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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
http://www.reflect.com/


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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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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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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

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