BAM 216 Practice of Entrepreneurship

INTERNET
The Internet is the world’s largest computer network. Internet is a collection of interconnected
networks, all freely exchanging information. Research firms, colleges, and universities have long
been part of the internet and businesses, high schools, elementary schools and other organizations
have joined it as well. Nobody knows exactly how big the Internet is because it is a collection of
separately run, smaller computer networks. A vast amount of information is available over the
internet from libraries. Many articles that served as the basis of the sidebars, cases and examples
used throughout this book were obtained from university libraries online. Movies, foods and wears
can be ordered and even delivered over the internet. The internet provides critical information
during times of disaster or terrorism. During a medical emergency, critical medical information
can be transmitted over the Internet. The Internet can also be used to translate words, sentences,
or complete documents from one language to another.
HOW THE INTERNET WORKS
Internet transmits data from one computer (called a host) to another. If the receiving computer is
on a network to which the first computer is directly connected, it can send the message directly. If
the receiving and sending computers are not directly connected to the same network, the sending
computer relays the message to another computer that can forward it. The message might be sent
through a router to reach the forwarding computer. Each computer on the Internet has an assigned
address called its Uniform Resource Locator (URL) to identify it to other hosts. The URL gives
those who provide information over the internet a standard way to designate where internet
elements such as servers, documents, and newsgroups can be found. Consider the URL for Course
Technology, http://www.course.com. The “http” specifies the access method and tells your
software to access a file using the Hypertext Transport Protocol. This is the primary method for
interacting with the Internet. In many cases, you don’t need to include http:// in a URL because it
is the default protocol. Thus, http://www.course.com can be abbreviated as www.course.com. The
“www” part of the address signifies that the address is associated with the World Wide Web
service. The “course.com” part of the address is the domain name that identifies the Internet host
site. Domain names must adhere to strict rules. They always have at least two parts, with each part
separated by a dot (period). For some Internet addresses, the far right part of the domain name is
the country code (such as ng for Nigeria, au for Australia, ca for Canada, dk for Denmark, fr for

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France and jp for Japan). Many Internet addresses have a code denoting affiliation categories. The
far left part of the domain name identifies the host network or host provider which might be the
name of a university or business.
S/no Affiliation ID Affiliation
1 com Business sites
2 edu Educational sites
3 gov Government sites
4 net Networking sites
5 org Non-profit organization sites
INTERNET SERVICE PROVIDER
An internet service provider (ISP) is any company that provides internet access to people and
organizations. Example of them are MTN, Airtel, Global Com and Etisalat, they all offer extended
information services through software installed on the subscriber’s PC. Many others simply offer
connection to the internet that subscribers use with internet software to access various services. To
use this type of connection, you must have an account (SIM) with the service provider and software
that allows a direct link via TCP/IP. Some businesses and universities use very fast T1 or T3 lines
to connect to the Internet. These are special high-speed communications links capable of sending
and receiving data at up to 1.536 Mbps for T1 and 4.736 Mbps for T3.
THE WORLD WIDE WEB
The World Wide Web was developed by Tim Berners-Lee at CERN, the European Organization
for Nuclear Research in Geneva. He originally conceived of it as an internal document
management system. Web users use hyperlinks, highlighted text or graphics in a web document,
that, when clicked, open a new Web page or section of the same page containing related content.
Thanks to the high speed internet circuits connecting them and some clever cross-indexing
software, users can jump from one web computer to another effortlessly creating the illusion of
using one big computer. Because of the vast amount of information available on the web and the
wide variety of media, the web has become the most popular means of information access in the
world today.
Social Networks
Social networking websites provide web based tools for users to share information about
themselves with people on the web and to find, meet and converse with other members. The most

