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ITM 209: Study Guide & Class Notes Exam #1

by: AlissaRabat

ITM 209: Study Guide & Class Notes Exam #1 ITM 209

Marketplace > Michigan State University > Information System > ITM 209 > ITM 209 Study Guide Class Notes Exam 1
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About this Document

This includes all of the information addressed in-class and in the study guide
Bus Analytics & Info Systems
Professor Rodammer
Class Notes




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This 34 page Class Notes was uploaded by AlissaRabat on Tuesday October 4, 2016. The Class Notes belongs to ITM 209 at Michigan State University taught by Professor Rodammer in Fall 2016. Since its upload, it has received 5 views. For similar materials see Bus Analytics & Info Systems in Information System at Michigan State University.


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Date Created: 10/04/16
Review 10/3/16 8:24 PM Information Systems in Business – Chapter 1 • Internet of Things Case and Class Discussion • Porter’s Five Forces Model • Porter’s Three Generic Strategies Model • Value Chain and Value Chain Analysis • Business Competitive Advantages Using IT Enablers Decisions and Processes – Chapter 2 • Operational, Managerial and Strategic Support Systems • Transaction Processing Systems • Decision Support Systems • Executive Information Systems • Artificial Intelligence HBR: Staple Yourself To An Order • Business Process Definitions • Systems Thinking and Systems Components • Business Process Improvement • Business Process Reengineering • Business Process Management eBusiness – Chapter 3 • Pinterest Case and Class Discussion • Disruptive vs. Sustaining Technologies • Internet and the World Wide Web • The Internet of Things • eBusiness Models • B2C eBusiness Types • Online Auctions • eBusiness Measurements • eBusiness Advantages and Challenges • Web 1.0, Web. 2.0 and Web 3.0 Guest Speaker - General Electric Business Driven MIS 10/3/16 8:24 PM Case Study Questions: The Internet of Things – pp. 3-4 • Explain the Internet of Things (IoT) and cite examples. o IoT refers to how all of the electronics and machines are in connection with one another through the Internet. o Examples: Traffic signals and Traffic cameras • Explain why it is important for business leaders to understand that data collection rates from IoT devices is increasing exponentially. o Data increases exponentially because more devices are connected. o More electronics are collecting and communicating data to various sources o Ex. FitBit can share data with friends • What are the security issues associated with IoT devices? o Hacking, stolen credit card information, privacy issues o As data becomes more virtual and mobile, more security issues will arise and become more prominent • Do you agree with the following statement: “The Internet of Things is just a passing fad and will be gone within a decade.” Why or why not? o No, it will become more prominent. o We become more and more reliable on machines and the Internet o Analytics, Security and Data Flow problems show need of IT Expertise Business Strategy & Competitive Advantages • Business Strategy: A leadership plan that achieves a specific set of goals or objectives such as: o Developing new products or services o Entering new markets o Increasing customer loyalty o Attracting new customers o Increasing sales o Strategic o Longer time frames o Set it and implement it functionally • Updating business strategies is a continuous undertaking as internal and external environments change rapidly • Competitive Advantage: a feature of a product or service on which customers place a greater value than they do on similar offering from competitors o Provide the same product or service either at a lower price or with additional value that can fetch premium prices o Typically temporary o First-mover advantage: occurs when a company can significantly increase its market share by being first with a new competitive advantage • SWOT Analysis: Understanding Business Strategies o SWOT Analysis: evaluates an organizations Strengths, Weaknesses, Opportunities and Threats to identify significant influences that work for or against business strategies § Strengths and Weaknesses can be either external or internal § Opportunities and Threats are external and cant always be anticipated o Potential Internal Strengths (Helpful) § Identify all key strengths associated with competitive advantage o Potential Internal Weakness (Harmful) § Identify all key areas that require improvement o Potential External Opportunities (Helpful) § Identify all significant trends along with how the organization can benefit from each o Potential External Threats (Harmful) § Identify all threats or risks detrimental to your organization Business Strategy: Linkage to Functional Strategies • Identifying Competitive Advantages • Competitive Intelligence: The process of gathering information about the competitive