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E business

  1. 1. Introduction to e-Business
  2. 2. E-Business <ul><li>E-Business is the Integration business with </li></ul><ul><li>Technology means to say business done through </li></ul><ul><li>Electronically. </li></ul>
  3. 3. E-Commerce <ul><li>Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information via computer networks, including the Internet. </li></ul>
  4. 4. What Is the Internet? <ul><li>A network of networks, joining many government, university and private computers together and providing an infrastructure for the use of E-mail, bulletin boards, file archives, hypertext documents, databases and other computational resources </li></ul><ul><li>The vast collection of computer networks which form and act as a single huge network for transport of data and messages across distances which can be anywhere from the same office to anywhere in the world. </li></ul>
  5. 5. cont… <ul><li>The largest network of networks in the world. </li></ul><ul><li>Uses TCP/IP protocols and packet switching . </li></ul><ul><li>Runs on any communications substrate. </li></ul>From Dr. Vinton Cerf, Co-Creator of TCP/IP
  6. 6. Government Business Consumer Government Business Consumer E-commerce and Broader Internet Applications Source OECD (2000) C2C e.g. action markets C2B e.g. price comparisons C2G e.g. taxes B2C e.g. e-commerce B2B e.g. e-commerce B2G e.g. procurement G2C e.g. information G2B e.g. information G2G e.g. coordination
  7. 7. VISION <ul><li>E-Business will be a secure, flexible and integrated </li></ul><ul><li>approach combining the systems and processes that </li></ul><ul><li>run core business operations with the simplicity and </li></ul><ul><li>reach made possible by Internet technology. </li></ul><ul><li>E-Business is the process of using Web technology to </li></ul><ul><li>help the streamline processes, improve productivity, </li></ul><ul><li>increase efficiencies and enable organizations to </li></ul><ul><li>easily communicate with partners, vendors and </li></ul><ul><li>customers, connect back-end data systems and </li></ul><ul><li>transact commerce in a secure manner. </li></ul>
  8. 8. Business Models <ul><li>A Model is the systematic or structured approach which instruct the ways by following, we can easily perform any respective business activity. </li></ul><ul><li>The business model spells out how a company plans to make money and how it is competitively positioned in an industry. </li></ul>
  9. 9. Learning Objectives <ul><li>Identify the key components of e-commerce business models. </li></ul><ul><li>Describe the major B2C business models. </li></ul><ul><li>Describe the major B2B business models. </li></ul><ul><li>Recognize business models in other emerging areas of e-commerce. </li></ul><ul><li>Understand key business concepts and strategies applicable to e-commerce. </li></ul>
  10. 10. E-Commerce Business Models <ul><li>Business model </li></ul><ul><ul><li>a set of planned activities designed to result in a profit in a marketplace </li></ul></ul><ul><li>E-commerce business model </li></ul><ul><ul><li>a business model that aims to use and leverage the unique qualities of the Internet and the World Wide Web. </li></ul></ul>
  11. 11. Components of e-Business Models <ul><li>Business Model </li></ul><ul><li>Customer value </li></ul><ul><li>Scope </li></ul><ul><li>Price </li></ul><ul><li>Resources </li></ul><ul><li>Capabilities </li></ul><ul><li>Implementations </li></ul>Environment Internet Performance
  12. 12. Eight Key Ingredients of a Business Model Key Questions Business Model Components Value Proposition Why should the customer buy from you? Revenue model How will you earn money? Market opportunity What marketspace do you intent to serve, and what is its size? Competitive environment Who else occupies your intended marketspace? Competitive advantage What special advantages does your firm bring to the marketspace? Market strategy How do you plan to promote your products to attract customer? Organizational development What types of organizational structures within the firm are necessary to carry out the business plan? Management team What kinds of experiences and background are important for the company’s leaders to have?
