Transcript lecture 19 IT.ppt

Internet & e-commerce
LEARNING OBJECTIVES
• Web 1.0 - Ebusiness
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Disruptive Technologies and Web 1.0
Advantages of Ebusiness
Ebusiness Models
The Challenges of Ebusiness
• Web 2.0 – Business 2.0
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Web 2.0: Advantages of Business 2.0
Networking Communities with Business 2.0
Business 2.0 Tools for Collaborating
The Challenges of Business 2.0
• Internet Basics
Disruptive Technologies
• Digital Darwinism – Implies that organizations which cannot
adapt to the new demands placed on them for surviving in
the information age are doomed to extinction
• Disruptive technology – A new way of doing things that
initially does not meet the needs of existing customers
• Sustaining technology – Produces an improved product
customers are eager to buy
GREAT BUSINESS DECISIONS – Edwin Land Develops
the Polaroid Camera
In 1937, Edwin Land started a company that made a
polarizing plastic and named it Polaroid. The business
boomed. Land was taking family pictures on his vacation
in 1943 when his three-year-old daughter asked why they
had to wait so long to see the developed photographs.
Land was struck with the idea of combining the
polarization technology with developing films. By 1950,
Land had a camera that produced black-and-white images
and by 1963, he released a camera that produced color
pictures. The Polaroid camera took off and by the late
1960s, it was estimated that 50 percent of American
households owned one.
If Polaroid executives had used
Porter’s Five Forces analysis would
they have discovered the threat of
substitute products of the digital
camera?
Disruptive Vs. Sustaining
Technology
Disruptive Vs. Sustaining
Technology
• Innovator’s Dilemma: how established companies
can take advantage of disruptive technologies
without hindering existing relationships with
customers, partners, and stakeholders
Disruptive Vs. Sustaining
Technology
The Internet And World Wide Web
The Ultimate Business Disruptors
• One of the biggest forces changing business is the
Internet – A massive network that connects computers
all over the world and allows them to communicate
with one another
• Organizations must be able to transform as markets,
economic environments, and technologies change
• Focusing on the unexpected allows an organization to
capitalize on the opportunity for new business growth
from a disruptive technology
Reasons for Growth of the WWW
– Microcomputer revolution
– Advancements in networking
– Easy browser software
– Speed, convenience, and low cost of email
– Web pages easy to create and flexible
What are the two primary reasons
for growth of the WWW?
Two events changed the history of
the Internet
On August 6, 1991 Tim BernersLee built the first website
Marc Andreesen built and
distributed Mosaic
WEB 1.0 – THE CATALYST FOR
EBUSINESS
• Web 1.0 – A term to refer to the WWW during its
first few years of operation between 1991 and
2003
• Ecommerce – Buying and selling of goods and
services over the Internet
• Ebusiness – Includes ecommerce along with all
activities related to internal and external business
operations
WEB 1.0 – THE CATALYST FOR
EBUSINESS
• The Internet has had an impact on almost every
industry including
– Travel
– Entertainment
– Electronics
– Financial services
– Retail
– Automobiles
– Education and training
Industry Business Changes Due to Technology
Travel Travel site Expedia.com is now the biggest leisure-travel
agency, with higher profit margins than even American Express.
Thirteen percent of traditional travel agencies closed in 2002
because of their inability to compete with online travel.
Entertainment The music industry has kept Napster and others
from operating, but $35 billion annual online downloads are
wrecking the traditional music business. U.S. music unit sales
are down 20 percent since 2000. The next big entertainment
industry to feel the effects of ebusiness will be the $67 billion
movie business.
Electronics Using the Internet to link suppliers and customers,
Dell dictates industry profits. Its operating margins have risen
from 7.3 percent in 2002 to 8 percent in 2003, even as it takes
prices to levels where rivals cannot make money.
Financial services Nearly every public e-finance company left
makes money, with online mortgage service Lending Tree growing
70 percent a year. Processing online mortgage applications is now
40 percent cheaper for customers.
Retail Less than 5 percent of retail sales occur online. eBay is on
track this year to become one of the nation’s top 15 retailers, and
Amazon.com will join the top 40.
Wal-Mart’s ebusiness strategy is forcing rivals to make heavy
investments in technology.
Automobiles The cost of producing vehicles is down because of
SCM and Web-based purchasing. eBay has become the leading U.S.
used-car dealer, and most major car sites are profitable.
Education and training Cisco saved $133 million last year by
moving training sessions to the Internet, and the University of
Phoenix online college classes please investors.
Advantages Of Ebusiness
Expanding Global Reach
• The Internet’s impact on information
– Easy to compile
– Increased richness
– Increased reach
– Improved content
Opening New Markets
• Mass customization – The ability of an
organization to tailor its products or services to
the customers’ specifications
• Personalization – Occurs when a company
knows enough about a customer’s likes and
dislikes that it can fashion offers more likely to
appeal to that person
Opening New Markets
• Intermediary – Agents, software, or businesses that
provide a trading infrastructure to bring buyers and
sellers together
– Disintermediation: eliminate intermediaries
– Reintermediation: add values to the chain
– Cybermediation: new kinds of intermediary
Disintermediation
Business Value of Disintermediation
Improving Effectiveness
• Clickstream data tracks the exact pattern of a
consumer’s navigation through a website
• Clickstream data can reveal
– Number of page views
– Pattern of websites visited
– Length of stay on a website
– Date and time visited
– Number of customers with shopping carts
– Number of abandoned shopping carts
Marketing/Sales
• Generating revenue on the Internet
– Online ad (banner ad) - Box running across a web
page that contains advertisements
– Pop-up ad - A small web page containing an
advertisement
– Associate program (affiliate program) - Businesses
generate commissions or royalties
– Viral marketing - A technique that induces websites
or users to pass on a marketing message
Improving Effectiveness
• Website metrics include
– Visitor metrics
– Exposure metrics
– Visit metrics
– Hit metrics
EBUSINESS FORMS
• Common ebusiness forms
– Content providers
– Informediaries
– Online marketplaces
– Portals
– Service providers
– Transaction brokers
Ebusiness Revenue-generating Strategies
• Ebusiness revenue models
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Advertising fees
License fees
Subscription fees
Transaction fees
Value-added service fees
Common Revenue Models for Ebusiness
The Challenges Of Ebusiness
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Identifying limited market segment
Managing consumer trust
Ensure consumers protection
Adhering to taxation rules
EBUSINESS MODELS
• Ebusiness model – A plan that details how a company
creates, delivers, and generates revenues on the
internet
Thankyou