environment to improve the company’s ability to succeed o Understanding and learning as much as possible as soon as possible about what is occurring outside the company to remain competitive • Competitive intelligence tools o Porter’s Five Forces Model § Should we be in this industry? o Porter’s Three Generic Strategies § Set the strategy o Porter’s Value Chain Analysis § Evaluate the strategy Porter’s Five Forces Model: Evaluating Industry Attractiveness • Porter’s Five Forces Model: analyzes the competitive forces within the environment in which a company operates to assess the potential for profitability in an industry o Purpose: combat competitive forces to identify opportunities, competitive advantages, and competitive intelligence § Strong forces increase competition § Weak forces decrease competition • o Threat of Substitute Products or Services § Threat of substitutes have high power when there are many choices § Can reduce the treat of substitutes by offering additional value through wider product distribution § Can also offer various add-on services, making the substitute product less of a threat o Threat of New Entrants § Threat of entrants have low power when entry restrictions are high § Entry barrier: a feature of a product or service that customers have come to expect and entering competitors must offer the same for survival o Rivalry among Existing Competitors § High when competition is fierce in a market § Overall trend is toward increased competition in almost every industry § Product differentiation: occurs when a company develops unique differences in its products or services with the intent to influence demand ú Can be used to reduce rivalry o Buyer Power § Buyer power: ability of buyers to affect the price they must pay for an item § Factors used to asses include: ú Number of customers ú Sensitivity to price ú Size of orders ú Differences between competitor ú Availability of substitute products § One way to reduce: switching costs and loyalty programs ú Switching Costs: costs that make customers reluctant to switch to another product or service • Can be financial or intangible values ú Loyalty programs: reward customers based on their spending o Supplier Power § Supply chain: consists of all parties involved, directly or indirectly in obtaining raw materials or a product § Supplier power: suppliers ability to influence the prices they charge for supplies § Factors used to asses include: ú Number of suppliers ú Size of suppliers ú Uniqueness of services ú Availability of substitute products § Can influence to industry by: ú Charging higher prices • Raises prices for customer too • If supplier power is high buyer lose revenue ú Limiting quality or services ú Shifting costs to industry participants • Context on Buyer and Seller Relationship o § Suppliers have high power when there are little choices § Buyers have high power when there are many choices § The company is the supplier for the customer, likewise the company is the suppliers customer • Examples: o Customers § Cars à there are many car suppliers (many options) § Walmart o Competitors § Who can do it for: ú Lower Cost ú Higher Quality ú Better Service o Entrants § How attractive is the market o Substitute § Cellphones Generic Strategies – Creating a Business Focus • Porter’s Generic Strategies: are generic business strategies that are neither organization nor industry specific and can be applied to any business, product or service o Strategies are: § Broad cost leadership § Broad differentiation § Focused strategy • Organizations typically follow one of Porter’s generic strategies when entering a new market o Broad market and low cost o Broad market and high cost o Narrow market and low cost o Narrow market and high cost • Generic Strategies Example o o Apple - Merging Technology, Business and Entertainment • Using Porter’s Five Force Model, analyze Apple’s buyer power and supplier power. o Buyers had low choices, so prices were high o Focused on bargaining power of customers was low § Overtime it changed o Apple’s power as a supplier was high • Which of Porter’s Five Forces did Apple address through its initial introduction of the iPhone? o Differentiation § Quality and Service • Which of the Generic Strategies is Apple following? o High Cost, Narrow Market Porter: Business Strategy Basics • Corporate strategy is all about deciding how your firm will create economic value added • How the work gets done • Drivers of firm profitability are: o Industry structure: § Determines profitability of average competitor § Analyze with the Five Forces Model o Sustainable competitive advantage: § Determines profitability relative to the average competitor § Analyze using the Value Chain Model Value Creation • Once an organization chooses its strategy, it can use tools such as the value chain to determine the success or failure of its chosen strategy o Business process: a standardized set of activities that accomplish a specific task, such as processing a customer’s order § Must determine the industry first o Value Chain Analysis: views an organization as a series of processes, each of which adds value to the product or service for each customer § Useful tool for determining how to create the greatest possible for the customer § Goal: identify process in which the firm can add value for the customer and cerate a competitive advantage for itself with a cost advantage or product differentiation § 2 categories ú Primary value activities ú Support value activities Porter’s Value Chain Analysis • Used to asses our compatibility and our competitors compatibility • o Primary value activities: acquire raw materials and manufacture, deliver, market, sell and provide after-sales services § Inbound logistics § Operations § Outbound logistics § Marketing and sales § Service o Support value activities: include firm infrastructure, human resource management, technology development and procurement § Firm infrastructure § Human resource management § Technology development § Procurement IT Competitive Strategy Summary • Information technologies can support many competitive strategies including broad cost leadership, broad differentiation, and focused strategies • IT can help o Build customer-focused businesses o Reengineer business processes o Businesses become agile companies o Create virtual companies o Build knowledge-creating companies Staple Yourself to an Order 10/3/16 8:24 PM Questions for HBR: Staple Yourself To An Order • Why do orders “fall through the cracks” ? o Not knowing who is responsible for the order, overlapping and poorly designed process lead to confusion o No communication between section of the company • What is meant by a “functional silo” ? o Disparaging remark o Not paying attention to what’s around you • What four problems emerge in the OMC ? o Organizations are organized vertically when orders flow horizontally § Horizontal Gaps o Incomplete visibility of top management o 4 problems: § OMC not views as a whole system § Each step requires a mix of overlapping functional responsibilities § To Top management the details of the OMC are invisible § The customer remains as remote from the OMC as top management does • What improvements were recommended ? o Analyze the OMC: § Graph the gaps from customer perspective rather than an internal perspective o System Focus: move across boundaries § Inter-functional programs and investments § Role of it o Staple yourself to an order § Executive alignment to manage the process horizontally • What are the Benefits of fixing the OMC ? o Improved customer satisfaction o Inter-departmental problems will recede § More cross-functional team work § Productivity improvement § Less conflict more alignment o Improve financial performance What is a Process? • A group of business activities undertaken by an organization in pursuit of a common goal. • Typical business processes include receiving orders, selling products, delivering services, distributing products, or invoicing for services received. • A business process usually depends upon several business functions for support, e.g. IT or personnel. • A business process rarely operates in isolation, i.e. processes are interdependent Managing Business Processes • Customer facing process: Results in a product or service that is received by an organization’s external customer • • Business facing process: Invisible to the external customer but essential to the effective management of the business Business Processes and Roles: Order Management Example • Business Processes: Manual • Business Processes: Technology Enabler – Phase 1 • Business Processes: Technology Enabler – Phase 2 • Business Processes: Technology Enabler – Phase 3 Examining Business Processes • Business process characteristics: o The processes have internal and external users o A process is cross-departmental o The processes occur across organizations o The processes are based on how work is done in the organization o Every process should be documented and fully understood by everyone participating in the process o Processes should be modeled to promote complete understanding • The process steps are the activities the customer and store personnel do to complete the transaction • Business process: a standardized set of activities that accomplish a specific task, such as processing a customer’s order • Business processes transform a set of inputs into a set of outputs (goods or services) for another person or process by using people and tools Order Management Cycle • Organizations are organized vertically whereas the orders flow horizontally! o Horizontal Gaps o Incomplete visibility of top management of the Order Management Cycle • Steps in the OMC o Order Planning o Order Generation o Cost Estimation and Pricing o Order Receipt and Handling o Order Selection and Prioritization o Scheduling o Fulfillment o Billing o Returns and Claims o Post-sales Service Efforts to improve OMC • Analyze the OMC: Graph the gaps from a Customer Perspective rather than an