  13. 13. Value Position <ul><li>Defines how a company’s product or service fulfills the needs of customers. </li></ul><ul><li>Questions </li></ul><ul><ul><li>Why will customers choose to do business with your firm instead of another company? </li></ul></ul><ul><ul><li>What will your firm provide that other firms do not and cannot? </li></ul></ul>
  14. 14. Revenue Model <ul><li>Describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital. </li></ul><ul><li>E-commerce revenue models include: </li></ul><ul><ul><li>advertising model </li></ul></ul><ul><ul><li>subscription model </li></ul></ul><ul><ul><li>transaction fee model </li></ul></ul><ul><ul><li>sales model </li></ul></ul><ul><ul><li>affiliate model </li></ul></ul>
  15. 15. cont… <ul><li>Advertising revenue model </li></ul><ul><ul><li>a company provides a forum for advertisements and receives fees from advertisers ( Yahoo ) </li></ul></ul><ul><li>Subscription revenue model </li></ul><ul><ul><li>a company offers it users content or services and charges a subscription fee for access to some or all of it offerings ( Consumer Reports or Wall Street Journal ) </li></ul></ul>
  16. 16. cont… <ul><li>Transaction fee revenue model </li></ul><ul><ul><li>a company receives a fee for enabling or executing a transaction ( eBay or E-Trade ) </li></ul></ul><ul><li>Sales revenue model </li></ul><ul><ul><li>a company derives revenue by selling goods, information, or services ( Amazon or DoubleClick ) </li></ul></ul><ul><li>Affiliate revenue model </li></ul><ul><ul><li>a company steers business to an affiliate and receives a referral fee or percentage of the revenue from any resulting sales ( MyPoints ) </li></ul></ul>
  17. 17. Market Opportunity <ul><li>Market opportunity </li></ul><ul><ul><li>refers to the company’s intended marketspace and the overall potential financial opportunities available to the firm in that market space </li></ul></ul><ul><ul><li>defined by the revenue potential in each of the market niches where you hope to compete </li></ul></ul><ul><li>Marketspace </li></ul><ul><ul><li>the area of actual or potential commercial value in which a company intends to operate </li></ul></ul>
  18. 18. Competitive Environment <ul><li>Refers to the other companies operating in the same marketplace selling similar products </li></ul><ul><li>Influenced by: </li></ul><ul><ul><li>how many competitors are active </li></ul></ul><ul><ul><li>how large are their operations </li></ul></ul><ul><ul><li>the market share of each competitor </li></ul></ul><ul><ul><li>how profitable these firms are </li></ul></ul><ul><ul><li>how they price their products </li></ul></ul>
  19. 19. Competitive Advantage <ul><li>Achieved by a firm when it can produce a superior product and/or bring the product to market at a lower price than most, or all, of its competitors </li></ul><ul><li>Achieved because a firm has been able to obtain differential access to the factors of production that are denied their competitors -- at least in the short term </li></ul>
  20. 20. cont… <ul><li>Asymmetry </li></ul><ul><ul><li>exists whenever one participant in a market has more resources than other participants </li></ul></ul><ul><li>First mover advantage </li></ul><ul><ul><li>a competitive market advantage for a firm that results from being the first into a marketplace with a serviceable product or service </li></ul></ul>
  21. 21. cont… <ul><li>Unfair competitive advantage </li></ul><ul><ul><li>occurs when one firm develops an advantage based on a factor that other firms cannot purchase </li></ul></ul><ul><li>Perfect Market </li></ul><ul><ul><li>a market in which there are no competitive advantages or asymmetries because all firms have equal access to all the factors of production </li></ul></ul><ul><ul><li>when a company uses its competitive advantage to achieve more advantage in surrounding markets </li></ul></ul>
  22. 22. Market Strategy <ul><li>The plan you put together that details exactly how you intend to enter a new market and attract new customers </li></ul><ul><li>Best business concepts will fail if not properly marketed to potential customers </li></ul>
