Chapter 10 Multinational E-Commerce: Strategies and Structures © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• •• •• •• Define Define the the forms forms ofof e-commerce e-commerce Appreciate Appreciate the the growing growing presence presence ofof e-commerce e-commerce inin the the global global economy economy Understand Understand the the structure structure ofof the the Internet Internet economy economy Identify Identify the the basic basic components components ofof successful successful e-commerce e-commerce strategy strategy © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• Know Know the the basic basic multinational multinational e-commerce e-commerce business business models models •• Identify Identify the the practicalities practicalities ofof running running aa multinational multinational e-commerce e-commerce business business •• Understand Understand the the function function ofof enablers enablers inin multinational multinational e-commerce e-commerce operations operations © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Internet Economy •• Internet Internet Economy Economy •• Growing Growing faster faster than than any any other other business business trend trend inin history history •• Companies Companies face face issues issues similar similar toto those those faced faced by by traditional traditional multinational multinational companies companies © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part What Is E-Commerce? •• Refers Refers toto the the selling selling ofof goods goods or or services services over over the the Internet Internet •• Includes Includes goods goods or or services services delivered delivered offline offline E.g., E.g.,Amazon.com Amazon.com shipping shipping book book via via UPS UPS •• Also Also includes includes goods goods and and services services delivered delivered online online E.g., E.g., downloaded downloaded computer computer software software © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Types of E-Commerce Transactions •• B2C: B2C: business-to-consumer business-to-consumer transactions transactions Buying Buying toys toys from from eToys eToys •• B2B: B2B: business-to-business business-to-business transactions transactions Makes Makes up up 70 70 toto 85% 85% ofof current current e-commerce e-commerce business business •• C2C: C2C: consumer-to consumer-to consumer consumer transactions transactions Anyone Anyone selling selling online online •• C2B: C2B: consumer-to-business consumer-to-business transactions transactions © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 10.1: E-Commerce Value Chain © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Internet Economy •• Two Two indicators indicators ofof the the global global presence presence ofof e-commerce e-commerce Secure Secure server: server: an an Internet Internet host host that that allows allows users users toto send send and and receive receive encrypted encrypted data data Internet Internet hosts: hosts: computers computers connected connected toto the the Internet Internet with with their their own own IP IPaddresses addresses •• OECD OECD dominate dominate the the Internet Internet with with over over 90% 90% ofof Internet Internet hosts hosts © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 10.2: Secure Servers and Internet Hosts in Selected OECD Countries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Internet Economy •• InIn 1991, 1991, 33 million million people people used used the the Internet Internet and and almost almost none none used used itit for for e-commerce e-commerce •• The The growth growth inin the the use use ofof the the Internet Internet or or the the World World Wide Wide Web Web for for e-commerce e-commerce isis so so dramatic dramatic that that its its impact impact isis difficult difficult toto estimate estimate •• Some Some say say that that the the Internet Internet will will have have more more impact impact on on the the world world than than the the industrial industrial revolution revolution •• Offers Offers tremendous tremendous opportunities opportunities for for multinationals multinationals © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 10.9: E-Readiness of Selected Countries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Multinational E-Commerce Strategy Implementation •• Requires Requires building building an an appropriate appropriate organization organization and and developing developing the the necessary necessary technical technical capabilities capabilities toto conduct conduct electronic electronic transactions transactions © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Multinational E-Commerce Organization •• •• Three-tiered Three-tiered mixing mixing ofof global global and and local local functions functions Headquarters Headquarters Vision, Vision, strategy, strategy, leadership leadership for for worldwide worldwide electronic electronic marketing marketing Also Also provide provide shared shared services services such such as as network network infrastructure infrastructure © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Multinational E-Commerce Organization (cont.) •• Shared Shared functional functional services services Provide Provide HRM, HRM, marketing, marketing, partner partner management management toto regions regions •• Local Local subsidiaries subsidiaries Deliver Deliver goods, goods, manage manage functions functions better better done done locally locally such such as as the the supply supply chain