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popular social networking site is Facebook. It provides members with their own personal web page
and allow members to post photos and information about themselves. Social networking sites
allow members to send messages to each other and post comments on each other’s pages. Members
accumulate friends through an invitation process. Special interest groups can be created and joined
as well. Tools are provided to search for others with similar interests.
The power of social networks is being harnessed for business purposes as well. Many businesses
are using the information posted in member profiles to find potential clients. LinkedIn is a social
network that allows professionals to find others who work in the same field, applying social
networking techniques for business networking. Another social networking site called Twitter
(www.twitter.com) allows members to report on what they are doing throughout the day.
Media Sharing
Media-sharing Web sites such as YouTube for video sharing and Flickr for photo sharing provide
methods for members to store and share digital media files on the Web. YouTube allows members
to post homemade video content in categories such as comedy, entertainment, film and animation.
Content Streaming
Content streaming is a method for transferring multimedia files, radio broadcasts, and other content
over the Internet so that the data stream of voice and pictures plays more or less continuously,
without a break, or with very few of them. It also enables users to browse large files in real time.
For example, rather than wait for an entire 5 MB video clip to download before they can play it,
users can begin viewing a streamed video as it is being received. Content streaming works best
when the transmission of a file can keep up with the playback of the file.
Shopping on the web
Shopping on the web for books, clothes, cars, medications, and even medical advice can be
convenient, easy and cost effective. Amazon.com for example sells short stories by popular
authors. The service, called Amazon Shorts, has stories that vary in length from 2,000 to 10,000
words by authors such as Danielle Steel, Terry Brooks, and others. The company also sells
traditional books and other consumer products.
AN INTRODUCTION TO ELECTRONIC COMMERCE
Electronic commerce is the conducting of business activities (e.g., distribution, buying, selling,
marketing and servicing of products or services) electronically over computer networks such as
the internet. Business activities that are strong candidates for conversion to e-commerce are paper

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based, time-consuming, and inconvenient for customers. Thus, some of the first business processes
that companies converted to an e-commerce model were those related to buying and selling. For
example, after Cisco Systems, the maker of Internet routers and other telecommunications
equipment, put its procurement operation online in 1998, the company reported that it halved cycle
times and saved an additional $170 million in material and labor costs.
TYPES OF E-COMMERCE
1. Business to business (B2B)
2. Business to consumer (B2C)
3. Consumer to business (C2B)
4. Consumer to consumer (C2C)
Business-to-Business (B2B)
Business-to-business (B2B) e-commerce is a subset of e-commerce where all the participants are
organizations. B2B e-commerce is a useful tool for connecting business partners in a virtual supply
chain to cut resupply times and reduce costs.
Business-to-Consumer (B2C)
Business-to-consumer (B2C) e-commerce pioneers competed with the traditional “brick-and-
mortar” retailers in an industry selling their products directly to consumers. Although it is
estimated that B2C e-commerce represents only about 3.4 percent of retail sales in the rate of
growth of online purchases is three times faster than the growth in total retail sales. One reason for
the rapid growth is that shoppers find many goods and services cheaper when purchased via the
web, including stocks, books, newspapers, airline tickets, and hotel rooms. They can also compare
information about automobiles, cruises, loans, insurance and home prices to find better values.
More than just a tool for placing orders, the Internet is an extremely useful way to compare prices,
features and value.
Consumer-to-Consumer (C2C)
Consumer-to-consumer (C2C) e-commerce is a subset of e-commerce that involves consumers
selling directly to other consumers. eBay is an example of a C2C e-commerce site; customers buy
and sell items directly to each other through the site. Founded in 1995, eBay has become one of
the most popular web sites in the world.

