Every business manager. This work addresses e-business innovation and change management issues. It provides an understanding of the interdependence and synergy between the two issues and that a holistic approach is imperative for organizations to survive in this economy and achieve a competitive advantage.
Compiles top research from the world's leading experts on many topics related to electronic commerce. Covers topics including mobile commerce, virtual enterprises, business-to-business applications, Web services, and enterprise methodologies. This four-part overview of electronic commerce offers a more thorough and technical view of the subject than many recent books on the subject.
The book provides a balance of theories, applications, and hands-on material. The book's chapters begin with introductions of leading companies with significant e-commerce expertise and at least two small case studies. The authors provide a brief introduction to the concepts and strategic issues surrounding information warfare, managing organizational knowledge, and the information economy. The virtual organization is now an important business model for contemporary business organizations and the flexibility and adaptability of the virtual organization make it ideal for survival in today's highly.
This book focuses on those concepts that are at the core of developing effective e-Commerce systems and is a starting point for the study of how effective e-Commerce systems are developed. Readers are provided a foundation for further investigation into particular issues as well as for actually developing successful e-Commerce in the real world. It does not require any particular programming skills as a prerequisite. These entry polypeptides correlate the rate of B trial or study.
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Figures through show C2C Web sites. FIGURE American Boat Listing In addition to enabling consumers to interact with each other directly, the growth of Internet access and Web content has shifted marketplace power from sellers to buyers. This shift has transformed the relationships between these two groups in dramatic ways, and has led to the creation of the final business model listed in Table the consumer-tobusiness model.
The most well-known e-business following the C2B e-business model is priceline. In addition to broad categories such as B2B and B2C, there are various subcategories of e-business models. Many of these subcategories were created by organizations such as government agencies, non-profit institutions, and social or religious groups that decided to reduce their operating expenses and improve customer service by adapting e-business models to their specific needs.
National Public Radio is an example of a non-profit institution following an e-business model. A notable exception to this trend was the online store, whose sales were growing dramatically. The message was clear: Egghead had to change its business even more dramatically or go under. The decision was made to close the remaining brick-and-mortar stores, lay off store employees, and begin doing business online only—that is, as the pure-play e-retailer now known as Egghead.
It also improved customer support by adding an automatic service that sent order status updates via e-mail. Finally, Egghead. In , Egghead. But a combination of factors forced the new Egghead.
One such factor was that competitors continued to undercut Egghead. Also, a general downturn in the overall economy further reduced sales, and in trying to stay afloat, the company began hemorrhaging cash.
Unfortunately, however, all this was too little too late. The company suspended operations, and its assets—including its URL www. Checklist Thinking about Doing Business Online? Consider the current costs involved in providing information and services to your customers that they could then get for themselves by accessing a Web site.
Determine what additional information or transaction services you could provide to your existing customer base through a Web site. Think about how you can use the information you have about your customers to make it easier for them to continue to do business with you if you were to be online.
Identify how valuable your customers might find the expertise of your employees or your other customers, and look for ways to deliver this expertise online.
Consider the competitive disadvantages if your competitors were to offer online services and information before you do. Chapter 1 Discover ways to improve your business by rethinking your value chains. Consider new ways to generate revenue by enhancing sales or attracting new customers to your Web site. Develop ideas for repackaging current information to attract new customers or create new business opportunities on your Web site.
Determine whether online competitors can significantly harm your business by providing some of the value you currently offer customers in the traditional way. The World Wide Web is a subset of the Internet.
True or False? Understanding E-Business 32 3. It is easy to keep track of how many people are using the Internet and how many Web sites exist on the World Wide Web.
The traditional factors that can limit business transactions—time, space, and geographical location—are less limiting for e-business transactions. One disadvantage to online buyers is the lack of trust when dealing with unfamiliar sellers.
Multiple Choice Questions 1. Chapter 1 A traditional business environment in a physical location is called a: a. The Internet is: a. Which of the following e-businesses follows the B2B exchange model? B2B e-business model. B2G e-business model.
C2B e-business model. C2C e-business model. Which of the following is not an advantage of doing business online? Using online search tools or other relevant resources, research the origins and history of the Internet and the World Wide Web. Then write a one- or two-page paper describing at least five major events in this history, and how these events led to the growth of global e-business.
