Maf 635 E Commerce

PART 1 CHAPTER 1 The Revolution Is Just Beginning CHAPTER 2 E-commerce Business Models and Concepts Introduction to E-commerce C H A P T E R 1 The Revolution Is Just Beginning LEARNING OBJECTIVES After reading this chapter, you will be able to:  ¦  ¦  ¦  ¦  ¦  ¦  ¦  ¦ Define e-commerce and describe how it differs from e-business. Identify and describe the unique features of e-commerce technology and discuss their business significance. Describe the major types of e-commerce.Discuss the origins and growth of e-commerce. Understand the vision and forces operating during the first five years of e-commerce, and assess its successes, surprises, and failures. Identify several factors that will define the next five years of e-commerce. Describe the major themes underlying the study of e-commerce. Identify the major academic disciplines contributing to e-commerce research. A m a z o n a t 1 0 : Profitable At Last A mazon. com is one of the Web’s most exciting and instr uctive stories.Started in a garage by Jeff Bezos in 1995, it has since grown to become the largest Internet retailer, with the highest levels of customer satisfaction, the fastest revenue growth rates, and finally, after nine years, profitable. One of the Internet â€Å"Big Four† companies, along with Yahoo, eBay and Google, few would have thought it possible when Amazon first opened for business that an online bookstore would become one of the premiere general retailers in the world. But Amazon’s ability to maintain operations at a sufficiently profitable level is a fact that continues to worry investors in 2005.Critics are of two minds: either Amazon will become the online Wal-Mart (and suffer from its huge size just as WalMart does) or it will fail to deliver superior growth and profits because it has spread itself too thin, taken on too many product lines, and given away too much revenue to customers by offering free shipping and superior service. Supporters, and B ezos himself, counter that Amazon has become the Web’s largest retailer on a revenue basis by focusing on the customer, not short-term profits, and that it will ultimately become one of the most profitable by following the same strategy.Amazon certainly has had a roller coaster ride in its ten brief years. In December 1999, Jeff Bezos graced the cover of Time magazine as its Person of the Year. In the same month, Amazon’s stock reached a peak of $113 per share. In January 2001, Amazon reported a whopping $1. 411 billion as its overall loss for the year. Its stock hit a low of $6 a share. Amazon laid off 1,300 employees, constituting about 15% of its workforce. Questions about its long-term viability abounded. Bezos promised he would make the company profitable in two years, but few believed this was possible.But, in 2003, Amazon reported soaring sales; it achieved its first annual profit ever (about $35 @ Amazon. com’s first Web site 3 4 CHAPTER 1 The Revolution Is Just Beginning million), and its stock price more than doubled to $25 a share. The good news continued into 2004 when Amazon reported profits of $588 million on $6. 92 billion in revenue. How was Amazon able to turn around its business from a $1. 4 billion annual loss to a $588 million profitable operation despite the dot. om stock market crash and the withdrawal of venture capital funding for e-commerce companies? The story of Amazon. com, the most well-known e-commerce company in the United States, in many ways mirrors the story of e-commerce itself. So, let’s take a closer look at Amazon’s path to preview many of the issues we’ll be discussing throughout this book. In 1994, Jeff Bezos, then a 29-year-old senior vice president at D. E. Shaw, a Wall Street investment bank, read that Internet usage was growing at 2,300% per year.To Bezos, that number represented an extraordinary opportunity. He quit his job and investigated what products he might be able to sell successfully online. He quickly hit upon books—with over 3 million in print at any one time, no physical bookstore could stock more than a small percentage. A â€Å"virtual bookstore† could offer a much greater selection. He also felt consumers would feel less need to actually â€Å"touch and feel† a book before buying it. The comparative dynamics of the book publishing, distributing, and retailing industry were also favorable.With over 2,500 publishers in the United States, and the two largest retailers, Barnes and Noble and Borders, accounting for only 12% of total sales, there were no â€Å"800-pound gorillas† in the market. The existence of two large distributors, Ingram Books and Baker and Taylor, meant that Amazon would have to stock only minimal inventory. Bezos easily raised several million dollars from private investors and in July 1995, Amazon. com opened for business on the Web. Amazon offered consumers four compelling reasons to shop ther e: (1) selection (a database of 1. million titles), (2) convenience (shop anytime, anywhere, with ordering simplified by Amazon’s patented â€Å"1-Click† express shopping technology), (3) price (high discounts on bestsellers), and (4) service (e-mail and telephone customer support, automated order confirmation, tracking and shipping information, and more). In January 1996, Amazon moved from a small 400-square-foot office into a 17,000-square-foot warehouse. By the end of 1996, Amazon had almost 200,000 customers. Its revenues had climbed to $15. 6 million, but the company posted an overall loss of $6. 24 million.In May 1997, Amazon went public, raising $50 million. Its initial public offering documents identified several ways in which Amazon expected to have a lower cost structure than traditional bookstores: it would not need to invest in expensive retail real estate, it would have reduced personnel requirements, and it would not have to carry extensive inventory, sin ce it was relying in large part on book distributors. During 1997, Amazon continued to grow. It served its one-millionth unique customer, expanded its Seattle warehouse, and built a second 200,000-square-foot distribution center in Delaware.By the end of 1997, revenues had expanded to $148 million for the year, but at the same time, losses also grew, to $31 million. In 1998, Amazon expanded its product line, first adding music CDs and then videos and DVDs. Amazon was no longer satisfied with merely selling books. Its business strategy was now â€Å"to become the best place to buy, find, and discover any product or Amazon at 10: Profitable At Last 5 services available online. † It also opened Web sites in Great Britain and Germany. Amazon, pundits noted, was planning to be the online Wal-Mart. Revenues for the year increased significantly, to $610 million, but the osses also continued to mount, quadrupling to $125 million. The year 1999 was a watershed year for Amazon. Bezosâ €™s announced goal was for Amazon to become the â€Å"Earth’s Biggest Store. † In February, Amazon borrowed over $1 billion, using the funds to finance expansion and cover operating losses. During the year, it added electronics, toys, home improvement products, software, and video games to its product lines. It also introduced several marketplaces, including Amazon. com Auctions (similar to that offered by eBay), zShops (online storefronts for small retailers), and sothebys. amazon. om, a joint venture with the auction house Sotheby’s. To service these new product lines, Amazon significantly expanded its warehouse and distribution capabilities, adding eight new distribution centers comprising approximately 4 million square feet. By the end of 1999, Amazon had more than doubled its 1998 revenues, recording sales of $1. 6 billion. But at the same time, Amazon’s losses showed no signs of abating, reaching $720 million for the year. Although Bezos and Ama zon were still riding high at the end of December 1999, in hindsight, it’s possible to say that the handwriting was on the wall.Wall Street analysts, previously willing to overlook continuing and mounting losses as long as the company was expanding into new markets and attracting customers, began to wonder if Amazon would ever show a profit. They pointed out that as Amazon built more and more warehouses brimming with goods, and hired more and more employees (it had 9,000 by the end of 2000), it strayed farther and farther from its original vision of being a †virtual† retailer with lean inventories, low headcount, and significant cost savings over traditional bookstores.The year 2000 ended on a much different note than 1999 for Amazon. No longer the darling of Wall Street, its stock price had fallen significantly from its December 1999 high. In January 2001, it struggled to put a positive spin on its financial results for 2000, noting that while it had recorded a s taggering $1. 4 billion loss on revenues of $2. 7 billion, its fourth-quarter loss was slightly less than analysts’ projections. For the first time, it also announced a target for profitability, promising a â€Å"pro forma operating profit† by the fourth quarter of 2001.Few analysts were impressed, pointing out that the method by which Amazon was suggesting its profit be calculated was not in accordance with generally accepted accounting principles. They also noted that growth had slowed in Amazon’s core books, music, and video business, and profit margins were slim in the faster-growing categories, such as consumer electronics. In 2001 and 2002, Bezos and fellow executives began to implement their strategy for profitability: cut prices, offer free shipping, and leverage Amazon’s investment in infrastructure and consumer brands, while lowering costs of operation significantly.By evolving and leveraging the existing business model, Amazon hoped to do what analysts thought was impossible. The â€Å"easy† part of the strategy was driving business revenues higher by offering customers the â€Å"lowest possible prices† for a broad range of goods, providing free shipping for orders greater than $25, and then multiplying sources of revenue. Amazon’s 6 CHAPTER 1 The Revolution Is Just Beginning SOURCES: â€Å"Amazon Announces Free Cash Flow Surpassed $500 Million for the First Time; Customers Joined Amazon Prime at an Accelerated Rate,† Amazon. com, February 2, 2006; Amazon. om Form 10-Q for the nine months ended September 30, 2005, filed with the Securities and Exchange Commission on October 27, 2005; †Amazon Faces the Challenges of Its Second Decade,† by Paul Festa, Cnetnews. com, July 15, 2005; â€Å"A Retail Revolution Turns 10,† by Gary Rivlin, New York Times, July 10, 2005; â€Å"Tabs on Tech: The Internet,† by Laurie Kawakami, Wall Street Journal, June 1, 2005; â€Å"Internet Big Four: Worth a Look As Growth Stocks,† by James B. Stewart, Wall Street Journal, May 4, 2005; â€Å"Amazon Net Falls As Rivals Take Toll, by Mylene Mangalindan, Wall Street Journal, April 27, 2005; Amazon. om, Inc. Form 10-K for the fiscal year ended December 31, 2004, filed with the Securities and Exchange Commission on March 11, 2005; â€Å"Amazon Gets the Last Laugh,† by Chip Bayers, Business 2. 0, September 2002. [email  protected] and Amazon Marketplace allow other businesses to fully integrate their Web sites into Amazon’s site to sell their branded goods, but use Amazon’s fulfillment and payment infrastructure. Nordstrom, Toys â€Å"R† Us, Gap Inc. , Target, and many other retailers use Amazon to sell their goods and then pay Amazon commissions and fees.Amazon also offers its expertise in Web site hosting through its Merchant. com program to national brands such as Target. In the Amazon Marketplace program, individuals are encouraged to se ll their used or new goods on Amazon’s Web site even when they compete directly with Amazon’s sales of the same goods. Amazon reports that sales by third parties now represent 27% of revenues and that it makes as much profit on commissions from other vendors as it does from its own sales. Lowering costs proved difficult, but not impossible.In early 2001, Amazon closed two of its eight warehouses and laid off 15% of its workforce. It hired 35-year-old engineer Jeffrey Wilke and a half-dozen mathematicians to figure out how to cut costs. The team found a way to redistribute book inventory among the warehouses to reduce shipping costs; used Six Sigma quality measures to reduce errors in fulfillment; consolidated orders from around the country prior to shipping (adding an extra day to fulfillment of â€Å"free shipping† orders); and further lowered shipping costs by using its own trucks to deliver orders to postal system centers.Wilke and his team reduced fulfillmen t costs from 15% of revenue in 2000 down to 10% by 2003. The effort contributed to Amazon’s first ever annual profit in 2003: $35. 3 million on revenues of $5. 26 billion. The results were even better in 2004: a $588. 5 million profit on revenues of $6. 92 billion. Looking back on the last ten years, it’s clear that Wall Street and Main Street have differing views on Amazon. Amazon has been a tremendous Main Street e-commerce success story even if it took nine years to achieve profitable operations.It has changed its business model several times, focused on improving the efficiency of its operations, and maintained a steady commitment to keeping its 49 million customers satisfied. In 2005, Amazon was one of the leaders in a survey of customer satisfaction with retail Web sites, while traditional bricks-and-mortar retailers such as Target and Costco received low marks for their online offerings. Right now, Amazon must be counted as an online retailing success story. Few would have predicted this outcome in 1995, or even in 2000.For the future, however, Amazon faces powerful competitors who keep innovating, such as eBay and Yahoo! Shopping. eBay has been profitable from its first day, while Yahoo achieved profitability in 2002. But despite Wall Street critics, Bezos has not changed his original vision: in 2005, for instance, he announced additional expenditures to increase customer convenience, such as a flat-fee shipping membership program (Amazon Prime). And although Amazon’s revenues continue to grow, profits in 2005 were down compared to 2004.So the Amazon roller coaster ride continues, and what’s around the next curve remains to be seen. E-commerce: The Revolution Is Just Beginning 7 T 1. 