1 / 37

Chapter Three

Chapter Three. Digitizing the Business: e-Business Patterns. e-Business Patterns: The Structural Foundation. e-Channel. Click-and-Brick. e-Portal. e-Market Maker. Pure-E “Digital Products”. Table of Contents. e-Business Patterns: Structural Foundation.

paula-carr
Download Presentation

Chapter Three

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter Three Digitizing the Business: e-Business Patterns

  2. e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” Table of Contents www.ebstrategy.com

  3. e-Business Patterns: Structural Foundation • In dynamic market environment, manager’s challenge is how to tell forest from trees • Are we investing in the right business opportunity? • Are these opportunities ever going to be useful? • Are we using the right business model to attack these opportunities? • The Scoop: New, Web-enabled firms eating into large, old-economy companies’ businesses • So: Managers of old-economy companies need right support tools to make strategic moves, allocate scarce resources, and manage risk www.ebstrategy.com

  4. e-Business Patterns: Structural Foundation • But: Choosing target strategy complex • To move online, large brick-and-mortar corporations either swallow a startup or go at it alone. Which is the right approach? • Implication: With focus shifting from physical to digital assets, managers must monitor macroeconomic and customer trends • To trigger new e-business structural designs • Resulting new business models form the basis for next gen corporate strategic planning • Sadly: Many companies still not taking the digital world seriously www.ebstrategy.com

  5. e-Business Patterns: Structural Foundation • Bottom line: We are still in early stages of the e-Business revolution • There have been and will be moments of extreme optimism; also moments of extreme pessimism • What is certain is that it is creating opportunities for companies willing to adapt • For others, it represents a destabilizing threat to the status quo of business-as-usual • When all is said and done, we’ll find big corporate winners join ranks of premiere companies in the world • Aim of this chapter • Help identify winners • Discuss characteristics leading to their success • Analyze discernible patterns for better understanding www.ebstrategy.com

  6. Going Digital • First step in identifying an e-business leader • Look at companies asking the innovative questions that are transforming the rules of today’s business game • When innovative companies change the types of strategic questions that they ask themselves, the result is business revolution • In 1970s, the Japanese posed new questions and changed rules of the Auto industry • Not gas-guzzlers, how do we create fuel-efficient cars? • Not cars that break down, how can we create a high-quality car with few manufacturing defects? • Not piles of “just-in-case” inventory, how can we create a “just-in-time” inventory process? www.ebstrategy.com

  7. Going Digital • In mid 1980s, it was Wal-Mart • Not what business are we in, what business should we be in? • Wal-Mart turned from retailer into supply chain expert • Offered right product mix at right store • In mid 1990s, it was new entrants who rose to challenge almost every leading company • Questions about customer and business model, not processes, thus challenging sentiment of early 1990s among leading companies • AOL vs. CompuServe and Prodigy • Dell vs. Compaq and IBM • EMC vs. IBM and StorageTek • Sun Microsystems vs. HP and Silicon Graphics www.ebstrategy.com

  8. Going Digital • In the 2000s, the questions for today’s business leader will be on the speed with which his/her firm implements e-business solutions powered by recent innovations • How fully digital can we make our customers’ experience? • Our supply chain? • Our internal operations and processes? • Intuit transformed from a stand-alone PC-based business model into an online financial services portal when the Internet emerged to threaten it’s business www.ebstrategy.com

  9. Going Digital • Startups continue to shape the direction of today’s business by taking advantage of recent technological innovations • E-Business can change the way companies interact with customers, communicates, sells, purchases, manufactures, and develops products • Asking a new question not only produces new answers but also reinvents the game • Result: a cost advantage that’s not 10 percent better than competitor’s but rather many fold. www.ebstrategy.com

  10. Analyzing the Environment • What is the new opportunity based on certain customer and market trends? • What are the macro-economic drivers of the business change? • Which digital technologies are going to dominant your industry? e-Business Patterns The structural foundation sets the new rules of the game • What models are better suited to take advantage of new business opportunities? • What business processes need to change? • How do you move from existing model to an e-model reflecting your firm’s organizational readiness? • What are the challenges management must face when executing the new business model? e-Business Models The strategic framework allows you to compete in the game • Who are your target customers? • What is your value proposition? • How do you make money? • How to finance the company? • How do you get and retain customers? • How to attract and retain talented people? e-Business Designs A specific strategy for what you need to do in the marketplace www.ebstrategy.com

