level of online business. This integrated, however, happens in parts and is not prevalent throughout the firm. This is the third stage of development. The fourth stage is where the firm is fully integrated with its partners, suppliers and customers across all of its operations. This represents a fully integrated e-business company and is discussed in more detail in the next chapter. Customer’s content is highly interactive and there is a “flow-through” approach to information, starting with the customer and ending with suppliers. Partners, suppliers and customers are thus all part of the same information loop. Dynamic segmentation in real-time based on customer activity within the Web site, is another goal at this point.

T H I N K P OI N T
F i n d o u t o n t h e i n te rn e t w h a t E co m m e r ce
D ev e lo p m e n t M o d e l re a l l y m e a n s a n d e x p l a i n ho w i t i s l i k e l y to a f f ec t t h e p e r f o rm a n c e , o r n o n p e r f o rm a n c e o f a n organization. The final stage is an on-going evolutionary stage during which the company continues to evolve, following a path of proactive destruction, where it keeps shedding its old business models and finding new and innovative ways to serve customers. The players in business-to-consumer e-commerce:
The types of organizations that are likely to be involved with business-to consumers e-COMMERCE include:


Producers



Manufactures (selling direct to end-users)



Direct-to-consumer wholesalers



Retailers

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

Service provider



Utilities



Educational institutions

The size of business-to-consumer e-commerce
Over the recent years there has been an increase in the need by consumers to do
B2C business due to its relative ease and convenience. These days every company invests time and money to develop and research such facilities as this concept is becoming a part of everyday life just as a normal commodity would be.

FIVE BUSINESS-TO-CONSUMER E-COMMERCE
FIVE || BUSINESS-TO-CONSUMER E-COMMERCE

5.2

CREATING A BUSINESS-TO-CONSUMER E-COMMERCE

There are essentially three routes to market. Creating a stand-alone corporate Web presence: The first route to market is to create a corporate Web presence; that is a company
Web site. In this regard we will consider any company Web site as an e-COMMERCE site, not just one that transacts sales. In other words, Web site that advertise a company’s product and/or services to consumers, or corporate Web sites that publicize and brand the company as a whole to the general public are also considered to be an e-COMMERCE Web sites, not just those that transact sales.

Figure 5.1 Establishing an Online presence

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In the fact, corporate Web site may have a number of business objectives. These might include:

Promoting and publicizing the company (corporate PR)



Advertising the company’s product and services



Transaction sales



Informing consumers of new developments, changes or other
‘happenings’



Providing the customer support and advice



FIVE | BUSINESS-TO-CONSUMER E-COMMERCE



Interacting with the customer to solicit product feedback, foster twoway communications and gather market information

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The need for third-party services

FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

In the process of creating the Web site, the company will require Web hosting services, a
Web site development team and a promotion team. The hosting and the development of the Web site can either be done internally or externally.

Figure 5.2 Hosting the Web site with ISP

Deciding whether to host, develop and/or promote a Web site internally or outsource it, will depends on whether the company has the requisites skills and technologies in-house, or believes it necessary to acquire these skills and/or technologies from a strategic perspective.

Refer to your prescribed text book E-COMMERCE FOR SOUTH AFRICAN
MANAGERS, edition 2000, Cornelius H. Bothma). Study pages 139 on the Ecommerce
Portal

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The need for security
Where sales are transacted or access to the company database is given to the customer, security and user authentication is required and the assistance of a security service provider and the building of demilitarized zone (DMZs) may be necessary.

The need to offer value
Transactional business-to-consumer Web sites – or e-stores - combined the qualities of both a traditional store and mail-order catalogue. The difference online is that the customer can
‘visit’ the catalogue on the Internet. While there may a loss of personal contact in the online environment, no travel or waiting is necessary and the customer can shop any time of the day or night. As loads of links or games to attract and keep customers coming back. These are on likely to work if the site already offers the consumers some compelling business value.

FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

The need to promote the site
Just because you have created your sparkling new e-COMMERCE Web site and have registered the site with a number of local and international search engines, does not mean that you targeted customers will know about the site. Extensive and on-going promotion is required before you will begin seeing visitors to your site. Remember also that a large number of visitors still may not translate into sales if they are not the right type of customers. Registering your site with a large number of international search engines may bring visitors to your site, but that will buy from you.

The revenue model
The revenue model behind such as Web site is based on self-funding. If sales will are being transacted over the Web site, then some of the income from these sales will need to help fund the development and maintenance of the site. There will hopefully also be a number of indirect benefits stemming from the Web site such as improve customer support, effective customer feedback, etc., and an attempt needs to be made to quantity these benefits.

Creating an e-commerce portal or community
A second route to market is to create an e-COMMERCE portal or community-see ffg 5.5. Many new online intermediaries (which we referred to in chapter 3 as cybermediaries) have recently been established and they are actively building consumer of the effort of online entrepreneurs to stake a claim to the tremendous business potential that exists on the internet. They represent gateways to content, trading opportunities and business services.

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E-commerce business models these include


Providing access (e.g. ISPs-similar to the ‘functional’ category)



Providing content (e.g. news and content portals – covers the ‘interest’, ’relationship’,
’fantasy’, and ’learning’ category



Enabling commerce (e.g. online business exchanges, auctions, catalogue retailer, etc.similar to the ‘transaction’ category)



Providing software /services (e.g. companies that provide the software and services that are required to support an online ecosystem-overlaps with the ‘functional’ category)

FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

Inform diaries
Inform diaries are a form of cybermediary, that are focused on manipulating information to extract higher value from it by reselling it, reusing, repackaging it, or giving it away. The different between the two-and they are often used interchangeable- is that the inform diary is focused more in the depth and breadth of information that is packaged with the site, while a cybermediary tends to be focused on the transaction side of things. It is a moot difference, but nevertheless one that you may often come across in the literature.