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 E-GOVERNMENT
E-government is the use of information and communications technology to simplify the sharing of
information, speed formerly paper-based processes, and improve the relationship between citizens
and government. Form of e-government with different applications:
a. Government-to-consumer (G2C)
b. Government-to-business (G2B)
c. Government-to-government (G2G)
Government-to-consumer (G2C)
Citizens can use G2C applications to submit their state and federal tax returns online, renew auto
licenses, apply for student loans, and make campaign contributions. Information about the 2008
economic stimulus payments that were sent to over 130 million taxpayers was available on the IRS
website for months before the rebates were mailed out.
Government-to-business (G2B)
G2B applications support the purchase of materials and services from private industry by
government procurement offices, enable firms to bid on government contracts and help businesses
receive current government regulations related to their operations. Allows businesses to access
information about laws and regulations and relevant forms needed to comply with federal
requirements for their business.
Government-to-government (G2G)
G2G applications are designed to improve communications among the various levels of
government. For example, the E-vital initiative establishes common electronic processes for
federal and state agencies to collect, process, analyze, verify, and share death record information.
ELECTRONIC AND MOBILE COMMERCE APPLICATIONS
Mobile commerce (m-commerce) relies on the use of mobile, wireless devices such as personal
digital assistants, cell phones, and smartphones, to place orders and conduct business. Handset
manufacturers such as Infinix, Samsung, Huawei, Ericsson, Motorola, Nokia, and Qualcomm are
working with communications carriers such as AT&T, Cingular, Sprint/Nextel, and Verizon to
develop such wireless devices, related technology and services. The Internet Corporation for
Assigned Names and Numbers (ICANN) created mobile domain to help attract users to the web.
E-commerce and m-commerce are being used in innovative and exciting ways. It examines few of
the many B2B, B2C, C2C, and m-commerce applications in the retail and wholesale,

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manufacturing, marketing, investment and finance, real estate services and auction arenas. Retail
and wholesale e-commerce is being used extensively in retailing and wholesaling. Electronic
retailing, sometimes called e-tailing, is the direct sale of products or services by businesses to
consumers through electronic storefronts, which are typically designed around the familiar
electronic catalog and shopping cart model.
Electronic commerce, commonly known as e-commerce consists of the buying and selling of
products or services over electronic systems such as the internet and other computer networks. The
amount of trade conducted electronically has grown extraordinarily since the spread of the Internet.
A wide variety of commerce is conducted in this way, spurring and drawing on innovations in
electronic funds transfer, supply chain management, Internet marketing, online transaction
processing, electronic data interchange (EDI), inventory management systems, and automated data
collection systems.
Applications of Mobile Commerce (m-commerce) devices usually have a single user, they are
ideal for accessing personal information and receiving targeted messages for a particular
consumer. Through m-commerce, companies can reach individual consumers to establish one-to-
one marketing relationships and communicate whenever it is convenient in short, anytime and
anywhere. Following are just a few examples of potential m-commerce applications:
1. Mobile Banking: with mobile banking, consumers can manage their finances from
anywhere without driving to their bank or credit union or booting up their computer.
Consumers can use mobile banking to access multiple banks, accounts, and financial
services to:
a. View account balances (checking, savings, Money Market, and credit cards)
b. Transfer funds between accounts
c. View and pay bills
d. Review a history of account transactions.
As a security measure, the mobile banking user must enter their Personal PIN to unlock the
application each time they use it.
2. Mobile Price Comparison: Growing number of companies are employing strategies that
encourages shoppers to do web-based price comparisons while they are in the stores. The
idea is to drive the shopper who is ready to make a purchase from one retailer to another
based on price and product comparisons. Web sites, like Google Maps, can be used to

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 locate stores, restaurants, gas stations, and other retailers while you are on the move.
ShopLocal offers product location and comparison on mobile devices via a service called
uLocate vendor locate. Shoppers. The application works with GPS-enabled phones and
provides comparison shoppers with product, price and retailer information including step-
by-step directions to the selected retailer’s store.
3. Mobile Advertising: Many advertisers are not yet convinced that mobile advertising is
effective and are taking a wait-and-see approach. Traditional websites designed for access
by users with personal computers place cookies on your computer to track your browsing
behavior and pass the data on to advertisers and ad-placement networks. However, the
wireless industry service providers block cookies before they get to the cell phone out of
concern that the cookies could provide access to their networks for computer viruses. They
also fear that the cookies might cause a dramatic increase in the volume of data traffic as
the cookies report back to the advertisers. The increase in volume could be enough to choke
the network and seriously degrade performance. Thus advertisers are frustrated in their
attempt to gather data to measure the number of views or effectiveness of mobile ads.
4. Mobile Coupons: About two percent of advertisers surveyed by Jupiter Research are using
mobile coupons. Users in the test must first download a mobile marketing application to
their cell phones so that coupons from the companies can be loaded onto their cell phones.
While in a Kroger store, a shopper can choose an item, select the appropriate coupon from
the cell phone, and have the coupon information sent to Kroger’s in-store computer, which
identifies the shopper by her loyalty card.
Marketing
The nature of the web allows firms to gather much more information about customer behavior and
preferences than they could using other marketing approaches. Marketing organizations can
measure many online activities as customers and potential customers gather information and make
their purchase decisions. Internet advertisers use the data they gather to identify specific portions
of their markets and target them with tailored advertising messages. This practice, called market
segmentation, divides the pool of potential customers into subgroups, which are usually defined in
terms of demographic characteristics, such as age, gender, marital status, income level, and
geographic location.

