Chapter 7 – Legal, Ethical and Tax Issues; This is Really Good Stuff
The legal environment of electronic commerce
-Scholars define the relationship between geographic boundaries and legal boundaries in terms of four elements: power, effects, legitimacy, and notice.
1. Power – a form of control over physical space and the people and objects that reside in that space, and is a defining characteristic of statehood.
Jurisdiction - The ability of a government to exert control over a person or corporation.
-laws in the physical world do not apply to people who are not located in or do not own assets in the geographic area that created those laws. For example, a Japanese website that offers delivery to goods in the US would however be subject to US laws.
2. Effects – the impact of a person’s/corporation’s behavior
3. Legitimacy – those subject to laws should have some role in formulating them
4. Notice – the expression of a change in rules (usually legal or cultural rules) typically represented by a physical boundary
Jurisdiction on the Internet
-more difficult to establish on the Internet than in the real world because geographic boundaries do not exist
Contract – a promise or set of promises between two or more legal entities that provides for an exchange of value (goods or services) between them. A failure to comply with a contract is called a breach of contract.
Subject-matter jurisdiction – a courts authority to decide a particular type of dispute; state courts have subject matter jurisdiction over issues governed by state laws, and federal courts have subject-matter jurisdiction over issues governed by federal laws.
Personal jurisdiction – a court’s authority to hear a case based on the residency of the defendant (when the defendant is a resident of the state in which the court is located)
-an out of state person can voluntarily submit to the jurisdiction or a particular state court by agreeing to do so and signing a forum selection clause, making them subject to their own jurisdiction’s laws as well as the laws of the selected jurisdiction.
Jurisdiction in International Commerce
-is more complex
-generally governed by treaties between the countries engaged in the dispute
-most courts are reluctant to serve as forums for international disputes
Conflict of Laws takes place when business is governed by state, local and federal laws that address the issues in different ways
Contracting and enforcement in E-commerce
-Any contract includes 3 essential elements:
1. An offer
2. An acceptance
3. Consideration
Offer – a commitment with certain terms made to another party. Offer can be revoked as long as no payment, delivery of service, or other consideration has been accepted
Acceptance – the expression of willingness to take an offer, including all of its stated terms
Consideration – the agreed upon exchange of something of value, such as money, property or future services
-an implied contract can also be formed when two or more parties that act as if a contract exists, even if no contract has been written and signed
-when a seller advertises goods for sale on a web site, that seller is not making an offer, but is inviting offers from potential buyers
Warranties on the Web & Authority to form contracts
Warranty disclaimer – is a statement declaring that the seller will not honor some or all implied warranties. These should be in large type, bold font or a contrasting color, as they must be noticeable to the buyer.
Authority to bind – determining whether an individual has the authority to commit a company to a contract
Terms of Service Agreements
TOS (Terms of Service)- a page full of detailed rules and regulations, most of which are intended to limit the Web site owner’s liability for what you might do with the information you obtain from the site
Use and Protection of Intellectual Property
Intellectual Property – a general term that includes all products of the human mind, tangible or intangible
Copyright – the right granted by a government to the author or creator of a literary or artistic work, for a specific length of time provided in the copyright law and gives the creator sole and exclusive right to print, publish, or sell the work.
-can include books, music, recordings, architectural drawings, computer software, etc.
-Fair Use of a copyrighted work includes copying it for use in criticism, comment, news reporting, research, etc.
Patent - an exclusive right granted by the government to an individual to make, use, and sell an invention.
-Business Process Patent – protects a specific set of procedures for conducting a particular business activity.
Trademark – a distinctive mark, device, motto, or implement that a company affixes to the goods it produces for identification purposes.
-Service Mark – similar to a trade mark, but used to identify services provided
Common Law – part of British and US law established by the history of court decisions that has accumulated over many years (precedent?)
Statutory Law – also part of British and US law, arises when the elected legislative bodies pass laws, which are also statutes.
Domain names, Cyberaquatting, and Name stealing
Cybersquatting – registering a domain name that is the trademark of another person or company in the hopes that the owner will pay huge sums of money to acquire the URL
Name Changing – when someone registers purposely misspelled variations of well-known domain names, to lure consumers who make typographical errors
Name Stealing – when someone posing as a site’s administrator changes the ownership of the site’s assigned domain name to another site and owner.
Defamation – a defamatory statement is false and injures the reputation of another person or company. If it injures the reputation of a product of service instead of a person, it is called product disparagement
Trademark dilution – the reduction of the distinctive quality of a trademark by alternative uses
Online Crime, etc.