With inform diaries, information is the product and value is placed in its digital manipulation.
Inform diaries as with cybermediaries attempts to match needs with suppliers of goods and services. They fulfil a useful role in aggregating needs (i.e. they bring customers together) they often provide a real-time bid/ask matching engine, they proactively keep you informed, they refer leads, they facilitate up-selling and cross-selling, and they provide a wealth of supporting information.

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Example of Cybermediaries

TYPE OF CYBERMEDIARY
Buy/sell brokers

HOW THEY FUNCTION

REVENUE MODEL

These are cybermediaries that The cybermediary provide an environment for buyers charges the buyer and/or to purchase goods from seller such seller a transaction fee as insurance brokers, travel agents, second-hand car sales, and residential property sales

EXAMPLES
Meggshopper (SA)
McCarthy (SA)
Kalahari.net (SA)
Automark (SA)
Exclusive Books
(SA)

Market Exchanges

Buyer
Buying

More often found in business-tobusiness e-COMMERCE, they bring the buyers and sellers of commodities together

The cybermediary MetalSite charges the seller a
Chamdex
transaction fee based on the value of the sale.
Plasticsnet

aggregators/Group They bring together buyers from across the internet to transact as a group with a purpose of achieving discounts because of the volume being purchased

Seller pay cybermediary a Mob shop small percentage of the
Mercata
volume of the total transaction Distributors

This is a catalogue-type of cybermediary that introduce manufacturers to both volume and retail a buyers, and its becoming more common in business-tobusiness e-COMMERCE

Usually a fee is charged to NECX be part of the catalogue,
Brabys (SA) possibly combined with a easy info (SA) subscription fee

Shopping malls

This is a portal that host a number Shopping malls normally M_Web’s of online retail outlets. charge a set-up fee, a shopZone (SA) monthly listing fee and/or
The shop (SA) a transaction fee

Metamediaries

Similar to the shopping mall, a As with the shopping mall Virtual Sellers metamediaries offers the online the metamediaries outlets additional service such as transaction facilities, order tracking

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services, online billing and revenue charges a set-up fee and a collection per-transaction fee
Online auctions

Reverse auctions
Name Your Price

Much like a physical auctions the online auction allows a bidder (the buyer) to make bid of a product on an offer from the seller. The auction uses a software programme that keeps tracks of a various bids. In some cases, the bids are open and you can bid again, while with others, the bids are closed. The seller takes the highest bid from the buyer above the minimum

The online auctions eBay charges the seller a fee
Aucor (SA) based of the value of the transaction BidorBuy (SA)

The opposite of a ‘buyer make an offer (bid)’ auction, the reverse auction encourages the buyer to name a price and a broker and then seek fulfillment from the seller

The broker’s fee is the Priceline spread between the bid
Bond Net (SA) and fulfillment price, together with a processing charge

Auxion (SA)

Haggling

Similar to a online auction, except Fee based on the value of NexTag .com that the seller can haggle with the the transaction.
HaggleZone.com
buyer
MakeUsaOffer.co
m

Classified

Similar to the newspaper classified, this cybermediary provides a listing of items for sale and potential buyers can run through these lists and choose to buy or not. Price may or may not be specified

The cybermediaries Junk mail (SA) charges a listing fee or
Auto trader (SA) subscription fee for a buyer Wanted marketplaces

These buy-driven cybermediaries let users know what good or services are wanted. Sellers then do battle for the business

The small fee for ‘wanted’ Imandi.com listing and/or a broker’s
Respond.com
fee. A fee is charged for finding the information.
IWant.com
EWanted.com

Search agents

This is essentially intelligent A fee is charged for Roboshopper software (called a’ robot’) that finding the information.
Clickthebutton
searches the net to find product available within a certain price limit.

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Generalized content portal

Specialized content portals

Free portals These are content portals that provide a gateway to a range of
‘newsy’ type of information. They often have a directory of topics associated with them and it is possible to get your Web site included in an appropriate topic heading (such as ‘Business’).

General content portal may or may not charge for replacement in their associate’s directory. If they are very popular and they reach the right target market, it may be worth advertising as a most of these portals generate revenue from advertising. Similar to the generalized portals, the specialized portals focus on a specific area, such as IT or automotive. They are not transaction brokers but content providers. It is not uncommon for them to provide links to company associated with their area of specialization. They may or may not ITWeb (SA) charge you for a listing of
Net Assets (SA) their directory of associates companies
Powerzone (SA)

product/services This type of cybermediary provides product or services for free.
Although mostly associates with digital types of give-away, such as free web hosting space and electronics greeting cards, a number of computer companies are starting to give-away free computers as a part of a deal. The catch is that the recipient is often locked in to a particular platform,
Web site, or services. Alternatively, the freebie generate a large volume of visitors, a fact that can be used to attract advertising revenue

24.com (SA)
World online (SA)
Iafrica.com (SA)
Wall street journal
Yahoo
Excite

Either the user is locked FreeMerchant into a particular platform, Card (SA) web site of service, or the site generates enough visitors to attract advertising revenue.

Bargain discounters/Selling These cybermediaries may sell Revenue is generated Buy.com
Below Cost product at a significant discount, through advertising.
Onsale.com
possibly even at or below cost. The

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idea is to attract the large volume of customers Price-comparison services

These cybermediaries provide a small source for reliable up-to-date information on competitors and product. Customer can get access detail to comparative information on tens and thousands of products and even can create their own handy feature-by-feature comparison sheet

Free to consumer. CompareNet C2B
Vendors pay a fee to include an informational blurb on the site, much like an advertorial that is linked to products being profiled. Recommender for services

This form of cybermediary is known Data about user profiles Dine.com as an informediary. The information and preferences is sold to broker brings buyer and the seller clients objectives of gathering information about them, which is then a use to generate income.

Product reviewers

Product reviewers provide shoppers Advertising and possibly a with reviews and recommendation fee to be listed and to enable them to make good reviewed buying decision. The reviewing may be done by paid reviewers or by online users

CNET
Epinion.com
Productopia Dine
(SA)

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Many of these cybermediaries (e.g. Mega shopper) only operate in the cyberspace and often do not have any presence in the physical market place. Other may also perform an intermediary in a physical marketplace and has simply taken their service onto the net (e.g.
Computicket). In both cases, a cybermediary needs to be able to offer an independent and unbiased market facilitation service.

FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

Participating in a consumer Portal or Community
The third route to market is to participate in a consumer portal or online community in order to reach the online consumer – see fig. 5.6. This can again be done in one of two ways. Either the company makes use for the structures or templates provided by the community organizer, or the company simple links its Web site to the services in question. Of course, there is nothing preventing a company creating and its own eCOMMERCE Web site and still making using of a cybermediary. In fact, this is probably a sensible route to take to maximize exposure in the marketplace. A model for getting, keeping and growing online customer Having established a corporate Web presence, it is important for an e-COMMERCE site’s success to attract customers. Online promotion plays an important role in this regard.

WEB RESOURCE

https://www.youtube.com/watc h?v=9jq7rfwBKzo The link above will open a comprehensive online resource giving details about the
Cybermediaries. This resource makes for very interesting reading and it will be worth your while to visit this page and peruse through its contents

Once customers have visited the site you need to convert these visitors into buying customers. Here the focus is on building an on-going relationship with the customers. To this end, product value, brand perception, designed, ease-of-use, dynamism, and ease of transaction are important factors in converting online visitors into customers and shoppers.

Retaining customers is the next step. The same factor will apply, but now it is important to integrate the customers onto an online community. Special discount for registered customers and loyalty programmes are two ways of locking customers into your online
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services. The final step is to extend your firm’s relationship with it existing online customers
(i.e. to get them buying more from you) as well as to increase your share of online customers. The focus now might on cross selling (encouraging the sales of related products and accessories such as selling cutlery with crockery) and up-selling (encouraging customers to buy higher value products). Similarly, discounts and other incentives, encourage customers to take actions at appropriate times. Two important aspects of this model is to (a) give support that is necessary to help customers work through the shopping process, and (b) the subsequent distribution logistics that are so essential for business-toconsumer e-commerce success. With respect to the first point, it is essential to provide assistance and to support the customer through the entire purchasing process all the way through the paying. Online retailers need to ensure that their distribution logistic work.
Many firms are currently experiencing logistics problems in delivering goods bought online to customers. The reason for this is the huge number of items available for sale, the need to ship large volume of small packages to customers and rising customer.

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Making it easier to get online
A number of companies have created tools and software programs to make it easier for companies to become e-COMMERCE enable. The shopping malls that we mentioned earlier in this chapter represent a quick route to the e-COMMERCE world for many smaller companies. 135

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Acquisition
A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own.
Business to Business (B2B)
Business-to-Business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
Business to Consumer (B2C)
Business to consumer is electronic commerce from a business to the consumer. This is commonly known as B2C through out the Internet.
Internet marketing consultants can be found for the area of business to business through online Yellow pages, directories, and a vast amount of other business to consumer resources.
Consumer to Consumer (C2C)
Consumer-to-Consumer (C2C) (or citizen-to-citizen) electronic commerce involves the electronically facilitated transactions between consumers through some third party
Customisation
Personalization involves using technology to accommodate the differences between individuals
Direct to Consumer Wholesalers
Direct sales of product the client no middle men involved
Ecommerce Development Model
A model that focus on suppliers, wholesalers, retailers , consumers
Extensible Markup Language (XML)
Extensible Markup Language (XML) is a markup language that defines a set of rules for encoding documents in a format that is both humanreadable and machine-readable.
Franchise
A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location.
Franchise
A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location.
Local Area Network (LAN)
A Local Area Network (LAN) is a computer network that interconnects computers in a limited area such as a home, school, computer laboratory, or office building using network media.
Operating System
An Operating System (OS) is a collection of software that manages computer hardware resources and provides common services for computer programs.

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Voters Increasingly Turn to Social Media for Political News
Mobile and social media are playing a larger role in how voters get political information, according to survey results from the Pew Research Center.
The survey, which included phone interviews of 2,003 people 18 and older, indicates that the number of people using cell phones to track political news has doubled for this year’s midterm election. Twenty-eight percent of registered voters tracked campaign coverage on their cell phones, up from 13 percent in 2010.
When broken down by age, 40 percent of those ages 30 to 49 are using their cell phones to track the election; 21 percent also follow on social media. This behavior was not affected by political affiliation. In fact, both
Republicans and Democrats said they used social media to get breaking news without the traditional media
“filter.”
Sixteen percent of registered voters also follow political candidates, elected officials or political parties on social media. And those who follow political figures are more engaged in the political process, according to the report.
Political social media followers are more likely to volunteer their time for a campaign, make campaign contributions, attend a political event and encourage their friends to support a specific candidate.

According to the report, 41 percent of respondents say getting breaking news before anyone else was a “major reason” for following political figures social media — up from 21 percent in 2010. Thirty-five percent want to feel connected to the candidates or groups. Twenty-six percent said that they wanted reliable information other than what was available from traditional sources.
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Unit 5 Review Questions

FIVE | BUSINESS-TO-CONSUMER E-COMMERCE

1. Mention the players in business-to-consumer eCOMMERCE.
2. Why security is is of fundamental importance to an eCOMMERCE web site. Discuss one the ways it can be implemented.
3. Compare Inform diaries and Cybermediaries.
4. Discuss how social media the voting process

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Learning Outcomes
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6.1.

Defining B2B e-commerce.
Explain B2B hubs
Describe the importance of Application service providers.

