Chapter 7: Key Concept

Chapter 7: The Environment of Electronic Commerce: Legal, Ethical, and Tax Issues



The Legal Enviro of E-Commerce

Borders and Jurisdiction:

Power: form of control obrt physical space and ppl and objects that reside in that space
Effects: impact of laws of persons behaviour
Legitimacy: idea that those subject to laws should have some role if formulating them
Notice: constructive notice: when people receive notice that they have become subjected to new laws and cultural norms when they cross international border


Jurisdiction of the Internet
- more difficult in the internet
- contract: promise or set of promises between 2 or more ppl. provides for exchange of value
- breach of contract: either party to contract does not comply with terms
Subject-Matter Jurisdiction: court's authority to decide particular type of dispute
Personal Jurisdiction: determined by residence of the parties
Jurisdiction in International Commerce: judicial comity: voluntarily enforce other countries aws or judgements out of a sense of comity or friendly civility

Contracting and Contract Enforcement in ECommerce
- implied contract: 2 or more parties act as if contract exists (even if no contract was written and signed)
Warranties on the web: warranty disclaimer: statement declaring that the seller will not honor some or all implied warranties
Terms of Service Agreements: site visitor is held to terms of service even is that visitor has not read the text or clicked a button to indicate agreement with the terms


Use and Protection of Intellectual Property in Online Business
- intellectual property: includes all products of human mind
Web Site Content Issues
Copyright information: right granted by gov't to author of work - right to print, publish or sell work
Patent Infringment: patent: exclusive right granted by gov't to individual to make, use and sell invention; business process patent: protects specific set of procedures for conducting particular business activity
Trademark Infringement: trademark: distinctive mark, devide, motto, a company affixes to the goods it produces for identification purposes; service mark: used to identify services provided; trade name: name business uses to identify itself; common law: part of british and us law established by history of court; statutory law: arises when elected legislative bodies pass laws


Domain Names, Cybersquatting, and Name Stealing
- cybersquatting: practice of registering a domain name that is trademark of another person or company in hopes that the owner will pay huge amounts of money to acquire the URL
- name changing: someone registers purposely misspelled variations of well-known domain names
- name stealing: someone posing as a site's administrator changes the ownership of site's assigned domain name to another site and owner


Protecting Intellectual Property Online
- digital watermark: digital code embedded in digital image of audio file
- copy control: electronic mechanism for limiting the number of copies that one can make of digital work


Defamation:
- statement that is false and that injures the reputation of another person or company
- product disparagement: if statement injures the reputation of product or service instead of a person


Deceptive Trade Practices
- trademark dilution: reductiong of distinctive quality of a trademark by alternative uses

Chapter 7: Class Notes

Ethical & Tax Issues in Electronic Commerce

Why is this Important:
1. E-Commerce = cross-border international business
2. E-commerce = fast & efficient communications
3. E-commerce = customer contact is interactive
4. E-commerce = promotes C2C interactions (social networking features / discussion boards to discuss products)

**all are affected by legal issues (defamation, slander)

Jurisdiction
Legal Issues:
Geographic-Legal Relationship :
- power: do they have the power to enforce the law? (regular business)
- effects: Impact - by doing business in a certain area
- legitimacy : if you are under the laws of the province, you should have some say in how those laws are forming (voting)
- notice : know what laws you are under in different areas
** don't work for e-commerce : who's jurisdiction takes over when two ppl from different countries go through with a contract

Contractual Jurisdiction
- subject-matter jurisdiction : is its a federal law, then fed's have jurisdiction
- personal jurisdiction : residence: jurisdiction determined by where the customer lives and where you live
- conflict of laws: whos jurisdition do you fall under?

Contratual Enforcement
- What is a contract? : legally binding arrangement, when somebody has provided an offer and someone on the other side has accepted it and consideration is paid (product or money)
- written contracts : some places have a minimum in which a written contract is not required: now we have the ability to digitally sign contracts
- warranties & disclaimers : warrant that the good is in operable condition and it works - the customer will be delivered as per what they ordered
- authority to bing and form contracts : because you cannot see anyone, how do you trust them to get into a contract with them

International Commerce
Culture and Customers :
Treaties (judical comity)

Income & Sales Tax Implications
State use tax
internet tax moratorium : no one can enforce any additional tax from e-commerce (only user tax)


Intellectual Property
Copyright : massive issue on the internet right now - legal right to ownership of creative works - anything original - all rights reserved

Fair Use : exemptions for using
Purpose of use : is your purpose to resell this thing?
Nature of Work : is this stuff that has already been published or is it original?
Amount Used : there is a maximum amount that can be used before copyright laws affect it
Market Impact : by using someone else's work, are you affecting them from gaining profit?

