Introduction to Electronic Commerce 3/e

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Introduction to

Electronic Commerce 3/e

Efraim Turban

University of Hawaii

David King

JDA Software Group, Inc.

Judy Lang

Lang Associates

with contributions from

Linda Lai

Macau Polytechnic University, China

Carol Pollard

Appalachian State University

Deborrah C. Turban

University of Santo Tomas, Philippines

Linda Volonino

Canisius College

Ivan C. Seballos II

La Salle Lipa, Philippines

Boston Columbus Indianapolis New York San Francisco Upper Saddle River

Amsterdam Cape Town Dubai London Madrid Milan Munich Paris

Montreal Toronto Delhi Mexico City Sao Paulo Sydney

Hong Kong Seoul Singapore Taipei Tokyo

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PREFACE 35

1 I n t r o d u c t i o n t o E-Commerce and E-Marketplares 45

CHAPTER 1 OVERVIEW OF ELECTRONIC COMMERCE 45

Zappos Wows Their Customers 46 1.1 ELECTRONIC COMMERCE: DEFINITIONS

AND CONCEPTS 48 Defining Electronic Commerce 48 Defining E-Business 48 Major EC Concepts 49 Electronic Markets and Networks 50 1.2 THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION,

CONTENT, AND HISTORY 50 An EC Framework 51 Classification of EC by the Nature of the Transactions

and the Relationships Among Participants 52

Case 1.1 E C A p p l i c a t i o n : Want to Buy Chocolate Online? Try Godiva.com 54

A Brief History of EC 55 The Future of EC 56 1.3 E-COMMERCE 2.0: FROM WEB 2.0 TO ENTERPRISE

SOCIAL NETWORKING AND VIRTUAL WORLDS 57 Social Computing 57 Web 2.0 57 Social Networks and Social Network Services 58 Business-Oriented Social Networks 60 Enterprise Social Networks 60

Case 1.2 E C A p p l i c a t i o n : MySpace: A World's Popular

Social Networking Web Site 61

Virtual Worlds and Second Life 62 The Major Tools of Web 2.0 63 1.4 THE DIGITAL WORLD: ECONOMY, ENTERPRISES,

AND SOCIETY 64 The Digital Economy 64 The Digital Enterprise 66 The Digital Society 67 1.5 ELECTRONIC COMMERCE DRIVERS AND THE CHANGING

BUSINESS ENVIRONMENT 69 The Drivers of EC and Its Growth 69 Performance, Business Pressures,

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1.6 ELECTRONIC COMMERCE BUSINESS MODELS 73 The Structure and Properties of Business Models 74 Typical EC Business Models 76 1.7 BENEFITS, LIMITATIONS, AND IMPACTS OF ELECTRONIC

COMMERCE 77 The Benefits and Impacts of EC 78 The Limitations and Barriers of EC 79 Why Study E-Commerce? 80 1.8 OVERVIEW OF THIS BOOK 80 Case 1.3 EC A p p l i c a t i o n : How College Students

Become Entrepreneurs 81

Part 1 : Introduction to E-Commerce

and E-Marketplaces 82 Part 2: Internet Consumer Retailing 82 Part 3: Business-to-Business E-Commerce 82 Part 4: Other EC Models and Applications 83 Part 5: EC Support Services 83 Part 6: EC Strategy and Implementation 83 Online Part 7: Application and Site Development 83 Online Tutorial 83 Online Appendices ' 83 Online Supplements 83 MANAGERIAL ISSUES 83 SUMMARY 84 KEY TERMS 85 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 85 TOPICS FOR CLASS DISCUSSION 86 INTERNET EXERCISES 86 TEAM ASSIGNMENTS AND PROJECTS 87

Closing tase: Beijing 2008: A Digital Olympics 88

ONLINE RESOURCES AVAILABLE AT

pearsonhighered.com/turban 90

CHAPTER 2 E-MARKETPLACES: MECHANISMS, TOOLS,

AND IMPACTS OF E-COMMERCE 9 1

Web 2.0 Tools at Eastern Mountain Sports 92

2.1 ELECTRONIC COMMERCE MECHANISMS: AN OVERVIEW . . . 94

EC Activities and Mechanisms 94 Sellers, Buyers, and Transactions 94 2.2 E-MARKETPLACES 96 Electronic Markets 96 E-Marketplace Components and Participants 98 Disintermediation and Reintermediation 99 Types of E-Marketplaces 100