DEFINE B2B E-COMMERCE

B2B e-commerce was broadly defined as any form of commercial transaction or structured information exchange that takes place between firms within industry value chains via an
ICT-based, computer-mediated network. B2B e-commerce can be divided into two categories: (1) open marketplace-based trade that occurs in public Internet based environments using the TCP/IP protocol suite3 (2) direct trade between business partners that occurs through either public Internet-based platforms, proprietary computer networks, or both. The former generally takes place at various World Wide Web-based auctions or exchange sites (information and/or transaction-oriented; open or restricted; horizontal or vertical; independent or industry sponsored; etc.). In contrast, the latter tends to occur either through a firm’s Extranet, or website which has an online purchasing function, or an electronic data interchange (EDI) network. These two models are, however, not mutually exclusive. It may well be that in the future South African manufacturing firms will need to develop ‘hybrid’ models of B2B e-commerce to handle different aspects of their business. Perhaps this is something to look at in the future especially for South African firms that have yet to go down the B2B e-commerce path and need to develop an investment strategy. There could be savings at the outset if both types need to be developed in parallel.

The theory of transaction cost economics that emerged from this work helped to clearly delineate the boundary of the firm as defined by the equilibrium between the advantages of the lower transaction costs of internal production on the one hand, and the lower agency costs and economies of scale and scope of outside procurement on the other The costs of conducting marketplace transactions, i.e. information seeking, negotiating the terms, and settlement, define to a large extent what a firm will buy, instead of making it nice these coordination costs are lowered in ecommerce, a general agreement exists that an increase in outsourcing is likely to take place (Malone, Benjamin and Yates, 1987).

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Drawing on the transaction cost paradigm, Garicano and Kaplan (2000), Humphrey (2002) and
Paré (2001) argue that e-commerce has the potential to substantially reduce coordination costs and increase efficiency in inter-firm trade. 4 The efficiency gains that they highlight can be classified into three broad categories:
(1) Process improvements – a substantial reduction in overall transaction costs;
(2) Direct information improvements – minimizing information search costs, and a reduction in information asymmetries; and

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(3) Indirect benefits – better information processing (e.g., about future demand, about existing and future supply, etc.) as a result of greater transparency and improved connectivity, and more efficient ‘make or buy’ decisions as a result of a substantial reduction in transaction costs in inter-firm trade. It must be borne in mind, however, that the existence of a network technology infrastructure is not in itself a sufficient condition for the emergence of a durable trade network. That depends on repeated interactions through which parties build reputations for trustworthiness and gain confidence in one another.

6.2.

B2B HUBS

While B2B e-commerce forecasts vary, researchers agree that it is growing rapidly and that it constitutes about 90% of total e-commerce transactions. It is clear that global B2B ecommerce is rapidly increasing in importance, and represents a vast field of opportunity for the South African manufacturing sector. It has been argued that B2B ecommerce facilitates co-ordination and synchronization of workflow between members of the demand and supply chain .Historically, a manufacturing firm’s ability to collect and manipulate data far exceeded its ability to communicate and interact with partners because of the diversity of systems technology and high costs of private networks. The Internet is a much better channel management platform than proprietary systems such as EDI. Channel partners are largely already connected and start-up costs are low. The ability to search catalogues online, submit orders, modify orders, track shipments, and schedule delivery is a service most manufacturing companies will want to offer their direct customers.

The key advantages being tight supply chain integration, customization and better service. A blind spot in the literature is that for those firms that are using EDI, this application is likely to have already influenced how and by whom information within the firm and between firms are managed. Therefore, any shift to Internet-enabled commerce simply cannot assume that

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changes in the way information is handled will come at zero cost, or indeed, that they necessarily lead to greater transaction efficiencies.

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An important caveat is that these benefits are based largely on untested extrapolation from the experiences of highly industrialized countries which themselves are only beginning to be examined systematically, as well as on theoretical arguments. In other words, it is uninformed by rigorous empirical research on the actual experiences of developing country producers involved in e-commerce trading relationships. Moreover, the impression created is that all, or the vast majority of, inter-firm commercial transactions will take place through ecommerce portals. Rather companies will continue to use multiple channels for procurement. Companies are likely to reserve their most strategic purchases for off-line negotiation since much of that is locked up in long-term contracts

In addition, it is claimed that B2B e-commerce reduces the importance of marketing barriers, powerful intermediaries (such as trading organisations in the US or the UK) and of physical distance as barriers to entry into international markets (Morgan Stanley Dean
Witter, 2000; Panagariya, 2000; UNCTAD, 2000). It is claimed that buyers in the highly industrialized countries will have much easier access to information about developing country producers, and third world suppliers will find it easier to obtain knowledge of market requirements in developed countries. In this sanguine view, the primary obstacles to realizing the potential of B2B e-commerce rests with physical infrastructure barriers in developing countries, especially inadequate telecom systems. This is most clearly captured and reflected in the ‘digital divide’ literature which focuses on the limitations and asymmetries of the technological infrastructure and the weak skills and capabilities in developing countries, particularly the least developed countries

The potential benefits of e-commerce for buyers and sellers, based on a general scan of the literature, are summarized in Table I.

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Table I: Potential E-Commerce Benefits
However, there is to-date no reliable evidence of benefits realization and little evidence of quantification of potential benefits in developing country contexts. This notwithstanding, there appears to be e-commerce opportunities throughout the value chain and across the project lifecycle for South African manufacturing firms (Box I). For developing country producers, low-cost, high-speed transaction capabilities and information transfer coupled with relatively low investment and configuration costs, and interactive global market reach are crucial requirements for competing in the global economy. Moreover, the expected reductions in inventory and process efficiency gains resulting from reduced lead-times, better procurement and production practices, and logistical improvements are also critical success factors.

E-Commerce Opportunities for SA Manufacturing Firms
Using e-commerce to:
1. Enhance or replace traditional linkages between supply chain participants (e.g. EDI, ecommerce, e-procurement)
2. Streamline internal processes (e.g. to reduce costs, improve productivity)
3. Co-ordinate internal systems with the external electronic environment (e.g. to increase availability of information, potentially reshape market presence, etc.)

Using e-commerce for:
1. Information management (which includes the activities associated with knowledge management, research and development and marketing);

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2. Transactions (which encompasses sales and procurement activities);
3. Documentation (which encompasses configuration management, maintenance, repair and overhaul activities); and

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4. Collaboration (which encompasses design, engineering, planning activities, etc.).

