BUSINESS MODELS AND STRATEGIES FOR THE INTERNET ECONOMY

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CHAPTER 7

• BUSINESS MODELS AND STRATEGIES FOR THE
  INTERNET ECONOMY

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Impact of the Internet and E-Commerce

• Impact on external industry environment
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• Impact on internal company environment
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Strategy-Shaping Characteristicsof the
E-Commerce Environment

• Internet makes it feasible for companies
  everywhere to compete in global markets
• Competition in an industry is greatly intensified
  by new e-commerce strategic initiatives of
  existing rivals and by entry of new, enterprising
  e-commerce rivals
• Entry barriers into e-commerce world are
  relatively low
• On-line buyers gain bargaining power

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Strategy-Shaping Characteristics of
theE-Commerce Environment (continued)

• Internet makes it feasible for firms to reach
  beyond their borders to find the best suppliers
  and, further, to collaborate closely with them to
  achieve efficiency gains and cost-savings
• Internet and PC technologies are advancing
  rapidly, often in uncertain and unexpected
  directions
• Internet results in much faster diffusion of new
  technology and new ideas across the world
• E-commerce environment demands that firms move
  swiftly - at Internet speed

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Strategy-Shaping Characteristics of
theE-Commerce Environment (continued)

• Internet and e-commerce technology open up a host
  of opportunities for reconfiguring industry and
  company value chains
• Internet can be an economical means of delivering
  customer service
• Capital for funding potentially profitable
  e-commerce businesses is readily available
• Needed e-commerce resource in short supply is
  human talent, in the form of both technological
  expertise and managerial know-how

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The Early Days What went wrong?

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Learning from past mistakes Business Models and
Strategies for Dot-Coms

• Distinctive strategy
• Well-planned value chain
• Enables differentiation or lower costs or better
  value
• Clear focus on competencies and specialized
  activities
• Cutting-edge Internet technology
• Innovative marketing techniques
• Low reliance on ancillary revenues
• Innovative, entertaining website

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Strategic ApproachesE-Commerce Retailers

• Spend heavily on advertising to build widespread
  brand awareness, draw traffic, and start process
  of developing customer loyalty
• Add new product offerings to help
  attract traffic to firms Web site
• Be a first-mover or at worst an early mover
• Pay consideration attention to Web site
  attractiveness to generate buzz about the site
  among surfers
• Keep Web site innovative, fresh, and entertaining