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 Advantages of Electronic and Mobile Commerce
Conversion to an e-commerce or m-commerce system enables organizations to reduce the cost of
doing business, speed the flow of goods and information, increase the accuracy of order processing
and order fulfillment, and improve the level of customer service. These advantages are summarized
below:

TECHNOLOGY INFRASTRUCTURE REQUIRED TO SUPPORT E-COMMERCE AND M-

COMMERCE
Successful implementation of e-business requires significant changes to existing business
processes and substantial investment in technology. These technology components must be chosen
carefully and integrated to support a large volume of transactions with customers, suppliers, and
other business partners worldwide. Online consumers complain that poor website performance
(e.g., slow response time, inadequate customer support, and lost orders) drives them to abandon
some e-commerce sites in favor of those with better, more reliable performance.

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 Web server hardware
A web server hardware platform complete with the appropriate software is a key e-commerce
infrastructure ingredient. The amount of storage capacity and computing power required of the
web server depends primarily on two things:
a. The software that must run on the server and
b. The volume of e-commerce transactions that must be processed.
Although people can sometimes define the software to be used, they can only estimate how much
traffic the site will generate. As a result, the most successful e-commerce solutions are designed
to be highly scalable so that they can be upgraded to meet unexpected user traffic. A key decision
facing new e-commerce companies is whether to host their own website or to let someone else do
it. Many companies decide that using a third-party web service provider is the best way to meet
initial e-commerce needs. The third-party company rents space on its computer system and
provides a high-speed connection to the internet, which minimizes the initial out-of-pocket costs
for e-commerce start-up. The third party can also provide personnel trained to operate,
troubleshoot and manage the web server.
Web server software
Web server operating system, each e-commerce website must have web server software to perform
fundamental services, including security and identification, retrieval and sending of web pages,
website tracking. The two most popular web server software packages are:

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 a. Apache HTTP Server and
b. Microsoft Internet Information Services.
Security and Identification
Security and identification services are essential for internet web servers to identify and verify
employees accessing the system from the Internet. Access controls provide or deny access to files
based on the username or URL. Web servers support encryption processes for transmitting private
information securely over the public Internet.
Website Development
Website development tools include features such as an HTML/visual web page editor (e.g.,
Microsoft Expression Web, Adobe Dreamweaver, NetStudio Easy Web Graphics, and SoftQuad
HoTMetaL Pro), software development kits that include sample code and code development
instructions for languages such as Java or Visual Basic and Web page upload support to move web
pages from a development PC to the website.
Web Page Construction
Web page construction software uses HTML editors and extensions to produce static or dynamic.
Static web pages always contain the same information. For example, a page that provides text
about the history of the company or a photo of corporate headquarters. Dynamic web pages contain
variable information and are built to respond to a specific website visitor’s request. For example,
if a website visitor inquires about the availability of a certain product by entering a product
identification number, the web server searches the product inventory database and generates a
dynamic web page based on the current product information it found, thus fulfilling the visitor’s
request. This same request by another visitor later in the day might yield different results due to
ongoing changes in product inventory. A server that handles dynamic content must be able to
access information from a variety of databases.
E-COMMERCE SOFTWARE
After you have located or built a host server, including the hardware, operating system and web
server software, you can begin to investigate and install e-commerce software. E-commerce
software must support five core tasks:
a. Catalog Management
b. Product Configuration
c. Shopping Cart Facilities,

