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Opportunities and Liabilities Surrounding Electronic Commerce

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In this Introductory chapter from Warwick Ford and Michael Baum’s book, the authors explain the opportunities and liabilities that surround electronic commerce and how security measures can mitigate the risks without compromising the tremendous upside that ecommerce has to offer.

This sample chapter is excerpted from Secure Electronic Commerce.

Electronic commerce (e-commerce) is rapidly and massively changing our business and personal lives-our jobs, our purchasing experiences, our fortunes, our business strategies, and our expectations for the times ahead. It is causing upheavals in the way that businesses, large and small, must strive to become or continue to be successful. It is changing the ways in which businesses and consumers interact with their product and service suppliers. It is creating opportunities for whole new breeds of business ventures. It is causing governments to rethink aspects of their traditional regulatory roles. It has an impact on virtually all businesses, professionals, consumers, entrepreneurs, investors, and governments. It is global in scope, with the ability to leap national boundaries in ways never seen before.

The term electronic commerce defies precise definition. Most fundamentally, e-commerce represents the realization of digital, as opposed to paper-based, commercial transactions between businesses, between a business and its consumers, or between a government and its citizens or constituent businesses. E-commerce is the practical result, in the business and government spheres, of the exploding availability, performance-curve advancement, and real-world adoption of technologies relating to the IC chip, personal computer, Internet-age communications, and advanced application software solutions. These technological advances reinforce and are reinforced by the emergence of a new, global, geopolitical-economic community.

1.1 The Upside

The opportunities that e-commerce presents to the business world include

  • Productivity advances: E-commerce adoption represents one of the few remaining avenues for the productivity advances needed to satisfy shareholder value expectations, attract new investment capital, and overcome competitive onslaughts. In today's supercompetitive world, e-commerce frequently represents an essential avenue for corporate survival and success.

  • Expanded and better-focused markets: E-commerce can expand market reach dramatically. For example, a small local firm can now easily market its wares on a national or even global scale. At the same time, new information-gathering and storage technologies allow market segments and individual leads to be more precisely targeted and more accurately qualified than in the past.

  • Cost reduction: Costs of performing traditional business tasks-such as external and internal communications, inventory control, accounting, customer relations management, and procurement-can be slashed.

  • Quality gains: Reductions in transaction times and error rates, resulting from the elimination of manual steps such as telephone operator and telesales representative transaction entry, can allow inventories to be trimmed, processes to be streamlined, and both customer and employee satisfaction to increase.

  • Improved customer appeal: E-commerce empowers the customer by putting information and control of transactions in the customer's hands. Customers get better access to comparative shopping and new computer-based customization offerings such as the ability to specify a unique configuration of an otherwise mass-market product. Self-service customer support can be offered. These factors, coupled with an increasing range of services, faster response times, and fewer transaction errors, can improve customer satisfaction and increase customer retention levels.

  • Improved employee satisfaction: As overall job satisfaction increases through the shift away from repetitive task execution and toward the knowledge-worker model, improved employee communication processes and hands-on access to benefits systems provide new opportunities to increase retention rates of most-valued employees.

  • New partnerships based on better information sharing: Improved means for the controlled sharing of information with partners open up the opportunity for new forms of strategic business relationships.

  • New business opportunities: The Internet world has spawned a set of entirely new business opportunities, such as online commodity marketplaces, online auction houses, online brokerages, and Internet trust institutions.

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