COM333

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COM333 IS3

• E-business Strategies

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• Internet
• reduces the marginal costs of information,
  communication, and distribution almost to zero.
• Internet business models offer significant
  advantages to suppliers and customers on at least
  one (often more than one) of these areas.

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• Information there were an estimated eight
  hundred million pages on the world wide web in
  mid-1999.
• Communication the internet enables customers to
  talk back in new ways, to make demands of
  suppliers
• Distribution the internet makes the distribution
  of information all but cost-free.
• programming software
• digital music formats such as MP3

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• Effects of Internet on business models.
• Everything speeds up.
• The ratio of a companys time spent on customer
  (both in B2B and B2C) increased dramatically.
• As a result of reduced search costs and cheap
  communication the consumer have far more control
  in markets than they have had before

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• Strategic systems development e-business models
• Consider the Internet as a channel for
  interaction with customers and other businesses
• Look at the areas of the business in which
  Internet and traditional business approaches
  merge or diverge.
• Integrate the Internet operations with current
  functional areas

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• Internet as Channel for interaction
• Use the Internet channel for information
  provision only
• Use the Internet channel primarily for export
  markets
• Subsume the Internet channel as another channel
  in the existing business
• View the Internet channel as another channel
• Set up the Internet channel as a separate
  business
• Develop a mixed system using a number of parallel
  channels with clear objectives for the
  contribution from the different channels and the
  nature of their interaction
• Switch fully to the Internet channel, taking out
  retail outlets.

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• Look for areas where internet and traditional
  business approaches Merge or diverge
• company can set up an Internet spin-off operation
  that is entirely separate
• This is viable when
• They are willing to exploit new business models
  and need to free themselves of the constraints of
  the current operation
• The spin-off is not constrained by current
  technology and earlier legacy operations
• They give the spin-off freedom to form alliances,
  raise capital, and attract new talent.

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• Integrate Internet operations
• They cant separate digital and physical
  operations without confusing customers
• Senior management is committed to redefining the
  entire business value proposition
• The entire organisation can be mobilised to
  migrate to an e-business channel

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• Types of business model for business-to-customer
  (B2C) operation
• e-shops a single firm selling their products or
  services online
• (www.amazon.com)
• e-malls a range of businesses share a website
  for the provision of e-services
• kelkoo - http//www.kelkoo.co.uk/
• yahoo shopping - http//shopping.yahoo.co.uk/
• third-party marketplace a third party provides
  Internet marketing and transaction services for
  other firms
• e-procurement electronic tendering of goods and
  services
• Value chain integrators offer a range of
  services across the value chain
• Value chain service providers specialise in a
  particular function within the value chain, such
  as electronic payments, inventory management and
  logistics
• www.ups.com
• Information brokerage companies that provide
  information to consumers to help make buying
  decisions, or to businesses to help business
  operations
• www.which.com
• Trust and other services authenticate the
  services and products of other companies provided
  on the Web.
• www.truste.com
• Beynon-Davies (2004)

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• Strategic systems development The five forces
• J. M. Porter (Porter Millar, 1985) proposed
  that there were five forces acting to create
  competition. These were
• The power of customers
• The power of suppliers
• The threat of new entrants
• The threat of new products and services, and
• Jostling for power among existing players in the
  market.
• The aim of strategic Internet-based systems
  development therefore needs to be to examine ways
  in which Internet-based information systems can
  be used to reduce or deflect any of these five
  threats

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• Strategic systems development e-business
  strategies
• agora
• aggregation
• alliance
• The new media writer Don Tapscott adds two
  further models
• Value chain
• Distribution networks.

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• Agora
• the Ancient Greek word for marketplace
• An electronic market driven by dynamic pricing
  and liquidity of goods.
• Time is a critical factor
• Information is a key factor
• Examples
• lastminute.com. (B2C)
• PC supplier network RosettaNet (B2B)

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• Aggregation
• Electronic mega-store offering convenient access
  to a wide selection of goods, together with
  delivery
• Aggregators have little impact on the nature of
  the good being bought
• The success of the model often depends on
  effective delivery
• Information is the critical factor
• Examples
• Amazon (www.amazon.com) B2C

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• Alliance
• Loose affiliation of individuals around one
  standard or service offer
• Value is created by connecting together
  sympathetic individuals or organisations.
• Alliance create intellectual value by sharing
  knowledge in accordance with a set of agreed
  rules
• Economic value comes from being a member of the
  alliance.
• Communication is the critical factor
• Examples
• The operating system Linux
• Digital music MP3
• Visa

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• Distributive networks
• The exchange of information among creators, users
  and customers
• Business has used the internet to make
  transparent to its customers information that
  they could previously only have obtained through
  employees
• This reduces service costs at one level
• Increases the complexity of calls which are
  received
• The value derives from the distribution of
  previously available information to a wider group
  of people
• Examples
• Federal Express
• United Parcel Service

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• Value chain
• Constructed by a manufacturer or supplier who
  uses management of information systems to
  construct personalised or specific products for
  customers
• The value comes from
• The communication with customers and the supplier
  network
• The management of the information systems between
  suppliers
• Examples
• Dell
• Cisco

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• The aim of strategic Internet-based systems
  development needs to be
• To examine ways in which Internet-based
  information systems can be used to reduce or
  eliminate the barriers between the different
  activities, thus reducing overall cost and
  increasing overall profit margin.