Internal perspective! • System Focus: Move across boundaries o Interfunctional programs and investments. o Role of IT • Staple yourself to an order! Summary • The same process can be preformed with drastically different results depending on who does the work and what information and technology is being used • Management’s attention to eliminate unnecessary work and improve productivity is accomplished through process improvement or process reengineering • Processes are the vehicles for meeting customer needs and achieving organization GE Speakers 10/3/16 8:24 PM A Company of Innovation • What the World Needs Now o Cleaner and more efficient energy o Better and more accessible healthcare § In the cloud and every corner of the globe o Safer and more efficient transportation § Fuel-efficient planes and locomotives that manage their own maintenance • What we Do o Move, cure, build and Power the World § Healthcare § Energy Connections § Power § Oil and Gas § Aviation § Current Powered by GE § Renewables § Transportation o Bridge the physical and digital worlds as the worlds premier digital industrial company • As the worlds first and only digital industrial company o We are connecting 50 billion machines via industrial Internet o We’ve created the world’s first industrial cloud and corresponding software platform o We will be a top 10 software manufacturing company The Brilliant Factory • GE is a technology business with a high diversity of products o Over 600 • High tech products require a diversity of high tech processes o Over 200 mfg technologies to build our products o Not just an assembly business • GEHC MFG landscape: 65 plants à 3 Solutions o System Assembly Plant § 40 factories § Single piece flow § Low/High Volume § Test data trending § Inventory sensitivity o Component MFG § 15 factories § Single and batch flow § Medium Volume § SPC/OEE critical § Quality sensitivity o Chemical process § 10 plants § Batch flow § High Volume § OEE critical § Auto process correction • Brilliant Factory Strategy o Get Connected § Sensor Enable o Get Insight § Factory Optimization § Real Time Visualization (RTV) o Get Optimized § SC Optimization § Data Lake Cloud Computing • Refers to the use of computing power that is located elsewhere, in the “cloud” of remote networks • Really a name for storing and processing data online • Data typically goes to large data centers in the network, depending on the type of cloud • Different types of clouds o Private § Resource dedicated to one customer o Public § Resources shared by multiple customers o Hybrid § Customized combination of shared and dedicated resource o Community § Dedicated resource for a group of customer • Why are companies shifting to the cloud? o Cost efficient o Easy to implement o Secure and reliable o Flexible and scalable o interoperable Decisions and Processes: Value Driven Business 10/3/16 8:24 PM Systems Thinking • o Control function works to adjust the input • Systems Thinking: A way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part • Focuses on how the thing being studied interacts with the other constituents of the system—a set of elements that interact to produce behavior—of which it is a part. • Works by expanding its view to take into account larger and larger number of interactions as an issue is being studied or a problem is being solved. Visualizing “Wholes” • Picture the Whole and Engage in Systems Thinking o Do not visualize individual parts of the organization, e.g., separate silos or departments with often opposing interests or self-directed goals • Rather, visualize the relationships between the different parts and how they integrate to create value as a whole. • “Horizontal” Processes (Systems View) produce an Organization’s products and services: “How Work Gets Done” Business Processes: Process Flow Diagrams • Illustrates the sequence of accomplishments of the business process • Used to make the steps and tasks of the work process visible for subsequent analysis and improvement • Steps and tasks are performed by more than one individual or function (cross-functional) • Analysis and simulation techniques used to compare current IS Process versus improved SHOULD Process Business Process Design • Business process modeling (or mapping): the activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities, in a structured sequence • Business process model: a graphic description of a process, showing the sequence of process tasks, which is developed for a specific o As-Is process model o To-Be process model • Arena Process Modeling o Assignment #1 Business Process Improvement • Continuous process improvement model: attempts to understand and measure the current process, and make performance improvements accordingly • Process Improvement • Process Improvement is used to eliminate unnecessary work and improve productivity • Involves identifying, analyzing and improving the process • Process Improvement involves taking action to ensure process is controlled vs. re-building