chain © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 10.10: Organizational Structures of the Multinational E-Corporation © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Technical Capabilities for Multinational E-commerce •• •• Ability Ability toto process process multiple multiple currencies currencies Ability Ability toto calculate/show calculate/show purchase purchase information information on on international international shipping, shipping, duties, duties, and and local local taxes taxes such such as as VAT VAT •• Systems Systems that that check check compliance compliance with with local local and and international international laws laws © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Technical Capabilities for Multinational E-commerce •• •• •• Ability Ability toto provide provide support support inin multilingual multilingual service service centers centers Fraud Fraud protection protection Electronic Electronic payment payment models models inin addition addition toto credit credit cards cards © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Web Sites: To Localize or Standardize •• Standardized Standardized web web site: site: companies’ companies’web web sites sites are are fairly fairly similar similar inin layout layout and and design design around around the the world world •• Localized Localized web web site: site: values, values, appeals, appeals, symbols, symbols, and and even even themes themes inin the the communication communication content content isis adapted adapted toto the the local local culture culture © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 10.11: High-Context and Low-Context Cultures and Two of Hoftsede’s Cultural Dimensions and Potential Influence on Web Design and Layout © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part “Mission-Critical” Factors to Communicate to Global Audience 1.1.Link Link all all Web Web sites sites toto corporate corporate Web Web site site 2.2.Web Web site site should should contain contain all all nonelectronic nonelectronic local local contact contact information information for for feedback feedback or or comment comment 3.3.Provide Provide aa prominent prominent list list ofof languages languages used used by by the the company’s company’s Web Web site site 4.4.Use Use different different languages languages for for downloads downloads © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part “Mission-Critical” Factors to Communicate to Global Audience (cont.) 5.5.Localize Localize by by language language the the parts parts ofof the the parent parent company company Web Web site site that that receive receive the the most most access access 6.6.Provide Provide aa site site map map 7.7.Provide Provide the the firm’s firm’s privacy privacy statement statement inin all all local local languages languages © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part “Mission-Critical” Factors to Communicate to Global Audience (cont.) 8.8.Guard Guard against against local local piracy piracy by by putting putting your your policies policies inin local local languages languages 9.9.Localize Localize your your graphics graphics and and written written material material 10.Localize 10.Localize content content management management © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 10.12: Major Problems Identified in Web Site Globalization © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To Build or Outsource Technical Capabilities? •• Two Two options options Run Run all all e-commerce e-commerce functions functions internally internally or or outsource outsource toto e-commerce e-commerce enablers enablers •• E-commerce E-commerce enablers: enablers: fulfillment fulfillment specialists specialists that that provide provide services services such such as as Web Web site site translation translation Provide Provide services services and and software software that that translate translate Web Web sites, sites, calculate calculate shipping, shipping, value-added value-added taxes, taxes, duties, duties, and and other other charges charges unique unique toto each each country country © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Conclusion •• Internet Internet and and e-commerce e-commerce becoming becoming an an increasingly increasingly important important component component ofof any any multinational’s multinational’s strategy strategy •• Chapter Chapter introduced introduced the the basic basic concepts concepts ofof e-commerce e-commerce •• Comparison Comparison ofof traditional traditional vs vs e-commerce e-commerce companies companies discussed discussed •• Many Many ofof the the same same challenges challenges are are faced faced •• Chapter Chapter provides provides solid solid background background on on key key international international e-commerce e-commerce issues issues © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part ... history •• Companies Companies face face issues issues similar similar toto those those faced faced by by traditional traditional multinational multinational companies companies © 2011 Cengage Learning... e-commerce organization organization Entire Entire firm firm (not (not only only top top management) management) must must be be prepared prepared toto embrace embrace the the e-commerce e-commerce... experiences •• Have Have an an e-commerce e-commerce strategy strategy Use Use strategic strategic management management toto implement implement aa strong strong and and adequate adequate strategic strategic