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 d. E-commerce Transaction Processing and
e. Web traffic data analysis.
The specific e-commerce software you choose to purchase or install depends on whether you are
setting up for B2B or B2C transactions. For example, B2B transactions do not include sales tax
calculations if they involve items purchased for resale and software to support B2B must
incorporate electronic data transfers between business partners, such as purchase orders and
shipping. B2C software, on the other hand, must handle the complication of accounting for sales
tax based on the current state laws and rules. However, it does not need to support negotiation
between buyer and seller.
Technology Needed for Mobile Commerce
For m-commerce to work effectively, the interface between the wireless device and its user must
improve to the point that it is nearly as easy to purchase an item on a wireless device as it is to
purchase it on a PC. In addition,
a. Network speed must improve so that users do not become frustrated.
b. Security is also a major concern, particularly in two areas:
i. The security of the transmission itself and
ii. The trust that the transaction is being made with the intended party.
c. Encryption can provide secure transmission. Digital certificates, can ensure that
transactions are made between the intended parties.
d. The handheld devices used for m-commerce have several limitations that complicate their
use. Their screens are small, perhaps no more than a few square inches, and might be able
to display only a few lines of text. Their input capabilities are limited to a few buttons, so
entering data can be tedious and error prone. They also operate on limited-life batteries.
For these reasons, it is currently impossible to directly access many websites with a
handheld device. Web developers should rewrite web applications so that users with
handheld devices can access them.
To address the limitations of wireless devices, the industry has undertaken a standardization effort
for internet communications. The wireless application protocol (WAP) is a standard set of
specifications for internet applications that run on handheld, wireless devices. It effectively serves
as a web browser for such devices. WAP is a key underlying technology of m-commerce that is
supported by an entire industry association of over 200 vendors of wireless devices, services and

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tools. In the future, devices and service systems based on WAP and its derivatives (including WAP
2.0 and Wireless Internet Protocol) will be able to interoperate.
TRANSACTION PROCESSING (TP) ACTIVITIES
Along with having common characteristics, all TPSs perform a common set of basic data
processing activities. TPSs capture and process data that describes fundamental business
transactions. This data is used to update databases and to produce a variety of reports for people
within and outside the enterprise use. The business data goes through the following TP cycle:
1. Data collection
2. Data editing
3. Data correction
4. Data manipulation
5. Data storage and
6. Document production.

Data Collection
Capturing and gathering all data necessary to complete the processing of transactions is called data
collection. In some cases, it can be done manually, such as by collecting handwritten sales orders
or changes to inventory. In other cases, data collection is automated via special input devices such
as scanners, point-of-sale devices, and terminals.

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Data Editing
An important step in processing transaction data is to perform data editing for validity and
completeness to detect any problems. For example, quantity and cost data must be numeric and
names must be alphabetic; otherwise, the data is not valid. Often, the codes associated with an
individual transaction are edited against a database containing valid codes. If any code entered (or
scanned) is not present in the database, the transaction is rejected.
Data Correction
It is not enough simply to reject invalid data. The system should also provide error messages that
alert those responsible for editing the data. Error messages must specify the problem so proper
corrections can be made. A data correction involves re-entering data that was not typed or scanned
properly.
Data Manipulation
Another major activity of a TPS is data manipulation, the process of performing calculations and
other data transformations related to business transactions. Data manipulation can include
classifying data, sorting data into categories, performing calculations, summarizing results and
storing data in the organization’s database for further processing.
Data Storage
Data storage involves updating one or more databases with new transactions. After being updated,
this data can be further processed and manipulated by other systems so that it is available for
management reporting and decision making. Thus, although transaction databases can be
considered a by-product of transaction processing, they have a pronounced effect on nearly all
other information systems and decision-making processes in an organization.
Document Production and Reports
Document production involves generating output records, documents, and reports. These can be
hardcopy paper reports or displays on computer screens (sometimes referred to as soft copy).
Printed paychecks, for example, are hard-copy documents produced by a payroll TPS, while an
outstanding balance report for invoices might be a soft-copy report displayed by an accounts
receivable TPS. Often, results from one TPS flow downstream to become input to other systems,
which might use the results of updating the inventory database to create the stock exception report
(a type of management report) of items whose inventory level is below the reorder point.

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