1 he Amazon story is emblematic of the e-commerce environment of the past ten years: an early period of business vision, inspiration, and experimentation, followed by the realization that establishing a successful business model based on those v isions would not be easy, which then ushered in a period of retrenchment and reevaluation, ultimately leading to a more finely tuned business model that actually produces profits.During the last two years, the fortunes of the ecommerce revolution once again have been contrary to what many people thought would happen after the stock market crash of March 2001, when the stock market value of e-commerce, telecommunications, and other technology stocks plummeted by more than 90%. After the bubble burst, many people were quick to write off ecommerce and predicted that e-commerce growth would stagnate, and the Internet audience itself would plateau. But they were wrong. E-COMMERCE: THE REVOLUTION IS JUST BEGINNING The e-commerce revolution is just beginning.For instance: †¢ Online consumer sales expanded by more than 23% in 2005 to an estimated $142–$172 billion (eMarketer, Inc. , 2005a; Shop. org and Forrester Research, 2005). †¢ The number of individuals online in the U nited States increased to 175 million in 2005, up from 170 million in 2004 (The total population of the United States is about 300 million. ) (eMarketer, Inc. , 2005b; U. S. Census Bureau, 2005). †¢ Of the total 112 million households in the United States, the number online increased to 71 million or 63% of all households (U. S.Census Bureau, 2005; eMarketer, Inc. , 2005b; Pew Research Center, 2005). †¢ On an average day, 70 million people go online. Around 140 million send e-mail, 8 million have created a blog, 4 million share music on peer-to-peer networks, and 3 million use the Internet to rate a person, product, or service (Pew Research Center, 2005; Pew Internet & American Life Project, 2004). †¢ The number of people who have purchased something online expanded to about 110 million, with additional millions shopping (gathering information) but not purchasing (Pew Research Center, 2005). The demographic profile of new online shoppers broadened to become more like ordinary American shoppers (Pew Research Center, 2005; Fallows, 2004). †¢ B2B e-commerce—use of the Internet for business-to-business commerce— expanded about 30% in 2005 to more than $1. 5 trillion (U. S. Department of Commerce, 2005). †¢ The Internet technology base gained greater depth and power, as more than 42 million households had broadband cable or DSL access to the Internet in 2005—about 38% of all households (eMarketer, Inc. , 2005c). 8 CHAPTER 1 The Revolution Is Just Beginning Initial public offerings (IPOs) returned, with 233 IPOs in 2004—more than the number of IPOs in 2002 and 2003 combined. The Internet stock group rebounded in value, along with the entire NASDAQ stock exchange, which is primarily composed of technology stocks. The rebound in Internet stocks was led by Google’s IPO, which raised $1. 67 billion. Google’s stock opened at $85 on the first day and has since rocketed to the $300 range (Hoovers, 2005; Riv lin, 2005; Elgin, 2005). These developments signal many of the themes in the new edition of this book (see Table 1. 1).More and more people and businesses will be using the Internet to conduct commerce; the e-commerce channel will deepen as more products and services come online; more industries will be transformed by e-commerce, including travel reservations, music and entertainment, news, software, education, and finance; Internet technology will continue to drive these changes as broadband telecommunications comes to more households; pure e-commerce business models will be refined further to achieve higher levels of profitability; and traditional retail brands such as Sears, J.C. Penney, and Wal-Mart will further extend their multichannel, bricks-and-clicks strategies and retain their dominant retail positions. At the societal level, other trends are apparent. The major digital copyright owners have increased their pursuit of online file-swapping services; states have successfull y moved toward taxation of Internet sales; and sovereign nations have expanded their surveillance of, and control over, Internet communications and content. In 1994, e-commerce as we now know it did not exist.In 2005, just ten years later, around 110 million American consumers are expected to spend about $142–$172 billion purchasing products and services on the Internet’s World Wide Web (eMarketer, Inc. , 2005b; Shop. org and Forrester Research, 2005; Rainie, 2005). Although the terms Internet and World Wide Web are often used interchangeably, they are actually two very different things. The Internet is a worldwide network of computer networks, and the World Wide Web is one of the Internet’s most popular services, providing access to over 8 billion Web pages.We describe both more fully later in this section and in Chapter 3. In 2005, businesses are expected to spend over $1. 5 trillion purchasing goods and services from other businesses on the Web (U. S. Departm ent of Commerce, 2005). From a standing start in 1995, this type of commerce, called electronic commerce or e-commerce, has experienced growth rates of well over 100% a year; although the rate has slowed and is now growing at about 25% a year. These developments have created the first widespread digital electronic marketplaces. Even more impressive than its spectacular initial growth is its future predicted growth.By 2008, analysts estimate that consumers will be spending around $232 billion and businesses about $3 trillion in online transactions (eMarketer, Inc. , 2005a; 2003; U. S. Department of Commerce, 2005). E-commerce: The Revolution Is Just Beginning 9 TABLE 1. 1 BUSINESS MAJOR TRENDS IN E-COMMERCE, 2006 †¢ Retail consumer e-commerce continues to grow at double-digit rates. †¢ The online demographics of shoppers continues to broaden. †¢ Online sites continue to strengthen profitability by refining their business models and leveraging the capabilities of the In ternet. The first wave of e-commerce transformed the business world of books, music, and air travel. In the second wave, eight new industries are facing a similar transformation: telephones, movies, television, jewelry, real estate, hotels, bill payments, and software. †¢ The breadth of e-commerce offerings grows, especially in travel, information clearinghouses, entertainment, retail apparel, appliances, and home furnishings. †¢ Small businesses and entrepreneurs continue to flood into the e-commerce marketplace, often riding on the infrastructures created by industry giants such as Amazon, eBay, and Overture. Brand extension through the Internet grows as large firms such as Sears, J. C. Penney, L. L. Bean, and Wal-Mart pursue integrated, multi-channel bricks-and-clicks strategies. †¢ B2B supply chain transactions and collaborative commerce continue to strengthen and grow beyond the $1. 5 trillion mark. TECHNOLOGY †¢ Wireless Internet connections (Wi-Fi, Wi-Max, and 3G telephone) grow rapidly. †¢ Podcasting takes off as a new media format for distribution of radio and user-generated commentary. †¢ The Internet broadband foundation becomes stronger in households and businesses.Bandwidth prices fall as telecommunications companies re-capitalize their debts. †¢ RSS (Really Simple Syndication) grows to become a major new form of user-controlled information distribution that rivals e-mail in some applications. †¢ Computing and networking component prices continue to fall dramatically. †¢ New Internet-based models of computing such as . NET and Web services expand B2B opportunities. SOCIETY †¢ Self-publishing (user-generated content) and syndication in the form of blogs, wikis and social networks grow to form an entirely new self-publishing forum. Newspapers and other traditional media adopt online, interactive models. †¢ Conflicts over copyright management and control grow in significance. †¢ Over half th e Internet user population (about 80 million adults) join a social group on the Internet. †¢ Taxation of Internet sales becomes more widespread and accepted by large online merchants. †¢ Controversy over content regulation and controls increases. †¢ Surveillance of Internet communications grows in significance. †¢ Concerns over commercial and governmental privacy invasion grow. Internet fraud and abuse occurrences increase. †¢ First Amendment rights of free speech and association on the Internet are challenged. †¢ Spam grows despite new laws and promised technology fixes. †¢ Invasion of personal privacy on the Web expands as marketers find new ways to track users. 10 CHAPTER 1 The Revolution Is Just Beginning THE FIRST THIRTY SECONDS It is important to realize that the rapid growth and change that has occurred in the first ten years of e-commerce represents just the beginning—what could be called the first thirty seconds of the e-commerce re volution.The same technologies that drove the first decade of e-commerce (described in Chapter 3) continue to evolve at exponential rates. Changes in underlying information technologies and continuing entrepreneurial innovation promise as much change in the next decade as seen in the last decade. The twenty-first century will be the age of a digitally enabled social and commercial life, the outlines of which we can barely perceive at this time. It appears likely that e-commerce will eventually impact nearly all commerce, or that most commerce will be e-commerce by the year 2050.Business fortunes are made—and lost—in periods of extraordinary change such as this. The next five years hold out extraordinary opportunities—as well as risks—for new and traditional businesses to exploit digital technology for market advantage. For society as a whole, the next few decades offer the possibility of extraordinary gains in social wealth as the digital revolution works its way through larger and larger segments of the world’s economy, offering the possibility of high rates of productivity and income growth in an inflation-free environment.This book will help you perceive and understand the opportunities and risks that lie ahead. By the time you finish, you will be able to identify the technological, business, and social forces that have shaped the first era of e-commerce and extend that understanding into the years ahead. WHAT IS E-COMMERCE? e-commerce the use of the Internet and the Web to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals Our focus in this book is e-commerce—the use of the Internet and the Web to transact business.More formally, we focus on digitally enabled commercial transactions between and among organizations and individuals. Each of these components of our working definition of e-commerce is important. Digitally enabled transactions incl ude all transactions mediated by digital technology. For the most part, this means transactions that occur over the Internet and the Web. Commercial transactions involve the exchange of value (e. g. , money) across organizational or individual boundaries in return for products and services.Exchange of value is important for understanding the limits of e-commerce. Without an exchange of value, no commerce occurs. THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS There is a debate among consultants and academics about the meaning and limitations of both e-commerce and e-business. Some argue that e-commerce encompasses the entire world of electronically based organizational activities that support a firm’s market exchanges—including a firm’s entire information system’s infrastructure (Rayport and Jaworksi, 2003).Others argue, on the other hand, that e-business encompasses the entire world of internal and external electronically based activities, including e-c ommerce (Kalakota and Robinson, 2003). E-commerce: The Revolution Is Just Beginning 11 FIGURE 1. 1 THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS E-commerce primarily involves transactions that cross firm boundaries. E-business primarily involves the application of digital technologies to business processes within the firm. We think that it is important to make a working distinction between e-commerce and e-business because we believe they refer to different phenomena.For purposes of this text, we will use the term e-business to refer primarily to the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm. For the most part, in our view, e-business does not include commercial transactions involving an exchange of value across organizational boundaries. For example, a company’s online inventory control mechanisms are a component of e-business, but such internal processes do not directly generate revenue for the firm from outside businesses or consumers, as e-commerce, by definition, does.It is true, however, that a firm’s e-business infrastructure provides support for online e-commerce exchanges; the same infrastructure and skill sets are involved in both e-business and e-commerce. Ecommerce and e-business systems blur together at the business firm boundary, at the point where internal business systems link up with suppliers or customers, for instance. E-business applications turn into e-commerce precisely when an exchange of value occurs (see Mesenbourg, U. S. Department of Commerce, August 2001 for a similar view).We will examine this intersection further in Chapter 12. e-business the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm WHY STUDY E-COMMERCE? Why are there college courses and textbooks on e-commerce when there are no courses or textbooks on â€Å"TV Commerce,† â€Å"Radio Commerce,à ¢â‚¬  â€Å"Direct Mail Commerce,† â€Å"Railroad Commerce,† or â€Å"Highway Commerce,† even though these 12 CHAPTER 1 The Revolution Is Just Beginning information asymmetry any disparity in relevant market information among parties in a transaction echnologies had profound impacts on commerce in the twentieth century and account for far more commerce than e-commerce? The reason, as you shall see, is that e-commerce technology (discussed in detail in Chapters 3 and 4) is different and more powerful than any of the other technologies we have seen in the past century. While these other technologies transformed economic life in the twentieth century, the evolving Internet and other information technologies will shape the twenty-first century. Prior to the development f e-commerce, the process of marketing and selling goods was a mass-marketing and sales force-driven process. Consumers were viewed as passive targets of advertising â€Å"campaigns† and brand ing blitzes intended to influence their long-term product perceptions and immediate purchasing behavior. Selling was conducted in well-insulated â€Å"channels. † Consumers were considered to be trapped by geographical and social boundaries, unable to search widely for the best price and quality. Information about prices, costs, and fees could be hidden from the consumer, creating profitable â€Å"information asymmetries† for the selling firm.Information asymmetry refers to any disparity in relevant market information among parties in a transaction. It was so expensive to change national or regional prices in traditional retailing (what are called menu costs) that â€Å"one national price† was the norm, and dynamic pricing to the marketplace— changing prices in real time—was unheard of. E-commerce has challenged much of this traditional business thinking. Table 1. 2 lists seven unique features of e-commerce technology that both challenge traditiona l business thinking and explain why we have so much interest in e-commerce. SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGYEach of the dimensions of e-commerce technology and their business significance listed in Table 1. 