Transcript E-Business Management

E-Business Management
Session 1: E-Business
Management Models
Session Objectives
What is e-business?
 Highlight the history of e-business
 What is a strategy?
 Determine the types of e-businesses
 Market Segmentation
 e-business Market Segmentation Matrix
 B2B Marketplaces
 e-business models

What is e-business?

The use of internet to network and
empower business processes, electronic
commerce, organizational
communication and collaboration with in
a company and with its customers,
suppliers, and other stakeholders.
(Combe, 2006)
What is e-business?

The use of electronic means to conduct an
organization's business externally and/or
internally


Internal – linking of employees within the
organization through an intranet to improve
information sharing, facilitate knowledge
dissemination and support management reporting
External – supporting after-sales service and
collaborating with partners (Jelassi & Enders, 2005)
e-business and e-commerce

E-commerce is the buying and selling of goods
and services on the Internet
 E-business is a subset of e-commerce
http://www.onenortheast.co.uk/page/business/ecommerce.cfm
Course Rationale
Is it too soon to take the “e” out
especially in the Caribbean?
 Bringing technologists and nontechnologists together to make the
strategy work
 To be a technologist and a strategist as
well

Before e-business there was…

Information & Communication Technology
(ICT) Infrastructures before the Internet




Electronic Data Interchange (EDI)
Inter-organizational information systems (IOS)
Public IT platforms
Disadvantages


High Implementation costs
Difficult to inter-connect different ‘islands of
technology’
Strategy - Definitions

The strong focus on profitability not just
growth, an ability to define a unique
value proposition, and a willingness to
make tough trade-offs in what not to do
(Porter, 2001)
Strategy - Definitions





Long term direction of the firm
Overall plan for deploying the firm’s resources
Willingness to make trade-offs
Achieve unique positioning vis-à-vis
competitors
Achieve sustainable competitive advantage
over rivals thus ensuring lasting profitability
(Enders & Jelassi, 2005)
Types of strategy
Block Strategy

A firm erects barriers around its product
market space
Components of the business model are
inimitable, offering customers unique value
and thus keeping out competitors
 If all firms are equally capable, firm can
reduce prices signaling to newcomers that
post-entry prices will be low

Run Strategy
Blockades to entry can often be
penetrated or eventually will fall
 Running – changing some subsets of
components or linkages of the business
model or reinvent the entire model to
offer customers better value
 Cannibalization – introduction of new
products that render existing ones less
competive

Team-Up Strategy

Teaming-up via a strategic alliance,
acquisition or equity position allowing a
firm to share in resources of another
company

Disadvantage – The firm may become too
dependent on the other firm’s resources
It takes more than technology to
profit from technology

Imitability


The extent to which the technology can be
duplicated/substituted/leapfrogged by
competitors
Complementary Assets

All other capabilities that underpin the
technology – brand name, manufacturing,
marketing, distribution, channels, etc..
It takes more than technology to
profit from technology
e-business Type – Pure-Clicks

Internet Pure-clicks

Companies in existence because of the
internet


Examples – www.amazon.com,
www.lastminute.com, www.limewire.com
Internet as addition to core business

Examples – www.tesco.com
e-business Type – Clicks and mortar

Clicks and mortar/Bricks and clicks

Traditional companies that invest or merge
with dot.coms to achieve synergy with
online and offline activities

Examples – www.barnesandnoble.com;
www.shopatcaveshepherd.com;
http://www.colonyclubhotel.com
Key Elements of a Business
Environment

Economies of exchanging information


Connectivity and interactivity


More people are communicating via the internet in real-time
Network economies of scale


Cost of sending information via the internet is practically zero
and the reach is global
Opportunities for achieving critical mass of customers by
accessing a wider customer base electronically at a lower cost
Speed of change

Transactions are faster thus processes throughout supply
chain are re-adjusted to meet customers’ demands and
expectations
Key Elements of a Business
Environment

Economies of abundance


Merchandise exchange


Too much information lead to increase of search
costs
Compared to traditional forms of shopping Internet
offers much greater convenience at lower cost and
potentially better service delivery
Prosumption

Customers can determine design, development and
production of the products and services that they
wish to buy
Key Elements of a Business
Environment

There are three types of channels
through which e-business can take place

Communications Channel


Transactions Channel


Easier access to more information
Increases efficiency and reduces transaction
costs
Distribution Channel

Some products and services can be received
instantly via the Internet (Combe, 2006)
Market Segmentation