  11. Focusing on the Whole Picture Begins as a Channel, But Extends to Total Transformation of Business E-Portal (B2C) e-Channel Pure E E-Market-Makers (B2B) Click and Brick • Basic efficiency, effectiveness enhancements as the selling becomes E-enabled • Selling goods/services • Payment/settlement enhancements • Traditional business transferred to the Net • Rise of new intermediaries • New forms of supply chain integration • Consolidation/transformation of intermediary industry • Customer Expects “E” everywhere • Fundamental re-design of business • New structures to allow market making, trading and virtual warehousing www.ebstrategy.com

  12. Table of Contents e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” www.ebstrategy.com

  13. Table of Contents Transaction Enhancement e-Channel Compression e-Channel e-Channel Expansion e-Channel Innovation www.ebstrategy.com

  14. Transaction Enhancement • Augments or replaces the old transaction method • Home Depot • In most cases, does not alter other aspects of the process • Sometimes, more technically savvy companies may gain business from other firms, thereby altering the identify of players in the channel • Dell • Gap Consumer Manufacturer Electronic Transaction www.ebstrategy.com

  15. E-Channel Compression • Eliminates redundant steps in the channel • When value added by channel is less than cost of the channel • Cisco partner/reseller “always on” e-channels • Southwest eliminated the ticketing agent “link” by moving information sharing and transaction processing online • Online stock trading • Amazon.com X Consumer Manufacturer Electronic Transaction with Disintermediation www.ebstrategy.com

  16. E-Channel Expansion • Lengthens the legacy channel • Counterintuitive? Inefficiencies in the marketplace can make this approach a necessity • Infomediaries • Carpoint in automotive market • Intuit in financial services • Vstore.com Consumer Manufacturer Electronic Transaction, Metamediation www.ebstrategy.com

  17. E-Channel Innovation • Pioneering new channels to satisfy and to anticipate unmet and potential customer desires • E-Stamp • Given the high stakes, companies everywhere want to make it easier and more enjoyable for customers to do business with them • In every industry, customer base is fragmented into multiple segments, each with its own behavior and needs • Diversity of customer tastes and needs has led to a revolution in where, when and how customers buy the products and services they seek • Winner will take all! www.ebstrategy.com

  18. e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” Table of Contents www.ebstrategy.com

  19. The Click-and-Brick Pattern • Brick and mortar + Click and order = Click and Brick • The C&B pattern allows an existing offline business to profit from partnering with an emerging online presence. • Charles Schwab • Established retailers are creating new C&B patterns. • Land’s End • A new variation in C&B strategy • Amazon.com and Toys “R” Us • Click • Infomediation • Speed • Direct, one-to-one experience • Personalized content • Automation (assistants, alerts) • Brick & Mortar • Localized inventory • In-store shopping experience • Immediacy (try, buy, take home) • Service (returns, repairs, exchanges) Click & Brick www.ebstrategy.com

  20. Why the Click-and-Brick Pattern • Physical stores offer convenience and personal service • Order online but return at store for an exchange • Established retailer’s clout should procure higher-quality merchandise for its Web sites than a start up • Exceptions: commodity items, ex. books • Efficient branding of Web sites through store fronts • Established retailers’ storefronts are living, 3-D billboards • Traditional retailers have serious cost advantages • Spend half as much to acquire each new customer as do Web-only retailers www.ebstrategy.com

  21. Webvan • Discuss with Ravi the purpose and nature of this case, now that Webvan is out of this business www.ebstrategy.com

  22. Management Challenges • Lack of merchandise selection on site • Lack of communication and mgmt collaboration between the Web site and store staffs and separate channels for fulfilling orders and resolving customer and process problems • Hiring second-tier talent to staff the Web sites • Continuing to invest millions of dollars on Web commerce initiatives w/o generating a positive ROI (return on investment) www.ebstrategy.com

  23. e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” Table of Contents www.ebstrategy.com

  24. The e-Portal Pattern • Portals are “Killer” apps of e-business • An intermediary or middleman offering an aggregated set of services for a specific well-defined group of users • Yahoo! Organizes collections of news, search and communication services for consumers • E-Bay, E-Loan, and E*Trade for business activities related to auctioning, loan financing, and stock trading, respectively • Portals occur when new players succeed in positioning themselves between customers and suppliers • Customer focused, enter chain to address specific customer dissatisfaction with current way of doing business • Either add value-added services to market channel or decrease transaction costs of customer/supplier relationship www.ebstrategy.com