B2B e-commerce is being widely promoted as a means of enabling developing country
VLLCOLproducers to become more deeply integrated into the global economy (UNCTAD,
2000). It has been argued that e-commerce provides developing country producers with the ability to expand and extend existing markets, improve their forecasting ability, streamline their procurement operation, and improve data transfer between a firm and its customers and suppliers. With the ever reducing ‘time to market’ and shorter life cycles of new products, ecommerce provides the means to optimize business processes whereby communication of purchase orders and acknowledgements, data transfer, schedules, etc. is electronic and instant. This suggests that those companies or countries which are most successful in focusing their e-commerce activities on commercial objectives will gain significant competitive advantage in the new economy. Value is derived from more accurate information, greater visibility and transparency in the supply chain and systemic efficiencies. This provides a basis for more open relationships between buyers and sellers from which to conduct trade with proper input cost management, demand forecasting and resultant collaboration.

The promise of greater supply chain transparency is, however, problematic. Assuming a move to the open TCP/IP enabled systems, this does not have to mean that the IT system will likewise be open since the commercial sensitivities surely cannot be expected to disappear. The mixes of applications of IT might create transparency of information in some cases and even greater security than had existed in the past in other cases. Thus one has to be very cautious about claims made by many of the e-commerce gurus about the use of B2B ecommerce in a way that simply ‘connects’. Where it is used, the issue is under what terms and conditions?

B2B e-commerce has been widely regarded as a major force likely to raise productivity.
However, at least so far, the identifiable effects on productivity appear small and largely confined to the USA (Graham, 2001). How business is done, what skills base exist, and whether there are the resources and an inclination to do things differently are the crucial

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issues in whether any given application of e-commerce will bring benefits to any particular firm. Refer to your prescribed text book E-COMMERCE FOR SOUTH AFRICAN
MANAGERS, edition 2000, Cornelius H. Bothma). Study pages 153 on the
A Framework for business to business e-commerce

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Summary of research findings
It would appear that South African manufacturing firms are just starting to explore the possibilities of B2B e-commerce, with some firms already at the experimentation level. In response to the question of whether their company is planning to participate in B2B ecommerce, 33.3% of the respondents said ‘yes’, 17.4% said ‘no’, 14.4% were ‘not sure’, and 34.8% claimed to be ‘currently evaluating the potential of e-commerce’ for their companies. The overwhelming majority (91.7%) of firms were not able to explicitly articulate specific ecommerce strategies and objectives.

There is a general lack of integration of the back-end systems of the buyers and sellers in their marketplace. A number of South African manufacturers are forecasting with historical data rather than real-time information on shifts in end-market demand. Inventory accumulates because manufacturers are generally not aware of what inventory and manufacturing capacity is available in their own supply chains. Their suppliers in turn cannot see demand two or three levels up the value chain. As a result suppliers are disconnected from the value chain with large buffers of inventory. Firms mentioned the following supply chain problems: high inventory levels; long lead times; poor inter-firm communication; lack of trust and what Sako (1992) calls ‘obligational’ relationships; limited collaborative forecasting, planning and replenishment processes; little strategic supply chain thinking; and an imbalance between supply and demand. Thus it would appear that companies have much to gain from an appropriate B2B e-commerce strategy geared towards advanced supply chain management and logistics.

Most B2B e-commerce still occurs on proprietary platforms, such as EDI, which pre-date web applications. Where traditional EDI links have been established, they are typically being under-exploited. Companies are using EDI to perform only a limited range of information flow and document delivery functions (e.g. placing orders, checking material

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availability, providing test certification) and less than 10% of companies surveyed are using
EDI for any form of sales transaction (e.g. sending invoices, conducting price negotiations).
Internet platforms are being used mainly to supplement existing private networking technologies such as EDI, process management systems (such as CAD and ERP) and proprietary database systems, mainly through the use of websites and e-mail to provide general information and communication services.

Table II: Corporate Internet Use (N=132)

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Figure 6.1: The E-Commerce Cycle

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All of the firms have multiple access points to the Internet, and are using the Internet for a wide variety of purposes (Table II). Corporate Internet use, however, tends to be focused largely on general e-mail correspondence/exchange of information and marketing/customer lead generation. There was limited use of the Internet for technical information transfer
(data, drawings and designs), receiving electronic payment, receiving orders, electronic payment, ordering goods and services, and supply chain management and logistics (Table
II). The majority of firms in the industry are unable to support e-commerce ventures as yet, because they do not have the integrated customer and supplier ICT interfaces in place.
Figure 6.1 provides a highly stylised structural overview of an evolutionary e-commerce cycle model. Phase I is largely experimental and exploratory, with firms adopting basic ecommerce tools such as email and/or a website. Inter-firm electronic information flows, where it exists, are still mainly centred on more traditional private networking technologies like EDI via direct lines or VAN applications. Phase II marks a shift to integration, with firms exploring the intra-organisational potential of e-commerce, to link different aspects of their business, from production to sales. Phase III sees ‘transforming’ firms deploying e-commerce for inter-organisational networking, and aligning its benefits to strategic planning. Ecommerce is used here to enhance traditional linkages between value chain participants, to build new business partnerships and to restructure existing business models. Currently, most of the firms’ prime focus is still largely on a functional orientation (Phase 1 in Figure I),
i.e. they do not form part of an enterprise-wide e-commerce or business strategy, or on operational efficiency across the enterprise (Phase 2) where the focus is on using technology to improve efficiency and support existing business processes. Only a minority of firms are using e-commerce to increase the organization’s effectiveness outside the enterprise by linking acro

ss the Internet with suppliers and customers to create virtual supply chains (Phase 3).