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2.3 CUSTOMER INTERACTION MECHANISMS:

STOREFRONTS, MALLS, AND PORTALS 100 Electronic Storefronts 101 Electronic Malls and Large Retailers 101 Types of Stores and Malls 102 Web (Information) Portals 102 The Roles and Value of Intermediaries

in E-Marketplaces 104 Case 2.1 E C A p p l i c a t i o n : WebMD 105 2.4 ELECTRONIC CATALOGS, SEARCH ENGINES,

AND SHOPPING CARTS 106 Electronic Catalogs 106 EC Search Activities, Types, and Engines 107 Shopping Carts 109 2.5 AUCTIONS, BARTERING, AND NEGOTIATING ONLINE 109 Definition and Characteristics 109 Traditional Auctions Versus E-Auctions 110 Innovative Auctions 111 Dynamic Pricing and Types of Auctions 111 Benefits, Limitations, and Impacts of E-Auctions 113 Online Bartering 114 Online Negotiating 115 2.6 WEB 2.0 TOOLS AND SERVICES: FROM BLOGS

TO WIKIS TO TWITTER 115 Blogging (Weblogging) 116 Mechanism Aids for Web 2.0 Tools: Tags,

Folksonpmy, and Social Bookmarks 118 Wikis 119 Social Network Services 119 Case 2.2 E C A p p l i c a t i o n : Craigslist: The Ultimate

Online Classified Site 120 2.7 VIRTUAL WORLDS AS AN ELECTRONIC

COMMERCE MECHANISM 121 Avatars 121 Business Activities and Value i n Virtual Worlds 121 MANAGERIAL ISSUES 123 SUMMARY 123 KEY TERMS 124 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 124 TOPICS FOR CLASS DISCUSSION 125 INTERNET EXERCISES 125 TEAM ASSIGNMENTS AND PROJECTS 126

Closing Case: Second Life 1 2 7

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2 I n t e r n e t Consumer Retailing 12SL

CHAPTER 3 RETAILING IN ELECTRONIC COMMERCE:

PRODUCTS AND SERVICES 129

Amazon.Com: E-Tailing Grows Despite

the Slumping Economy 130 3.1 INTERNET MARKETING AND ELECTRONIC RETAILING 132

Overview of Electronic Retailing 132

J-- Size and Growth of the B2C Market 133

What Sells Well on the Internet 133 Considered Commerce 135 Characteristics and Advantages

of Successful E-Tailing 135 3.2 E-TAILING BUSINESS MODELS 137 Classification of Models by Distribution Channel 137

Insights and Additions 3 . 1 : Selling Cars Online: Build-to-Order

Other B2C Models and Special Retailing 141 B2C in Social Networks . 142

3.3 TRAVEL AND TOURISM (HOSPITALITY)

SERVICES ONLINE 143 Services Provided 143 Special Services Online 143 Benefits and Limitations of Online Travel Services 144

Case 3.1 EC Application: WAYN: A Social Network

for Travelers 145

Corporate Travel 145 3.4 EMPLOYMENT PLACEMENT AND THE JOB

MARKET ONLINE 146 The Internet Job Market 146

Insights and Additions 3.2: Social Networking Sites for Business Professionals . .

Benefits and Limitations of the Electronic

Job Market 149 3.5 REAL ESTATE, INSURANCE, AND STOCK

TRADING ONLINE 150 Real Estate Online 150 Insurance Online 151 Online Stock Trading 152 3.6 BANKING AND PERSONAL FINANCE ONLINE 153 Home Banking Capabilities 154 t Virtual Banks 154 International and Multiple-Currency Banking 155 Online Financial Transaction

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Case 3.2 EC Application: Security for Online

Bank Transactions 156 Online Billing and Bill Paying 157 3.7 ON-DEMAND DELIVERY OF PRODUCTS, DIGITAL ITEMS,