Using online search tools and other relevant resources, locate information about two people whose contributions have had a significant impact on the growth of the Internet and the World Wide Web as a business medium. Write a one- or two-page paper describing each person and his or her contribution. Using online search tools and other relevant resources, research the rise and fall of Pets.
Then write a one- or two-page paper explaining what went right and what went wrong at Pets. In addition to the primary e-business models discussed in detail in the chapter, additional models, such as P2P, M2M, G2C, and B2E, continue to be defined.
Using online search tools and other relevant resources, research these and other e-business models not discussed in this chapter. Then write a one-page paper describing at least three of the models. Using online search tools and other relevant resources, find a representative example of each of the e-business models discussed in detail in this chapter. Do not use examples already discussed in the chapter. Then write a one- or two-page paper describing each example and how the example fits the e-business model.
Case Projects 1. You think some of the items may be valuable as collectibles. First, you want to determine the value of the items, and then you want to find a place to sell them.
Write a brief summary of each site and how it could be useful to you. You are the executive assistant to the president of a brick-and-mortar company that sells equipment for extreme sports. The president is considering adding an online store and asks you to prepare a report on existing e-business sites for similar stores.
Locate at least three extreme sports e-business Web sites and write a brief summary of each site, including an explanation of its e-business model. Make a recommendation to the president on the type of e-business model he should consider.
You maintain a file of Internet statistical data for your supervisor, the online sales manager. She asks you to prepare a report for the next sales meeting. She would like current estimates of the number of people who are online in the United States and worldwide; estimates for global and U. B2C and B2B online sales; and other relevant data about the state of the e-business economy. Using Web search tools and other relevant resources, gather useful data estimates.
Then write a brief report containing the data estimates and their sources for your supervisor. Understanding E-Business 34 Team Project You and two classmates are eager to start your own e-business. Meet with your classmates, and using brainstorming as well as other applicable techniques and resources, decide on an e-business idea, including the e-business model your e-business will follow.
Then, using presentation software, create a 5—10 slide presentation that describes your e-business and its e-business model. Include in your presentation an analysis of the advantages and disadvantages you expect to face by doing business online. Present your e-business idea to your classmates and your instructor. For Further Study Here are some resources that might help you in further investigating the topics covered in this chapter.
Articles and Books Amor, Daniel. Sculley, Arthur B. William A. B2B Exchanges. Segaller, Stephen. Nerds 2. Department of Commerce. June End Notes 1 Guglielmo, Connie. February 24, October 31, Weaving the Web. New York: HarperCollins. February 3, March 3, October 18, September 10, New York: Free Press. October 19, January 9, June 5, November 9, August 15, December 3, Kelby Hagar, a fifth-generation Texan, grew up in Hereford, Texas, a small town in the Texas panhandle.
After graduating from Angelo State University with a degree in prelaw and accounting, Hagar married and moved east to study law at Harvard in the early s. Looking for a snack late one night, Hagar opened the refrigerator and found it was practically empty!
But who had time to shop for groceries? After graduating from Harvard, Hagar and his wife moved to Dallas, where he began working for a major law firm. Are you excited about taking your e-business idea to market? One of the first things you should do is consider the entrepreneurial abilities needed to start any business, including an e-business.
The Entrepreneur An entrepreneur is someone who assumes the risks associated with starting and running his or her own business. Leadership traits common to most successful entrepreneurs include intelligence, determination, integrity, listening skills, and the ability to relate to others in a positive way. As a leader, an entrepreneur must be able to communicate the mission and goals of his or her business to investors, suppliers, customers, employees, and interested others.
Starting any new business requires considerable energy and the ability to focus that energy on accomplishing objectives. Because starting and running a business is more timeintensive than working for someone else, following an appropriate stress management plan including exercise and a healthy diet is a must for an entrepreneur. Successful entrepreneurs must believe in their business ideas and have the selfconfidence to accomplish their goals. Along with selfconfidence, entrepreneurs need the ability to organize business activities successfully, as this is essential to get things done on time, locating business-critical information quickly, and staying on schedule.
TIP Entrepreneurship is also taking place within large corporations, such as Sun Microsystems and Boeing, where project leaders are encouraged to use their entrepreneurial skills to turn new product ideas—especially the kind that strive to take advantage of the Internet and Web—into profits. Many successful entrepreneurs display their competitive natures early in life—that is, in their approach to school, hobbies, or sports.