Provides insights into customer
preferences
Helps to determine the product and the
features
 Helps to determine the distribution channels


Provides information on potential size
Helps to determine ROI
 Helps to determine scale effects

Market Segment

Measurable


Substantial


Should be large enough to be served profitably
Differentiable


Should be able to measure the size of a segment to
determine purchasing power
Should be exclusive and react differently to a
variety of marketing approaches
Actionable

Should be possible to develop and serve specific
segments
Types of Market Segmentation

Geographic segmentation

Demographic segmentation

Psychographic segmentation

Behavioral segmentation
e-business Market Segmentation
Matrix
Jelassi & Enders, 2005
B2B Marketplaces - Openess

Public Exchange


Consortiums


www.onecer.net; www.leadpoint.com
www.orbitz.com
Private exchanges

www.entrex.net
B2B Marketplaces -based on
Purchasing Characteristics

What businesses are buying:
MRO goods
 Manufacturing inputs


Sourcing of goods (how):

Systematic sourcing


Negotiated contracts with qualified suppliers
Spot sourcing

To fulfill an immediate need at the lowest
possible price
B2B Marketplaces -based on
Purchasing Characteristics
Jelassi & Enders, 2005
Discussion

Provide a real-world example of your
choice for each one of the nine
quadrants that make up the e-business
market segmentation matrix.


Choose as many Caribbean examples as
possible
Discuss the advantages and
disadvantages of the varying degrees of
openness in B2B marketplaces
e-business model
A business model – the organization of
product, service and information flows
and the sources of revenue and benefits
for suppliers and customers
 An e-business model is the adaptation
of an organization's business model to
the internet economy

Types of e-business models

Brokerages


E-shops


Intermediaries who bring together buyers
and sellers for transactional purposes
Shopping carts offered allowing you to
make transactions via the company website
E-Malls

A collection of e-shops with some
commonality between them
Types of e-business models

E-auctions


Provide a channel of communication through which
the bidding process for products and services can
take place between competing buyers
Trading communities

Also known as Vertical Web Community – it
provides a source of information and
communication that is necessary for e-business
activity to take place in a particular industry
Types of e-business models

Virtual communities


Communities that share a common interest
and use the internet to communicate with
each other
Buyer aggregator model

Organizes large numbers of individual
buyers so that they can gain the types of
savings that are usually the privilege of
large volume buyers
Types of e-business models

Classifieds


Online classified advertisement which run
on the same principles as newspaper
classifieds
Infomediaries

Specialise in gathering valuable information
about customers and selling it to third
parties
Types of e-business models

E-procurement


Management of all procurement activities
via electronic means
Distribution model

Helps distributors to achieve efficiency
savings by managing large volumes of
customers, automating orders,
communicating with partners and facilitating
value-adding services
Types of e-business models

Portal


Collaboration platforms


A Channel through which websites are offered as
content
Provide the technological tools for information to
pass quickly and efficiently between organsiations
Third-party marketplaces

A channel through which firms can extend their
sales pitch to customers by making available their
product catalogue on the website
Types of e-business models

Manufacturer model


Affiliate model


Creates a direct line of communication
between manufacturers and consumers
Offers buying opportunities for internet
users across many websites
Subscription model

Generates revenue through subscription to
access particular websites
Characteristics of a Viable ebusiness Model

Design programs that take advantage of the
internet network effects and other disruptive
attributes to achieve a critical mass of installed
customer base
 Leverage on a single set of digital assets to
provide across many different and disparate
markets
 Build trust relationships with customers
through e-business communities to increase
their cost of switching to other vendors
Characteristics of a Viable ebusiness Model
Transform value propositions and
organisational structures for enhanced
value creation
 Generate synergy effect on e-commerce
products and service offerings

Success Factors
Understand
and exploit the emarketspace characteristics
Add value to the customers
Achieve economic viability
Discussion

Explain how e-marketplaces work and discuss
the advantages that they provide for
participants
 Using examples, identify the main valueadding characteristics of the internet for ebusiness
 Find an example of a firm that operates in the
B2C market and identify the characteristics of
a firm’s e-business model
References

Colin Combe, Introduction to E-Business:
Management and Strategy, 2006
 Tawfik Jelassi & Albretch Enders, Strategies
for e-Business: Creating Value through
Electronic Commerce and Mobile
Commerce, 2005
 Allan Afuah & Christopher Tucci, Internet
Business Models and Strategies: Text and
Cases, 2001
 www.onenortheast.co.uk