2 deserves a brief exploration, as well as a comparison to both traditional commerce and other forms of technology-enabled commerce. marketplace physical space you visit in order to transact Ubiquity In traditional commerce, a marketplace is a physical place you visit in order to transact. For example, television and radio typically motivate the consumer to go someplace to make a purchase. E-commerce, in contrast, is characterized by its ubiquity: it is available just about everywhere, at all times.It liberates the market from being restricted to a physical space and makes it possible to shop from your desktop, at home, at work, or even from your car, using mobile commerce. The result is called a marketspace—a marketplace extended beyond traditional boundarie s and removed from a temporal and geographic location. From a consumer point of view, ubiquity reduces transaction costs—the costs of participating in a market. To transact, it is no longer necessary that you spend time and money traveling to a market. At a broader level, the ubiquity of e-commerce lowers the cognitive energy required to transact in a marketspace.Cognitive energy refers to the mental effort required to complete a task. Humans generally seek to reduce cognitive energy outlays. When given a choice, humans will ubiquity available just about everywhere, at all times. marketspace marketplace extended beyond traditional boundaries and removed from a temporal and geographic location E-commerce: The Revolution Is Just Beginning 13 TABLE 1. 2 SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY BUSINESS SIGNIFICANCE The marketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location. â€Å"Marketspace† is created; shopping can take place anywhere.Customer convenience is enhanced, and shopping costs are reduced. Commerce is enabled across cultural and national boundaries seamlessly and without modification. â€Å"Marketspace† includes potentially billions of consumers and millions of businesses worldwide. There is one set of technical media standards across the globe. Video, audio, and text marketing messages are integrated into a single marketing message and consuming experience. Consumers are engaged in a dialog that dynamically adjusts the experience to the individual, and makes the consumer a co-participant in the process of delivering goods to the market.Information processing, storage, and communication costs drop dramatically, while currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap, and accurate. Personalization of marketing messages and customization of products and services are based on individual characteristics. E-COMMERCE TECHNOLOGY DIMENSION U biquity—Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime. Global reach—The technology reaches across national boundaries, around the earth. Universal standards—There is one set of technology standards, namely Internet standards.Richness—Video, audio, and text messages are possible. Interactivity—The technology works through interaction with the user. Information density—The technology reduces information costs and raises quality. Personalization/Customization—The technology allows personalized messages to be delivered to individuals as well as groups. choose the path requiring the least effort—the most convenient path (Shapiro and Varian, 1999; Tversky and Kahneman, 1981). Global Reach E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost-effectively than is true in traditional commerce.As a resul t, the potential market size for e-commerce merchants is roughly equal to the size of the world’s online population (over 1 billion in 2005, and growing rapidly, according to the Computer Industry 14 CHAPTER 1 The Revolution Is Just Beginning reach the total number of users or customers an e-commerce business can obtain Almanac) (Computer Industry Almanac, Inc. , 2006). The total number of users or customers an e-commerce business can obtain is a measure of its reach (Evans and Wurster, 1997). In contrast, most traditional commerce is local or regional—it involves local merchants or national merchants with local outlets.Television and radio stations, and newspapers, for instance, are primarily local and regional institutions with limited but powerful national networks that can attract a national audience. In contrast to e-commerce technology, these older commerce technologies do not easily cross national boundaries to a global audience. Universal Standards One striking ly unusual feature of e-commerce technologies is that the technical standards of the Internet, and therefore the technical standards for conducting e-commerce, are universal standards—they are shared by all nations around the world.In contrast, most traditional commerce technologies differ from one nation to the next. For instance, television and radio standards differ around the world, as does cell telephone technology. The universal technical standards of the Internet and e-commerce greatly lower market entry costs—the cost merchants must pay just to bring their goods to market. At the same time, for consumers, universal standards reduce search costs—the effort required to find suitable products.And by creating a single, one-world marketspace, where prices and product descriptions can be inexpensively displayed for all to see, price discovery becomes simpler, faster, and more accurate (Bakos, 1997; Kambil, 1997). And users of the Internet, both businesses and individuals, experience network externalities—benefits that arise because everyone uses the same technology. With e-commerce technologies, it is possible for the first time in history to easily find many of the suppliers, prices, and delivery terms of a specific product anywhere in the world, and to view them in a coherent, comparative environment.Although this is not necessarily realistic today for all or many products, it is a potential that will be exploited in the future. universal standards standards that are shared by all nations around the world Richness richness the complexity and content of a message Information richness refers to the complexity and content of a message (Evans and Wurster, 1999). Traditional markets, national sales forces, and small retail stores have great richness: they are able to provide personal, face-to-face service using aural and visual cues when making a sale.The richness of traditional markets makes them a powerful selling or commercial env ironment. Prior to the development of the Web, there was a trade-off between richness and reach: the larger the audience reached, the less rich the message (see Figure 1. 2). interactivity technology that allows for two-way communication between merchant and consumer Interactivity Unlike any of the commercial technologies of the twentieth century, with the possible exception of the telephone, e-commerce technologies allow for interactivity, meaning they enable two-way communication between merchant and consumer.Television, for instance, cannot ask viewers any questions or enter into conversations E-commerce: The Revolution Is Just Beginning 15 FIGURE 1. 2 THE CHANGING TRADE-OFF BETWEEN RICHNESS AND REACH E-commerce technologies have changed the traditional tradeoff between richness and reach. The Internet and the Web can deliver, to an audience of millions, â€Å"rich† marketing messages with text, video, and audio, in a way not possible with traditional commerce technologies such as radio, television, or magazines. SOURCE: Evans and Wurster, 2000. ith them, and it cannot request that customer information be entered into a form. In contrast, all of these activities are possible on an e-commerce Web site. Interactivity allows an online merchant to engage a consumer in ways similar to a face-to-face experience, but on a much more massive, global scale. Information Density The Internet and the Web vastly increase information density—the total amount and quality of information available to all market participants, consumers, and merchants alike. E-commerce technologies reduce information collection, storage, processing, and communication costs.At the same time, these technologies increase greatly the currency, accuracy, and timeliness of information—making information more useful and important than ever. As a result, information becomes more plentiful, less expensive, and of higher quality. A number of business consequences result from the gro wth in information density. In e-commerce markets, prices and costs become more transparent. Price transparency refers to the ease with which consumers can find out the variety of prices in a market; cost transparency refers to the ability of consumers to discover the actual costs merchants pay for products (Sinha, 2000).But there are advantages for merchants as well. Online merchants can discover much more about consumers; this allows merchants to segment the market into groups willing to pay different prices and permits them to engage in price discrimination—selling the same goods, or nearly information density the total amount and quality of information available to all market participants 16 CHAPTER 1 The Revolution Is Just Beginning the same goods, to different targeted groups at different prices.For instance, an online merchant can discover a consumer’s avid interest in expensive exotic vacations, and then pitch expensive exotic vacation plans to that consumer at a premium price, knowing this person is willing to pay extra for such a vacation. At the same time, the online merchant can pitch the same vacation plan at a lower price to more price-sensitive consumers (Shapiro and Varian, 1999). Merchants also have enhanced abilities to differentiate their products in terms of cost, brand, and quality. Personalization/Customization ersonalization the targeting of marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases customization changing the delivered product or service based on a user's preferences or prior behavior E-commerce technologies permit personalization: merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases. The technology also permits customization— changing the delivered product or service based on a user’s preferences or prior behavior.Given the interactive n ature of e-commerce technology, much information about the consumer can be gathered in the marketplace at the moment of purchase. With the increase in information density, a great deal of information about the consumer’s past purchases and behavior can be stored and used by online merchants. The result is a level of personalization and customization unthinkable with existing commerce technologies. For instance, you may be able to shape what you see on television by selecting a channel, but you cannot change the contents of the channel you have chosen.In contrast, the online verson of the Wall Street Journal allows you to select the type of news stories you want to see first, and gives you the opportunity to be alerted when certain events happen. Now, let’s return to the question that motivated this section: Why study e-commerce? The answer is simply that e-commerce technologies—and the digital markets that result—promise to bring about some fundamental, u nprecedented shifts in commerce. One of these shifts, for instance, appears to be a large reduction in information asymmetry among all market participants (consumers and merchants).In the past, merchants and manufacturers were able to prevent consumers from learning about their costs, price discrimination strategies, and profits from sales. This becomes more difficult with e-commerce, and the entire marketplace potentially becomes highly price competitive. In addition, the unique dimensions of e-commerce technologies listed in Table 1. 2 also suggest many new possibilities for marketing and selling—a powerful set of interactive, personalized, and rich messages are available for delivery to segmented, targeted audiences.E-commerce technologies make it possible for merchants to know much more about consumers and to be able to use this information more effectively than was ever true in the past. Potentially, online merchants could use this new information to develop new informat ion asymmetries, enhance their ability to brand products, charge premium prices for high-quality service, and segment the market into an endless number of subgroups, each receiving a different price. To complicate matters further, these same technologies make it possible for merchants to know more about other merchants than was ever true in the past.This presents the possibility that merchants might collude on prices rather than compete and drive overall average prices up. This strategy works especially well when there are just a E-commerce: The Revolution Is Just Beginning 17 TABLE 1. 3 MAJOR TYPES OF E-COMMERCE EXAMPLE Amazon. com is a general merchandiser that sells consumer products to retail consumers. ChemConnect. com is a chemical industry exchange that creates an electronic market for chemical producers and users. eBay. com creates a marketspace where consumers can auction or sell goods directly to other consumers.Gnutella is a software application that permits consumers to share music with one another directly, without the intervention of a market maker as in C2C e-commerce. Wireless mobile devices such as PDAs (personal digital assistants) or cell phones can be used to conduct commercial transactions. TYPE OF E-COMMERCE B2C—Business-to-Consumer B2B—Business-to-Business C2C—Consumer-to-Consumer P2P—Peer-to-Peer M-commerce—Mobile commerce few suppliers (Varian, 2000b). We examine these different visions of e-commerce— friction-free commerce versus a brand-driven imperfect marketplace—further in Section 1. 2 and throughout the book.TYPES OF E-COMMERCE There are a variety of different types of e-commerce and many different ways to characterize these types. Table 1. 3 lists the five major types of e-commerce discussed in this book. 1 For the most part, we distinguish different types of e-commerce by the nature of the market relationship—who is selling to whom. The exceptions are P2P and m-commerce, w hich are technology-based distinctions. Business-to-Consumer (B2C) E-commerce The most commonly discussed type of e-commerce is Business-to-Consumer (B2C) e-commerce, in which online businesses attempt to reach individual consumers.Even though B2C is comparatively small ($140–$170 billion in 2005), it has grown exponentially since 1995, and is the type of e-commerce that most consumers are likely to encounter. Within the B2C category, there are many different types of business models. Chapter 2 has a detailed discussion of seven different B2C business mod1 Business-to-Consumer (B2C) e-commerce online businesses selling to individual consumers Business-to-Government (B2G) e-commerce can be considered yet another type of e-commerce.For the purposes of this text, we subsume B2G e-commerce within B2B e-commerce, viewing the government as simply a form of business when it acts as a procurer of goods and/or services. 