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Table III: Stages of E-Commerce Development (N=132)

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A significant 68.2% of firms have a website (Table III). The vast majority of these websites are ‘static’, communicating information about their companies but offering no interactive capability other than possibly an e-mail link. In the South African manufacturing sector ecommerce is so far largely limited to improving communications with value chain partners, particularly customers. Currently, very few firms are using the Internet as a fully interactive ecommerce platform and for managing inter-firm relationships in the supply and demand chain. Internet use tends to be confined to the provision of product information and general communication within and between firms. South African manufacturing firms are at present exploring only a fraction of the potential of e-commerce. The majority of the large manufacturing firms have spent the last five years or so integrating their internal computing systems, and many are now in the midst of consolidating and restructuring their front-office applications. The next phase of automation would be greater integration between transaction activities and general business process management. This will be followed by synchronizing inter-enterprise business processes across a global, web-based network.

There are two main reasons for South African manufacturers’ sluggishness to adopt ecommerce systems: (1) their inability to develop an opposite e-commerce model which is tightly integrated into their respective value chains; and (2) the large, unanticipated barriers impeding their progress to a functional e-commerce system. The major barriers to the diffusion and adoption of e-commerce can be summarized as follows:

Uncertainty about the scope and scale of e-commerce, and the returns from e-commerce investments;  Technical barriers: lack of industry-wide standards, especially for data formats, system security, transmission speeds and infrastructure reliability;
 Managers are inherently conservative about large IT investments. Moreover, after the disappointing results of enterprise resource planning (ERP) and computer integrated manufacturing (CIM), managers are very cautious about elevating e-commerce to core business strategy levels;
 Entrenched organizational cultures – e-commerce, as a systemic innovation, challenges traditional ways of thinking about business, as well as of doing business. The culture is typically insular and reactive and, as a result, e-commerce developments are seen often as a threat rather than an opportunity to be seized to improve competitiveness and profitability; 147

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 Migration from EDI and VANs to Internet-based systems are often inhibited by pressures to extract maximum value from sunk investment in a previous generation of IT systems;
The lack of a critical mass of e-commerce enabled firms, thus impeding sectorwide activity;



Fear that e-commerce in the form of co-ordinated or pooled procurement systems may lead to ‘commoditization’ of products resulting in downward price pressure; 

The absence of robust assessment methodologies and the fact that the ecommerce environment is very dynamic makes it difficult for companies to carry out a systematic cost-benefit analysis;

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The current Internet bandwidth is inadequate for large data downloads, i.e. datasheets, 

CAD data photo images, etc.

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Security concerns fuelled by media coverage of ‘Internet fraud’ and ‘virus software’. This stems largely from a poor understanding of new Internet technologies, which fuels concerns such as loss of transaction security, loss of reliability and loss of accountability.

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These security issues then discourage the firm’s pursuit of e-commerce initiatives;

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Firms typically lack awareness and understanding of the potential impact that ecommerce could have on their operations;

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Many companies remain sceptical about the potential for new e-commerce opportunities to enhance linkages within the supply chain as a result of negative experiences or perceptions of traditional EDI linkages;

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The slow pace of planned liberalization of the telecommunications sector;

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Unexpectedly high implementation costs. Apart from technology investment costs, HR costs (new employees with IT skills, training of existing staff, etc.) need to be factored in as well. Having said that, it must be borne in mind that the operating costs of Internet based e-commerce systems are much lower than proprietary networks such as EDI ;

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High cost of broadband connectivity. Large South African firms pay on average
$22,222 per month for a dedicated 1.5Mbps leased line. In the US the same capacity costs $1,795.



At the lower end, in South Africa a 128Kbps line costs $1,222 per month, compared to $842.1 in Britain and in the US a firm can get six times the capacity for just $768; and

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Inadequate e-commerce infrastructures, skills and capabilities.

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Though there is much discussion, neither customers nor suppliers in the South African manufacturing sector are applying real pressure to adopt e-commerce. However, there are pressures from international customers (i.e. US and Western Europe). South African manufacturing companies are confused about how best to adopt e-commerce and reluctant to invest in initiatives that might not be supported by their customers. As a result, few independent web enabled e-commerce initiatives are underway. Integration is currently very limited, whether it be with internal ERP systems in place or with external value chain partners.

Many companies see e-commerce as an evolutionary process and expect to become more strategic over the next few years, by developing interactive websites, website-based customer service, supply chain Extranets and giving customers/suppliers access to their
Intranet. The vast majority of companies are adopting a ‘wait and see’ approach until there is more clarity on the e-commerce strategy of major players in their respective value chains and the response of customers to the new wave of electronic services. Table II gives some indication of firms’ plans for future e-commerce development. It seems as if the firms are more likely to stress knowledge sharing in the short-term, transaction capability development in the medium-term and integrating the extended enterprise in the longterm.

Policy recommendations
Government
There is wide acceptance of the case for government involvement in the development of technology and in technology change in developing countries, given the many and obvious reasons for market failure .there is a tendency for the public sector to end up financing second-best projects, especially those seen to be of national prestige. Moreover, the state may not have the resources and capabilities to ‘go it alone’. Recently, in development studies, there has been a distinctive shift in the literature towards a multi-stakeholder, pluralist system rather than a purely state or market driven conception of the technology development and diffusion process. To this end, joint public-private sector partnerships are the key to maximize the opportunities of individual firms to benefit from the business potential offered by the Internet.

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Based on the preceding discussion, it would be prudent for policy-makers to adopt a cautious approach to assessing claims about the potential of Internet-based e-commerce to facilitate South African manufacturers’ access to international markets. Simple, undifferentiated policy prescriptions are unlikely to succeed. The impact of ecommerce is likely to vary from market to market and
WEB RESOURCE from firm to firm. Therefore, “a one-size fits all” approach is inappropriate.

