E-Business Management

1. E-Business Management Session 1: E-Business Management Models

2. Session Objectives • What is e-business? • Highlight the history of e-business • What is a strategy? • Determine the types of e-businesses • Market Segmentation • e-business Market Segmentation Matrix • B2B Marketplaces • e-business models

3. What is e-business? • The use of internet to network and empower business processes, electronic commerce, organizational communication and collaboration with in a company and with its customers, suppliers, and other stakeholders. (Combe, 2006)

4. What is e-business? • The use of electronic means to conduct an organization's business externally and/or internally • Internal – linking of employees within the organization through an intranet to improve information sharing, facilitate knowledge dissemination and support management reporting • External – supporting after-sales service and collaborating with partners (Jelassi & Enders, 2005)

5. e-business and e-commerce • E-commerce is the buying and selling of goods and services on the Internet • E-business is a subset of e-commerce http://www.onenortheast.co.uk/page/business/ecommerce.cfm

6. Course Rationale • Is it too soon to take the “e” out especially in the Caribbean? • Bringing technologists and non-technologists together to make the strategy work • To be a technologist and a strategist as well

7. Before e-business there was… • Information & Communication Technology (ICT) Infrastructures before the Internet • Electronic Data Interchange (EDI) • Inter-organizational information systems (IOS) • Public IT platforms • Disadvantages • High Implementation costs • Difficult to inter-connect different ‘islands of technology’

8. Strategy - Definitions • The strong focus on profitability not just growth, an ability to define a unique value proposition, and a willingness to make tough trade-offs in what not to do (Porter, 2001)

9. Strategy - Definitions • Long term direction of the firm • Overall plan for deploying the firm’s resources • Willingness to make trade-offs • Achieve unique positioning vis-à-vis competitors • Achieve sustainable competitive advantage over rivals thus ensuring lasting profitability (Enders & Jelassi, 2005)

10. Types of strategy

11. Block Strategy • A firm erects barriers around its product market space • Components of the business model are inimitable, offering customers unique value and thus keeping out competitors • If all firms are equally capable, firm can reduce prices signaling to newcomers that post-entry prices will be low

12. Run Strategy • Blockades to entry can often be penetrated or eventually will fall • Running – changing some subsets of components or linkages of the business model or reinvent the entire model to offer customers better value • Cannibalization – introduction of new products that render existing ones less competive

13. Team-Up Strategy • Teaming-up via a strategic alliance, acquisition or equity position allowing a firm to share in resources of another company • Disadvantage – The firm may become too dependent on the other firm’s resources

14. It takes more than technology to profit from technology • Imitability • The extent to which the technology can be duplicated/substituted/leapfrogged by competitors • Complementary Assets • All other capabilities that underpin the technology – brand name, manufacturing, marketing, distribution, channels, etc..

15. It takes more than technology to profit from technology

16. e-business Type – Pure-Clicks • Internet Pure-clicks • Companies in existence because of the internet • Examples – www.amazon.com, www.lastminute.com, www.limewire.com • Internet as addition to core business • Examples – www.tesco.com

17. e-business Type – Clicks and mortar • Clicks and mortar/Bricks and clicks • Traditional companies that invest or merge with dot.coms to achieve synergy with online and offline activities • Examples – www.barnesandnoble.com; www.shopatcaveshepherd.com; http://www.colonyclubhotel.com

18. Key Elements of a Business Environment • Economies of exchanging information • Cost of sending information via the internet is practically zero and the reach is global • Connectivity and interactivity • More people are communicating via the internet in real-time • Network economies of scale • Opportunities for achieving critical mass of customers by accessing a wider customer base electronically at a lower cost • Speed of change • Transactions are faster thus processes throughout supply chain are re-adjusted to meet customers’ demands and expectations

19. Key Elements of a Business Environment • Economies of abundance • Too much information lead to increase of search costs • Merchandise exchange • Compared to traditional forms of shopping Internet offers much greater convenience at lower cost and potentially better service delivery • Prosumption • Customers can determine design, development and production of the products and services that they wish to buy

20. Key Elements of a Business Environment • There are three types of channels through which e-business can take place • Communications Channel • Easier access to more information • Transactions Channel • Increases efficiency and reduces transaction costs • Distribution Channel • Some products and services can be received instantly via the Internet (Combe, 2006)

