E Business Introduction

E-business E-business MANAGEMENT AND STRATEGYMANAGEMENT AND STRATEGY

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ContentsContents

• Introductions• E-business technology• E-business markets and

models• E-business economics• E-marketing• Management of e-business

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Contents (cont.)Contents (cont.)

• E-business strategy : Formulation

• E-business strategy : Implementation

• E-business strategy : Evaluation

• The internet : law, privacy and security

• E-business in the future

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IntroductionIntroduction

• Defining e-business• The development of the new

economy• Types of e-business and

related industries• The growth of e-business• Use of the internet• Key people

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Defining e-businessDefining e-business• E-business can be defined as the

use of the internet to network and empower business processes, electronic commerce, organizational communication and collaboration within a compay and with its customers, suppliers, and other stakeholders

• E-business utilise the internet, intranets, extranets and other networks to support their commercial processes

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• E-commerce is the buying and selling, marketing and servicing of products and services via computer networks

• E-business and e-commerce are often used synonymously

• Chaffey (2004) e-commerce can best be conceived as a subser of e-business

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The relationship between e-The relationship between e-business and e-commercebusiness and e-commerce

•Buying and selling electronically

•Electronic distribution

•Online customer service

•Electronic marketing•Secure transactions•Automation of

processes•Electronic

collaboration

• Sell-side e-commerce

• Buy side e-commerce

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The development of the new The development of the new economyeconomy

• Don Tapscott (1997) : “Digital Economy: Promise And Peril In The Age Of Networked Intellegency“, memaparkan bagaimana perekonomian bergeser menuju pada perekonomian baru yang disebut sebagai digital economy

• Perekonomian baru (digital economy) adalah perekonomian yang didasarkan pada ilmu pengetahuan, sehingga disebut juga dengan knowledge economy

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• This terms are used to define the distinct contributions to the economy through use of the internet, digital technology, or information and communications technology (ITC).

• Called “new economy” based on entrepreneurship in knowledge creation and sharing, innovation and creativity, and utilising information technology for developing and selling new products and services.

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• The new economy has been boosted by the development of the infrastructure that supports the internet, ICT and digital technology

• The internet has opened up the possibility of exchanging information, products and services around the globe without any restrains of time or distance.

• This has given rise to the concept of the ‘boundaryless’ organization

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Digital ConvergenceDigital Convergence

Computing

Content

Communications

Interactive Multimedia

Experience

• Hal penting dalam perubahan teknologi terhadap tata kehidupan manusia adalah dapat disatukannya tiga kegiatan pokok yaitu computing, communication dan content dalam satu sistem yaitu multimedia.

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An Internet Framework (Hanson, An Internet Framework (Hanson, 2000)2000)

The Web is The Web is fundamentally about fundamentally about individuals using a individuals using a network to access network to access digital products digital products

Marketing

Technology Economics

Internet Marketin

g

Digital

Networked

Individuals

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Isues Old economy New economy

Economy factors

Market Stable Dynamic and complex

Competition National International and global

Structure Manufacturing Service

Value driver Physical capital Human capital

Business Factor

Organisation Hierarchy Network or virtual

Production Mass Flexible, customised

Growth driver Capital and labour Innovation and knowledge

Technology driver Machines Digital and electronic

Competitive advantage

Low cost/high production

Innovation, speed, quality

Relationships Independent Collaborative

Consumer factors

Tastes Stable Dynamic, segmented

Skills Specialised Multiple and flexible

Educational needs Trade orientated Lifelong learning

Workplace relations Confrontational Collaborative

Nature of employment

Stable Insecure, opportunistic

Key differences between the old and new economy

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““How Business Practices are Changing”How Business Practices are Changing”Table 2-1: Old Economy vs. New EconomyTable 2-1: Old Economy vs. New Economy

(Kotler, 2004)(Kotler, 2004)

Old Economy New Economy

Organize by product units

Focus on profitable transactions

Look primarily at financial scorecard

Focus on shareholders

Marketing does the marketing

Build brands through advertising

Focus on customer acquisition

No customer satisfaction measurement

Overpromise, underdeliver

Organize by customer segments

Focus on customer lifetime value

Look also at marketing scorecard

Focus on stakeholders

Everyone does the marketing

Build brands through behavior

Focus on customer retention and growth

Measure customer satisfaction and retention rate

Underpromise, overdeliver

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Procter & Gamble’s Reflect.com site allows customers Procter & Gamble’s Reflect.com site allows customers to design their own beauty productsto design their own beauty products

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Types of e-business and related Types of e-business and related industriesindustries

• Radically transformed by development of the internet and related technologies.– B2B– B2C– C2C

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The growth of e-The growth of e-businessbusiness

Firm Consumers

Ease of access Ease of access

Ease of use Ease of use

Access to wider market Access to market information

Potential economies of scale

Convenience

Marketing economies Lower prices

Improved logistics Personalisation

Automated processes Customisation

Network externalities Network externalities

Improved costomer knowledge

One-to-one customer service

Lower costs Access to internet community

Increased efficiency empowerment

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Use of the InternetUse of the Internet

Check e-mail 92 Play games 48

Product information 87 Bank online 45

Surfing/browsing 83 Look for jobs 42

Look up facts 78 School material 40

Plan travel 77 Download videos 33

Buy online 74 Listen to radio 33

Local information 66 Chat 26

News 61 Genealogy 21

Instant messaging 56 Distance learning 21

Download music 51 Read blogs 17

% %

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Key PeopleKey People

• Tim Berners Lee• Marc andreeson• Bill gates• Michael Dell• Jerry Yang• Pierre Omidyar• Jeff Bezos

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Key Business Key Business DecisionsDecisions

• Product – What type of product should be

produced?• Production

– How should the product be produced?• Promotion

– How should the product be promoted?• Financing

– How should the company obtain funds to finance the cost of producing the product?