ENTERTAINMENT, AND GAMING 158 On-Demand Delivery of Products 158 Online Delivery of Digital Products, Entertainment,

and Media 159 Online Entertainment 160 3.8 ONLINE PURCHASE-DECISION AIDS 161 Shopping Portals 162 Shopbots Software Agents 162 Business Ratings Sites 163 Trust Verification Sites 163 Other Shopping Tools 164 3.9 ISSUES IN E-TAILING AND LESSONS LEARNED 164 Disintermediation and Reintermediation 164 Channel Conflict 165 Determining the Right Price 166 Product and Service Customization

and Personalization 166 Fraud and Other Illegal Activities 166 Lessons Learned from Failures

and Lack of Success . 166 MANAGERIAL ISSUES 167 SUMMARY 168 KEY TERMS 169 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 169 TOPICS FOR CLASS DISCUSSION 170 INTERNET EXERCISES 170 TEAM ASSIGNMENTS AND PROJECTS 171

Closing Case: Walmart Powers Online 171

CHAPTER 4 ONLINE CONSUMER BEHAVIOR,

MARKET RESEARCH, AND ADVERTISEMENT 1 7 4

Netflix Increases Sales Using DVD

Recommendations and Advertisements 175 4.1 LEARNING ABOUT CONSUMER PURCHASING ONLINE 176

A Generic Purchasing-Decision Model 176 Customer Decision Support in Web Purchasing 177 Players in the Consumer Decision Process 177 One-to-One Marketing 178

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Contents

4.2 PERSONALIZATION, LOYALTY, SATISFACTION, AND TRUST IN EC

Personalization and Behavioral Targeting in E-Commerce

Insights and Additions 4 . 1 : Cookies in E-Commerce

Customer Loyalty Satisfaction in EC Trust in EC

4.3 MARKET RESEARCH FOR EC

Methods for Conducting Market Research Online Case 4.1 EC Application: Internet Market Research

Expedites Time-to-Market at Procter & Gamble

What are Marketers Looking for in EC Market Research?

Market Segmentation Research Market Research for One-to-One

Limitations of Online Market Research and How to Overcome Them

Biometric Marketing 4.4 WEB ADVERTISING

Overview of Web Advertising

Some Basic Internet Advertising Terminology Why Internet Advertising?

4.5 ONLINE ADVERTISING METHODS Banners

Pop-Up and Similar Ads E-Mail Advertising Classified Ads

Search Engine Advertisement Viral Marketing and Advertising

Insights and Additions 4.2: Google's Major Advertisement Methods

4.6 ADVERTISING IN SOCIAL NETWORKS AND THE WEB 2.0 ENVIRONMENT Social Network Advertising

Advertising in Chat Rooms and Forums

Video Ads on the Web and in Social Networking Viral Marketing in Social Networks

179 179 180 181 182 182 183 183 184 184 184 188 188 189 189 190 191 192 192 193 193 194 194 195

4.7 ADVERTISING STRATEGIES AND SPECIAL ADVERTISING TOPICS

Affiliate Marketing and Advertising

Ads as a Commodity (Paying People to Watch Ads) Selling Space by Pixels

Personalized Ads and Other Personalization Online Events, Promotions, and Attractions

197

198

199

200

201

202

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4 . 8 SPECIAL ADVERTISING TOPICS 203 Permission Advertising 203 Advertisement as a Revenue Model 203 Measuring Online Advertising's Effectiveness 204 Mobile Marketing and Advertising 204 Ad Content 205 Software Agents in Marketing and Advertising

Applications 205 Localization 206 MANAGERIAL ISSUES 206 SUMMARY 207 KEY TERMS 208 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 208 TOPICS FOR CLASS DISCUSSION 209 INTERNET EXERCISES 209 TEAM ASSIGNMENTS AND PROJECTS 210

Closing Case: Toyota Scion Goes Social for Advertising

and Market Research 2 1 0

I Bnsiness-to-Business E-Commerce £13_

CHAPTER 5 B2B E-COMMERCE 213

Auction for Supplies Helps Portsmouth Hospitals 214 5.1 CONCEPTS, CHARACTERISTICS, AND MODELS

OF B2B E-COMMERCE 215 Basic B2B Concepts 215 Market Size and Content of B2B 215 The Basic Types of B2B Transactions

and Activities 216 The Basic Types of B2B E-Marketplaces

and Services 217 B2B Characteristics 217 Supply Chain Relationships in B2B 218 Service Industries Online in B2B 218 The Benefits and Limitations of B2B 219 The Content of the B2B Field 220 5.2 ONE-TO-MANY: SELL-SIDE E-MARKETPLACES 221 Sell-Side Models 221 Selling from Catalogs 221 Example: Cisco Systems 222 Case 5.1 EC A p p l i c a t i o n : Brady Corporation Reorganizes