18 CHAPTER 1 The Revolution Is Just Beginning els: portals, onlin e retailers, content providers, transaction brokers, market creators, service providers, and community providers. Business-to-Business (B2B) E-commerce Business-to-Business (B2B) e-commerce online businesses selling to other businesses Business-to-Business (B2B) e-commerce, in which businesses focus on selling to other businesses, is the largest form of e-commerce, with over $1. trillion in transactions in the United States in 2005. There was an estimated $13 trillion in business-to-business exchanges of all kinds, online and offline, in 2002, suggesting that B2B e-commerce has significant growth potential (eMarketer, Inc. , 2003). The ultimate size of B2B e-commerce could be huge. There are two primary business models used within the B2B arena: Net marketplaces, which include e-distributors, e-procurement companies, exchanges and industry consortia, and private industrial networks, which include single firm networks and industry-wide networks.Consumer-to-Consumer (C2C) E-commerce C onsumer-toConsumer (C2C) e-commerce consumers selling to other consumers Consumer-to-Consumer (C2C) e-commerce provides a way for consumers to sell to each other, with the help of an online market maker such as the auction site eBay. Given that in 2005, eBay generated more than $44 billion in gross merchandise volume around the world, it is probably safe to estimate that the size of the global C2C market in 2006 will be over $50 billion (eBay, 2006).In C2C e-commerce, the consumer prepares the product for market, places the product for auction or sale, and relies on the market maker to provide catalog, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for. Peer-to-Peer (P2P) E-commerce Peer-to-peer technology enables Internet users to share files and computer resources directly without having to go through a central Web server. In peer-to-peer’s purest form, no intermediary is required, although in fact, most P 2P networks make use of intermediary â€Å"super servers† to speed operations.Since 1999, entrepreneurs and venture capitalists have attempted to adapt various aspects of peer-to-peer technology into Peer-to-Peer (P2P) e-commerce. To date there have been very few successful commercial applications of P2P e-commerce with the notable exception of illegal downloading of copyrighted music. Napster. com, which was established to aid Internet users in finding and sharing online music files, was the most well-known example of peer-to-peer e-commerce until it was put out of business in 2001 by a series of negative court decisions.However, other file-sharing networks, such as Kazaa and Grokster, quickly emerged to take Napster’s place. These networks have also been subjected to legal challenge. For instance, in 2002, the Recording Industry of America, a trade organization of the largest recording companies, filed a federal lawsuit against Kazaa and Grokster for violating copyri ght law by enabling and encouraging members to exchange copyrighted music tracks without compensation to the copyright holders. The Supreme Court issued a decision in the case against the file-sharing networks in June 2005.Read the case study at the end of the chapter for a further look at how file-sharing networks work and the legal issues surrounding them. Peer-to-Peer (P2P) e-commerce use of peer-to-peer technology, which enables Internet users to share files and computer resources directly without having to go through a central Web server, in e-commerce E-commerce: The Revolution Is Just Beginning 19 Mobile Commerce (M-commerce) Mobile commerce, or m-commerce, refers to the use of wireless digital devices to enable transactions on the Web.Described more fully in Chapter 3, m-commerce involves the use of wireless networks to connect cell phones, handheld devices such Blackberries, and personal computers to the Web. Once connected, mobile consumers can conduct transactions, includ ing stock trades, in-store price comparisons, banking, travel reservations, and more. Thus far, m-commerce is used most widely in Japan and Europe (especially in Scandinavia), where cell phones are more prevalent than in the United States; however, as discussed in the next section, m-commerce is expected to grow rapidly in the United States over the next five years. obile commerce (m-commerce) use of wireless digital devices to enable transactions on the Web GROWTH OF THE INTERNET AND THE WEB The technology juggernauts behind e-commerce are the Internet and the World Wide Web. Without both of these technologies, e-commerce as we know it would be impossible. We describe the Internet and the Web in some detail in Chapter 3. The Internet is a worldwide network of computer networks built on common standards.Created in the late 1960s to connect a small number of mainframe computers and their users, the Internet has since grown into the world’s largest network, connecting over 500 million computers worldwide. The Internet links businesses, educational institutions, government agencies, and individuals together, and provides users with services such as e-mail, document transfer, newsgroups, shopping, research, instant messaging, music, videos, and news. Figure 1. 3 illustrates one way to measure the growth of the Internet, by looking at the number of Internet hosts with domain names. An Internet host is defined by the Internet Software Consortium, which conducts this survey, as any IP address that returns a domain name in the in-addr. arpa domain, which is a special part of the DNS namespace that resolves IP addresses into domain names. ) In January 2005, there were over 317 million Internet hosts in over 245 countries, up from a mere 70 million in 2000. The number of Internet hosts has been growing at a rate of around 35% a year since 2000 (Internet Systems Consortium, Inc. , 2005). The Internet has shown extraordinary growth patterns when compared to other e lectronic technologies of the past.It took radio 38 years to achieve a 30% share of U. S. households. It took television 17 years to achieve a 30% share. Since the invention of a graphical user interface for the World Wide Web in 1993, it took only 10 years for the Internet/Web to achieve a 53% share of U. S. households. The World Wide Web (the Web) is the most popular service that runs on the Internet infrastructure. The Web is the â€Å"killer application† that made the Internet commercially interesting and extraordinarily popular. The Web was developed in the early 1990s and hence is of much more recent vintage than the Internet.We describe the Web in some detail in Chapter 3. The Web provides easy access to over 8 billion Web pages created in a language called HTML (HyperText Markup Language). These HTML pages contain information—including text, graphics, animations, and other Internet Worldwide network of computer networks built on common standards World Wide Web (Web) the most popular service that runs on the Internet; provides easy access to Web pages 20 CHAPTER 1 The Revolution Is Just Beginning FIGURE 1. 3 THE GROWTH OF THE INTERNET, MEASURED BY NUMBER OF INTERNET HOSTS WITH DOMAIN NAMESGrowth in the size of the Internet 1993-2005 as measured by the number of Internet hosts with domain names. SOURCE: Internet Systems Consortium, Inc. (www. isoc. org), 2005. objects—made available for public use. You can find an exceptionally wide range of information on Web pages, ranging from the entire catalog of Sears Roebuck, to the entire collection of public records from the Securities and Exchange Commission, to the card catalog of your local library, to millions of music tracks (some of them legal), and videos. The Internet prior to the Web was primarily used for text communications, file transfers, and remote computing.The Web introduced far more powerful and commercially interesting, colorful multimedia capabilities of direct relevance t o commerce. In essence, the Web added color, voice, and video to the Internet, creating a communications infrastructure and information storage system that rivals television, radio, magazines, and even libraries. There is no precise measurement of the number of Web pages in existence, in part because today’s search engines index only a portion of the known universe of Web pages, and also because the size of the Web universe is unknown.Google, the Web’s most popular and perhaps most comprehensive Web search engine, currently E-commerce: The Revolution Is Just Beginning 21 FIGURE 1. 4 THE GROWTH OF WEB CONTENT AS MEASURED BY PAGES INDEXED BY GOOGLE The number of Web pages indexed by Google has grown from about 1 billion in 1998 to over 8 billion in 2005. SOURCE: Based on data from Google Inc. , 2005. indexes over 8 billion pages. There are also an estimated 600 billion Web pages in the so-called â€Å"deep Web† that are not indexed by ordinary search engines such as Google.Nevertheless, it would be accurate to say that Web content has grown exponentially since 1993. Figure 1. 4 describes the growth of Web content measured by the number of pages indexed by Google. Read Insight on Technology: Spider Webs, Bow Ties, Scale-Free Networks, and the Deep Web on pages 22–23 for the latest view of researchers on the structure of the Web. ORIGINS AND GROWTH OF E-COMMERCE It is difficult to pinpoint just when e-commerce began. There were several precursors to e-commerce.In the late 1970s, a pharmaceutical firm named Baxter Healthcare initiated a primitive form of B2B e-commerce by using a telephone-based modem that permitted hospitals to reorder supplies from Baxter. This system was later expanded during the 1980s into a PC-based remote order entry system and was widely copied throughout the United States long before the Internet became a commercial environment. The 1980s saw the development of Electronic Data Interchange (EDI) 22 CHAPTER 1 The R evolution Is Just Beginning INSIGHT ON TECHNOLOGYSPIDER WEBS, BOW TIES, SCALE-FREE NETWORKS, AND THE DEEP WEB The World Wide Web conjures up images of a giant spider web where everything is connected to everything else in a random pattern, and you can go from one edge of the web to another by just following the right links. Theoretically, that’s what makes the Web different from a typical index system—you can follow hyperlinks from one page to another. In the â€Å"small world† theory of the Web, every Web page is thought to be separated from any other Web page by an average of about 19 clicks.In 1968, sociologist Stanley Milgram invented small-world theory for social networks by noting that every human was separated from any other human by only six degrees of separation. On the Web, the small world theory was supported by early research on a small sampling of Web sites. But recent research conducted jointly by scientists at IBM, Compaq, and AltaVista found some thing entirely different. These scientists used AltaVista’s Web crawler â€Å"Scooter† to identify 200 million Web pages and follow 1. 5 billion links on these pages.The researchers discovered that the Web was not like a spider web at all, but rather like a bow tie (see figure below). The bow-tie Web had a â€Å"strongly connected component† (SCC) composed of about 56 million Web pages. On the right side of the bow tie was a set of 44 million OUT pages that you could get to from the center, but could not return to the center from. OUT pages tended to be corporate intranet and other (continued) E-commerce: The Revolution Is Just Beginning 23 Web site pages that are designed to trap you at the site when you land.On the left side of the bow tie was a set of 44 million IN pages from which you could get to the center, but that you could not travel to from the center. These were recently created â€Å"newbie† pages that had not yet been linked to by many center pages. In addition, 43 million pages were classified as â€Å"tendrils,† pages that did not link to the center and could not be linked to from the center. However, the tendril pages were sometimes linked to IN and/or OUT pages. Occasionally, tendrils linked to one another without passing through the center (these are called â€Å"tubes†).Finally, there were 16 million pages totally disconnected from everything. Further evidence for the non-random and structured nature of the Web is provided in research performed by Albert-Lazlo Barabasi at the University of Notre Dame. Barabasi’s team found that far from being a random, exponentially exploding network of 8 billion Web pages, activity on the Web was actually highly concentrated in â€Å"very connected super nodes† that provided the connectivity to less wellconnected nodes.Barabasi dubbed this type of network a â€Å"scale-free† network and found parallels in the growth of cancers, disease transmiss ion, and computer viruses. As its turns out, scale-free networks are highly vulnerable to destruction. Destroy their super nodes and transmission of messages breaks down rapidly. On the upside, if you are a marketer trying to â€Å"spread the message† about your products, place your products on one of the super nodes and watch the news spread. Or build super nodes like Kazaa did (see the case study at the end of the chapter) and attract a huge audience.Thus, the picture of the Web that emerges from this research is quite different from earlier reports. The notion that most pairs of Web pages are separated by a handful of links, almost always under 20, and that the number of connections would grow exponentially with the size of the Web, is not supported. In fact, there is a 75% chance that there is no path from one randomly chosen page to another. With this knowledge, it now becomes clear why the most advanced Web search engines only index about 6 million Web sites, when the o verall population of Internet hosts is over 300 million.Most Web sites cannot be found by search engines because their pages are not well-connected or linked to the central core of the Web. Another important finding is the identification of a â€Å"deep Web† composed of over 600 billion Web pages that are not indexed at all. The pages are not easily accessible to Web crawlers that most search engine companies use. Instead, these pages are either proprietary (not available to crawlers and non-subscribers, such as the pages of the Wall Street Journal) or are not easily available from home pages. In the last few years, new search engines (such as the medical search engine Mamma. om) and older ones such as Yahoo! have been revised to enable them to search the deep Web. Because e-commerce revenues in part depend on customers being able to find a Web site using search engines, Web site managers need to take steps to ensure their Web pages are part of the connected central core, or super nodes of the Web. One way to do this is to make sure the site has as many links as possible to and from other relevant sites, especially to other sites within the SCC. SOURCES: â€Å"Deep Web Research,† by Marcus P. Zillman, Llrx. com, July 2005; â€Å"Momma. om Conquers Deep Web,† Mammamediasolutions. com, June 20, 2005; â€Å"Yahoo Mines the ‘Deep Web,’† by Tim Gray, Internetnews. com, June 17, 2005; Linked: The New Science of Networks by Albert-Lazlo Barabasi. Cambridge, MA: Perseus Publishing (2002); â€Å"The Bowtie Theory Explains Link Popularity,† by John Heard, Searchengineposition. com, June 1, 2000; â€Å"Graph Structure in the Web,† by A. Broder, R. Kumar, F. Maghoul, P. Raghaven, S. Rajagopalan, R. Stata, A. Tomkins, and J. Wiener, Proceedings of the 9th International World Wide Web Conference, Amsterdam, The Netherlands, pages 309–320.Elsevier Science, May 2000. 24 CHAPTER 1 The Revolution Is Just Beginning FI GURE 1. 5 THE GROWTH OF B2C E-COMMERCE In the early years, B2C e-commerce was doubling or tripling each year. This explosive early growth rate has since slowed. Currently, B2C e-commerce is growing at about 25% per year, with seasonal spikes showing stronger year-to-year gains. [Note: Revenue shown includes retail sales, travel and financial services revenues. ] SOURCES: Based on data from eMarketer, Inc. , 2005a;