Finally, entrepreneurs must be ready to make short-term sacrifices, such as spending limited time with family and friends, in return for long-term success. While entrepreneurs often do set their own work schedules, they are seldom easy ones.
Together the two of them launched an online magazine named Failure in July, Because failure is a universal experience, Zasky believes that people are interested in failure-related stories. Before you do, remember to consider your ongoing financial needs. Various sources suggest that you should set aside funds to cover living expenses for a period ranging anywhere from six months to two years.
The Entrepreneurial Process The entrepreneurial process, which can be divided into several steps or stages, is a methodology in which you begin by determining whether or not you are an entrepreneur and then deciding whether to start your own business or purchase an existing business. If you choose to start your own business, you must define the business idea, create a business plan, and perhaps, secure financing before you can begin operating the business.
Figure illustrates the five stages of the entrepreneurial process. It is critical that you assess your entrepreneurial abilities and evaluate the time and effort that will be required.
Consider seriously the effect of this commitment on you and your family before going to the next stage. Stage 2: Decide whether to buy or start a business. If you determine that you are an entrepreneur, the next step in the entrepreneurial process is to decide whether to start a new business or purchase an existing business. Stage 3: If you decide to start a new business, you must first define the business idea or concept, including the products or services to be sold.
Then you must create a business plan that includes your assessment of the business environment in which you will operate, an identification of the business need, estimates of expected profitability, and a description of the legal form the business will take.
Part of the business planning process includes defining stakeholders, such as customers, suppliers, distributors, and possible investors.
Stage 4: After you either start a new business or purchase an existing one, you then must operate and grow the business. Stage 5: Once the business is in operation and has grown, you will be able to harvest the business through a number of means: by continuing to operate the business and letting it become a cash cow that is, continue operations to generate cash , by going public issuing a public stock offering or IPO , by selling the business, or by allowing it to be acquired by another business.
Of course, if the business is not successful, you may be required at this stage to liquidate the business and, if necessary, file for bankruptcy. It seemed that many of the venture capital firms they contacted were concerned that WebPromote lacked the marketing management expertise to succeed. Enter David M. Tolmie, an experienced marketing professional who met with the founders on behalf of his venture capital firm. Tolmie liked the WebPromote e-business idea, and because he wanted the challenge of running a business, he agreed to join WebPromote as the chief executive officer and president—thereby providing the business the important marketing expertise it needed.
After determining that you have the entrepreneurial abilities to take your e-business idea to market and after reviewing the entrepreneurial process, you should next consider some of the major factors that could affect the long-term success of your e-business idea. Successful e-businesses based on viable e-business models and sound business principles will grow, change, and mature; on the other hand, e-businesses based on flawed e-business models or unsound business practices find it difficult, if not impossible, to survive.
Many factors can affect the success of a new e-business idea. There are several factors that are unique to doing business online including the network effect, creating innovative marketing ideas, scalability, the ease of entry into electronic markets for you and your competitors, and adaptability to change. Every e-business entrepreneur should carefully consider each of these factors.
The Network Effect A primary factor in the growth of e-business is the network effect. The network effect is the phenomena in which the total value of a product, service, or technology grows as more and more people use the product, service, or technology. A commonly used example that demonstrates how the network effect leads to increasing value is a telephone service.
A telephone service or network with a single telephone user has little value to the user or to others because there is no one else to call. However, when you add a second telephone user, the value of the telephone network increases because there are now other people to call. Bob Metcalfe, an engineer and entrepreneur, was involved in the early development of network technologies at Xerox PARC and is the founder of 3Com Corporation.
For global e-business, the network of linked e-businesses and consumers becomes more valuable as more and more e-businesses and Chapter 2 consumers participate in the process. Examples of e-businesses and other organizations who have successfully harnessed the power of the network effect include auction sites, such as uBid; professional associations, such as that of the developers of Bluetooth; and B2B technology providers, such as Groove Networks.
Figures through show the Web sites for these organizations. You should also be mindful of the inherent dangers of the network effect on your e-business idea—for example, rapidly circulating negative customer comments or technologies that perform in unexpected and unwanted ways. As part of the evaluation of your e-business idea, you should identify ways to exploitthe network effect by using innovative marketing ideas to promote your e-business. Users simply downloaded the Third Voice browser plug-in software, which enabled them to post comments, view comments by others, and even join discussion groups or communities related to specific Web pages.
