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E-businessMANAGEMENT AND STRATEGY
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Contents
Introductions
E-business technology
E-business markets and models E-business economics
E-marketing
Management of e-business
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Contents (cont.)
E-business strategy :Formulation
E-business strategy :Implementation
E-business strategy : Evaluation
The internet : law, privacy andsecurity
E-business in the future
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Introduction
Defining e-business
The development of the neweconomy
Types of e-business and relatedindustries
The growth of e-business
Use of the internet
Key people
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Defining e-business
E-business can be defined as the useof the internet to network andempower business processes,electronic commerce, organizational
communication and collaborationwithin a compay and with itscustomers, suppliers, and otherstakeholders
E-business utilise the internet,intranets, extranets and othernetworks to support their commercialprocesses
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E-commerce is the buying andselling, marketing and servicingof products and services via
computer networks E-business and e-commerce are
often used synonymously
Chaffey (2004)
e-commercecan best be conceived as asubser of e-business
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The relationship between e-business and e-commerce
Buying and sellingelectronically
Electronic distribution
Online customerservice
Electronic marketing
Secure transactions Automation of
processes
Electroniccollaboration
Sell-side e-commerce
Buy side e-commerce
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The development of the new economy
Don Tapscott (1997) : Digital Economy:Promise And Peril In The Age Of
Networked Intellegency, memaparkan
bagaimana perekonomian bergesermenuju pada perekonomian baru yangdisebut sebagai digital economy
Perekonomian baru (digital economy)
adalah perekonomian yang didasarkanpada ilmu pengetahuan, sehinggadisebut juga dengan knowledgeeconomy
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This terms are used to define thedistinct contributions to the economythrough use of the internet, digitaltechnology, or information and
communications technology (ITC). Called new economy based on
entrepreneurship in knowledgecreation and sharing, innovation and
creativity, and utilising informationtechnology for developing and sellingnew products and services.
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The new economy has been boostedby the development of theinfrastructure that supports theinternet, ICT and digital technology
The internet has opened up thepossibility of exchanging information,products and services around theglobe without any restrains of time or
distance. This has given rise to the concept of
the boundaryless organization
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Digital Convergence
Computing
Content
Communications
Interactive Multimedia
Experience
Hal penting dalam perubahanteknologi terhadap tata kehidupanmanusia adalah dapat disatukannyatiga kegiatan pokok yaitu computing,
communication dan contentdalamsatu sistem yaitu multimedia.
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An Internet Framework (Hanson, 2000)
The Web is fundamentallyabout individuals using a
network to access digitalproducts
Marketing
Technology Economics
Internet
Marketing
Digital
Networked
Individuals
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Isues Old economy New economyEconomy factorsMarket Stable Dynamic and complex
Competition National International and global
Structure Manufacturing Service
Value driver Physical capital Human capital
Business FactorOrganisation 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 factorsTastes 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 ChangingTable 2-1: Old Economy vs. New Economy
(Kotler, 2004)
Old Economy New Economy
Organize by product units
Focus on profitable transactions
Look primarily at financial scorecardFocus on shareholders
Marketing does the marketing
Build brands through advertising
Focus on customer acquisition
No customer satisfactionmeasurement
Overpromise, underdeliver
Organize by customer segments
Focus on customer lifetime value
Look also at marketing scorecardFocus on stakeholders
Everyone does the marketing
Build brands through behavior
Focus on customer retention andgrowth
Measure customer satisfaction andretention rate
Underpromise, overdeliver
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Procter & Gambles Reflect.com site allows customers
to design their own beauty products
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Types of e-business and relatedindustries
Radically transformed bydevelopment of the internet andrelated technologies.
B2B
B2C
C2C
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The growth of e-business
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 costomerknowledge
One-to-one customer service
Lower costs Access to internetcommunity
Increased efficiency empowerment
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Use 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 21Instant messaging 56 Distance learning 21
Download music 51 Read blogs 17
% %
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Key People
Tim Berners Lee
Marc andreeson
Bill gates
Michael Dell
Jerry Yang
Pierre Omidyar Jeff Bezos
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Key Business Decisions
Product
What type of product should beproduced?