  23. 23. Organizational Development <ul><li>Describes how the company will organize the work that needs to be accomplished </li></ul><ul><li>Work is typically divided into functional departments </li></ul><ul><li>Move from generalists to specialists as the company grows </li></ul>
  24. 24. Management Team <ul><li>Employees of the company responsible for making the business model work </li></ul><ul><li>Strong management team gives instant credibility to outside investors </li></ul><ul><li>A strong management team may not be able to salvage a weak business model </li></ul><ul><li>Should be able to change the model and redefine the business as it becomes necessary </li></ul>
  25. 25. Major e-Business Models <ul><li>Business-to-Consumer (B2C) </li></ul><ul><li>Business-to-Business (B2B) </li></ul>
  26. 26. Business-to-Consumer (B2C) Business Model <ul><li>B2C (or Extranets) is just web-enabled relationships between existing partners; they tend to be run by a single company seeking to lower the cost of doing business with its current suppliers or individual customers. </li></ul><ul><li>Examples? </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul>
  27. 27. Enterprise User Profiles Workflow Business rules Payment Analytics Internet Firewall Figure: A B2C e-business Model Intranet
  28. 28. B2C Applications <ul><li>Electronic storefront </li></ul><ul><li>Electronic malls </li></ul><ul><li>Advertising online </li></ul><ul><li>Service online </li></ul><ul><ul><li>selling books, toys, computers </li></ul></ul><ul><ul><li>e-banking (cyber banking) </li></ul></ul><ul><ul><li>online stock trading </li></ul></ul><ul><ul><li>online job market, travel, real estate </li></ul></ul>
  29. 29. Various B2C Business Model
  30. 30. cont…
  31. 31. cont… <ul><li>Portal </li></ul><ul><ul><li>offers powerful search tools plus an integrated package of content and services </li></ul></ul><ul><ul><li>typically utilizes a combines subscription/advertising revenues/transaction fee model </li></ul></ul><ul><ul><li>may be general or specialize (vortal) </li></ul></ul>
  32. 32. cont… <ul><li>E-tailer </li></ul><ul><ul><li>online version of traditional retailer </li></ul></ul><ul><ul><li>includes </li></ul></ul><ul><ul><ul><li>virtual merchants (online retail store only) </li></ul></ul></ul><ul><ul><ul><li>clicks and mortar e-tailers (online distribution channel for a company that also has physical stores) </li></ul></ul></ul><ul><ul><ul><li>catalog merchants (online version of direct mail catalog) </li></ul></ul></ul><ul><ul><ul><li>online malls (online version of mall) </li></ul></ul></ul><ul><ul><ul><li>Manufacturers selling directly over the Web </li></ul></ul></ul>
  33. 33. cont… <ul><li>Content Provider </li></ul><ul><ul><li>information and entertainment companies that provide digital content over the Web </li></ul></ul><ul><li>Transaction Broker </li></ul><ul><ul><li>processes online sales transactions </li></ul></ul><ul><li>Market Creator </li></ul><ul><ul><li>uses Internet technology to create markets that bring buyers and sellers together </li></ul></ul>
  34. 34. cont… <ul><li>Service Provider </li></ul><ul><ul><li>offers services online </li></ul></ul><ul><li>Community Provider </li></ul><ul><ul><li>provides an online community of like-minded individuals for networking and information sharing </li></ul></ul><ul><ul><li>revenue is generated by referral fee, advertising, and subscription </li></ul></ul>
  35. 35. Business-to-Business (B2B) Business Model <ul><li>“ B2B” is business-to- business commerce conducted over the Internet (called B2B e-commerce space, or e-marketplaces ) </li></ul>
  36. 36. Figure : A B2B Model Banks, Financial Institutions Suppliers <ul><li>Production materials </li></ul><ul><li>Operating goods, services </li></ul>Invoices, Payment , Clearing Enterprise Customers Logistics Celarix, NTE Transportation, Warehousing
  37. 37. B2B Applications <ul><li>Advertising </li></ul><ul><li>Auctioning </li></ul><ul><li>Procurement </li></ul><ul><li>Channel management </li></ul><ul><li>E-commerce </li></ul>
  38. 38. Various (B2B) Business Model