With this software, users could also import their e-mail address books into Third Voice and use it to generate an e-mail message that included a link to the Web page being viewed.
By enabling people to import their address books, Third Voice immediately created a network of potential users for itself. In addition, many Web design professionals and proprietors of e-businesses were outraged that Third Voice users could, in effect, deface Web pages with unflattering and inappropriate comments. While some people championed Third Voice as a new tool for free expression, many others become concerned about threats to user privacy. Before long, Third Voice closed shop, posting instructions on its Web site for how its users could uninstall the Third Voice software from their computers.
One of the most famous examples of a new e-business that successfully exploited the network effect through the use of an innovative marketing idea is Hotmail. When they met with Tim Draper, the founding partner of the venture capital firm Draper Fisher Jurvetson DFJ , Draper liked the idea of free e-mail but insisted that text be added to the bottom of each outgoing e-mail message encouraging recipients to get their own free Hotmail account.
Draper wanted the text to be linked to the Hotmail Web site so that message recipients could click the link, view the features of Hotmail on the Web site, and immediately sign up for the service themselves. At first, Bhatia and Smith resisted the idea of adding the linked message, considering it to be too much like what today is called spam—unsolicited commercial messages or advertisements that are sent by marketers to a large number of unrelated and uninterested parties. Eager to get financing for their new e-business, however, Bhatia and Smith finally agreed with Draper about including the marketing message link.
Hotmail was quietly launched in over the July 4th holiday. Because of the holiday and because there was little money to spend on advertising the service, the launch generated little press coverage. The first customers to sign up were at colleges and universities. A single user from a school would sign up, and then, the next day, a hundred users from the same school would be signed up. By the end of the week, there would be a thousand users from the same school.
In the meantime, word about Hotmail would spread to another school, and this process would begin again. Before long, users from around the world began signing up, and the propagating process continued at impressive speeds. For example, within six weeks after the first user in India subscribed, India had , Hotmail subscribers. Less than 18 months after its launch, Hotmail had 12 million worldwide subscribers.
And in less than three years, Hotmail had become the fastest-growing media company in history, with more than 30 million subscribers! They noted that Hotmail spread around the world like an epidemic. It is the implementation, which is not trivial. People do not realize that. Chapter 2 Scalability Scalability refers to the ability of your e-business idea to continue to function well, regardless of how large the business gets.
The rapid growth of an e-business can cause problems if your e-business idea does not scale well with unexpected growth. Just ask the founders of AllAdvantage; they not only underestimated the power of the network effect and viral marketing, they also failed to realize how poorly the AllAdvantage e-business idea would scale as a result of rapid growth.
AllAdvantage, along with similar e-businesses such as Spedia and Jotter, tried to put a new twist on generating advertising revenues by paying people to browse the Web. Original members were also paid a bonus if the member they had referred wound up referring someone else, and so on—a classic pyramid scheme. AllAdvantage had expected to attract 20, members in three months.
In the first week of operations, , users enrolled with AllAdvantage; at the three-month mark, the company found itself with one million members. Within a few months, AllAdvantage had 6. While these numbers may suggest that AllAdvantage was experiencing the same runaway success that Hotmail had enjoyed, the real story is more complicated.
While AllAdvantage had no problem building its membership, advertisers resisted the idea of targeting online advertising to individuals browsing the Web. Many advertisers did not yet fully understand how to harness the power of the Internet and exploit the network effect to target customers with their advertising. Within two years, AllAdvantage burned through its capital and ceased operations. When evaluating your e-business idea, consider its scalability—how well your idea works with unexpected and rapid growth.
What will happen to your e-business if demand for your products or services explodes? For example, if your e-business sells products, do you have reliable sources for those products and a strong distribution system that can meet a sudden increase in demand from your customers? If your e-business sells a service, do you have sufficient resources to satisfy a spike in customer orders? FreeRide evolved into a marketing company that pays members to take online surveys. When evaluating your e-business idea, consider how easy it is for you—and your competitors—to enter the marketplace.
