e commerce quiz 2

Market Strategy

"How do you plan to promote your products or services to attract your target audience?"

Revenue Model

"How will the firm earn revenue, generate profits, and produce a superior return on invested capital?"

Management Team

"What kind of backgrounds should the company's leaders have?"

Market Opportunity

"What marketspace do you intend to serve and what is its size?"

Competitive Advantage

"What special advantages does your firm bring to the marketspace?"

Organizational Development

"What types of organizational structures within the firm are necessary to carry out the business plan?"

Competitive Environment

"Who else occupies your intended marketspace?"

Value Proposition

"Why should the customer buy from you?"

Exchanges

-Independently owned vertical digital marketplace for direct inputs -Create powerful competition between suppliers -Tend to force suppliers into powerful price competition; number of exchanges has dropped dramatically

Industry Consortia

-Industry-owned vertical digital marketplace open to select suppliers E.g.: Exostar -More successful than exchanges -Sponsored by powerful industry players -Strengthen traditional purchasing behavior

Industry Value Chains

-Set of activities performed by suppliers, manufacturers, transporters, distributors, and retailers that transform raw inputs into final products and services -Internet reduces cost of information and other transactional costs -Leads to greater operational efficiencies, lowering cost, prices, adding value for customers

Origins and Growth of E-commerce

1995: Beginning of e-commerce First sales of banner advertisements E-commerce fastest growing form of commerce in United States

Firm Value Chains

Activities that a firm engages in to create final products from raw inputs Each step adds value

types of revenue models

Advertising revenue model Subscription revenue model Transaction fee revenue model Sales revenue model Affiliate revenue model

revenue models portal

Advertising, referral fees, transaction fees, subscriptions

Revenue model(s):

Advertising, subscriptions, transaction fees, sales, and affiliate revenue.

Marketspace

Area of actual or potential commercial value in which company intends to operate

important concepts of competitive advantage

Asymmetries First-mover advantage, complementary resources Unfair competitive advantage Leverage Perfect markets

Build own vs. outsourcing

Build your own requires team with diverse skill set; choice of software tools; both risks and possible benefits

Types of E-commerce

Business-to-Consumer (B2C) Business-to-Business (B2B) Consumer-to-Consumer (C2C) Social e-commerce Mobile e-commerce (M-commerce) Local e-commerce

A strong management team

Can make the business model work Can give credibility to outside investors Has market-specific knowledge Has experience in implementing business plans

Technical approach

Computer science Management science Information systems

Traditional commerce:

Consumer as passive targets Sales-force driven Fixed prices Information asymmetry

Market Creator

Create digital environment where buyers and sellers can meet and transact

E-procurement

Creates digital markets where participants transact for indirect goods B2B service providers, application service providers (ASPs) e.g.: Ariba

Realistic market opportunity

Defined by revenue potential in each market niche in which company hopes to compete

Describing your audience

Demographics Age, gender, income, location Behavior patterns (lifestyle) Consumption patterns (purchasing habits) Digital usage patterns Content creation patterns (blogs, Facebook) Buyer personas

Characterize the marketplace

Demographics Size, growth, changes Structure Competitors Suppliers Substitute products

Business plan

Describes a firm's business model

what does organizatinoal development do

Describes how firm will organize work

System design specification

Description of main components of a system and their relationship to one another

Most important management challenges:

Developing a clear understanding of business objectives Knowing how to choose the right technology to achieve those objectives

Technology

Development and mastery of digital computing and communications technology

4 generic business strategies

Differentiation Cost Scope Focus

Private Industrial Networks

Digital network Used to coordinate communication among firms engaged in business together Typically evolve out of company's internal enterprise system e.g.: Walmart's network for suppliers

What Is E-commerce?

Digitally enabled commercial transactions between and among organizations and individuals

Technologies continue to evolve at exponential rates

Disruptive business change New opportunities

The Gold Rush Model

E-commerce infrastructure companies have profited the most: Hardware, software, networking, security E-commerce software systems, payment systems Media solutions, performance enhancement CRM software Databases Hosting services, etc.

Why Study E-commerce?

E-commerce technology is different, more powerful than previous technologies E-commerce brings fundamental changes to commerce

Major B2C Business Models

E-tailer Community provider (social network) Content provider Portal Transaction broker Market creator Service provider

2001-2006: Consolidation

Emphasis on business-driven approach

2006-Present: Reinvention

Extension of technologies New models based on user-generated content, social networks, services

Entrepreneurs

Extraordinary opportunity to earn far above normal returns on investment—first mover advantage

industries that use transcation broker

Financial services Travel services Job placement services

Co-location:

Firm purchases or leases Web server (with control over its operation), but server is located at vendor's facility

Outsourcing:

Hiring vendors to provide services involved in building site

variations of portal

Horizontal/General Vertical/Specialized (Vortal) Search

Hosting

Hosting company responsible for ensuring site is accessible 24/7, for monthly fee