-includes stalking, distribution of pornography, and gambling
Taxation and Ecommerce
-An online business can be subject to several types of taxes: income tax, property tax, and transaction tax.
Income tax: levied by national, state and local governments on the net income generated by business activities
Transaction tax: include sales tax, use taxes, excise tax, etc.
Property tax: on the personal property and real estate used in the business
Saturday, February 16, 2008
Friday, February 8, 2008
Chapter 6 Key Concepts
7 Types of Auctions
1. English Auction: bidders publicly announce their successive higher bids until no higher bid is forthcoming. Item is sold to the highest bidder. Also called an ascending price auction, or open auction.
-bidders tend not to bid at their full private valuations, only slightly higher than the bidder before, preventing the seller from achieving the maximum price
2. Dutch Auction: an open auction in which bidding starts at a high price and drops until a bidder accepts the price, also known as a descending price auction. Used in the Netherlands by farmers to sell perishable goods.
-are difficult for customers to understand, and expensive to run
3. First-Price Sealed-Bid Auctions: bidders submit their bids independently and are prohibited from sharing information with each other, where the highest bidder wins.
4. Second-Price Sealed-Bid Auctions: similar to first-price, but highest bidder is awarded the item at the price by the second highest bidder. Also called Vickrey auctions.
-encourages bidders to bid the amounts of their private valuations.
5. Open-Outcry Double Auctions: used by the Chicago Board of Trade for commodity futures and stock options. Buy and sell offers are shouted by traders standing in a small area on the exchange floor called a trading pit.
-can get a little hectic
-only work well for items of known quality in large quantities
6. Sealed-Bid Double Auctions: buyers and sellers each submit combined price-quantity bids to an auctioneer, who then matches the seller’s offers to the buyer’s offers until everything is sold. Used by the NYSE.
7. Reverse (Seller-Bid) Auctions: multiple sellers submit price bids to an auctioneer who represents a single buyer. Bids are for a given amount of a specific item that the buyer wants to purchase. Prices go down until no seller is willing to bid lower. Used by Priceline.com
Online Auctions
General Consumer Auctions: most successful example is eBay. Includes a third-party assurance provider, a minimum bid increment, a proxy bid (the bidders maximum bid). Amazon also added auctions to its services.
Specialty Consumer Auctions: special interest markets for certain target markets, in order to meet specified needs of those segments.
Consumer Reverse Auctions and Group Purchasing Sites:
-reverse auctions directed at a consumer market, using a reverse bid, ie. Priceline.com
-group purchasing site: seller posts item with a price. As more bids (without any specified prices) are put in, it forces the seller to reduce its price. Good for non-perishable goods with a high value-to-size ratio
Business to Business Auctions:
Developed from manufacturers’ need to get rid of excess inventory. Liquidation brokers sell excess inventory of smaller companies.
Business to Business Reverse Auctions:
Similar to consumer reverse auction, but takes place between businesses or suppliers
Auction-related services
Escrow services – an independent third party who holds an auction buyer’s payment until the buyer receives the purchased item and is satisfied with what the seller represented it to be. Escrow services charge a fee in order to provide this service.
Auction Directory and Information Services – a web directory of auctions, offering tips, newsletters, info on fair market value, current selling prices, etc.
Auction Software – software that helps buyers and sellers manage their online auctions. Ie. Sniping software helps bidders place the winning bid before the last second of the auction clock.
Consignment Services – an auction for people who wish to sell an item but do not have the time or skills to do it themselves. The consignment services will take care of the whole thing and deduct a fee from the sellers profit.
Virtual Communities and Web Portals
-Mobile Communications Technology
‘Wireless communication capabilities’. The PDA is an example that uses WAP (Wireless Application Protocol).
-WAP allows Web pages formatted in HTML to be displayed on devices with small screens such as PDAs and mobile phones.
-GPS (Global Positioning Service): user enters a destination, GPS tracks the users current location and then announces directions to the destination.
-Mobile Business
Expected to pick up in popularity soon, once mobile phones, notebooks, etc are interconnected in ways that allow people to switch modes of access seamlessly. Few companies have been successful so far.
-Intelligent Software Agents
Sites that help users find products and services for sale on the Web at buyers specifications.
-Virtual Communities
A gathering place for people and businesses that does not have a physical existence, ie. Chat rooms, usenet newsgroups, and web sites. They offer people a way to connect with each other and discuss common issues and interests.