Creative Commons : (cc): your ability as the author of a work to specify who has the right to do something with that work - allowing you to find the middle ground - some rights are reserved
Patents (inventions & processes) : legally structured
Trademarks and service marks

Domain Names & Cybersquatting: registered a domain name just because someone else might want it
Anti-cybersquatting consumer protection act
iCANN UDRP Domain Name dispute proceedings

Defamation & Deceptive Practices

Digital Watermarking & Copy Control

Web Disclosures
Terms of Service
Acceptable Use policies :
Conditions of use
user agreements
** have same purpose
EXAMPLE: GOogle, Paypal

Privacy Policy
Personal Information
- what data is collected?
- how securely is it protected?
- how will my data be used/shared?
- can i restrict the use of my data?
- how do i update my data?
- what is i am a child?
- can i contact you?

Chapter 6: Key Concept

Chapter 6: Online Auctions, Virtual Communities, and Web Portals

Key Concept:
This chapter focuses on how companies use different technologies including auctions, virtual communities, serving as web portals. We learn about the main auction types and the characteristics of each.

Supporting Points:
Auction Overview
English Auctions
- bidders publicly announce their successive higher bids until no higher bid is forthcoming (ascending auction, open auction, open-outcry auction)
- minimum bid: price at which an auction begins (reserve bid)
- yankee auctions: offer multiple units for sale and allow bidders to specify quantity they want to buy
Dutch Auctions
- bidding starts at high price and drops until a bidder accepts the price (descending-price auctions)
First-Price Sealed-Bid Auctions
- bidders submit their bids independently and usually prohibited from sharing info with each other – highest bidder wins
Second-Price Sealed-Bid Auctions
- highest bidder awarded the item at the price bid by the second-highest bidder
Open-Outcry Double Auctions
- buy and sell offers shouted by traders standing in small area on exchange floor called a trading pit
Sealed-Bid Double Auctions
- buyers and sellers each submit combined price-quantity bids to an auctioneer
Reverse (seller-bid) auctions
- multiple sellers submit price bids to an auctioneer who represents a single buyer
Online Auctions and Related Businesses
General Consumer Auctions
- eBay – with third-party assurance provider
Specialty Consumer Auctions
- justbeads.com – cater to buyers and sellers who are geographically dispersed but share highly focused interests
Consumer Reverse Auctions and Group Purchasing Sites
- priceline.com – reverse bid: visitors state a price they are willing to pay
- group purchasing site: seller posts an item with a price, buyers enter bids on an item, the site negotiates better price
Business-to-Business Auctions
- liquidation brokers: firms that find buyers for items they get from smaller businesses
Auction-Related Services
- Auction escrow services
- Auction directory and information services
- Auction software

Virtual Communities and Web Portals
Mobile Communications Technology
- wireless application protocol: allows web pages formatted in html to be displayed on devices with small screens
Intelligent Software Agents
- programs that search the web and find items for sale that meet buyer’s specifications
Virtual Communities
- gathering place for people and businesses that does not have a physical existence
- virtual learning community: webCT
Web Communities in the Second Wave of Electronic Commerce
- web logs (BLOGS)
- social networking web sites: craigslist
Revenue Models for Web portals and virtual communities
- advertising-supported web portals and virtual communities
- mixed-revenue web portals and virtual communities

Chapter 5: Key Concept

Chapter 5: Business-to-Business Strategies; From Electronic Data Interchange to Electronic Commerce

Key Concept:
This chapter focuses on companies that use the internet and different technologies to improve their logistics and purchasing activities.

Support Points:
Purchasing, Logistics, and Support Activities
Purchasing Activities
- identifying vendors, evaluating vendors, selecting specific products, placing orders, resolving issues (late deliveries, incorrect quantities, incorrect items, defective items)
- purchasing managers play role in maintaining and improving product quality and reducing costs
- e-sourcing: use of internet technologies in sourcing activities
Direct vs. Indirect Materials Purchasing
- direct: materials that become part of finished product in manufacturing process (cost is large part of cost of finished product
o replenishment purchasing (contract): company negotiates long-term contracts for materials; spot market: loosely organized market within specific industry
- indirect: other materials that are purchased (factory supplies, replacement parts); spot purchasing: direct materials purchasing that occurs within sport market; maintenance, repair, operating (MRO)
Logistic Activities
- managing inbound movements or materials and supplies, outbound movements of finished goods and services; receiving, warehousing, controlling inventory, scheduling and controlling vehicles, distributing finished
Support Activities
- finance and administration (making payments, processing payments, palnning capital expenditures, budgeting and planning); HR (hiring, training, evaluating employees, benefits; technology (network research scientists, posting research results, publishing research papers online, providing connections to outside sources
E-Government
- use of electronic commerce by gov’ts and governing agencies to perform activities (collect taxes and fees)