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Government needs to understand that e-commerce is a complex concept, with many different facets, with each posing its own challenges. Policy-making is further complicated by the fact that e-commerce is a
‘moving target’ which is constantly evolving and changing. https://www.youtube.com/watc h?v=Cjl2FC3DHhk The link above will open a comprehensive online resource giving details about the
Government. This resource makes for very interesting reading and it will be worth your while to visit this page and peruse through its contents

The potential benefits of e-commerce are more likely to come to fruition if policy-makers adopt a broader approach to e-commerce. This means that policymakers will need to move beyond the standard model of e-commerce which is fixated on online commercial transactions and transaction-oriented trading exchanges. Greater consideration will need to be given to: creating and enhancing ICT links between South African manufacturing firms and geographically dispersed firms in global value chains; Internet-based communication and information exchange such as collaborative product design, joint problem solving and quick response to customer requirements; and streamlining tasks such as production planning, inventory control and scheduling that lie closer to the heart of supply chain management.

Reliable, high-speed Internet connections are essential for these tasks. In addition,
Government will need to commit significant resources to training employees to exploit the new Internet-based technologies and systems. According to Lundvall (1992), in the new growth regime knowledge, information and learning are crucial for economic growth and competitiveness, and policies relating to ICTs are especially important. Therefore, government needs to take a leading role in the technology policy sphere, partly since its room to manoeuvre in the macroeconomic and labour market policy arenas are being curtailed. In this sense, industrial policy focuses on ‘empowering firms’ rather than ‘picking winners’. 150

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Government intervention is justified in areas where it is foreseen that market forces will not be sufficient to ensure effective and more widely spread implementation of e-commerce in South
Africa. State policy should, therefore, focus on: governance and leadership; establishing the ground rules for B2B e-commerce; knowledge building (information systems and human resources development); infrastructure and connectivity; and trust.5 Government should also explore the possibility of creating a time-limited tax incentive to raise e-commerce awareness and adoption by manufacturing companies. This incentive would be for investments in ecommerce technologies and could be in the form of accelerated depreciation.

The State should also take a leading role in: providing advice on matters like technology choice; identifying and disseminating information on best practice; providing a critical assessment of the available e-commerce technologies and approaches; developing meaningful industry benchmarks; setting in motion programmes aimed at raising appreciation of the strategic impact of e-commerce; and investing in training and skills development. A policy priority is to liberalise the highly regulated and concentrated South African telecommunication market and promote competition in order to stimulate new investment, increase demand for communications access and services through falling prices, and promote greater efficiency and innovation in the provision of infrastructure and services. Policy initiatives to lower network infrastructure costs and Internet access charges for manufacturing firms are important. This is likely to provide a stimulus to the growth of ecommerce among South African firms. In the OECD
(1999, 2000a, 2000b) countries, for example, the availability of affordable access to high-speed telecommunication infrastructure is closely linked with firm migration to e-commerce.

The government’s recent decision to license one additional full service network operator and one international-only operator introduces competition into the fixed line voice market for the first time.. The key issue is whether this competition is likely to be sufficient to bring about improved efficiency in the market and lower prices for consumers. With proper regulatory oversight, it is possible to have vigorous competition among two firms. It is, however, of critical importance that the regulator, ICASA, has the resources and technical capacity to monitor and act decisively against any potentially anti-competitive actions by Telkom.

Policy-makers should be especially wary of not slipping into an overly technocratic approach that ignores the priorities and needs of the firms in question, and broader industrial development goals. The biggest e-commerce challenges facing the South African manufacturing sector is not technical, since the technology is already available for information exchange, trade and financial transactions. Therefore, focusing primarily on the production or acquisition of ecommerce technologies is counterproductive. The challenge rather is for Government to exercise a strategic vision and leadership. Government must focus on what manufacturing firms

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need, and on decisions about how e-commerce is to be incorporated into economic activities, at both the intra- and inter-firm levels. Ultimately, the policy-makers must have a vision of the most important e-commerce applications for the South African manufacturing sector, and how such priorities are to be realised.

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Public-Private Partnerships
The magnitude of the e-commerce challenge is such that there is a need for various public private and multi-partnerships, alliances and consortia. There is an urgent need for the forging of partnerships to: (1) assist firms to access capital for their e-commerce ventures; (2) allay basic fears about the sharing of information; (3) establish a standard format for conveying information and transaction standards; (4) encourage firms to form networks in order to share knowledge, reduce the average costs of their input transactions, and
T H I N K P OI N T increase their relative market power in e-commerce
W h a t do yo u u n d e rs t a n d transactions; and (5) develop ICT capacities and skills a b o u t Management at the Firmthrough education and training, and counter skill
Level a n d e x p l a i n h o w i t i s shortages which are greatest in three areas, viz. likely to a f f e ct the managers capable of completing complex p e r f o rm a n c e , or nontechnology projects, local content creators aware of p e r f o rm a n c e of an the network’s potential, and software and hardware organization. engineers.

Management at the Firm-Level
Figure 6.2 illustrates a systemic approach which policymakers could adopt as a guide to developing and upgrading South African manufacturing firms’ e-commerce capabilities. We advocate an incremental approach guided by appropriate technology rather than one-off large-scale, expensive transformations such as Enterprise Resource Planning (ERP) which is fraught with risk and a large number of failures. The e-commerce model (Figure 6.2) questions the appropriateness of e-commerce for the particular firm and its circumstances.
In other words, the model forces the firm to think strategically about the ultimate suitability of ecommerce for its business operations. This approach requires a systematic understanding of the forces at play in determining the appropriateness of e-commerce to the firm, the fundamental characteristics of the organization, as well as the underlying principles that determine success and failure.

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Figure 6.2: E-Commerce Strategy
Before making decisions about e-commerce systems, and choosing the necessary hardware and software, managers should carefully determine the format for communication, information flows and transactions favoured by the lead firms in their value chain, and then use ecommerce to support those relationships. Also, the firm should conduct a cost-benefit and business risk analysis, and determine and budget the costs involved. Finally, the firms need to factor in the organizational and management changes that are needed to optimize the use of e-commerce technologies.