Main areas where you will need to make decisions

Human resources and organizational capabilities Creating a team with the skill set needed to build and manage a successful site Hardware/software Telecommunications Site design

effect of internet on firm value chains

Increases operational efficiency Enables product differentiation Enables precise coordination of steps in chain

Computer scientists

Inexpensive, universal communications and computing environment accessible by all

system analysis/planning business objectives information requirements

Information elements that system must produce in order to achieve business objectives

Behavioral approach

Information systems Economics Marketing Management Finance/accounting Sociology

Society

Intellectual property, individual privacy, public welfare policy

First 17 years of e-commerce

Just the beginning Rapid growth and change

1995-2000: Invention

Key concepts developed Dot-coms; heavy venture capital investment

Imagine Your E-commerce Presence

Know yourself—SWOT analysis Develop an e-commerce presence map Develop a timeline: Milestones How much will this cost?

system analysis/planning business objectives

List of capabilities you want your site to have

system analysis/planning business objectives system functionalities

List of information system capabilities needed to achieve business objectives

Two components of system design

Logical design Data flow diagrams, processing functions, databases Physical design Specifies actual physical, software components, models, etc.

Implementation and maintenance

Maintenance is ongoing Maintenance costs: Similar to development costs Benchmarking

The Systems Development Life Cycle

Methodology for understanding business objectives of a system and designing an appropriate solution

The Web

Most popular Internet service Provides access to Web pages HTML documents that may include text, graphics, animations, music, videos Web content has grown exponentially Google reports one trillion unique URLs; 120 billion Web pages indexed

Economists

Nearly perfect competitive market; friction-free commerce Lowered search costs, disintermediation, price transparency, elimination of unfair competitive advantage

B2B Business Models

Net marketplaces E-distributor E-procurement Exchange Industry consortium Private industrial network

Firm Value Webs

Networked business ecosystem Uses Internet technology to coordinate the value chains of business partners Coordinates a firm's suppliers with its own production needs using an Internet-based supply chain management system

Business

New technologies present businesses with new ways of organizing production and transacting business

Digital content on the Web

News, music, video, text, artwork

what is the competitive environment influenced by

Number and size of active competitors Each competitor's market share Competitors' profitability Competitors' pricing

E-tailer

Online version of traditional retailer Revenue model: sales Low barriers to entry

Successful e-commerce value propositions

Personalization/customization Reduction of product search, price discovery costs Facilitation of transactions by managing product delivery

Business Strategy

Plan for achieving superior long-term returns on the capital invested in a business firm

Business model(s):

Portal, e-tailer, content provider, transaction broker, market creator, service provider, community provider

Transaction Broker

Process online transactions for consumers

Community Provider

Provide online environment (social network) where people with similar interests can transact, share content, and communicate

How the Internet and the WebChange Business

Rivalry among existing competitors Barriers to entry Threat of new substitute products Strength of suppliers Bargaining power of buyers

revenue model for e distributor

Sales of goods

service provider revenue model

Sales of services, subscription fees, advertising, sales of marketing data

Portal

Search plus an integrated package of content and services

revenue model for e procurement

Service fees, supply-chain management, fulfillment services

Business model

Set of planned activities designed to result in a profit in a marketplace

Revenue models

Subscription; pay per download (micropayment); advertising; affiliate referral

variations of content provider

Syndication Web aggregators

major steps of the systems development life cycle

Systems analysis/planning Systems design Building the system Testing Implementation

revenue model for broker

Transaction fees

revenue model for market creator

Transaction fees

revenue model for exchanges

Transaction, commission fees

revenue model for industry consortia

Transaction, commission fees

revenue models for community providers

Typically hybrid, combining advertising, subscriptions, sales, transaction fees, affiliate fees

Eight Unique Features of E-commerce Technology

Ubiquity Global reach Universal standards Information richness Interactivity Information density Personalization/customization Social technology

Testing

Unit testing System testing Acceptance testing

Web 2.0

User-centered applications and social media technologies User-generated content and communication Highly interactive, social communities Large audiences; yet mostly unproven business models e.g.: Twitter, YouTube, Facebook, Instagram, Wikipedia, StumbleUpon, Tumblr, Pinterest

E-commerce business model

Uses/leverages unique qualities of Internet and Web

service provider value proposition

Valuable, convenient, time-saving, low-cost alternatives to traditional service providers

Eight Key Elements of a Business Model

Value proposition Revenue model Market opportunity Competitive environment Competitive advantage Market strategy Organizational development Management team

E-distributor

Version of retail and wholesale store, MRO goods, and indirect goods e.g.: Grainger.com Owned by one company seeking to serve many customers

variations of etailer

Virtual merchant Bricks-and-clicks Catalog merchant Manufacturer-direct

The Internet

Worldwide network of computer networks built on common standards Created in late 1960s Services include the Web, e-mail, file transfers, etc. Can measure growth by looking at number of Internet hosts with domain names

Mobile platform solidifies Mobile e-commerce explodes Continued growth of social networks Expansion of social and local e-commerce Explosive growth in "Big Data" E-books gain wide acceptance

e-commerce trends

service provider online services

e.g.: Google—Google Maps, Gmail, etc.