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Business DecisionsBusiness Decisions

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Key StakeholdersKey Stakeholders• Owners

– Entrepreneurs– Co-owners– Stockholders

• Creditors• Employees

– Managers

• Suppliers• Customers

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Interaction among Owners, Interaction among Owners, Employees, Customers, Suppliers, Employees, Customers, Suppliers,

and Creditorsand Creditors

Exhibit 1.1

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Creating a Business Creating a Business IdeaIdea

• Identify a competitive advantage.

• Differentiate the product or service from competitors.

• Determine necessary resources.

• Assess feasibility of the idea.

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business onlinebusiness online ee -- businessbusiness

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Success StoriesSuccess Stories• Domino’s Pizza

– Managhans bought bankrupt pizza parlor– Started with little funding– Now generates sales of $1 billion per year

• Jeremy’s Micro Batch Ice Cream– Applied microbrewery concept to ice cream– Makes ice cream in small batches, sold in

limited editions• Glow Dog, Inc.

– Sells light-reflective clothing for pets– After two years, average annual sales of $1

million

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Lessons to Lessons to RememberRemember

• Successful businesses do not require a great invention. – Many focus on making life

more convenient for customers.

• Some business ideas will fail—but entrepreneurs can learn from failures and make revisions.

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Impact of TechnologyImpact of Technology• Technology defined

– Knowledge or tools used to produce products and services

• Information technology– Represents over 1/3 of the growth

in U.S. output– Reduces cost of producing products– Workers in technology industries

earn more than workers in other industries.

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Impact of TechnologyImpact of Technology

• E-business or e-commerce– Use electronic communications

to produce or sell products and services• Sales to individual customers • B2B e-business: transactions

between a business and its suppliers

• Generates $301 billion in revenue and creates 1.2 million jobs each year

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Successful E-Successful E-BusinessesBusinesses

• Started out small• Created to sell a product or service

that was not offered by competitors• Transformed how traditional firms

conducted business– Improved communication with

customers– Improved information flow– Improved efficiency– Complemented traditional business

operations

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E-Business ExamplesE-Business Examples• Amazon

– Online seller of books, music and other products

– Low overhead costs allow price discounting

• Yahoo!– Internet search engine and the most visited

site on the Web– Offers variety of services - free email, web

page hosting, custom-designed start-up pages– Generates revenue by selling advertising

• eBay– Online auction service

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Key Functions of Key Functions of BusinessBusiness

• Management– Means by which employees and other

resources are used by the firm

• Marketing– Means by which products and services

are developed, priced, distributed, and promoted to customers

• Finance– Means by which firms obtain and use

funds for their business operations

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Key Functions of Key Functions of BusinessBusiness

• Accounting– Summary and analysis of the

firm’s financial condition– Used to make various business

decisions

• Information systems– Information technology, people,

and procedures that provide appropriate information to make effective decisions

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How Business Decisions How Business Decisions Affect a Firm’s EarningsAffect a Firm’s Earnings

Exhibit 1.4

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Common Business Common Business DecisionsDecisions

• Management Decisions

– What equipment is needed?

– How many employees should be hired?

– How can employees be motivated to perform well?

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Common Business Common Business DecisionsDecisions

• Marketing Decisions

– What price should be charged?

– Should the product be changed to be more appealing to customers?

– Should the firm use advertising or some other strategy to promote its product?

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Common Business Common Business DecisionsDecisions

• Finance Decisions

– Should financial support come from the sale of stock or from borrowing money or some combination?

– Should the firm attempt to obtain borrowed funds for a short-term or long-term period?

– Should the firm invest funds in a new business project?

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Which is more important for Which is more important for developing an e-presence: the agility developing an e-presence: the agility of a pure click company, or the well of a pure click company, or the well defined and readily identifiable defined and readily identifiable resources of a traditional resources of a traditional brick and mortar brick and mortar company?company?

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A Business PlanA Business Plan

• Detailed description of the proposed business– Description of the product or

service– Types of customers the

business would attract– Competition– Facilities needed for production

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Developing a Developing a Business PlanBusiness Plan

• Assess the Business Environment– Economic environment– Industry environment– Global environment

• Develop Management Plan– Organizational Structure– Production– Human Resources

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Developing a Developing a Business PlanBusiness Plan

• Marketing Plan– Target Market– Product

Characteristics– Pricing– Distribution– Promotion

• Financial Plan– Financing– Feasibility

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Online ResourcesOnline Resources

• Advice and basic information– Yahoo’s Small Business site– American Express– Small Business Administration

• Financing Options– Quicken Small Business– Garage.com– The Elevator

• Business Planning Software

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Assessing a Business Assessing a Business PlanPlan

• Potential revenue• Potential demand for product

or service• Potential expenses• Profit potential

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Expected Monthly Expected Monthly Expenses of CHCExpenses of CHC

Exhibit 1.6

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Expected Performance of CHC Expected Performance of CHC in the First Yearin the First Year

Exhibit 1.7