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, * " <

5.3 SELLING VIA DISTRIBUTORS AND OTHER

INTERMEDIARIES 224 Case 5.2 EC A p p l i c a t i o n : W.W. Grainger and Goodrich

Corporation 224 5.4 SELLING VIA E-AUCTIONS 225 Using Auctions on the Sell Side 225 Auctioning from the Company's Own Site 225 Auction Rules 226 Using Intermediaries in Auctions 226 Examples of B2B Forward Auctions 227 5.5 ONE-FROM-MANY: BUY-SIDE E-MARKETPLACES

AND E-PROCUREMENT 227 Procurement Methods 228 Inefficiencies in Traditional Procurement Management 229 The Goals and Benefits of E-Procurement 230 5.6 BUY-SIDE E-MARKETPLACES: REVERSE AUCTIONS 231 Conducting Reverse Auctions 232 Group Reverse Auctions 233 5.7 OTHER E-PROCUREMENT METHODS 233

An Internal Purchasing Marketplace: Aggregating'

Suppliers' Catalogs and Desktop Purchasing 233 Buying at Sellers' E-Auctions 234 Group Purchasing 234 Buying at Sellers' Sites and Collaborative Commerce 236 Acquisition Via Electronic Bartering 236 5.8 B2B ELECTRONIC EXCHANGES: DEFINITIONS

AND CONCEPTS 236 Case 5.3 EC A p p l i c a t i o n : Agentrics: A Giant Retail

Exchange 237 Functions of Exchanges 238 Dynamic Pricing in B2B Exchanges 239 Advantages, Limitations, and the Revenue

Model of Exchanges 240 5.9 B2B PORTALS, DIRECTORIES, AND OWNERSHIP

OF B2B MARKETPLACES 241 B2B Portals 241 Case 5.4 EC A p p l i c a t i o n : Alibaba.com 242 Ownership of B2B Marketplaces 244 Comparing the Many-to-Many B2B Models 245 5.10 B2B IN THE WEB 2.0 ENVIRONMENT AND

SOCIAL NETWORKING 245 The Opportunities 245 The Use of Web 2.0 Tools in B2B 246 Social Networks in the B2B Marketplace 246 Examples of Other Activities of B2B Social Networks 247 The Future of B2B Social Networking 247

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5 . 1 1 INTERNET MARKETING IN B2B EC 247

Organizational Buyer Behavior 248 The Marketing and Advertising Processes i n B2B 248 Methods for B2B Online Marketing 248 Affiliate Programs, Infomediaries,

and Data Mining 249 MANAGERIAL ISSUES 250 SUMMARY 250 KEY TERMS . . ^ 252 QUESTIONS FOR DISCUSSION BY INDIVIDUAL

STUDENTS 252 TOPICS FOR CLASS DISCUSSION 252 INTERNET EXERCISES 252 TEAM ASSIGNMENTS AND PROJECTS 253

Closing Case: iMarketKorea 254

CHAPTER 6 INNOVATIVE EC SYSTEMS: FROM E-GOVERNMENT

AND E-LEARNING TO C2C E-COMMERCE

AND COLLABORATIVE COMMERCE 2 5 7

Caterpillar Champions E-Learning 258 6.1 E-GOVERNMENT: AN OVERVIEW 259

Definition and Scope 259 Govern ment-to-Citizens 260 Govemment-to,-Business 263 Government-to-Government 264 Government-to-Employees and Internal

Efficiency and Effectiveness 264 Implementing E-Govemment 265 The Transformation to E-Government 265 E-Government 2.0 and Social Networking 265 M-Govemment 266 6.2 E-LEARNING 267

The Basics of E-Learning: Definitions

and Concepts 267 Benefits and Drawbacks of E-Learning 269 Distance Learning and Online Universities 271 Online Corporate Training 272 Implementing E-Learning and E-Training 273 Social Networks and E-Learning 273 Learning in Virtual Worlds and Second Life 273 Visual Interactive Simulation 274 E-Learning Tools and Management 274 Electronic Books 276

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6.3 KNOWLEDGE MANAGEMENT, LEARNING,