the structural costs we eliminated • Improvement in processes is critical to seizing and maintaining a competitive advantage Business Process Reengineering • Definition: Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, speed, and service. • The purpose of BPR is to o make all business processes o best-in-class • Business process reengineering (BPR): analysis and redesign of workflow within and between enterprises • Finding Opportunity Using BPR • A company can improve the way it travels the road by moving from foot to horse and then horse to car • BPR looks at taking a different path, such as an airplane which ignore the road completely Selecting a Process to Reengineer • Criteria to determine the importance of the process o Is the process broken? o Is it feasible that reengineering of this process will succeed? o Does it have a high impact on the agency’s strategic direction? o Does it significantly impact customer satisfaction? o Is it antiquated? o Does it fall far below best-in-class? o Is it crucial for productivity improvement? o Will savings from automation be clearly visible? o Is the return on investment from implementation high and preferably immediate? Business Process Management • Business process management (BPM): Focuses on evaluating and improving processes that include both person-to-person workflow and system-to-system communications • BPM allows business process to be executed more efficiently and measures performance and identifies opportunities for improvement, BPM benefits include: o Update processes in real-time o Reduce overhead expenses o Automate key decisions o Reduce process maintenance cost o Reduce operating cost o Improve productivity o Improve process cycle time o Improve forecasting o Improve customer service • Categories: Economic, Service, Sustainability, Productivity Drivers For Business Process Management • Modeling For Understanding and Documentation o I want to have a culture that everyone knows the game o Know the Business process • Modeling For Redesign o Have a current state and a future state o Finding ways to challenge and improve the process • Modeling For Execution and Compliance o Understanding how the new process will work o Taking them through the simulation and transition Decision Makers • Reasons for the growth of decision-making information systems o People need to analyze large amounts of information o People must make decisions quickly o People must apply sophisticated analysis techniques, such as modeling and forecasting, to make good decisions o People must protect the corporate asset of organizational information Making Business Decisions • Managerial decision-making challenges o Analyze large amounts of information § 90% of the worlds data was created in the last two years § Exponential data growth o Apply sophisticated analysis techniques § 1 of 2 business leaders don’t have access to the data they need o Make decisions quickly The Decision-Making Process • The six-step decision-making process o Problem identification o Data collection o Solution generation o Solution test o Solution selection o Solution implementation Decision-Making Essentials • Decision-making and problem-solving occur at each level in an organization • o Dimensions § Time ú Operational: days and weeks • Short time frame ú Managerial: months ú Strategic: Years • Longer time frame § Data ú Operational: detailed and accurate ú Managerial: ú Strategic: Aggregated and at times non existent § Decisions ú Operational: Structured • Repetitive ú Managerial: Semistructured ú Strategic: Unstructured • Make them only once Decision-Making Essentials • Operational Decision Making: Employees develop, control, and maintain core business activities required to run the day-to-day operations o Structured Decisions: Situations where established processes offer potential solutions o Ex. Order taking • Managerial Decision Making: Employees evaluate company operations to identify, adapt to, and leverage change o Semi-Structured Decisions: Occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision o Ex. Forecast for demand, sale analysis, o Cross-functional ad hoc function • Strategic Decision Making: Managers develop overall strategies, goals, and objectives o Unstructured Decisions: Occurs in situations in which no procedures or rules exist to guide decision makers toward the correct choice o Decisions have bigger pay off, bottom line impact is greater • Information Levels Throughout An Organization o Using Models to Make Business Decisions • Model: A simplified representation or abstraction of reality • Models help managers to o Calculate risks o Understand uncertainty o Change variables o Manipulate time to make decisions Support: Enhancing Decision Making with MIS • Types of Decision Making MIS Systems o § Shows classification of Model through different domains Managerial Support Systems • Analytical information: encompasses all organizational information and its primary purpose is to support the performance of