FMC Green River Essay

FMC Green River, one of the plants of FMC Corporation presently experiences dilemma regarding the efficiency and effectiveness of the entire plant with respect to other plants of FMC Corporation specifically FMC Aberdeen. Despite of the many year of FMC Green River in operation, it has been overtaken by a much younger company-FMC Aberdeen in terms of profitability and operating cost reduction rate. FMC Green River and FMC Aberdeen have different management orientations and plant operations. But despite of these differences, FMC Green River still faces the problem of having inefficient plant operations relative to FMC Aberdeen. In this regard, Ken Daily, FMC Green River manager, decided to study the possibility of using some of the management principles that FMC Aberdeen has been using for the past years of its operations. Organizational and Behavioral Analysis After a critical analysis of the case, Bob Lancaster and his â€Å"unorthodox† way of managing people would be the primary reason why FMC Aberdeen has been experiencing high productivity and efficiency since its establishment. The extensive recruitment process of FMC Aberdeen secured the said plant with dedicated yet skilled workers and has passion over taking initiatives in making the entire plant more productive. On the other hand, FMC Green River has a very opposite orientation than of FMC Aberdeen. There is no sense of group effort and teamwork on the floors of FMC Green River plus having more workers on a job area even if a few numbers of workers can finish the same job at the same quality level. Furthermore, wages of FMC Green River is relatively higher relative to other FMC Corporation’s plants all over the United States. Combining this fact with the information that job areas in FMC Green River can be performed by less number of people seems to be the reason behind they are performing inefficiently. They said plant pays workers that are really not contributing to the entire company. Worker-management and worker-worker relationship is also of low level since working stations of every worker are located far from one another thereby causing a less interaction between every employee. Ken Daily, though he encourages interaction between the management and the employees, still, given the fact that the working stations of every worker are located far from one another would only make his management style of being interactive and open fail. It has been identified that the structure of the plants of FMC Green River is already old and must be renovated and structured in such a way that every workers can interact with each in order for the management style of Daily and FMC Aberdeen to work in FMC Green River. The lax recruitment process of FMC Green River also contributed for the low productivity of their production floors since not all of the workers of FMC Green River are skilled enough to assume responsibilities in the said plant. Alternatives One of the possible alternatives that Daily must implement would be to renovate the structure of FMC Green River’s plants in such a way that the workers will have enough chances of interacting with one another thereby creating an avenue towards the development of sense of teamwork and group effort to attain higher quality output for the company (Binkley, 2007). Another possible alternative that FMC Green River could implement would be to review the performances of every employee and provide sanctions to those that have negative performances. Even though these employees are being protected by the labor union, still, with the basis of not conforming to the standards of FMC Green River, the management can right away fire those employees with low performance and productivity. On the other hand, FMC Green River management must provide incentives to those employees that able to surpass the expectations of the management. This will motivate every employees of the said plant to perform productively. FMC Green River must provide a new set of schedules for the entire work force of the plant in such a way that there will be no worker that will be laid off and only the optimal number of workers will only report on a specific day depending on the urgency of the production line. Daily must reach out to his workers and employees to organizing company outings, picnics per department in order to establish a good working relation with the workers and at the same time earning their trust (Weber, 2007). A manager that approaches an ordinary worker will be appreciated by the latter and will boost the morale of every employees of the plant. The last but not the least alternative would be the provision of trainings and seminars for FMC Green River’s workers that would enhance not only their skills but also their outlook on performing their responsibilities in the company. With this, Ken Daily will be able to increase the productivity as well as the flexibility of his workers in performing their responsibilities to the company. Recommendation Among the above identified alternatives above, the most effective alternative would be the restructuring of FMC Green River’s plants in such a way that every workers will have a chance to interact with each other creating enough room for the development of teamwork and cooperation on every workers of FMC Green River. This will increase the productivity of the workers and at the same time the productivity of the plants. If this will become successful, it would be now easy for Daily to approach his workers and make bond as well as to earn their trust and this solution will also boost the morale of every workers of FMC Green River (Levit, 2002). Implementation and Contingency Plan The renovation of various plants will take one at a time in order not to affect the operation of the entire company. After this, Daily is expected to launch some activities, as a â€Å"mood starter†, of the interactions of every worker on their new working stations after the renovation process. A few months after this, Daily can now launch activities that would enhance the interaction of employees from various departments and then from various plant to widen the range of interaction in FMC Green River. If this solution will not work, then the restructuring of workers schedule in such a way that all of the workers will still remain in the company yet the optimal number of workers are the ones that will report on a given day in order to minimize their operational cost and increase the productivity of the entire company.

