Difference between E-commerce and E-business
How e-commerce relates to the broader idea of e-business.
5-mark Exam Answer
Although e-commerce and e-business are often used interchangeably, Laudon and Traver draw a working distinction: e-commerce involves commercial transactions that cross firm boundaries, whereas e-business is the digital enabling of transactions and processes within a firm.
- 1.E-commerce crosses firm boundaries with exchange of value
- 2.E-business is internal, under firm control
- 3.Internal inventory control is e-business, not e-commerce
- 4.E-business infrastructure supports e-commerce
- 5.They blur at the firm boundary
There is a debate about the meaning and limitations of both terms. Some argue that e-commerce encompasses the entire world of electronically based organizational activities that support a firm's market exchanges, while others argue that e-business encompasses the entire world of internal and external electronically based activities, including e-commerce.
Laudon and Traver use e-business to refer primarily to the digital enabling of transactions and processes within a firm, involving information systems under the control of the firm. For the most part, e-business does not include commercial transactions involving an exchange of value across organizational boundaries.
For example, a company's online inventory control mechanism is 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.
E-business applications turn into e-commerce precisely when an exchange of value occurs. The two systems blur together at the firm boundary, at the point where internal business systems link up with suppliers or customers.
An internal warehouse-management system is e-business. The moment a customer pays for an item on the firm's website, value crosses the firm boundary — that transaction is e-commerce.
In short, e-business is internal digital enablement; e-commerce is the externally directed commercial exchange of value. The two intersect at the firm boundary, where internal systems connect to external customers and suppliers.
The exam interface follows the university paper pattern: Section A & B carry 5-mark questions; Section C carries objective questions.