21. Market Segmentation • Provides insights into customer preferences • Helps to determine the product and the features • Helps to determine the distribution channels • Provides information on potential size • Helps to determine ROI • Helps to determine scale effects

22. Market Segment • Measurable • Should be able to measure the size of a segment to determine purchasing power • Substantial • Should be large enough to be served profitably • Differentiable • Should be exclusive and react differently to a variety of marketing approaches • Actionable • Should be possible to develop and serve specific segments

23. Types of Market Segmentation • Geographic segmentation • Demographic segmentation • Psychographic segmentation • Behavioral segmentation

24. e-business Market Segmentation Matrix Jelassi & Enders, 2005

25. B2B Marketplaces - Openess • Public Exchange • www.onecer.net; www.leadpoint.com • Consortiums • www.orbitz.com • Private exchanges • www.entrex.net

26. B2B Marketplaces -based on Purchasing Characteristics • What businesses are buying: • MRO goods • Manufacturing inputs • Sourcing of goods (how): • Systematic sourcing • Negotiated contracts with qualified suppliers • Spot sourcing • To fulfill an immediate need at the lowest possible price

27. B2B Marketplaces -based on Purchasing Characteristics Jelassi & Enders, 2005

28. Discussion • Provide a real-world example of your choice for each one of the nine quadrants that make up the e-business market segmentation matrix. • Choose as many Caribbean examples as possible • Discuss the advantages and disadvantages of the varying degrees of openness in B2B marketplaces

29. e-business model • A business model – the organization of product, service and information flows and the sources of revenue and benefits for suppliers and customers • An e-business model is the adaptation of an organization's business model to the internet economy

30. Types of e-business models • Brokerages • Intermediaries who bring together buyers and sellers for transactional purposes • E-shops • Shopping carts offered allowing you to make transactions via the company website • E-Malls • A collection of e-shops with some commonality between them

31. Types of e-business models • E-auctions • Provide a channel of communication through which the bidding process for products and services can take place between competing buyers • Trading communities • Also known as Vertical Web Community – it provides a source of information and communication that is necessary for e-business activity to take place in a particular industry

32. Types of e-business models • Virtual communities • Communities that share a common interest and use the internet to communicate with each other • Buyer aggregator model • Organizes large numbers of individual buyers so that they can gain the types of savings that are usually the privilege of large volume buyers

33. Types of e-business models • Classifieds • Online classified advertisement which run on the same principles as newspaper classifieds • Infomediaries • Specialise in gathering valuable information about customers and selling it to third parties

34. Types of e-business models • E-procurement • Management of all procurement activities via electronic means • Distribution model • Helps distributors to achieve efficiency savings by managing large volumes of customers, automating orders, communicating with partners and facilitating value-adding services

35. Types of e-business models • Portal • A Channel through which websites are offered as content • Collaboration platforms • Provide the technological tools for information to pass quickly and efficiently between organsiations • Third-party marketplaces • A channel through which firms can extend their sales pitch to customers by making available their product catalogue on the website

36. Types of e-business models • Manufacturer model • Creates a direct line of communication between manufacturers and consumers • Affiliate model • Offers buying opportunities for internet users across many websites • Subscription model • Generates revenue through subscription to access particular websites

37. Characteristics of a Viable e-business Model • Design programs that take advantage of the internet network effects and other disruptive attributes to achieve a critical mass of installed customer base • Leverage on a single set of digital assets to provide across many different and disparate markets • Build trust relationships with customers through e-business communities to increase their cost of switching to other vendors

38. Characteristics of a Viable e-business Model • Transform value propositions and organisational structures for enhanced value creation • Generate synergy effect on e-commerce products and service offerings

39. Success Factors • Understand and exploit the e-marketspace characteristics • Add value to the customers • Achieve economic viability

40. Discussion • Explain how e-marketplaces work and discuss the advantages that they provide for participants • Using examples, identify the main value-adding characteristics of the internet for e-business • Find an example of a firm that operates in the B2C market and identify the characteristics of a firm’s e-business model

41. References • Colin Combe, Introduction to E-Business: Management and Strategy, 2006 • Tawfik Jelassi & Albretch Enders, Strategies for e-Business: Creating Value through Electronic Commerce and Mobile Commerce, 2005 • Allan Afuah & Christopher Tucci, Internet Business Models and Strategies: Text and Cases, 2001 • www.onenortheast.co.uk