Production How should the product be produced?
Promotion
How should the product be promoted?
Financing
How should the company obtain fundsto finance the cost of producing the
product?
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Business Decisions
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Key Stakeholders
Owners Entrepreneurs
Co-owners
Stockholders Creditors
Employees
Managers Suppliers
Customers
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Interaction among Owners, Employees,
Customers, Suppliers, and Creditors
Exhibit 1.1
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Creating a BusinessIdea
Identify a competitive advantage.
Differentiate the product or
service from competitors. Determine necessary resources.
Assess feasibility of the idea.
b i li
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business onlineee--business
business
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Success Stories
Dominos Pizza Managhans bought bankrupt pizza parlor
Started with little funding
Now generates sales of $1 billion per year
Jeremys Micro Batch Ice Cream
Applied microbrewery concept to ice cream
Makes ice cream in small batches, sold inlimited editions
Glow Dog, Inc.
Sells light-reflective clothing for pets
After two years, average annual sales of $1million
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Lessons to Remember
Successful businesses do notrequire 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 Technology
Technology defined
Knowledge or tools used to produceproducts 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 otherindustries.
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Impact of Technology
E-business or e-commerce
Use electronic communications toproduce or sell products and
services Sales to individual customers
B2B e-business: transactions betweena business and its suppliers
Generates $301 billion in revenue andcreates 1.2 million jobs each year
S f l E
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Successful E-Businesses
Started out small
Created to sell a product or service thatwas not offered by competitors
Transformed how traditional firmsconducted business
Improved communication with customers
Improved information flow Improved efficiency
Complemented traditional businessoperations
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E-Business Examples Amazon
Online seller of books, music and otherproducts
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-uppages
Generates revenue by selling advertising
eBay
Online auction service
K F ti f
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Key Functions ofBusiness
Management
Means by which employees and otherresources are used by the firm
Marketing Means by which products and services
are developed, priced, distributed, andpromoted to customers
Finance Means by which firms obtain and use
funds for their business operations
K F ti f
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Key Functions ofBusiness
Accounting Summary and analysis of the firms
financial condition
Used to make various businessdecisions
Information systems
Information technology, people,and procedures that provideappropriate information to makeeffective decisions
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How Business Decisions
Affect a Firms Earnings
Exhibit 1.4
C B i
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Common BusinessDecisions
Management Decisions
What equipment is needed?
How many employees should behired?
How can employees be motivatedto perform well?
C B i
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Common BusinessDecisions
Marketing Decisions
What price should be charged?
Should the product be changed tobe more appealing to customers?
Should the firm use advertising or
some other strategy to promote itsproduct?
C B i
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Common BusinessDecisions
Finance Decisions
Should financial support come fromthe sale of stock or from borrowing
money or some combination?
Should the firm attempt to obtainborrowed 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
developing an e-presence: the agility
of a pure click company, or the well
defined and readily identifiable
resources of a traditional
brick and mortarcompany?
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A Business Plan
Detailed description of theproposed business
Description of the product or
service Types of customers the business
would attract
Competition Facilities needed for production
D l i B i
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Developing a BusinessPlan
Assess the BusinessEnvironment
Economic environment
Industry environment Global environment
Develop Management Plan
Organizational Structure Production
Human Resources
D l i B i
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Developing a BusinessPlan
Marketing Plan Target Market
ProductCharacteristics
Pricing
Distribution
Promotion
Financial Plan Financing
Feasibility
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Online Resources
Advice and basic information Yahoos Small Business site
American Express
Small Business Administration
Financing Options
Quicken Small Business
Garage.com
The Elevator
Business Planning Software
Assessing a Business
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Assessing a BusinessPlan
Potential revenue
Potential demand for product orservice
Potential expenses
Profit potential
E t d M thl E
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Expected Monthly Expensesof CHC
Exhibit 1.6
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Expected Performance of CHCin the First Year