Ease of Entry into Electronic Markets Low-cost Internet technologies have made it easy for many new e-businesses to enter an online marketplace and become competitive. A good example is the C2C auction marketplace, which in recent years has experienced tremendous growth in both the number of auction sites and in auction sales dollars. Three major reasons for the growth of online C2C auction sites are the following. Ease with which consumers can interact with an auction Web site—they need only a computer and Internet access.
Attractive business proposition—the e-business hosting the auction can earn sales commissions without having to manage, warehouse, or distribute product inventories. Because eBay beat everyone else to the Web auction market, the site developed a strong community of buyers and sellers.
Thanks to the fact that buyers and sellers are naturally attracted to a Web site where there are already a large number of buyers and sellers—and to the fact that the company was able to fortify its first-mover advantage with aggressive marketing—eBay continues to attract many buyers, who then attract more sellers, who then attract more buyers. Today, eBay reports more than million registered users around the world, including places such as China, India, South Korea, Spain, and Taiwan.
It should be noted that the name also represents a strong online community of already entrenched buyers and sellers. At eBay, buyers and sellers not only enjoy the excitement of hunting for garage sale bargains, but also the thrill of coming into contact and exchanging information with a community of people who share their interests. This type of name identification is the ultimate competitive barrier for new auction sites hoping to break into the C2C auction market.
While other e-businesses, such as Dell, Inc. She made brownies and cookies, and bought other items to sell at the snack bar. Whitman has embraced innovative technologies and adopted forward-looking strategies throughout her career. When eBay was a small, three-year-old Internet startup, Whitman took a look and liked what she saw.
She quickly recognized that the eBay C2C auction concept was a great e-business idea—it was unique, and it had no brick-and-mortar equivalent. Already very successful in the traditional business world, in Whitman left her position at FTD and staked her career and livelihood on the new venture by joining eBay as President and CEO Figure From the start, Whitman had the foresight to know that eBay was going to be huge.
But no one—not even Meg Whitman—really anticipated just how huge eBay would become in just a few short years. But, if you love retail, travel, sports, or something else, follow your passion and go for it.
Next, think about how quickly your e-business idea can be adapted in an ever-changing business environment. Adaptability to Change The e-business marketspace is characterized by rapid knowledge transfer and the need to make decisions quickly. An e-business entrepreneur must act quickly to exploit new ideas and opportunities and to handle new challenges.
The ability to quickly adapt to the marketplace is a hallmark for what may be the most famous e-retailer, Amazon. Then, to meet consumer demand for purchasing all kinds of items online, Amazon. When the online auction craze hit, Amazon. Next, Amazon. The next step is to then think of ways to exploit the built-in advantages you will have by doing business online.
Existing businesses and new e-businesses can exploit these built-in advantages to expand their markets, acquire greater business visibility, maximize customer relationships and increase responsiveness, create new products and services, and reduce costs. Expand the Market Because consumers in the e-business marketplace are not bound by the constraints of physical location or time, an e-business has the opportunity to reach a larger market than a traditional brick-and-mortar business.
Recognizing this, many successful businesses are revamping their existing business model to add an e-business component that complements their primary value chain.
Examples of brick-and-mortar businesses that have successfully modified their business model to incorporate an e-business include Wal-Mart, Costco, and Ticketmaster. Ticketmaster, the world leader in the market for live event ticket sales, demonstrates how a very successful business idea can add e-business to its business mix. Founded in , Ticketmaster was a pioneer in offering computerized ticketing services at brick-andmortar ticket outlets.
In the mid s, Ticketmaster launched its fledgling Web site, which offered tickets online to events in the Pacific Northwest area. The ease with which a transaction could be completed online was clearly popular with clients and consumers, and within a few months, Ticketmaster was offering tickets online to events across the country. Ticketmaster continued to expand its share of the market by actively marketing to consumers via e-mail, holding online ticket auctions, and providing an authorized marketspace where season ticket holders could sell their unwanted tickets.
Today, Ticketmaster Figure leads global online and offline ticket sales by combining more than 3, brick-and-mortar ticket outlets and 19 call centers with its online operations. In , Ticketmaster sold 98 million tickets across seventeen markets including the U. Acquire Greater Business Visibility The Internet and the Web enable companies to get their name and products or services in front of more potential customers than ever before.