-another form is a ‘virtual learning community’ such as WebCT
-Bogs (Web Logs): web sites that contain commentary written by individuals
-Social Networking Sites: virtual communities that exist for the sole purpose of community (Facebook)
-Idea-based virtual communities: communities based on certain ideas or specialized topics
Revenue Models for Web Portals and Virtual Communities
Advertising Supported
Site is free for users; survives on revenue from ads placed on the site
Mixed Revenue
Charges a fee to users and always runs ads on the site. Monetizing refers to converting existing regular site visitors into fee-paying members.
Internal
Web portals of large organizations that provide info to employees on Intranets that are cost effective for employers.
1. English Auction: bidders publicly announce their successive higher bids until no higher bid is forthcoming. Item is sold to the highest bidder. Also called an ascending price auction, or open auction.
-bidders tend not to bid at their full private valuations, only slightly higher than the bidder before, preventing the seller from achieving the maximum price
2. Dutch Auction: an open auction in which bidding starts at a high price and drops until a bidder accepts the price, also known as a descending price auction. Used in the Netherlands by farmers to sell perishable goods.
-are difficult for customers to understand, and expensive to run
3. First-Price Sealed-Bid Auctions: bidders submit their bids independently and are prohibited from sharing information with each other, where the highest bidder wins.
4. Second-Price Sealed-Bid Auctions: similar to first-price, but highest bidder is awarded the item at the price by the second highest bidder. Also called Vickrey auctions.
-encourages bidders to bid the amounts of their private valuations.
5. Open-Outcry Double Auctions: used by the Chicago Board of Trade for commodity futures and stock options. Buy and sell offers are shouted by traders standing in a small area on the exchange floor called a trading pit.
-can get a little hectic
-only work well for items of known quality in large quantities
6. Sealed-Bid Double Auctions: buyers and sellers each submit combined price-quantity bids to an auctioneer, who then matches the seller’s offers to the buyer’s offers until everything is sold. Used by the NYSE.
7. Reverse (Seller-Bid) Auctions: multiple sellers submit price bids to an auctioneer who represents a single buyer. Bids are for a given amount of a specific item that the buyer wants to purchase. Prices go down until no seller is willing to bid lower. Used by Priceline.com
Online Auctions
General Consumer Auctions: most successful example is eBay. Includes a third-party assurance provider, a minimum bid increment, a proxy bid (the bidders maximum bid). Amazon also added auctions to its services.
Specialty Consumer Auctions: special interest markets for certain target markets, in order to meet specified needs of those segments.
Consumer Reverse Auctions and Group Purchasing Sites:
-reverse auctions directed at a consumer market, using a reverse bid, ie. Priceline.com
-group purchasing site: seller posts item with a price. As more bids (without any specified prices) are put in, it forces the seller to reduce its price. Good for non-perishable goods with a high value-to-size ratio
Business to Business Auctions:
Developed from manufacturers’ need to get rid of excess inventory. Liquidation brokers sell excess inventory of smaller companies.
Business to Business Reverse Auctions:
Similar to consumer reverse auction, but takes place between businesses or suppliers
Auction-related services
Escrow services – an independent third party who holds an auction buyer’s payment until the buyer receives the purchased item and is satisfied with what the seller represented it to be. Escrow services charge a fee in order to provide this service.
Auction Directory and Information Services – a web directory of auctions, offering tips, newsletters, info on fair market value, current selling prices, etc.
Auction Software – software that helps buyers and sellers manage their online auctions. Ie. Sniping software helps bidders place the winning bid before the last second of the auction clock.
Consignment Services – an auction for people who wish to sell an item but do not have the time or skills to do it themselves. The consignment services will take care of the whole thing and deduct a fee from the sellers profit.
Virtual Communities and Web Portals
-Mobile Communications Technology
‘Wireless communication capabilities’. The PDA is an example that uses WAP (Wireless Application Protocol).
-WAP allows Web pages formatted in HTML to be displayed on devices with small screens such as PDAs and mobile phones.
-GPS (Global Positioning Service): user enters a destination, GPS tracks the users current location and then announces directions to the destination.
-Mobile Business
Expected to pick up in popularity soon, once mobile phones, notebooks, etc are interconnected in ways that allow people to switch modes of access seamlessly. Few companies have been successful so far.
-Intelligent Software Agents
Sites that help users find products and services for sale on the Web at buyers specifications.
-Virtual Communities
A gathering place for people and businesses that does not have a physical existence, ie. Chat rooms, usenet newsgroups, and web sites. They offer people a way to connect with each other and discuss common issues and interests.
-another form is a ‘virtual learning community’ such as WebCT
-Bogs (Web Logs): web sites that contain commentary written by individuals
-Social Networking Sites: virtual communities that exist for the sole purpose of community (Facebook)
-Idea-based virtual communities: communities based on certain ideas or specialized topics
Revenue Models for Web Portals and Virtual Communities
Advertising Supported
Site is free for users; survives on revenue from ads placed on the site
Mixed Revenue
Charges a fee to users and always runs ads on the site. Monetizing refers to converting existing regular site visitors into fee-paying members.