AND ELECTRONIC COMMERCE 278 An Overview of Knowledge Management 278 KM Types and Activities 279 Case 6.1 E C A p p l i c a t i o n : Knowledge Management

at Infosys Technologies 280

How Is Knowledge Management Related

to E-Commerce? 281 Online Advice and Consulting 282 ~ Employee Knowledge Networks

and Expert Location Systems 283 Case 6.2 E C A p p l i c a t i o n : How the U.S. Department

of Commerce Uses an Expert Location System 285 6.4 CONSUMER-TO-CONSUMER ELECTRONIC COMMERCE 286

E-Commerce: C2C Applications 286 6.5 COLLABORATIVE COMMERCE 288 Essentials of Collaborative Commerce 288 Collaboration Hubs 288 Implementing C-Commerce 290 Barriers to C-Commerce 290 MANAGERIAL ISSUES 291 SUMMARY 291 KEY TERMS 292 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 293 TOPICS FOR CLASS DISCUSSION 293 INTERNET EXERCISES 293 TEAM ASSIGNMENTS AND PROJECTS 294

Closing Case: Social Networking Initiatives

by the New Zealand Government 2 9 4

Other Ff Mnriek anrl Applications 2Q7

7 THE WEB 2.0 ENVIRONMENT

AND SOCIAL NETWORKS 297

Wikipedia and Its Problems of Content,

Quality, and Privacy Protection 2 9 8 7.1 THE WEB 2.0 REVOLUTION, SOCIAL MEDIA,

AND INDUSTRY DISRUPTORS 299 What Is Web 2.0? 299 Representative Characteristics of Web 2.0 300 Web 2.0 Companies and New Business Models 300 Social Media 301 Industry and Market Disruptors 302

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7.2 VIRTUAL COMMUNITIES 302 Characteristics of Traditional Online Communities

and Their Classification 303 7.3 ONLINE SOCIAL NETWORKING: BASICS

AND EXAMPLES 305 A Definition and Basic Information 305 Representative Social Networks Sites and Services 307 Mobile Social Networking 308 7.4 MAJOR^OCIAL NETWORK COMPANIES:

FROM FACEBOOK TO FLICKR 309 Facebook: The Network Effect 309 Bebo 310 Twitter Is Also for Businesses 311 Flickr Ticks Off Some of Its Users 312 7.5 BUSINESS AND ENTERPRISE SOCIAL NETWORKS 313 Definitions, Concepts, Types, and Examples 313 Business Social Networking: Concepts and Benefits 313 Business-Oriented Social Networking 314 Enterprise Social Networks 314 Other Social Networking Structures 316 7.6 COMMERCIAL ASPECTS OF WEB 2.0 AND SOCIAL

NETWORKING APPLICATIONS 317 Why Is There an Interest? 317 Advertising Using Social Networks, Blogs, and Wikis 318 Shopping in Social Networks 320 Feedback From Customers: Conversational Marketing 320 Commercial Activities in Business

and Enterprise Social Networks 321 Revenue-Generation Strategies in Social Networks 323 Risks and Limitations When Interfacing

with Social Networks 324 Case 7.1 EC Application: Revenue Sources at YouTube . . . . 324 Justifying Social Media and Networking 325 7.7 ENTERTAINMENT WEB 2.0 STYLE: FROM SOCIAL

NETWORKS TO MARKETPLACES 326 Entertainment and Social Networks 326 Mobile Web 2.0 Devices for Entertainment and Work 328 7.8 THE FUTURE: WEB 3.0 AND WEB 4.0 329 Web 3.0: What's Next? 329 MANAGERIAL ISSUES 331 SUMMARY 332 KEY TERMS 332 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 333 TOPICS FOR CLASS DISCUSSION 333 INTERNET EXERCISES 333 TEAM ASSIGNMENTS AND PROJECTS 334

