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Innovirtua eCommerce vs vBusiness

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Innovirtua eCommerce vs vBusiness

  1. 1. eCommercevs vBusiness<br />
  2. 2. Changing Economy<br />The internet economy as it is traditionally understood is changing…<br />The virtual space is offering much sought after solutions to problems experienced by businesses implementing e-business models.<br />Pricing mechanisms for intangible goods, market positioning and development leading sustainable competitive advantage are made possible through community interactions.<br />However, concerns over information security, protection of intellectual property rights, copyright, low customer buy in and switching costs, still exist.<br />Value has to be added to an organisations customers through developing the value chain, value networks and network externalities.<br />Can innovation through v-Business help us stay competitive?<br />Access to a global market. <br />Direct B2C and B2B sales?<br />Economies of scale through electronic distribution of product?<br />Opportunities to build value networks and understand consumer community.<br />Leading to mass customisation and serving community needs.<br />
  3. 3. What, Why, How?<br />What technology should be utilised in the development of a virtual strategy?<br />What should the scope of the virtual initiative be? <br />What are the expected benefits that such an initiate would provide? <br />What risks could be associated with such a strategy and how would we alleviate them if identified? <br />How would such a website add value to the organisation and offer value to our customers?<br />How can the initiative provide competitive advantage and in what markets? <br />Why would such an initiative provide new opportunities to the organisation?<br />
  4. 4. IT Reconfiguration<br />When exploring how IT integration effects an organisation and the scale of the benefits that may be achieved because of it, we may follow the evolution of an organisations information infrastructure through five consecutive generic levels, as outlined by Prof. N.Venkatraman<br />
  5. 5. Electronification<br />Now by transposing these two theories, we can begin to visualise the development arc within the Electronification Long Wave.<br />
  6. 6. 3 Streams…<br />When applying these theories to organisation in the context of efficiency and innovation, it is important to consider…. B. Mahadevan, “Business Models for Internet‐Based E‐Commerce: An Anatomy,”California Management Review 42 (2000) <br />Value Stream – describes what value customers of the business gain from entering into a transaction with it, how to identify methods by which value may be increased for the business or added on behalf of customers to better differentiate the business from the competition. Dictates how to produce a business model and innovate<br />Revenue Stream – describes how the business may optimise existing revenue opportunities, how it can do what it does better. Also how it may identify new methods by which to generate profit and ensure survival. Dictates economic value of products or services<br />Logistics Stream – governs the supply chain of the processes held with the business and its part in it. Where the materials used in manufacture are sourced, how they are produced and the effect on quality of the final product, how that product is delivered to customers. Dictates viable delivery channels<br />When concentrating on v-business how prevalent are these theories? Are they comprehensive enough?<br />
  7. 7. First Link IS Practice<br />Formulating Strategy<br />When formulating any kind of strategy, firstly identify all the aspects of your organisation which “add value”.<br />This means that once the distinctive competencies of an organisation have been identified, a strategy can be formed which applies them in a market which best suits them, optimising the chances of success and profitability if there is any….John Kay, “Foundations of Corporate Success” (New York: Oxford University Press, 1993) .<br />Internal Architectures<br />External Architectures<br />Innovation<br />
  8. 8. Virtual Value<br />So in this context it is important not just to apply one or more of the three streams to the virtual space in developing a strategy that is sustainable.<br />A broad view must be taken, all three streams MUST be taken into account in a holistic and hybrid manner.<br />An environmental analysis must be undertaken on a constant footing. Every strategy can be assigned a lifecycle. Whilst commodities will become common place, monopolies will be a rare occurrence.<br />Constant innovation must take place, and both internal and external architectures developed in line with value chain activities.<br />
  9. 9. First Link IS Practice<br />Innovative Value Activities<br />An organisation which constantly innovates, can be thought of as perpetually transforming itself into something else.<br />
  10. 10. 8 Generic Internet Business Models<br />According to, Thomas R. Eisenmann, ed., “Internet Business Models: Text and Cases” (New York: McGraw‐Hill, 2002), there are 8 generic business models.<br />Internet Access Providers – Connect consumers and businesses to t’internet through the communications network…..(AOL, Plusnet, Pipex, Virgin)<br />Online Portals – provide navigational assistance to help users find and link to relevant third party online content, also community building features such as chat and IM services…..(Google, Yahoo)<br />Online Content Providers – use the internet to distribute copyrighted information and entertainment content…..(Academic Research Institutes, I-Tunes, Newspapers)<br />Online Retailers – manufacture physical products that they then sell and often rely on third party service providers (such as DHL, Fedex, UPS) to deliver those goods from warehouses…..(Staples, Argos, Wiggle)<br />
  11. 11. 8 Generic Internet Business models<br />Online Brokers – Use the internet to help customers identify prospective trading partners and sometimes help them complete transactions…..(Travel Agents, Real Estate Agents)<br />Online market Makers – intermediaries that facilitate an information discovery process. Central purpose is to organise a market place and provide a place to trade….(Expedia, Amazon)<br />Networked Utility Providers – distribute downloadable software applications that connect users with destination websites or with each other. Usually give away their client software in an effort to rapidly establish a defacto technology standard then profit from the sale of ancillary services…..(Acrobat, ICQ, MSN, Skype)<br />Application Service Providers – allow customers to access application software on remote servers. …..(Abobe Photoshop Light, Cloud Operators)<br />
  12. 12. Framework for an Internet Economy<br />
  13. 13. So how do MMOW’s Fit?<br />Eisenmann ahs always championed the approach of hybridisation of the generic models in order to best apply an organisations core competencies to an emerging strategy.<br />It is usual that we can apply aspects of two or more of the generic strategies to any specific organisation.<br />Interestingly (and at the same time arguably)….MMOW’s can be said to involve aspects of seven of the eight models. This is very unusual and gives rise to a need of reclassification.<br />The distinction between physical and digital product casts some doubt over this in a traditional sense, and gives rise to the contradictory theories of Online Delivered Content as a product, and digital products themselves.<br />
  14. 14. The Economics of Electronic Commerce<br />According to Choi et al, “The Economics of Electronic Commerce”, MacMillan (1997), the core of e-commerce can be separated along a boundary defining physical and digital products.<br />
  15. 15. Physical vs Digital Product<br />Choi breaks down the activities of physical or digital agents (sellers, buyers, intermediaries, governments, or groups) in order to purchase physical or digital product (shoes, downloads, holidays) through physical or digital means (shops or websites).<br />Barnes drops the agent dimension, claiming it has no relevance to digital agents. in favour of highlighting the intangible value of digital product.<br />
  16. 16. Online Delivered Content<br />According to Barnes, “E-Commerce and V-Business”, BH (2000), the intangible aspects of Online Delivered Content can be assigned a value.<br />
  17. 17. Tangible vs Intangible goods<br />Tangible goods can be easily assigned a value. In most cases, this involves physical product for which we pay a certain monetary value to own. For example, one can physically enter a shoe store, obtain physical product in the form of shoes<br />Intangible goods have traditionally been bundled through physical means, for example, knowledge is found in a book, and a theatre production needs a stage.<br />As we enter an age which provides the functionality to provide intangible products, free from the overheads and costs incurred by the traditional means necessary to bundle them to a paying audience….how will we react?<br />
  18. 18. Questions to Answer<br />How will we assign a value to information and digital products?<br />Why is it a worthwhile venture to do so?<br />What methods will we use to deliver these goods to a virtual market and service the communities which make use of them?<br />

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