Women and Associations Essay Example | Topics and Well Written Essays - 500 words

Women and Associations - Essay Example Women and associations are all about the information of the US women revolving around their history and their successes based on their lifestyles, ethnic groups, religions and where they come from. The factors that motivated women to start NACWC were to ensure that, the Africa American-based women’s welfare was well taken care of in their societies. They also aimed at protecting their civil rights when it came to matters that concerned registration and voting and they wanted to address the issues that faced military and schools in their communities. The impact of this group led to many benefits in the American societies; where they developed destinations for children, who were helpless, settled and ensured that girls were occupied with jobs and developed schools to promote education. On the other hand, the National Women’s Party NWP, was an organization whose members were women and was founded in 1915. The association fought for the women’s rights in America around the 20th century specifically the rights that would enable them to be equal to the way men were treated. When contrasted to organizations like the National Association of Colored women, which concentrated on the lobbying specific states, NWP dealt with matters that concerned the constitution amendment that fought for women’s right to vote and get places in offices. NWP also fought for the equal rights to be incorporated in the constitution where they campaigned for their conservative of their cultures and their jobs (DuBois, 2008).

Facebook vs Twitter Case Study Example | Topics and Well Written Essays - 500 words

Facebook vs Twitter - Case Study Example Undoubtedly, malicious virus attacks appear to be the most potent challenge to Facebook. Due to this problem, thousands of people lose access to their accounts. In addition, computer hackers intrude into Facebook IDs and steal users’ confidential information. The â€Å"Facebook’s mission is to give people the power to share and make the world more open and connected† (as cited in Reagan, 2009). However, growing governmental interventions and regulations including ban raise potential challenges to Facebook in some countries like China. Hence, the company has to struggle a lot to make its mission achievable. Market competitors like Twitter and Myspace are turning out to be a significant threat to Facebook. Last but not the least, many social interests groups raise their voice against Facebook, arguing that this website is a major reason of time wastage. Evidently, Facebook’s major competitor Twitter is the greatest challenge/threat to the company. Twitter has attained worldwide popularity and this website has the strength of over 500 million active users as of 2012. In addition, high profile people like celebrities and politicians prefer Twitter to Facebook. This situation may contribute to an increase in the level of Twitter traffic over the coming years. In order to manage the threat of Twitter, it is advisable for the Facebook to integrate more customized page features and applications. It is also recommendable to take efforts to ensure the presence of high profile celebrities on Facebook. Finally, the company should make financial incentive provisions for Facebook promoters. Possibly, the involvement of high profile people may be the best strategy for the Facebook to defend the threats from Twitter.

Mise en scene in Juno (Jason Reitman, 2007) Essay

Mise en scene in Juno (Jason Reitman, 2007) - Essay Example this girl Juno finds a way to get out of this sticky situation not by resorting to abortion but by instead going through with the pregnancy and finding good adoptive parents and securing a better future for her child. The film is, first of all, divided into the 4 seasons starting with autumn and so on. Somehow, this division of the film by season assisted in the transition of the whole story from Juno realizing her problem up to the time she gives birth and after. The movie starts with a long shot of Juno looking at a living room lounging chair, with a gallon of orange juice on her right hand, a closer shot of the same scene and then Juno’s face in close-up showing the actress’ face as reminiscent, sad and worried all at the same time. Juno narrates the cause of her mood then a flashback is shown and the viewers begin to understand the importance of the chair to the story – it was where Juno had sex with her boyfriend and the reason she got pregnant. The scenes are set in the local village where Juno resides, her home, her school, the local store, etc. Some scenes are shown of the house where the adoptive parents of Juno’s baby lived which left a good impression on Juno and her plans to give her baby to a good couple who love each other and who are capable of raising an equally good family. Narratives by the lead actress are used all throughout the film to shorten parts of the story which would otherwise draw attention from the main character to the other sub-plots. Although the main topic of the film is sex and teenage pregnancy, the presentation of the shots was tastefully done and only suggestive scenes were shown especially in the part when Juno and her boyfriend did the act. Scenes significant to the pregnancy like the ultrasound and the actual delivery of the child were also included which rendered more credence to the film since it seemed like the actress really got pregnant and gave birth. The costumes were also r ealistic with the lead

THEMATIC UNIT Assignment Example | Topics and Well Written Essays - 1250 words

THEMATIC UNIT - Assignment Example The teacher will say: "Today class, we are going to be talking about one of my favorite Japanese festivals! The cherry blossom festival!" (The teacher will pass the cherry blossoms around for students to touch) CD of Japanese traditional songs, (including "Sakura Sakura, "Moonlight on the Ruined Castle, and "Star Festival Song"- these songs are available, free of copyright from Mama Lisas world (see resources). "One important thing to remember before you decorate is that all kimonos have a theme. The theme can be springtime, winter, flowers, cars, anything you like. Write your theme on the sleeve of your kimono before you begin drawing." "The first thing we must do is give our logs a title. The title for this project is Bamboo Bonanza. Please write this down on the front of your folder. Then, write your name in the upper right hand corner." "Write the date at the top right corner of the page. You will date the page, each day. We will be writing on the front and back of each page. Today, you will write your hypothesis and make your first measurements" CD of Japanese traditional songs, (including "Sakura Sakura, "Moonlight on the Ruined Castle, and "Star Festival Song"- these songs are available, free of copyright from Mama Lisas world (see resources). "This song is a song that is normally played at the star festival. This festival is special because it is held at night. During the festival, little boys and girls write their wishes on paper notes, like this" (show pre-made note) and hope that their wish will come

Value Chain Analysis Research Paper Example | Topics and Well Written Essays - 500 words

Value Chain Analysis - Research Paper Example Organizations identify strategic advantages and disadvantages with the help of value chain analysis. Value chain refers to all the value-creating functions required for creating and delivering the goods and services to the target customers. Value chain analysis is an important tool for strategic cost management which is an important part of the management accounting. According to Porter, in value chain cost management methodology first the value chain need to be identified, and then the cost, asset and revenue need to be assigned to the value activities (Hoque, 2005). Value chain analysis involves organizations internal cost analysis, its internal differentiation analysis and vertical linkage analysis. Porters value chain model is represented below. Wal Mart, one of the largest organizations in the world not only in retail sector but among the entire private as well as public sector organizations. Wal Mart, founded by Sam Walton in 1962, started its operation in 1969; it is one of the largest organizations in terms of number of employees and revenue. There are almost 1.3 million employees working in Wal-Mart. According to estimates, there are 3400 Wal Mart stores in America till 31st January, 2007. Company is one of the most important drivers of US economy. It is further proven by the fact that every week there is almost 120 million people shop in Wal Mart. As far as sales is concerned Wal Mart is far ahead of its three major global competitors namely Carrefour (France), Home Depot (United States), and Metro (Germany). Cost management is one of the basic things in management accounting. Strategic cost management results to improved strategic performance and significant transformational change in organizational value chain. Cost management information is crucial for four important management functions, which are 1) strategic management, 2) control in management and operations, 3) planning and decision making and finally

OSHA Term Paper Example | Topics and Well Written Essays - 1000 words

OSHA - Term Paper Example This memorandum contains information regarding the effective ways of handling this problem and outlines the most appropriate strategy to be used. The most effective course of action recommended is the execution of laws regarding chemical exposure in the workplace and activation of occupational health and safety programs in different companies. Background Hazards in the workplace have through time affected workers in different industries. These hazards could either be chemical, physical, biological or psychological. For example in the construction industry, statistics show that the rate of fatalities among the construction workers in three times that of all other workers in the US. Construction workers are mainly affected by physical accidents such as falls and inadequacy of proper safety equipment (Occupational Safety and Health Standards for the Construction Industry 18). Even in the availability of safety equipment, the collapse of building due to lack of proper inspection or the f oundations also increases fatalities. Workers in the agricultural sector are commonly affected by biological and chemical hazards. This takes place during the application of pesticides on the plants, due to noise and exposure to the sun excessively. They are also susceptible to physical hazards caused by machinery used in the farm. In America, fatal agricultural injuries are mainly caused by the rolling over of tractors. The rate of accidents in the workplace has increased over the years mainly due to the current use of machinery which easily injures workers. Key Issues to be Addressed One of the major issues to be addressed by the Occupational Safety and Health Administration is the absence of laws and regulations that ensure thorough inspection of the workplace in order to ensure that they are secure for individuals to work in. For example in the mining industry, inspections done on the land being mined are not enough to ensure that the mining field is not susceptible to fires cau sed by methane production (Mendeloff 58). The lands could also collapse in case of an earthquake and as such many fatalities are caused by such accidents. Equipment in different industries are inspect from time to time. However, the frequency of inspection should be increased to avoid losing more lives and more human capital to accidents in the work place. Another major issue to be addressed is the absence of occupation health and safety programs in different companies. This program is effective in training individuals on how to care for their safety and to avoid accidents in the workplace. Many companies avoid having this program as it involves the hiring of new employees thus increasing the cost of production. In the absence of the program, employees are not made aware of their employment rights and further than that they are not aware of how to act in case of accidents in the workplace. Employees further are not aware of what is expected of them in the work environment in relatio n to their safety and the general safety of the company. Solutions to these Issues A solution to the absence of laws and regulations is to design and enforce policies that address various problems faced by workers in different fields. For example, laws should be passed to ensure that frequent inspections are carried out in different industries depending on the frequency of accidents to take place in the particular area. Inspections