Electronic Data Interchange (EDI) - echange or transfer of information(not money) between two parties (purchase orders, receipts)How EDI WorksDirect vs. VANs- direct: no intermediary system - you are connecting your EDI comp to someone elses EDI directly - requires leased-line (connection that is always on)- VANs: value added network - intermediary is involved (your system connects to the VAN) - don't need leased-line connection - treating EDI like email (good for companies like Kal Tire, not fortune 500 companies)Internet EDI- VPN: vitural private network, issue of security - ppl don't trust having purchase orders floating across internet unprotectedFinancial EDI- exchange of money, Clearing House (ACH - automated clearing house) - they transfer money from bank to bank using clearing house as intermediary
Supply Chain Management Using Internet Technologies: managing integration of supply management and logistics
Value Creation in the Supply Chain
- tier one suppliers: develop long-term relationships with larger number of suppliers that provide components and raw materials
- tier two: manage relationships with next level of suppliers (tier three suppliers), provide them with components and raw materials
- supply alliance: long-term relationships created among participants in supply chain
Suppliers Can:
- share info about customer demand fluctuations
- receive rapid notification of product design changes and adjustments
- provide specifications and drawings more efficiently
- reduce cost of handling transactions
- reduce errors
Using Materials-tracking Technologies with EDI and electronic Commerce
- radio frequency identification devices: small chips that use radio transmissions to track inventory
Creating an Ultimate Consumer orientation in the supply chain
- ultimate consumer orientation: difficulty in maintaining customer focus
Building and maintaining Trust in the Supply Chain
- continual communication and information sharing key elements
Electronic Marketplaces and Portals:
Independent Industry marketplaces
- industry marketplaces: focus on single industry
- independent exchanges: not controlled by a company that was an established buyer or seller
- public marketplaces: open to new buyers and sellers just entering
- collectively known as independent industry marketplaces
Private Stores and Customer Portals
- private store: password-protected entrance and offers negotiated price reductions on limited selection of products
- customer portal sites: offer private stores along with services (product usage guidelines, safety info)
Private Company Marketplaces
- e-procurement software: allows company to manage its purchasing function through a web interface
- private company marketplace: provides auctions, request for quote postings
Industry Consortia-Sponsored Marketplaces
- formed by several large buyers in particular industry

Chapter 6: Class Notes

Auctions, Communities & Portals

Types of Auctions
English (ascending Price)
Dutch (descending Price)
Sealed-Bid auctions
Open-Outcry Double
Sealed-Bid Double
Reverse (seller-bid): priceline

Online Auctions
CSC: Amazon auctions, ebay.ca, (TRUSTe, Escrow.com, eDeposit.com - ways to protect yourself)
CSB: Priceline.com - demand aggregation, customers come together to buy something cheaper than they would pay by themselves
BSB: liquidators - solution vendors
BSC: eBay stores, yahoo merchant

Building Long-Term Customer Relationships: social networking sites
Blogs
Wikis
Forums
Facebook
Friendster
Linkedin
MySpace

Web Portals: ability to search site for info, provide content (updated news stories), and directories on how to find other parts of the site (categorizing the info)

A company setting up ecommerce website builds in social networking, and earns revenue by creating portal-like front ends.

Neilsen NetRatings
Advertising-Supported
Mixed-Revenue (subscription based and advertising)
Intranet Portals: knowledge management model:

Chapter 5: Class Notes

BSB Strategies:
Purchasing & Logistics
e-Procurement: function within most large companies - many purchasing funtions are now done through online systems like Ariba as well as outsourced companies
- identify vendors
- evaluate venors
- place orders
- track receipt
- process payment

Direct vs indirect materials
- direct: anything that goes into manufacturing process
- indirect: MRO (maintenance, repair, operations)

Logistics management
- usually need understanding of the accounting function

Support Services & KM
- supply chain is a component of the entire value class - should be an activity that adds to te final product
- knowledge mgmt: able to capture all info from supply chain or elsewhere

Electronic Data Interchange (EDI) - echange or transfer of information(not money) between two parties (purchase orders, receipts)
How EDI Works
- P
ANSI ASC X12
UN EDIFACT

**** IMPORTANT!!!******Direct vs. VANs
- direct: no intermediary system - you are connecting your EDI comp to someone elses EDI directly - requires leased-line (connection that is always on)
- VANs: value added network - intermediary is involved (your system connects to the VAN) - don't need leased-line connection - treating EDI like email (good for companies like Kal Tire, not fortune 500 companies)

Internet EDI
- VPN: vitural private network, issue of security - ppl don't trust having purchase orders floating across internet unprotected

Financial EDI
- exchange of money, Clearing House (ACH - automated clearing house) - they transfer money from bank to bank using clearing house as intermediary

Supply Chain Management (SCM)
Upstream vs Downstream
- Upstream: raw materials - inbound logistics - warehouse and storage - production (everything that went in to creating a product)
- Downstream: getting production to the customer

Advantages:
- share customer demand info
- notify of design modifications
- exchange design schematics
- increase processing speed
- reduce handling costs
- reduce human (re-key) error
- reduce and inform of defects

Challenges:
- Trust:
- costs

B2B Models & e-Marketplaces (fig 5-14)
Private stores: build website to specific customer
Customer Portals: accessed to ecommerce site, provide directory and search assistance
Industry Marketplaces: demand aggregation
Consortium Marketplaces: vendors get together to get lower prices
Private Company Marketplaces