In fact, these days, having a presence online has become essential for most companies. Today, businesses large and small acquire greater business visibility by hosting useful and informative Web sites. A prime example of this is the way automobile manufacturers such as General Motors, Ford Motor Company, and Chrysler use their Web sites to promote their companies and their vehicles.
Figures through illustrate examples of automotive company Web sites. Market conditions, execution, and timing all play significant roles in this process. One major retailer that tried to harness the power of the Web to gain greater business visibility, but fell very short of the mark, is Federated Department Stores, a chain of brick-and-mortar department stores. Fingerhut also had trouble meeting its commitments to its logistics clients, who left in droves.
To spur sales, Fingerhut began offering revolving credit accounts to its customers—with predictable results. Curiously, Fingerhut—the subsidiary—fared better than expected. Reborn as Fingerhut Direct Marketing, Inc. It is timing too. Next, consider how your e-business idea exploits the Internet and the Web to maximize your customer relationships.
As consumers become increasingly in control in the new global economy, e-businesses must strive to improve their online responsiveness and maximize the benefits they can offer via the Internet in order to draw and keep customers. One company that uses its Web site to maximize customer benefits and maintain customer loyalty is Southwest Airlines. The company understands that simplicity, low airfares, and customer service are what keep its customers coming back, and the company kept this in mind when developing its Web site.
With just a few clicks, a customer can review flight and fare options, book a low-cost flight, print out a boarding pass, book a car and hotel room, and check on flight status. Understanding exactly what its online customers want and then using the power of the Internet and the Web to deliver that is paying off for Southwest Airlines.
Think about customer service. Grainger, which maintained a comfortable lead over its competitors in the sales of machine maintenance and repair supplies, at first seemed to be exactly the kind of traditional intermediary many analysts thought the advent of e-business would destroy.
But Grainger had a history of being a technology innovator in its industry. Orders placed at the Web site were twice as large on average as orders submitted via the traditional phone- or fax-based methods. Additionally, customers who ordered online were spending 20 percent more annually than they had by ordering via traditional methods. Grainger reports that 15 percent of its sales are generated at its Web site or through its EDI trading partners Figure To operate a successful e-business, you must be open to the new types of products and services your e-business idea might offer.
Create New Products and Services The Internet and the Web create an environment that enables existing companies to expand and refine their traditional businesses and one that promotes the emergence of new e-business ideas. The list of the new types of e-businesses made possible by the Internet and the Web goes on and on: business applications that can be accessed over the Web, server facilities that offer file backup and storage, firms that provide Web site hosting services to other firms, and more.
Online Dispute Resolution involves using Internet and Web technologies together with dispute resolution technologies to facilitate dispute mediation, negotiation, and arbitration. The idea for Cybersettle was born in the mids when two New York attorneys, Charles Brofman and James Burchetta, were negotiating a routine auto accident claim. Instead of spending days, weeks, and months in negotiations, the two attorneys chose a simpler method.
In the Chapter 2 case of the auto accident, the claim was settled on the first try. Their idea became the e-business named Cybersettle Figure Cybersettle uses patented computerized dispute resolution software, which it makes accessible to attorneys and claims professionals at its Web site.
The dispute resolution software matches confidential offers and demands in up to three rounds. When the maximum offer is equal to or greater than the minimum demand, the dispute is settled for a monetary figure that is the average of the two—up to the amount of the maximum offer. Cybersettle charges the participants in the dispute settlement fees based on the amount of the settlement.
With more than 9, claims professionals and 70, registered attorneys as clients, Cybersettle has been used to settle an assortment of disputes, ranging from those involving bodily injury to various types of insurance claims. Why engage in the bidding process for a used book that could be purchased at any used bookstore for half price or at any flea market for pennies? Following his instincts, Kopelman created an online marketspace for buyers and sellers of used books, CDs, and movies.
Since nothing was to be priced at more than half the original price, Kopelman named his online marketspace Half. Kopelman and the Half. The town accepted and issued a proclamation changing its name to Half.
In January, , Half. Intrigued by what eBay buyers and sellers were saying about Half. Recognizing that Half. Then, true to his core interests as an entrepreneur, he left and co-founded another e-business startup, TurnTide, a company that develops antispam technologies.
The first thing any entrepreneur should think about is what is your simple idea?
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