Creating a Winning E-Business Second Edition

1. Creating a Winning E-BusinessSecond Edition Defining Your E-Business Idea Chapter 2

2. Learning Objectives • Identify entrepreneurial abilities • Describe the entrepreneurial process • Understand the factors affecting e-business success • Identify ways to exploit e-business advantages

3. The Entrepreneur and theEntrepreneurial Process • Entrepreneur • Assumes the risks of starting and operating his or her own business • Must be able to lead others • Must believe in his or her business idea • Must have the self-confidence to accomplish business goals

4. The Entrepreneur and theEntrepreneurial Process (continued) • E-business entrepreneur examples • Jeff Bezos, Amazon.com • Pierre Omidyar, eBay • Kelby Hagar, GroceryWorks.com and Digital Witness • Jason Zasky, Failure Magazine

5. The Entrepreneur and theEntrepreneurial Process (continued) • Entrepreneurial abilities • Leadership traits • High-energy level • Self-confidence • Organizational skills • Ability to act quickly and decisively • Independent, goal-oriented, creative, competitive

6. The Entrepreneur and theEntrepreneurial Process (continued) • Entrepreneurial process • Stage 1: Are you an entrepreneur? • Assess your entrepreneurial abilities • Evaluate time and effort involved in starting/running your own business • Consider the effect of the business commitment on your family life

7. The Entrepreneur and theEntrepreneurial Process (continued) • Entrepreneurial process (continued) • Stage 2: Buy existing business or start own business?

8. The Entrepreneur and theEntrepreneurial Process (continued) • Entrepreneurial process (continued) • Stage 3: For a new business startup you must • Define the business idea • Create a business plan • Secure financing

9. The Entrepreneur and theEntrepreneurial Process (continued) • Entrepreneurial process (continued) • Stage 4: Operate and grow your business

10. The Entrepreneur and theEntrepreneurial Process (continued) • Entrepreneurial process (continued) • Stage 5: Harvest your business • Continue to operate “cash cow” • Go public • Sell the business • Liquidate the business

11. The Entrepreneur and theEntrepreneurial Process (continued)

12. Factors AffectingE-Business Success • The network effect • Total value of a product, service, or technology grows as more and more people use it • Telephone system example • Single telephone has no value; as more people join the telephone system, the value of each telephone increases • uBid online auction site example • As more people participate, the auction site becomes more valuable to buyers and sellers

13. Factors AffectingE-Business Success (continued)

14. Factors AffectingE-Business Success (continued)

15. Factors AffectingE-Business Success (continued) • Innovative marketing ideas • Hotmail and viral marketing example • Hotmail users grew at a rapid rate because of electronic word of mouth coupled with the network effect • Electronic word of mouth or viral marketing spreads from user to user in the same way a human virus spreads from person to person

16. Factors AffectingE-Business Success (continued)

17. Factors AffectingE-Business Success (continued) • Scalability • Ability of a business to function well in the face of rapid growth • Systems and procedures meet customers needs • AllAdvantage e-business failure example • E-business idea: Paying for users to browse the Web and view advertising • Millions of customers signed on; advertisers did not • No scalability with rapid growth in customers

18. Factors AffectingE-Business Success (continued) • Ease of entry into electronic markets • Low-cost technologies make it easy to create new e-businesses • eBay and online auction example • Easy for consumers to interact at auction site • Web auction software is cheap and easy toinstall /maintain • E-businesses earn commissions without having to manage, warehouse, and distribute products

19. Factors AffectingE-Business Success (continued)

20. Factors AffectingE-Business Success (continued) • Ease of entry into electronic markets (continued) • Competitive barriers to overcome • Failure to secure first-mover advantage • Lack of name identification • Lack of customer loyalty

21. Factors AffectingE-Business Success (continued) • Ability to quickly adapt to marketplace changes • Rapid knowledge transfer • Need to make decisions quickly • Exploit new ideas and opportunities • Handle new challenges • Amazon.com is an example of ongoing evolution from a basic e-business idea

22. Factors AffectingE-Business Success (continued)

23. Exploiting E-BusinessAdvantages (continued) • Expand the market • Business and consumers are no longer bound by constraints of time, space, physical location • Opportunity to reach larger market • Ticketmaster example

24. Exploiting E-BusinessAdvantages (continued)

25. Exploiting E-BusinessAdvantages (continued) • Acquire greater business visibility • Get business name, products, and services in front of potential customers more quickly • Auto industry example

26. Exploiting E-BusinessAdvantages (continued)

27. Exploiting E-BusinessAdvantages (continued)

28. Exploiting E-BusinessAdvantages (continued) • Use power of the Internet and Web to maximize customer relationships and improve responsiveness • Create customer loyalty • Stay in touch with customer needs • Build one-on-one relationships • Provide information to enrich customers’ online experience • Southwest Airlines example

29. Exploiting E-BusinessAdvantages (continued)

30. Exploiting E-BusinessAdvantages (continued) • Create new products and services • Opportunities for new e-business ideas where products or services are accessed over the Web • Business software applications • Server facilities for data file backup • Legal dispute resolution • Cybersettle example • Web hosting services • Rackspace Managed Hosting example

31. Exploiting E-BusinessAdvantages (continued)

32. Exploiting E-BusinessAdvantages (continued)

33. Exploiting E-BusinessAdvantages (continued) • Reduce costs of running a business • Sales and customer support costs • Transaction costs • Order handling costs • Dell Computers, Cisco Systems, and Microsoft Corporation examples

34. Exploiting E-BusinessAdvantages (continued)

35. Exploiting E-BusinessAdvantages (continued)

36. Chapter Summary • An entrepreneur assumes the risks of starting and operating his or her own business • Entrepreneurial abilities • Leadership • High-energy • Self-confidence • Organization skills • Ability to act quickly

37. Chapter Summary (continued) • Five stages of the entrepreneurial process • Decide if you are an entrepreneur • Decide to buy or start new business • Plan the business • Operate the business • Harvest the business

38. Chapter Summary (continued) • Factors that can affect e-business success • Network effect • Innovative marketing ideas • Scalability of the e-business idea • Cost of entry into the marketplace • Ability to overcome competitive barriers • Ability to exploit inherent advantages