Nonprofit organization pepar Essay Example | Topics and Well Written Essays - 1000 words

Nonprofit organization pepar - Essay Example There are innumerable nonprofit organizations throughout the world working for the society, environment, and governments. These nonprofit organizations produce a deep impact on the lives of many people, societies and environment through their dedication, focus and selfless service. These organizations continually set examples for other societies and cultures, which get conceptually copied or become the source of inspiration for other entities in different parts of the world. One such initiative is ‘SELCO Solar Light Pvt Ltd’ by Harish Hande, an Energy Engineer from India, in partnership with Neville Williams, the founder of Solar Electric Light Fund (SELF). SELCO Solar Light Pvt Ltd clearly has all the characteristics of a nonprofit organization as outlined by Ashcraft (2005). SELCO is headquartered in Bangalore, a southern city of India and has about 25 energy centers across two states within India. It employs about 170 employees and has sold over 115,000 solar systems in a span of 15 years. SELCO is registered as a private limited company and adheres to all business laws including employee wages, compensation etc. However, SELCO operates on exclusively designed policies, programs and services. SELCO can be contacted through its numbers available from its website, www.selco-india.com. Although SELCO is solely private in nature, it has partnered with different groups including technology, finance, carbon trading companies, community based organizations, international setups for community development, and other nonprofit organizations across India and other countries. SELCO is governed by a group of board members that are highly educate d and experienced in the field of nonprofit and rural development work (SELCO, n.d). Hande studied Masters Degree from the University of Massachusetts after acquiring an undergraduate degree in Energy Engineering from

Corporate Finance Essay Example | Topics and Well Written Essays - 2000 words

Corporate Finance - Essay Example In addition, environmental factors like macro economic conditions and cyclical behaviour of the industry may influence on their performance. The hubris hypotheses formulated by Roll, states that often company managers systematically commit error in evaluating merger opportunities which are due to their excessive self-confidence. So, managerial motives play important role in determining the outcome of the merger and acquisition. In contrast, in some instances even when shareholder wealth is destroyed, executives still seem to gain from mergers and acquisitions, which show that, managers through mergers and acquisition activities may seek to utilise their own utility at the expense of shareholders (Casper Flugt, 2009). Main objectives of merger Companies go for merger and acquisitions to expand their business. By the process they try to develop their companies’ brands. Aim to reduce market competition. Aim to cutting costs by laying off employees, removing management and other r elated actions. To reduce taxes they go for merger. Aim for ‘empire building’ by acquiring managers and other purposes, they may go for acquisition. It is a strategic move by companies to diversify their business away from their resources. Company managers think that joint company will be able to generate more value than the separate firms. There are many options for payment for a company when it goes for acquiring another firm. It can pay in fully cash, or it may buy targeted shares. It can also choose a combination of loan notes, share and equity, deferred payment. Actually, the payment method is important for several reasons. Payment by means of cash and debt will benefit more for a company than stock acquisitions, as it could be used more efficiently... At the time of stock market boom, mergers were more appealing. On the other hand, falling share prices can lead to a company being undervalued, and make it an attractive for acquisition. Mergers and acquisitions can either be value destroyers or value creators that depend on factors like company’s cost of capital, its strategies and decisions and cash flows generated from the business operations The performance is not related to the nature of an industry, instead it was driven by the quality and strategy of management. Good strategy by management can produce good results, on the other hand, poor decision and strategies may end with poor performance. In the present competitive market companies are looking for mergers and acquisitions to expand their business to a newer region. Most of the mergers and acquisitions resulted in value creation. Especially, in case of big companies it is true. There is some perception that nearly 50-70% of mergers fail to deliver shareholder value. In many occasions employees feel the pinch as the new group goes to cut jobs to reduce cost to the company. But, ultimately performance is not related to the nature of an industry, instead it was driven by the quality and strategy of management. Sound financial management along with other favourable factors is necessary for value creation, its survival and growth for any company.

Study of emotion Essay Example for Free

Study of emotion Essay The results of primate studies have developed in the scientific community a common belief that the amygdala plays a central role in mediating emotions, the anxious temperament and fearful responses. From this generalization, it can be further inferred that a fully intact amygdala, with all others that constitute the brain anatomy in a normal condition, could effect a normal reaction in primates upon exposure to a stimulus (i. e. hostility: defensive stance; threat: fear). On the other hand, a lesioned amygdala can result in abnormal or even totally lack of reaction upon exposure to stimulus. In an article by Kalin, et. al. , (2001), the exposure of lesioned monkeys to unfamiliar threats such as snake and an unknown hostile male resulted to blunted fear responses. This confirms the hypothesis on the role of the amygdala in mediating emotional responses. In mediating fear, information first reaches the eye which will then travel to the thalamus and to the amygdala. The result is a quick registration of any perceived danger to effect a quick response. This is the direct subcortical pathway. In the cortical pathway, information passes to the visual cortex first before passing to the amygdala, allowing for conscious consideration of the danger involved after the initial rapid response. Rapid response is made possible by the innervation of the adrenal glands by the sympathetic axons to produce hormones such as adrenalin, noradrenalin or cortisol which hill hasten blood flow (Peacock, 2005). The registration of danger, and thus, fear is slowed or made impossible by the damage in the amygdala in lesioned monkeys. Still, another part of this article shows that lesioned and unlesioned monkeys showed no differences in emotional processing when exposed to a human intruder. This inconsistency poses a challenge on the notion about the role of the amygdala in mediating behaviors and emotional responses. One possible reason for this inconsistency is that the monkeys have been exposed to human since childhoold (Kalin, et. al. , 2001). In the expression of emotions and behaviors associated with retained memories, a functional amygdala is not necessary (McGaugh, et.al. , 1996) because while the amygdala is necessary in mediating fear, other structures have a more direct function in mediating long-term nonspecific anxiety responses (Davis, et. al. , 1997) These include the bed nucleus in the stria terminalis and the orbitofrontal cortex which may not have been damaged during the exposure. With the orbitorfrontal cortex mediating anxious temperaments based on appraised consequences, input from the amygdala becomes uncritical (Kalin, et. al. , 2001). The amygdala, after all, is involved only in the processing of new and ambigious threatening situations (Whalen, 1998) which may not characterize their exposure to the humans. Physiological psychology gives light to a perspective that is almost completely removed from explanations arising from social biases. The subjectivity of social sciences allows more leeway for as many numbers of interpretations as there are interpreters and gives rise to more confusion rather than understanding. A more objective approach allows an in-depth, more scientific, more uniform appreciation of emotion. That is, even without access to a person’s historical background or experiences, one can predict anyone’s actions by mere examination of one’s anatomy and physiology. Works Cited Davis M, Walker DL, Lee Y (1997) Amygdala and bed nucleus of the stria terminalis: differential roles in fear and anxiety measured with the acoustic startle reflex. Philos Trans R Soc Lond B Biol Sci . 352:1675-1687 Kalin NH, Shelton SE, et. al. (2001). The primate amygdala mediates acute fear but not the behavioral and physiological components of anxious temperament. J Neuroscience. 21(6):2067-2074 McGaugh JL, Cahill L, Roozendaal B (1996) Involvement of the amygdala in memory storage: interactions with other brain systems. Proc Natl Acad Sci . 93:13508-13514 Peacock, S. (2005). Behavior, Physiology and Fear. Mind. Retrieved 05 May 2008 from http://mind. in/node/195. Whalen PJ (1998) Fear, vigilance, and ambiguity: initial neuroimaging studies of the human amygdala. Curr Dir Psychol Sci 7:177-188.