  39. 39. cont… <ul><li>B2B Hub </li></ul><ul><ul><li>also known as marketplace/exchange </li></ul></ul><ul><ul><li>electronic marketplace where suppliers and commercial purchasers can conduct transactions </li></ul></ul><ul><ul><li>may be a general (horizontal marketplace) or specialized (vertical marketplace) </li></ul></ul><ul><li>E-distributor </li></ul><ul><ul><li>supplies products directly to individual businesses </li></ul></ul>
  40. 40. cont… <ul><li>B2B Service Provider </li></ul><ul><ul><li>sells business services to other firms </li></ul></ul><ul><li>Matchmaker </li></ul><ul><ul><li>links businesses together </li></ul></ul><ul><ul><li>charges transaction or usage fees </li></ul></ul><ul><li>Info mediary </li></ul><ul><ul><li>gather information and sells it to businesses </li></ul></ul>
  41. 41. Figure : B2C and B2B Internet Commerce in the U.S. (Source: Forrester Research) Billion
  42. 42. How Big is B2B? Figure: The Goldman Sachs B2B Sizing in USA
  43. 43. The Magnificent Seven B2B Drivers <ul><li>Increasing competition and globalization </li></ul><ul><li>Growing interactivity </li></ul><ul><li>Financial opportunity </li></ul><ul><li>Efficiencies and cost savings </li></ul><ul><li>Enhanced market and customer reach </li></ul><ul><li>Real-time needs </li></ul><ul><li>Regulatory and taxation issues </li></ul>
  44. 44. Traditional versus E-Business Models? C B C B C: Individual Consumer B: Business
  45. 45. Seven Unique Feature of E-Commerce Technology
  46. 46. Seven Unique Feature of E-Commerce Technology <ul><li>Ubiquity </li></ul><ul><ul><li>Alters industry structure by creating new marketing channels and expanding size of overall market </li></ul></ul><ul><ul><li>Creates new efficiencies in industry operations and lowers cost of firms’ sales operations </li></ul></ul><ul><ul><li>Enables new differentiation strategies </li></ul></ul><ul><li>Global Reach </li></ul><ul><ul><li>Changes industry structure by lowering barriers to entry, but greatly expands market at the same time </li></ul></ul><ul><ul><li>Lowers cost of industry and firm operations through production and sales efficiencies </li></ul></ul><ul><ul><li>Enables competition on global scale </li></ul></ul>
  47. 47. Seven Unique Features of E-Commerce Technology <ul><li>Universal Standards </li></ul><ul><ul><li>Changes industry structure by lowering barriers to entry and intensifying competition within an industry </li></ul></ul><ul><ul><li>Lowers costs of industry and firm operations by lowering computing and communications costs </li></ul></ul><ul><ul><li>Enables broad-scope strategies </li></ul></ul><ul><li>Richness </li></ul><ul><ul><li>Alters industry structure by reducing strength of powerful distribution channels </li></ul></ul><ul><ul><li>Change industry and firm operations costs by lessening reliance on sales force </li></ul></ul><ul><ul><li>Enhances post-sale support strategies </li></ul></ul>
  48. 48. Seven Unique Features of E-Commerce Technology <ul><li>Interactivity </li></ul><ul><ul><li>Alters industry structure by reducing threat of substitutes through enhanced customization </li></ul></ul><ul><ul><li>Reduces industry and firm costs by lessening reliance on sales force </li></ul></ul><ul><ul><li>Enable differentiation strategies </li></ul></ul><ul><li>Personalization/Customization </li></ul><ul><ul><li>Alters industry structure by reducing threats of substitutes, raising barriers to entry </li></ul></ul><ul><ul><li>Reduces value chain costs in industry and firm by lessening reliance on sales forces </li></ul></ul>
  49. 49. Seven Unique Features of E-Commerce Technology <ul><li>Information Density </li></ul><ul><ul><li>Changes industry structure by weakening powerful sales channels, shifting bargaining power to consumer </li></ul></ul><ul><ul><li>Reduces industry and firm operations costs by lowering costs of obtaining, processing, and distributing information about suppliers and consumers </li></ul></ul>
  50. 50. Case Studies <ul><li>Should we integrate Internet business with our traditional business or should we keep the two separate? </li></ul>