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20 ' Contents

Closing Case: Linkedin: The Business-Oriented

Social Network 335

CHAPTER 8 MOBILE COMPUTING AND COMMERCE 337

The Blooming of Food Lion 338

8.1 MOBILE COMMERCE: ATTRIBUTES, BENEFITS,

-" AND DRIVERS 339

Attributes of M-Commerce 340

Drivers of M-Commerce 341

8.2 COMPONENTS, TECHNICAL INFRASTRUCTURE,

AND SERVICES OF MOBILE COMPUTING 342

Mobile Devices 342

Mobile Computing Software and Services 343

Wireless Telecommunications Networks 345

8.3 MOBILE FINANCIAL APPLICATIONS 348

Mobile Banking 348

Mobile Payments • 349

Case 8.1 EC Application: Closing the Digital

Divide with Mobile Microfinance 350

8.4 MOBILE MARKETING AND ADVERTISING 351

Mobile Marketing Campaigns 351

Mobile Marketing Guidelines 352

8.5 MOBILE WORKFORCE SOLUTIONS 353

Needs of the Mobile Workforce 353

8/6 MOBILE ENTERTAINMENT 356

Growth of the Mobile Entertainment Market 356

Mobile Music and Video 356

Mobile Games 357

Mobile Gambling 358

8.7 LOCATION-BASED MOBILE COMMERCE 359

L-Commerce Infrastructure 360

Location-Based Services and Applications 362

Barriers to Location-Based M-Commerce 363

8 . 8 SECURITY AND OTHER IMPLEMENTATION

ISSUES IN MOBILE COMMERCE 363 M-Commerce Security Issues 364 Technological Barriers to M-Commerce 364 Ethical, Legal, and Health Issues in M-Commerce 365 MANAGERIAL ISSUES 366 SUMMARY 367 KEY TERMS , 368 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 369 TOPICS FOR CLASS DISCUSSION 369

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INTERNET EXERCISES 369 TEAM ASSIGNMENTS AND PROJECTS 370

Closing Case: Walmart Turns to Mobile

for Weather Alerts 370

\ pearsonhighered.com/turban 371

5 EC Support Sen/ires 373

CHAPTER 9 E-COMMERCE SECURITY

AND FRAUD PROTECTION 3 7 3

How Seattle's Hospital

Survived a Bot Attack 374 9.1 THE INFORMATION SECURITY PROBLEM 375

What Is EC Security? 375 The Drivers of EC Security Problems 378 Why Is E-Commerce Security Strategy Needed? 380 9.2 BASIC E-COMMERCE SECURITY ISSUES

AND LANDSCAPE 380 The Security Basic Terminology 381 The EC Security Battleground 381 Security Scenarios and Requirements

in E-Commerce 383 The Defense: Defenders and Their Strategy 385 9.3 TECHNICAL ATTACK METHODS 386 Technical and Nontechnical Attacks: An Overview 386 Malicious Code: Viruses, Worms, and Trojan Horses 386 9.4 PHISHING, FINANCIAL FRAUD, AND SPAM 389 Phishing 390 Fraud on the Internet 391 Spam and Spyware Attacks 393 Case 9.1 EC Application: Internet Stock Fraud Aided

by Spam 394

Social Networking Makes Social Engineering Easy 394 9.5 THE INFORMATION ASSURANCE MODEL

AND DEFENSE STRATEGY 396 Confidentiality, Integrity, and Availability 397 Authentication, Authorization, and Nonrepudiation 397 E-Commerce Security Strategy 398 9.6 THE DEFENSE I: ACCESS CONTROL, ENCRYPTION,

AND PKI 399 Access Control 399 Encryption and the One-Key (Symmetric) System 401 Public Key Infrastructure (PKI) 402 9.7 THE DEFENSE I I : SECURING E-COMMERCE NETWORKS . . . 405 Firewalls 405

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Virtual Private Networks (VPNs) 406 Intrusion Detection Systems (IDSs) 407 Honeynets and Honeypots 407

9.8 THE DEFENSE I I I : GENERAL CONTROLS

AND OTHER DEFENSE MECHANISMS 408 General Controls 408 Application Controls 409 Internal Control and Compliance Management 410 Protecting Against Spam 411 Protecting Against Pop-Up Ads 411 Protection Against Phishing 412 Protecting Against Spyware 412

9.9 BUSINESS CONTINUITY, SECURITY AUDITING,

AND RISK MANAGEMENT 412 Business Continuity and Disaster

Recovery Planning 413

Case 9.2 E C A p p l i c a t i o n : Business Continuity

and Disaster Recovery 414

Risk-Management and Cost-Benefit Analysis 415

9.10 IMPLEMENTING ENTERPRISE-WIDE E-COMMERCE

SECURITY 416 Senior Management Commitment and Support 416 EC Security Policies and Training 416 EC Security Procedures and Enforcement 417 Industry Standards for Credit Card Protection (PCI DSS) 417 Why Is I t Difficult to Stop Internet Crime? 417 MANAGERIAL ISSUES 419 SUMMARY 420 KEY TERMS 422 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 423 TOPICS FOR CLASS DISCUSSION 423 INTERNET EXERCISES 423 TEAM ASSIGNMENTS AND PROJECTS 424

