MGT 235

1
MGT 235

• Planning, Process, and Structure in Electronic
  Business
• Week 11

2
Functions of a Business Model

• Articulate the value proposition
• Identify the potential users of the value
• Define structure of the value chain
• Estimate cost structures and profit potential
• Identify competitive environment / players
• Formulate competitive strategy

3
Taxonomy of Models

• Internet access providers EarthLink.com
• Portals iVillage.com
• Content providers Businessweek.com
• Retailers LandsEnd.com
• Brokers HiloBrokers.com
• Market makers FreeMarkets.com
• Network utility providers Netscape.com
• Application service providers TheWASP.com

4
Portals

• Directories
• Search engines
• Portals
• Search services
• Content news, sports
• Community building chats, bulletin boards
• Commerce - games
• Personal productivity email, calendars
• Horizontal
• General purpose, broad range (Yahoo!.com)
• Declining usage (as of overall usage)
• Vertical
• Thematic, specific (MarketWatch.com)
• Increasing popularity

5
Portals Business Development

• Acquire new users
• Provide search and directories
• Provide utility email, bill payment
• Provide internet access ISPs, OSPs
• Offline promotion
• Turn new into repeat users
• Quality and targeted, relevant content
• Community building chat rooms, Geo-Cities
• Productivity enhancement calendars, file
  storage
• Monetize user traffic
• Advertising
• Fees for premium services file storage, site
  hosting, auctions

6
Portals Economics

• Fixed costs are substantial
• Infrastructure, content, engine licensing
• Value of these determines customer retention
• Variable costs
• Service delivery costs are small
• Customer acquisition ad sales
• Lifetime customer value
• NPV of potential revenue stream minus
• Acquisition costs