managerial analysis or semi-structured decisions • DSSs: decision support systems; model using OLAP which provides assistance in evaluating and choosing among different courses of actions o OLAP: online analytical processing; is the manipulation of information to create business intelligence in support of strategic decision making o Enable high level managers to examine and manipulate large amounts of detailed data from different internal and external sources o Summarizes and aggregates the information from different TPS, which assist managers in making semi-structured decisions • Four quantitative models used by DSSs include o What-if analysis § What if we move one of the inputs what happens to the output § Show impact of change on one of the inputs on the proposed analysis o Sensitivity analysis § How sensitive is it § Changing the range and seeing a lack of out put movement = low sensitivity § The output is extremely sensitive to the range of the input = high sensitivity § The impact of one or more parts on the outcome of the model o Goal-seeking analysis § What is the configuration of the input to achieve a set goal o Optimization analysis § What is the max profit I can get with this configuration § Or min cost § You give it the output it gives you the configuration Strategic Support Systems • Executive information system (EIS): A specialized DSS that supports senior level executives within the organization o Granularity § Level of detail § Greater the granularity, deeper level of detail o Visualization § Use of graphics § Color coding o Digital dashboard § Summary o Do not have a correct or wrong answer o Requires data from external sources to support unstructured decisions • Most EISs offering the following capabilities o Consolidation o Drill-down o Slice-and-dice o Pivot Digital Dashboards • Digital dashboard: integrates information from multiple components and presents it in a unified display • Deliver results quickly • Easier to use, more employees can perform their own analyses without inundating MIS staff with questions and request for reports Artificial Intelligence • Artificial intelligence (AI): Simulates human intelligence such as the ability to reason and learn • Intelligent system: Various commercial applications of artificial intelligence • A field of science and technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics, & engineering • Goal is to develop computers that can think, see, hear, walk, talk, and feel • Major thrust – development of computer functions normally associated with human intelligence – reasoning, learning, problem solving • Five most common categories of AI o Expert system § Expert System: computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems § Most common o Neural Network § Neural Network: attempts to emulate the way the human brain works ú Analyze large quantities of information to establish patterns and characteristics when the logic and rules are unknown § Fuzzy Logic: a mathematical method of handling imprecise or subjective information o Genetic algorithm § Genetic Algorithm: mimics the evolutionary, survival of the fittest process to generate increasingly better solutions to a problem ú Essentially an optimizing system § Mutation: process within a genetic algorithm of randomly trying combinations and evaluating the success of the outcome o Intelligent agent § Intelligent Agent: a special-purpose, knowledge based information system that accomplishes specific tasks on behalf of its users § Shopping bots o Virtual reality § Virtual Reality: a computer simulated environment that can be simulated of the real world or an imaginary world § Not the same as Augmented reality ú Augmented Reality: viewing of the physical world with computer-generated layers of information added to it Data Mining • Data-mining systems sift instantly through information to uncover patterns, trends, correlations and relationships • Data-mining systems include many forms of AI such as neural networks and expert systems • Predictive Analytics offers insights and improved decision making, especially in “big data” domains E-Business 10/3/16 8:24 PM Closing Case: Pinterest • Do you consider Pinterest a form of disruptive or sustaining technology? o Either one is fine • Is Pinterest an example of Web 1.0, Web 2.0 or Web 3.0 and why? o Web 2.0 because its user contributed content; collaboration drives it • What is Pinterest’s e-business model(s)? o B2C • Explain the e-business challenges facing Pinterest and identify ways Pinterest can prepare to face these challenges o Violation of copyright; Copyright Infringement o Information Vandalism: damage destroy or vandalism website content o Peer play: exclusive dependent on technology § If technology fails the whole thing fails Disruptive Versus Sustaining Technology • How can a company like Polaroid go bankrupt? o Did not think ahead to digital cameras • What do steamboats, transistor radios and Intel’s 8088 processor all have in common? o Disruptive Technology: a new way of doing things that initially does not meet the needs of existing customers § Open new markets and destroy old ones § Typically enter the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies o Sustaining Technology: Produces an improved product customers are eager to buy § Tend to provide us with better, faster, cheaper products in established markets • Internet and World Wide Web: Ultimate Business Disruptors • One of the biggest forces changing business is the Internet o Internet: Massive network that connects computers all over the world and allows them to communicate with one another • Organizations must be able to transform as markets, economic environments, and technologies change • Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology • The Internet began as an emergency military communications system operated by the Department of Defense • Gradually the Internet moved from a military pipeline to a communication tool for scientists to businesses • Reasons for growth of the WWW o Microcomputer revolution o Advancements in networking o Easy browser software o Speed, convenience, and low cost of email o Web pages easy to create and flexible Different Types of Webs • Web 1.0 o First years of operation 1991-2003 o Ecommerce: the buying and selling of goods and services over the Internet o E-business: ecommerce along with all activities related to internal and external business operation o Created first forms of e-business • Web 2.0 o Encourages user participation and the formation of communities o Technical skills no longer required o Provide virtual environment o 4 characteristics § Content sharing through open sourcing § User-contributed content § Collaboration inside the organization § Collaboration outside the organization • Web 3.0 o Based on intelligent web applications using natural language processing, machine-based learning and reasoning and intelligent applications o Brings machines closer together by using information The Internet of Things • The Internet of Things (IoT): the interconnection of uniquely identifiable embedded computing devices within the existing Internet infrastructure. • Things can refer to a wide variety of devices such as heart monitoring implants, biochip transponders on farm animals, electric clams in coastal waters, automobiles with built-in sensors, or devices that assist fire-fighters in search and rescue. • Examples: smart thermostat systems and washer/dryers that utilize wifi for remote monitoring. • Expected to generate large amounts of data from diverse locations. • E-Business • Use of the Internet and other networks and information technologies to support electronic commerce, enterprise communications and collaboration, and web-enabled business processes both within an internetworked enterprise, and with its customers and business partners. • • Disadvantages: o Identifying limited market segments o Managing consumer trust o Ensuring consumer protection o Adhering to taxation rules The Four Business Models • Business model: plant that details how a company creates, delivers and generates revenues • E-business model: a plan that details how a company creates, delivers, and generates revenues on the Internet • Business-to-Business (B2B) o Applies to businesses buying from and selling to each other over the Internet • Business-to-Consumer (B2C) o Applies to any business that sells its products or services to consumers over the Internet § 3 forms ú Brick and Mortar Business • A business that operates in a physical store without an Internet presence ú Click-and-Mortar Business • A business that operates in a physical store and on the Internet ú Pure-Play (Virtual) Business • A business that operates on the Internet only without a physical store • Consumer-to-Business (C2B) o Applies to any consumer that sells a product or service to a business over the Internet • Consumer-to-Consumer (C2C) o Applies to sites primarily offering goods and services to assist consumers interacting with each other over the Internet E-business forms • Content Providers o Generate revenues by providing digital content such as news, music, photos or videos • Infomediaries o Provide specialized information on behalf of producers of goods and services and their potential customers • Online Marketplaces o Bring together buyers and sellers of products and services • Portals o Operate a central website for users to access specialized content and other services • Service Providers o Provide services such as photo sharing, video sharing, online backup, and storage • Transaction Brokers o Process online sales transactions • Generating Revenue o Pay-per-click § Generates revenue each time a user clicks a link to a retailers website o Pay-per-call § Generates revenue each time a user clicks a link that takes the user directly to an online agent waiting for a call o Pay-per-conversion § Generates revenue each time a website visitor is converted to a customer


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