Internal
Web portals of large organizations that provide info to employees on Intranets that are cost effective for employers.
Chapter 5 Key Concepts
Supply chain – the part of an industry value chain that precedes a particular strategic business unit
E-sourcing – the use of internet technologies in sourcing potential suppliers
Electronic Data Interchange (EDI) – a computer to computer transfer of business information between two businesses that uses a standard format of some kind
-firms that trade this data in specific formats are EDI compatible
-trade data such as transaction info, price quotes, & order status inquiries
-the most common method for B2B transactions
-first developed by freight companies to reduce paperwork and streamline the interchange of information-the internet provides the most inexpensive communication channel that lacked in EDI for many years
Value Added Networks (VANs) – a company that provides communications equipment, software, and skills needed to receive, store and forward electronic messages that contain EDI transaction sets.
-businesses use VANs instead of connecting directly to their trading partners by installing EDI translator software that is compatible with the VAN
Value creation in the Supply Chain
-Tier one suppliers: long-term relationships formed with a small number of very capable suppliers
-Tier two suppliers: these suppliers in turn develop long-term relationships with a larger number of the next level of suppliers
-Tier three suppliers: provide components and raw materials to the previous two levels
Benefits:
-increase the speed and reduce the cost of processing transactions
-reduce errors in entering data
-receive rapid notification about product design changes and adjustments
-share information about customer demand fluctuations
-increase supply-chain efficiencies
Web Portals
A site that serves as a customizable home base from which users do their searching, navigating, and other web-based activity
E-marketplaces and Portals
After the Internet emerged in the 1990’s spurred the development of different models of B2B e commerce, such as:
-Independent Industry Marketplaces
A collection of portals that include industry marketplaces, independent exchanges, and public markets, which are all information sources for companies of the same industry
-Private Stores and Customer Portals
A private store is a pass-word protected area of a web site that offers individual customers negotiated price reductions on a limited selection of products and customized features.
A customer portal is a corporate web site designed to meet the needs of customers by offering additional services such as private stores, part-number cross-referencing, etc.
-Private Company Marketplaces
A marketplace that provides auctions, requests for quotes postings, and other features to companies that want to operate their own marketplace
-Industry Consortia-Sponsored Marketplaces
A marketplace formed by several large buyers in a particular industry
E-sourcing – the use of internet technologies in sourcing potential suppliers
Electronic Data Interchange (EDI) – a computer to computer transfer of business information between two businesses that uses a standard format of some kind
-firms that trade this data in specific formats are EDI compatible
-trade data such as transaction info, price quotes, & order status inquiries
-the most common method for B2B transactions
-first developed by freight companies to reduce paperwork and streamline the interchange of information-the internet provides the most inexpensive communication channel that lacked in EDI for many years
Value Added Networks (VANs) – a company that provides communications equipment, software, and skills needed to receive, store and forward electronic messages that contain EDI transaction sets.
-businesses use VANs instead of connecting directly to their trading partners by installing EDI translator software that is compatible with the VAN
Value creation in the Supply Chain
-Tier one suppliers: long-term relationships formed with a small number of very capable suppliers
-Tier two suppliers: these suppliers in turn develop long-term relationships with a larger number of the next level of suppliers
-Tier three suppliers: provide components and raw materials to the previous two levels
Benefits:
-increase the speed and reduce the cost of processing transactions
-reduce errors in entering data
-receive rapid notification about product design changes and adjustments
-share information about customer demand fluctuations
-increase supply-chain efficiencies
Web Portals
A site that serves as a customizable home base from which users do their searching, navigating, and other web-based activity
E-marketplaces and Portals
After the Internet emerged in the 1990’s spurred the development of different models of B2B e commerce, such as:
-Independent Industry Marketplaces
A collection of portals that include industry marketplaces, independent exchanges, and public markets, which are all information sources for companies of the same industry
-Private Stores and Customer Portals
A private store is a pass-word protected area of a web site that offers individual customers negotiated price reductions on a limited selection of products and customized features.
A customer portal is a corporate web site designed to meet the needs of customers by offering additional services such as private stores, part-number cross-referencing, etc.
-Private Company Marketplaces
A marketplace that provides auctions, requests for quotes postings, and other features to companies that want to operate their own marketplace
-Industry Consortia-Sponsored Marketplaces
A marketplace formed by several large buyers in a particular industry
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