chapter 5 part1 - wordpress.com · 02/01/2018 · competitive environment 5. competitive advantage...
TRANSCRIPT
Chapter 5 – Part1 E-commerce Business Strategies
Copyright © 2015 Pearson Education, Inc. Copyright © 2016 Pearson Education, Ltd.
Learning Objectives
Identify the key components of e-commerce business models.
Describe the major B2C business models.
Describe the major B2B business models.
Understand key business concepts and strategies applicable to e-commerce.
Copyright © 2016 Pearson Education, Ltd. Slide 1-2
E-commerce Business Models
Business model Set of planned activities designed to result in a profit in
a marketplace
Business plan A document that describes a firm’s business model
E-commerce business model Uses/leverages unique qualities of Internet and Web
Copyright © 2016 Pearson Education, Ltd. Slide 1-3
Eight Key Elements of a Business Model
Copyright © 2016 Pearson Education, Ltd. Slide 1-4
Eight Key Elements of a Business Model
1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational development
8. Management team
Copyright © 2016 Pearson Education, Ltd. Slide 1-5
1. Value Proposition
“Why should the customer buy from you?” defines how a company’s product or service fulfills the needs
of customers
Successful e-commerce value propositions:
Personalization/customization
Reduction of product search, price discovery costs
Facilitation of transactions by managing product delivery
Copyright © 2016 Pearson Education, Ltd. Slide 1-6
2. Revenue Model
“How will you earn money?”
describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital
Major types of revenue models:
Advertising revenue model:
a company provides a forum for advertisements and receives fees from advertisers
Subscription revenue model:
a company offers its users content or services and charges a subscription fee for access to some or all of its offerings
Freemium strategy
Copyright © 2016 Pearson Education, Ltd. Slide 1-7
2. Revenue Model
Major types of revenue models (cont.):
Transaction fee revenue model:
a company receives a fee for enabling or executing a
transaction
Sales revenue model:
a company derives revenue by selling goods,
information, or services
Affiliate revenue model:
a company steers business to an affiliate and receives
a referral fee or percentage of the revenue from any
resulting sales
Copyright © 2016 Pearson Education, Ltd. Slide 1-8
2. Revenue Model
Copyright © 2016 Pearson Education, Ltd. Slide 1-9
3. Market Opportunity
“What marketspace do you intend to serve and what is its size?”
Marketspace: the area of actual or potential commercial value in which a company intends to operate
Market Opportunity: refers to the company’s intended marketspace and the overall potential financial opportunities available to the firm in that marketspace.
The realistic market opportunity: is defined by the revenue potential in each of the market niches where you hope to compete
Copyright © 2016 Pearson Education, Ltd. Slide 1-10
3. Market Opportunity
Copyright © 2016 Pearson Education, Ltd. Slide 1-11
4. Competitive Environment
“Who else occupies your intended marketspace?”
Other companies selling similar products in the same marketspace
the presence of substitute products and potential new entrants to the market
the power of customers and suppliers over your business.
Includes both direct and indirect competitors
Copyright © 2016 Pearson Education, Ltd. Slide 1-12
4. Competitive Environment
Influenced by:
Number and size of active competitors
Each competitor’s market share
Competitors’ profitability
Competitors’ pricing
Copyright © 2016 Pearson Education, Ltd. Slide 1-13
5. Competitive Advantage
“What special advantages does your firm bring to the marketspace?”
achieved by a firm when it can produce a superior product and/or bring the product to market at a lower price than most, or all, of its competitors
Copyright © 2016 Pearson Education, Ltd. Slide 1-14
6. Market Strategy
“How do you plan to promote your products or services to attract your target audience?”
Market strategy is the plan you put together that details exactly how you intend to enter a new market and attract new customers
Best business concepts or idea will fail if not properly marketed to potential customers
Copyright © 2016 Pearson Education, Ltd. Slide 1-15
7. Organizational Development
“What types of organizational structures within the firm are necessary to carry out the business plan?”
describes how the company will organize the work that needs to be accomplished.
Typically, divided into functional departments (production, shipping, marketing, customer support, and finance)
As company grows, hiring moves from generalists to specialists
Copyright © 2016 Pearson Education, Ltd. Slide 1-16
8. Management Team
“What kind of backgrounds should the company’s leaders have?”
employees of the company responsible for making the business model work
A strong management team:
Can make the business model work
Can give credibility to outside investors
Has market-specific knowledge
Has experience in implementing business plans
Copyright © 2016 Pearson Education, Ltd. Slide 1-17
Copyright © 2016 Pearson Education, Ltd. Slide 1-18
Raising Capital
Is one of the most important functions for a founder of a start-up business and its management team.
Seed capital:
an entrepreneur’s personal funds derived from savings, credit card advances, home equity loans, or from family and friends
Traditional sources:
Incubators:
provide a small amount of funding and also an array of services to start-up companies
Commercial banks
Copyright © 2016 Pearson Education, Ltd. Slide 1-19
Raising Capital
Traditional sources (cont.):
Angel investors:
Wealthy individuals or a group of individuals who invest their own money in exchange for an equity share in the stock of a business
Venture capital investors:
invest funds they manage for other investors; usually later-stage investors
Crowdfunding
involves using the Internet to enable individuals to collectively contribute money to support a project
Copyright © 2016 Pearson Education, Ltd. Slide 1-20
Categorizing E-commerce Business Models
There are many e-commerce business models, and more are being invented every day.
It is important to realize, however, that there is no one correct way to categorize these business models
In this book we categorize according to E-commerce sector (e.g., B2B)
Similar business models appear in more than one sector
Some companies use multiple business models (e.g., eBay)
Copyright © 2016 Pearson Education, Ltd. Slide 1-21
Categorizing E-commerce Business Models
A business’s technology platform is sometimes confused with its business model.
E.x. Sometimes mobile e-commerce referred as a distinct business model, which it is not.
Social e-commerce and local e-commerce are not business models, but they are subsectors of B2C and B2B e-commerce in which different business models can operate.
Copyright © 2016 Pearson Education, Ltd. Slide 1-22
Copyright © 2016 Pearson Education, Ltd. Slide 1-23