Closing Case: UBS PaineWebber's Business Operations

Debilitated by Malicious Code 424

CHAPTER 10 ELECTRONIC COMMERCE PAYMENT SYSTEMS 4 2 7

Pay-Per-View Pages: The Next iTunes 428 10.1 THE PAYMENT REVOLUTION 430 1 0 . 2 USING PAYMENT CARDS ONLINE 431

Processing Cards Online 432 Fraudulent Card Transactions 432

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10.3 SMART CARDS 435 Types of Smart Cards 436 Applications of Smart Cards 437 Case 10.1 EC A p p l i c a t i o n : TaiwanMoney Card 439 10.4 STORED-VALUE CARDS 440 10.5 E-MICROPAYMENTS 441

10.6 E-CHECKING 443

Case 10.2 EC .Application: To POP or BOC: Digital Checks in the Offline World 444 MANAGERIAL ISSUES 447 SUMMARY 448 KEY TERMS 449 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 449 TOPICS FOR CLASS DISCUSSION 449 INTERNET EXERCISES 449 TEAM ASSIGNMENTS AND PROJECTS 450 Closing Case: Freemiums i n t h e Social

Gaming World 450 ONLINE RESOURCES AVAILABLE AT

8 Strategy and Implementation 4-53

CHAPTER 1 1 EC STRATEGY ANDIMPLEMENTATION:

JUSTIFICATION, GLOBALIZATION, SMES,

AND REGULATORY AND ETHICAL ISSUES 4 5 3

Travelocity's Successful E-Strategy 454 11.1 STRATEGY, PLANNING, AND IMPLEMENTATION

OF ELECTRONIC COMMERCE 455 Strategy and the Web Environment 455 The Strategic Planning Process 457 Case 11.1 E C A p p l i c a t i o n : Strategic Planning

at InternetNZ 460 Business Planning in E-Commerce 461 Business Case 462 E-Commerce Strategy: Concepts and Overview 462

11.2 JUSTIFICATION AND COST-BENEFIT ANALYSIS 464

Other Reasons Why EC Justification Is Needed 465 EC Investment Categories and Benefits 465 How Is an EC Investment Justified? 465 What Needs to Be Justified? When Should

Justification Take Place? 466 Using Metrics in EC Justification 466

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11.3 DIFFICULTIES IN MEASURING AND JUSTIFYING

E-COMMERCE INVESTMENTS AND SUCCESS 468 The EC Justification Process 468 Difficulties in Measuring Productivity

and Performance Gains 468 Determining E-Commerce Success 470

11.4 GLOBAL E-COMMERCE 471

Benefits and Extent of Operations 472 Barriers to Global EC 472 Breaking Down the Barriers to Global EC 474 Case 11.2 EC A p p l i c a t i o n : Pierre Lang Expands

Into Eastern Europe 475 11.5 E-COMMERCE IN SMALL AND MEDIUM-SIZED

ENTERPRISES 476 Supporting SMEs 476

11.6 INTELLECTUAL PROPERTY AND OTHER

REGULATORY ISSUES 477 Laws Are Subject to Interpretation 477 Case 11.3 EC A p p l i c a t i o n : Is eBay a Store or

a Bulletin Board? 478 Personal and Property Rights 478 Intellectual Property Law (A Civil Law) 480

11.7 ETHICS IN E-COMMERCE 481

Ethical Principals and Guidelines 482 Business Ethics 482 EC Ethical Issues 483

11.8 PRIVACY, VIOLATION AND PROTECTION, AND THE

CONFLICT WITH FREE SPEECH 484 Privacy Rights and Protection 484 Free Speech Online Versus Privacy Protection 485 The Price of Protecting an Individual's Privacy 485 How Information About Individuals Is Collected 486 Privacy Issues in Web 2.0 Tools and Social Networks 487 Privacy Protection Using Ethical Principles 488 The USA Patriot Act 489

11.9 EC AND GREEN COMPUTING 490

Operating Greener Businesses and Ecofriendly

Data Centers 490 11.10THE FUTURE OF ELECTRONIC COMMERCE 492 Integrating the Marketplace with the Marketspace 492 Social Networks 493 Future Trends 493 MANAGERIAL ISSUES 494 SUMMARY 495 KEY TERMS " 496 QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 496