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Information Systems by Efrem G. Mallach

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265
Chapter 8
Connecting with Customers
and Suppliers
CHAPTER OUTLINE
E-Business and E-Commerce
Customer Relationship Management (CRM)
Connecting through Social Networks
Supply Chain Management (SCM)
Extranets
WHY THIS CHAPTER MATTERS
In Chapter 2, you read that a rm’s balance of forces relative to customers and suppliers
is key to its business success. A rm whose raw materials cost less than they cost its com-
petitors, or one whose customers will pay a premium price for its products, is in a strong
position. But how can a rm make that happen? It cant tell its suppliers “sell for less,” or
its customers “pay more.” It can, however, achieve nearly the same thing through intel-
ligent use of information systems. Employees who can make that happen are valuable.
is chapter will show you how that works.
CHAPTER TAKE-AWAYS
As you read this chapter, focus on these key concepts to use on the job:
1. Information systems remove time and distance barriers to many types of sales.
2. Information systems enable a company to make its sales process more eective.
3. Information systems enable a company to treat its customers personally, even with-
out personal contact.
4. Information systems enable a company to manage its supply chain, making it more
ecient and more eective.
266 Information Systems: What Every Business Student Needs to Know
E-BUSINESS AND E-COMMERCE
Youve purchased something online: a book from Amazon, music from the iTunes store, an
app from the Android Marketplace, refurbished electronics at bargain prices from woot.
com, hobby supplies on eBay, plane tickets from Expedia or aa.com, gemstones from Blue
Nile, shoes from zapatos.com—the list is endless.
You are not alone. In 2012, consumers bought about a trillion dollars worth of goods
from online sources. at’s less than 10% of what they bought from traditional stores in
that year, but traditional stores have existed for millennia and online shopping is about as
old as you are. e growth of e-commerce, online buying and selling of goods and services,
is shown in Figure 8.1. It is rapid by any standard.
Online business activity is more than buying and selling. E-commerce is part of the
broader concept of e-business. E-business is carrying out any type of business activity
online. Filing an automobile insurance claim, registering for courses online, or checking
how much your dental insurance will pay toward an extraction are e-business, though
they are not e-commerce since nothing is bought or sold. Figure 8.2 shows the relationship
between e-commerce and e-business.
Categories of E-Commerce
ere are several dierent types of e-commerce. It’s important to understand them because
the way an organization approaches e-commerce depends on the type of e-commerce it is
involved in. If it’s involved in more than one type, it may need to use more than one approach.
Business to Consumer
Business-to-consumer (B2C) e-commerce is the type youre most familiar with: a business
(such as M&M) sells something (candies with a photo of your dog) to a consumer (you) via
a website such as Figure 8.3.
2009
Global e-commerce sales
0
100
200
300
400
SB
500
600
700
800
900
1000
2010E 2011E 2012E 2013E
FIGURE 8.1 E-commerce growth.
Connecting with Customers and Suppliers 267
B2C is the most common type of e-commerce by transaction count, though small trans-
action sizes keep it from dominating the e-commerce picture nancially. Participants
range from large retailers, such as Macys and Staples, down to businesses operated by indi-
viduals on a part-time basis. When an e-commerce company also has physical stores, as
Macy’s and Staples do, the combination is known as bricks and clicks or clicks and mortar:
plays on the phrase “bricks and mortar” for a building. E-commerce sellers that don’t also
E-business
E-commerce
FIGURE 8.2 Relationship between e-commerce and e-business.
FIGURE 8.3 M&M website.

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