The e-commerce system should be implemented in stages where return on investment is achievable within a 6 to 12 month period. The stages are as follows:

1. Develop a knowledge sharing platform with a mix of automated features and web enabled personal interaction;
2. Reduce the cost-to-serve by moving inquiries to the website;

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3. Focus on developing transaction capabilities, both via own trading sites or Extranets to improve customer loyalty and via third party service providers to reduce costs;
4. Integrate the website/Extranet with internal back end systems to ensure efficient knowledge management; and
5. Integrate with other value chain partners

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This ensures that the risk is minimized and gains are maximized, since the implementation team will be able to gauge when any future ICT investments are likely to lead to diminishing returns. Managers should also take care not to employ B2B e-commerce in ways that disrupt existing, successful relationships. Ultimately, South African firms should pursue B2B initiatives that are aligned with the e-commerce systems of the lead firms in their respective value chains. Evolving from an enterprise focus (Phase II) to an inter-enterprise architecture (Phase III), i.e. linking the various elements of the extended enterprise together will take time but could amount to a major productivity enhancement (Figure I). Collaboration outweighs commerce here. Any move to strengthen capacity to implement various forms of e-commerce needs to keep supply chain management as the core, including at the policy level. Our experience is that e-commerce strategies seem very quickly to detach themselves from the business in the minds of designers/implementers. This is nothing new and the whole history of information systems design and implementation is characterized by this phenomenon. But that history serves as a reminder of the important ‘politics’ of embedding IT systems within and between organizations. This goes beyond awareness and skills to the need to work out how to counter the ‘technology push’ mentality of the IT vendors and business consultancies. Supporting intermediaries in business associations who can negotiate between e-commerce system suppliers and firms is important.

6.3.

APPLICATION SERVICE PROVIDERS

An application service provider (ASP) is a company that offers individuals or enterprises access over the Internet to applications and related services that would otherwise have to be located in their own personal or enterprise computers. Sometimes referred to as "apps-on-tap," ASP services are expected to become an important alternative, not only for smaller companies with low budgets for information technology, but also for larger companies as a form of outsourcing and for many services for individuals as well. Early applications include:
 Remote access serving for the users of an enterprise

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

An off-premises local area network to which mobile users can be connected, with a common file server

Specialized applications that would be expensive to install and maintain within your own company or on your own computer
Hewlett-Packard, SAP, and Qwest have formed one of the first major alliances for providing
ASP services. They plan to make SAP's popular R/3 applications available at "cybercenters" that will serve the applications to other companies. Microsoft is allowing some companies to offer its BackOffice products, including SQL Server, Exchange and Windows NT Server on a rental, pay-as-you-use basis.

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While ASPs are forecast to provide applications and services to small enterprises and individuals on a pay-per-use or yearly license basis, larger corporations are essentially providing their own ASP service in-house, moving applications off personal computers and putting them on a special kind of application server that is designed to handle the strippeddown kind of thin client workstation. This allows an enterprise to reassert the central control over application cost and usage that corporations formerly had in the period prior to the advent of the PC. Microsoft's Terminal Server product and Citrix's products are leading thin-client application server products.

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Acquisition
A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own
Acquisition Service Providers
An application service provider (ASP) is a business that provides computer-based services to customers over a network.
Business
A business (also known as enterprise or firm) is an organization involved in the trade of goods, services, or both to consumers
Business to Business (B2B)
Business-to-business, commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
Consumer
A consumer is a person or group of people that are the final users of products and or services generated within a social system.
Data
Data in computing (or data processing) are represented in a structure, often tabular (represented by rows and columns), a tree
(a set of nodes with parent-children relationship) or a graph structure (a set of interconnected nodes)
Electronic Data Interchange (EDI)
Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means, which is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention.
Extensible Markup Language (XML)
Extensible Markup Language (XML) is a markup language that defines a set of rules for encoding documents in a format that is both human-readable and machine-readable.
Intranet
An intranet is a computer network that uses Internet Protocol technology to share information, operational systems, or computing services within an organization.
Hub
Connection between two different entities.

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B2B eCommerce Market Worth $6.7 Trillion by 2020: Alibaba & China the Front-Runners

Alibaba is known for a number of achievements; the most noteworthy is the fact that it is larger than
Amazon and eBay eBay combined – it is recording more trade volume than the two together. While this is certainly an incredible achievement, perhaps the most disruptive move the 11-year-old Chinese behemoth has made is their focus on B2B markets.
According to recent research from Frost & Sullivan, Alibaba is a pioneer of B2B eCommerce with gross merchandise value of $27.28 billion, about 11 percent of their total; this dominant leadership position in a market expected to grow to $6.7 trillion in gross merchandise value by 2020. This trend will make the B2B eCommerce market two times bigger than the B2C market ($3.2 trillion) within that timeframe. With China expected to emerge as the largest online B2B market with an estimated potential of $2.1 trillion by 2020, there is a huge opportunity for Alibaba to stamp its authority on this important and growing market segment.
But before we begin drawing parallels between the B2C and B2B eCommerce markets’ ecosystems, which sounds similar, it is important to note the key differences between the two. In B2C, sales are relatively simple. Prices are fixed, quantities are low, and shipping is easy. Very little regulation or tax complexity comes into play, and products are easy to showcase and market. In the contrasting B2B setting, prices are highly variable. Similarly, volumes are much higher, but also of a much wider range, necessitating a flexible shipping and logistics solution. Tax and regulatory concerns impact sales highly, and providers typically employ large staffs whose only responsibility is delivering products and services within these restrictions. Marketing (or as many firms prefer, “client educational initiatives”) is more complex, as clients need to understand how products work and interact with other systems they already have or are considering for purchase. The “black box” effect, where a customer buys a device without a real interest in learning how it works, barely exists in B2B, while it is dominant in B2C. For this reason, a B2B eCommerce implementation is fundamentally more complex than in a B2C environment. While this makes the successful design and implementation of a B2B eCommerce platform more difficult, it also dramatically increases the value of that system, as the problems solved are costly to address using conventional means.

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Unit 6 Review Questions
Define B2B.
Explain how B2B hubs work.
Give detailed explanation about Application service providers.
Explain in detail how B2B can improve business and provide the edge against its rivals.

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1.
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