Effects of Nutribullet Processing on Glycemic Response

Effects of Nutribullet Processing on Glycemic Response The major results from the present study show that processing a variety of fruits with the Nutribullet has had beneficial effects on the postprandial glycemic response in healthy subjects. We observed that after the ingestion of the Nutribullet mixed fruit treatment, on average the subjects maximum glycemic increment was only 0.4mmol/L, in comparison to the maximum increment of 1.3mmol/L after the ingestion of whole mixed fruit. In contrast, processing mango with the Nutribullet showed to have no added beneficial effects on postprandial glycemic response in comparison to the ingestion of whole mango. After the ingestion of the Nutribullet processed mango the maximum glycemic increment was 0.9mmol/L, compared to the maximum increment of 0.8mmol/L in the whole mango group. Although the processing of mango did not have the same effects seen for the mixed fruit group, these results are still significant because they demonstrate that the domestic processing mango alone and processing a variety of fruits together does not increase their GI as previously thought. In fact, the results of the present study demonstrate that Nutribullet processing a combination of fruits favorably flattens the postprandial glycemic response which is in conflict with the current recommendations for diabetics to avoid fruit smoothies. As mentioned earlier, these recommendations are formed on the assumption that the majority of fibre in fruit juice and smoothies has either been removed or broken down. Although there is substantial evidence supporting the link between the consumption of fruit juice and the increased risk of T2DM (Muraki et al, 2013; Bolton et al, 1981; Haber et al, 1977), there appears to be a sparse amount of research investigating the effects of domestically blending fruits on glucose metabolism. Although, there is one study to our knowledge that has investigated the impact of whole fruit, fibre-disrupted purà ©e and fruit juice (Haber et al, 1977). The authors reported that plasma glucose rose to similar levels after the consumption all three meals. However, they suggested the removal of fibre from food or the physical disruption of fibre, could lead to slightly higher postprandial glycemic responses. Indeed the cellular structure of fruit is important and potentially explains the results of the present study because unlike fruit juice, the fibre was not removed during the Nutribullet processing. Interestingly, evidence from a recent investigation showed that commercial smoothies which have gone through a homogenization process still contained high concentrations of intact fruit cells (Chu et al, 2017). However, we must appreciate that the process of homogenization is completely different to domestic food processing and therefore, it could be argued that perhaps domestic processing would elicit different outcomes with regards to fibre content. Although a recent study reported that the concentrations of insoluble and soluble fibre were the same in both domestically blended mango fruit and high hydrostatic pressurized mango (Elizondo-Montemayor et al, 2015). Therefore, this evidence signifies that the processing of fruits, with a domestic blender does not completely breakdown the fibre. This may go on to explain why the present study did not observe a sharp peak in blood glu cose following the consumption of Nutribullet treatments, in comparison to studies which have observed postprandial hyperglycemia due to the consumption of fruit juice where the fibre is absent (Bolton et al, 1981;). Although the results of the present study may be in part attributable to the presence of dietary fibre within the treatments, several other parameters have also been identified to affect the absorption of glucose. These parameters include the viscosity of the fruit and other properties of fibre, such as solubility and swelling capacity. Effects of fibre on carbohydrate absorption Fibre can be classified as either soluble or insoluble, characterized by how they react in aqueous solutions.   Insoluble fibre includes lignin, cellulose and many hemicelluloses. These fibres make up the cellular-wall structure of fruits and vegetables. When consumed together with foods, these fibres behave as bulking agents and also increase intestinal transit time. Water-soluble fibre comprises hemicelluloses, and many polysaccharides, such as pectin. These fibres are characterized by their high water-holding capacity, also several of them are highly viscous in solution (Wursch et al, 1997). Pectins are constituents of the primary cell wall and intercellular layer of plant cells. They are insoluble in unripe fruit, yet become more water-soluble as the fruit ripens. Lastly, they have large water-holding capacity and form gels in aqueous solutions. Within the scientific community, it has been acknowledged that the presence of certain dietary fibres influences the digestion and absorption of CHO within the small intestine, resulting in a reduced and levelled off glycemic response. Importantly, this effect has been shown in both healthy and T2DM subjects (Jenkins et al, 2002; Anderson et al, 1994). It has widely been reported that viscous soluble fibre are most effective in improving glycemic control by reducing the postprandial glycemic response, in comparison to insoluble fibres (Jenkins et al, 1978; Elizondo-Montemayor et al, 2015). In contrast, it has also been established that when the viscosity of fibre in several products has been reduced through varied processing techniques then the reduction in blood glucose peak is attenuated (Wursch et al, 1997), signifying that both the solubility and viscosity of the fibre is directly linked to the attenuation of blood glucose. Due to the growing pool of scientific evidence linking t he consumption soluble fibre with a flattened glycemic response, several theories have been developed to explain what mechanisms in the small intestine may be causing the modulation of the glycemic response. One mechanism suggested is a delayed rate of gastric emptying. It is thought that due to the water-holding capacity of soluble fibre, a resulting delayed gastric emptying and transit time through the small intestine occurs, thereby resulting in a reduced rate of CHO absorption (Benini et al, 1995; Cherbut et al, 1995; Ou et al, 2001). Another proposed mechanism is that the ingestion of soluble fibre increases the viscosity in the small intestine resulting in a reduced mixing effect of peristalsis, thus reducing the digestion of CHO by pancreatic alpha-amylase and in turn causing a delayed diffusion of CHO to the intestinal mucosa (Cherbut et al, 1994; Ou et al, 2001). Lastly, it has also been proposed that the capacity of dietary fibre to bind to glucose may reduce the concentration of available glucose in the small intestine, resulting in reduced digestion and absorption of glucose (Ou et al, 2001). Considering all this, a theory has been developed to further explain the results observed in the present study for the Nutribullet mixed fruit treatment. The theory is that the banana used within the mixed fruit treatment is potentially the main fruit influencing the postprandial glycemic responses. As previously mentioned, the ripeness of fruits is a major influencing factor on the concentrations of soluble and insoluble fibre. Recall from the methodology in the present study that all of the fruit was freshly purchased within days of the appropriate trial. Therefore, it is highly probable that the banana included in the mixed fruit trial was unripe as they were refrigerated for no more than 2 days. This theory is based on the evidence that unripe or less-ripe bananas contain higher concentrations of resistant starch, in comparison to over-ripe bananas. Resistant starch has been found to be more slowly digested in humans by alpha-amylase thereby causing a flattened glycemic response due to the reduced availability of glucose (Wolever et al, 1990; Hermansen et al, 1992). From all of this information we have established that dietary fibre is still present in fruits which have been domestically blended, also we have discussed some of the mechanisms potentially causing the effects fibre has on glycemic response. The next question at hand is whether Nutribullet processing effects the sugar content of fruit. It has been proposed that foods containing Effects of Nutribullet processing on the composition of mango and mixed fruit carbohydrates The content of simple sugars was lower per portion of mango (11.8g) and mixed fruits (15.7g) after Nutribullet processing, compared to whole mango (16.5g) and whole mixed fruits (24.9) (Table 3).   Recall for the methodology in the present study that we calculated specific servings of each fruit to give 25g of sugar per serving among the whole fruit and Nutribullet treatments. Due to this it was hypothesized that HPLC analysis would reveal that the sugar content of the whole fruit treatments would be similar, if not lower, compared to the sugar content of the Nutribullet treatments. Previous work has suggested that processing fruits, through homogenization, can cause losses in cell integrity, thus resulting in the release of simple sugars from compartmentalized structures and non-covalent links (Elizondo-Montemayor et al, 2015). On the contrary, this was not observed in the present study. When comparing the total sugar content of both mango treatments to the observed postprandial glycemic responses (Figure 1), there is a discrepancy where the extrapolated IAUC for both mango treatments do not correlate with the sugar content revealed through HPLC analysis. For example, from figure 1 we can see that both mango treatments had a very similar postprandial glycemic response, yet HPLC analysis would suggest that the whole mango treatment should have had a higher glycemic response. Although this was not the case, signifying that errors in the HPLC methodology are potentially causing these results. For example, upon completion of the HPLC testing, it was regrettably found that several tubes containing various mango treatments still had remaining supernatant within them. This of course would explain the varied sugar content between the mango treatments and reflects that the investigators had varied pipetting skills. Regarding the mixed fruit HPLC results, the total sugar content of both mixed fruit treatments seem to correlate well with the postprandial glycemic responses (Figure 1). In addition, the mixed fruit Nutribullet contained half the sugar content compared to the whole fruit treatment. As discussed earlier, the potential mechanisms associated soluble fibre may explain why the Nutribullet treatment revealed to have a lower sugar content. For example, the fibre may have bound to the glucose molecules reducing the available glucose in the small intestine, thus resulting in the attenuation of postprandial glycemic response. An in vitro digestion model, designed to mimic the in vivo situation, was able to determine the glucose content within supernatant by mixing 1g of resistant starch or soluble fibre with 100ml of glucose solution, then incubating the mixture in a water bath (37 °C) for 6 hours, followed by centrifuging (Ou et al, 2001). The authors reported that the solutions which had added fibre contained less glucose within the supernatant, signifying that the fibre had binding potential to glucose. On the other hand, it is important to consider that the HPLC results for the mixed fruit treatments may also be subject to errors within the methodology. For example, looking at Table 4, there is high relative deviation amongst the whole fruit samples, yet not amongst the Nutribullet samples. This indicates that there was low precision during the measurement of whole fruit samples. Again, perhaps due to the low level of skill among the investigators with regards to the pipetting, syringing and filtration of supernatant. Considering all of these limitations, the results obtained from HPLC analysis provide little relevance and impact to the present study. Practical Implications of the results The fact that both the whole fruit and Nutribullet treatments elicited a low GI and specifically that the mixed fruit Nutribullet treatment showed a significantly lower GI (figure 2) has important clinical implications for both healthy and T2DM subjects. A relatively recent Cochrane review which was based on 11 randomized controlled trials, reported that glycemic control in T2DM subjects was improved significantly following a low GI diet, compared to those on a high GI diet (Thomas et al, 2009). In addition, a low GI diet elicited significant reductions in glycated hemoglobin A1c (0.5%) which are comparable to reductions usually found through medications for recently diagnosed T2DM patients (Holman, 1995; Holman, 1999). Furthermore, improvements in A1c of this size have been linked with the reduced risk of diabetes-related microvascular complications, such as retinopathy (Stratton, 2000). With regards to healthy subjects, diets containing low GI foods have been associated with reduct ions in body weight, improvements in lipid profile and a decreased risk of T2DM and cardiovascular disease (Jenkins et al, 2011; Barclay et al, 2008; Van Dam et al, 2000). Overall, as the Nutribullet does not appear increase their GI of commonly eaten fruits, both healthy and T2DM subjects could potentially benefit from this method of food preparation by improving glycemic control. Although as the results from the present study are novel, more research is needed before any conclusions can be drawn with regards to the safety and effectiveness of recommending that diabetics can consume fruit smoothies. Study limitations There are some limitations within the methodology of the present study that should be mentioned. Firstly, the present study employed only one reference trial. Recommendations are that the reference food (glucose) trial should be repeated at least once to minimise the variation of mean GI values (Wolever et al, 1991, 2002). For example, a simulation study carried out by Wolever et al (2003) found that the margin of error of the estimation of mean GI was reduced significantly from one to two reference measurements. Secondly, we were unable to enforce a strict standardization of diet and physical activity 24 hours prior to the test days which may reduce the reproducibility of the results. An ideal example would be that the subjects consumed a meal of their choice prior to the overnight fast and then would have been required to repeat that same meal before each trial. Thirdly, the results may be subject to selection bias as the participants included in the mixed fruit trials were also th e investigators of the study and randomization was not used. In addition, due to the 10% drop out rate, it is possible that the degree of statistical power and precision was reduced as recommendations are that glycemic trials include a minimum of 10 participants (Brouns et al, 2005). Although, several strengths include the appropriate use of a repeated measures design which ensures less individual differences and allows the inclusion of fewer participants. Another strength is that the protocol closely followed evidence-based recommendations. Conclusion In conclusion, our results indicate the consumption of a variety of fruits including banana, mango, passion fruit, kiwi, raspberry and pineapple have a low GI and that processing these fruits with a Nutribullet generated further benefits, such as a significantly lower GI and a more favorable glycemic response. A higher proportion of the subjects presented a low GI for both of the Nutribullet treatments. These results are in conflict with current recommendations to restrict or avoid fruit smoothies. However, much evidence has indicated that the fibre content of fruit is still present after domestic and commercial processing treatments. More so, the evidence suggests that the presence of fibre within the processed fruit is still potentially having several beneficial effects on the postprandial glycemic response, such slowing gastric emptying and reducing the amount of available glucose through binding mechanisms. These results could potentially have clinical implications for healthy an d T2DM subjects who include these fruits in their diet. However, more research is needed 1. to determine if these effects are reproducible and 2. to determine the safety of diabetics consuming different fruit treatments produced by Nutribullet and/or other domestic appliances. Future research should further investigate the potential mechanisms involved with Nutribullet blending and how they are causing an altered glycemic response.