MIS 6413 Chapter 2

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MIS 6413 Chapter 2
Crafting Business Models

• Dr. Richard Segall
• Fall 2005

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Agenda

• Crafting Business Models

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I. Business Models

• I sell cars
• I sell cars and books and CDs and airline
  tickets and pharmaceuticals and fine china and
  toys and telephones and coffee machines and .

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• Business Models have to evolve
• Let me tell you a story

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II. Classifying Business Models

• Businesses built on the networked infrastructure
• Companies that do business on the Internet and
  associated networks
• Companies that provide the networked
  infrastructure
• Sometimes the lines are blurred

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III. Businesses Built on the Networked
Infrastructure

• 1. Focused Distributors
• 2. Portals
• 3. Producers

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1. Focused Distributors

• Provide products and services related to a
  specific industry or market niche (non
  technology)
• Five types
• (i.) Retailers
• (ii.) Marketplaces
• (iii.) Aggregators
• (iv.) Infomediaries
• (v.) Exchanges
• Distinguished by
• Control of inventory, do they have online sales,
  how is price set, is there a physical product or
  service that must be distributed

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1. (i) Retailers

• Assume control of inventory
• Set a non-negotiable price
• Sell physical products on line
• e.g. Toys R Us, Staples
• What is the revenue model?
• (in real words how do they make money?)

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1.(ii) Marketplaces

• Do not take control of physical inventory
• Set a non-negotiable price
• Sell products and services on line
• e.g. E-Loan, InsWeb
• What is the revenue model?

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1 (iii) Aggregators

• Provide information on products and services for
  sales by others in the channel
• Do not control physical inventory
• Do not set price online
• Do not sell products or services online
• e.g. AutoWeb.com
• What is the revenue model?

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1. (iv) Infomediaries

• An aggregator that unites sellers and buyers of
  information-based products
• Do not control physical inventory
• Price is set online
• No physical product is sold online, but
  transaction is completed online
• e.g. Internet Securities
• What is the revenue model?

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1. (v) Exchanges

• May take control of physical inventory
• Price is set online
• May sell products online
• Does not sell a physical product or service
• e.g. Ebay, Freemarket
• What is the revenue model?

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2. Portals

• A doorway or gate
• Three types
• (i.) Horizontal
• (ii.) Vertical
• (iii.) Affinity
• Distinguished by
• Provide full range of service?
• Provide access to deep content?
• Provide service to all types of users?

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2(i.) Horizontal Portals

• Provide a gateway to the Internets vast store of
  content and services
• May provide deep content through partnerships
• May provide group focus through partnerships
• e.g. AOL, Yahoo, Quicken
• What is the revenue model?

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2. (ii) Vertical Portals

• Limited gateway access
• Deep content
• Does not provide affinity focus
• e.g. Covisint, WebMD
• What is the revenue model?

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2. (iii) Affinity Portals

• May provide full gateway access
• Provides deep content for affinity groups
• Focused on affinity groups
• e.g. Realtor.com, iVillage.com
• What is the revenue model?

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3. Producers

• Design, make, and possibly market, sell and
  distribute products, services and solutions.
• 3 types
• (i.) Manufacturers
• (ii.) Service Providers
• (iii.) Educators
• Distinguished by
• Sell physical products or face to face services,
  Sell information based products or services,
  Provide customized products or services?

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3.(i) Manufacturers

• Design, produce and distribute physical products
• e.g. Ford, Proctor and Gamble
• What is the business model?

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3. (ii) Service Providers

• Service offerings provided through multiple
  channels
• e.g. American Express, Singapore Airlines
• What is the business model?

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3. (iii) Educators

• Create and deliver online education programs,
  products and services
• e.g. Harvard, Virtual University
• What is the business model?

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IV. Businesses that Provide Networked
Infrastructure

• 1. Infrastructure Distributors
• 2. Infrastructure Portals
• 3. Infrastructure Producers
• 4. Infrastructure Service Providers

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IV(1)Infrastructure Distributors

• Enable technology buyers and sellers to transact
  business.
• Same revenue model as non-technology distributors
• (i.) Infrastructure Retailers
• CompUSA, Egghead
• (ii.) Infrastructure Marketplaces
• Ingram Micro, Tech Data
• (iii.) Infrastructure Aggregators
• Cnet.com, ZDnet.com
• (iv.) Infrastructure Exchanges
• Converge

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IV(2) Infrastructure Portals

• Provide consumers and businesses access to
  network, computing and application hosting
  services
• Same revenue model as non-technology portals
• Horizontal Infrastructure portals
• ISPs, network service providers, data center
  outsourcing providers, web hosting service
  providers
• Vertical Infrastructure portals
• Host and maintain software applications (ASPs)

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IV(3) Infrastructure Producers

• Design, build, market and sell technology
  hardware, software, solutions and services.
• Equipment/component manufacturers (IBM, Sony,
  Lucent)
• Software firms (SAP, Oracle, Microsoft)
• Custom software and integration providers
  (Accenture)
• What is the business model?

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IV(4) Infrastructure Service Providers

• Provide online/offline services to support
  logistics, marketing, and other shared services.
• Agency.com, Federal Express
• What is the business model?

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