  25. Table of Contents Eyeball Aggregators Or Superportals Auction Portals e-Portal Megatransaction Portals www.ebstrategy.com

  26. Eyeball Aggregators or Superportals • Attract and direct consumer traffic with free content and service offerings • Deliver customers to retailers for a fee (advertisement based or % of transaction) • Retailers leery of superportals • Disintermediation, especially of repeat buyers • Yet the mass buying power of superportals considerable • Forcing online retailers to bid for a superportal’s business Media Network Commerce Portal Communications Portal Sticky Content (GeoCities Acquisition) Content Portal Search Engine www.ebstrategy.com

  27. Auction Portals • Enable buyers and sellers to engage in transactions across geographic and demographic boundaries • More than just marketplaces • Unique community of collectors and hobbyists • Similarity with traditional auctions • Highest bidder wins • What is different • Online auction does not have the physical merchandise • eBay www.ebstrategy.com

  28. Megatransaction Portals • Category killers • Lock up portal real estate and create a critical mass of customers • Travelocity in online travel and Hoovers for financial news • Online travel services portals • Killing traditional agencies • Reduced agent commissions; Consumers’ acceptance of paperless transactions; Ease of use of completing online transactions • Expect to see consolidation and integration in online travel • Expedia offers airline tickets, hotel rooms, air/hotel packages • Travel services portals to consolidate along two segments • Full-service and off-price discount • Keys to success • Automation of the look-to-book process • Channel synchronization www.ebstrategy.com

  29. e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” Table of Contents www.ebstrategy.com

  30. The e-Market Maker Pattern • Online intermediary, connects disparate buyers and sellers within a common vertical industry • Eliminates channel inefficiencies; aggregates offerings from many sellers or matches buyers and sellers • Buyers: lower purchasing costs; reach new suppliers • Suppliers: lower sales cost; reach new customers • Revenue models: • % of transaction, subscription, mark-up www.ebstrategy.com

  31. The e-Market Maker Pattern • Major role for e-Market makers in industries with these characteristics: • Large market size • Fragmented supply chain • Unrecognized vendor or product differentiation • High information-search costs • High product-comparison costs • High workflow costs www.ebstrategy.com

  32. The Pure E-Digital Products Pattern • New innovations in s/w, h/w and communications placing digital content at center of business • software, music, video, news • digital goods produced, delivered, consumed and licensed electronically • delivery of digital goods already changing; delivery as a service • Growth of digital products due to • proliferation of Internet devices • cheap and abundant availability of bandwidth • inexpensive PCs, more free PC programs • industry standardization of APIs • XML permitting interface between data and speech and other systems www.ebstrategy.com

  33. The Pure E-Digital Products Pattern • 3 types of entrepreneurial activity characterize digital-goods market • high-quality end user technologies, services and products • s/w and h/w platforms • distribution infrastructure www.ebstrategy.com

  34. High-Quality, High Speed Content to Consumers: Digital Music • Internet altered how music will be distributed • “Collapse of the middle” pattern • Artists bypassing major labels to reach audience directly • Business as usual will soon mean no business at all for many of the industry’s middlemen • New companies and peer-to-peer technologies emerging to meet needs of the digital music download business: MP3.com, Napster, Gnutella, Pointera www.ebstrategy.com

  35. New Platforms for Digital-Media Delivery • Market for delivery of Internet services through handheld devices new and evolving rapidly • PDAs and mobile phones • WAP standard emerging for delivery of Internet-based services to mass-market wireless phones • WML for Internet apps and content for wireless phones • Next gen mobile delivery systems include voice browsers and speech-recognition systems • TellMe and HearMe www.ebstrategy.com

  36. New Infrastructure Services for Digital Content Delivery • New infrastructure services required to support faster content distribution • Content delivery or congestion mgmt services • Digital Island and Akamai Techologies • Caching services • Inktomi and CacheFlow • Outsourcing services • Exodus or Level 3 • Supported by different business models • Content delivery vendors paid by Web site owners but www.ebstrategy.com

  37. E-Business Strategies, Inc. www.ebstrategy.com contact@ebstrategy.com 678-339-1236 x201 Fax - 678-339-9793

More Related