module 5 : crafting business models(cont.)

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MODULE 5 :Crafting Business Models(Cont.)

Matakuliah : J0422 / Manajemen E-Corporation

Tahun : 2005

Versi : 1 / 2

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Learning Outcomes

In this chapter, we will study:

The four approaches to evolving business models serve as a road map for evolving networked business.

Evolving the American Express Interactive Business Models.

Envolving the Amazon Business Models.

Step by step approach to analyzing business models.

Analyzing case study of AOL-Timer Warner merger.

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Outline Topic

Evolving Business Models.

A Step by Step Approach to Analyzing Business Models.

Case Study : Valuing the AOL-Time Warner Merger.

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Content

Network businesses are built by artfully combining a variety of business models. These businesses are then linked with others across multiple value chain networks to create “web for the Web”.

Source: A pplegate, L ynda M ., Robert D . A usti n, and F . W arren M cF arl an, Corporate I nfor mation Strategy and M anagement. B urr R idge, I L : M cG raw-H il l /I rw i n, 2002. C hapter 2 F igure 2-4

A pproaches to B usi ness M odel E volution

Expand

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E n h an ceA dd functiona lity o r fea tures to curren t

p roduct/service o ffe rings o r im prove perfo rm ance of ex is ting business

E xp an dA dd new product/service o ffe rings o r en te r new geograph ic m arke ts

E xten dE nter new line o f bus iness and /or add new

business m ode ls

E xitE xit a business or m arke t o r d rop a

p roduct/service o ffe ring

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E n h an ceA dd functiona lity o r fea tures to curren t

p roduct/service o ffe rings o r im prove perfo rm ance of ex is ting business

E xp an dA dd new product/service o ffe rings o r en te r new geograph ic m arke ts

E xten dE nter new line o f bus iness and /or add new

business m ode ls

E xitE xit a business or m arke t o r d rop a

p roduct/service o ffe ring

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Evolving American Express Interactive : Timeline of Events

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/I rwin, 2002. Chapter 2 Figure 2-5

Evolving American Express Interactive: Timeline of Events

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Evolving American Express Interactive : Product/Service Enhancements

S o u r c e: A p p l e g a te , L y n d a M . , R o b e r t D . A u s t i n , a n d F . W a r r e n M c F a r l a n , C o r p o r a te I n fo r m a t i o n S t r a teg y a n d M a n a g e m e n t . B u r r R i d g e, I L : M c G r a w - H i l l / I r w i n , 2 0 0 2 . C h a p t e r 2 F i g u r e 2 - 6

E v o l v i n g A m e r i c a n E x p r e s s I n t e r a c t i v e: P r o d u c t/ S e r v i c e E n h a n c e m e n t s

E n h a n c e

E n h a n c e

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Evolving American Express Interactive : Product/Service Category Expansion

S o u r c e : A p p l e g a t e , L y n d a M . , R o b e r t D . A u s t i n , a n d F . W a r r e n M c F a r l a n , C o r p o r a te I n f o r m a t i o n S t r a te g y a n d M a n a g e m e n t . B u r r R i d g e , I L : M c G r a w - H i l l / I r w i n , 2 0 0 2 . C h a p t e r 2 F i g u r e 2 - 7

E v o l v i n g A m e r i c a n E x p r e s s I n t e r a c t i v e : P r o d u c t / S e r v i c e C a t e g o r y E x p a n s i o n

E x p a n dE x p a n dE x p a n d

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Evolving American Express Interactive : Business Model Extension

S o u r c e : A p p l e g a t e , L y n d a M . , R o b e r t D . A u s t i n , a n d F . W a r r e n M c F a r l a n , C o r p o r a t e I n f o r m a t i o n S t r a t e g y a n d M a n a g e m e n t . B u r r R i d g e , I L : M c G r a w - H i l l / I r w i n , 2 0 0 2 . C h a p t e r 2 F i g u r e 2 - 8

E v o l v i n g A m e r i c a n E x p r e s s I n t e r a c t i v e : B u s i n e s s M o d e l E x t e n s i o n

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9S o u r c e : A p p l e g a t e , L y n d a M . , R o b e r t D . A u s t i n , a n d F . W a r r e n M c F a r l a n , C o r p o r a t e I n f o r m a t i o n S t r a t e g y a n d M a n a g e m e n t . B u r r R i d g e , I L : M c G r a w - H i l l / I r w i n , 2 0 0 2 . C h a p t e r 2 F i g u r e 2 - 9

E v o l v i n g A m e r i c a n E x p r e s s I n t e r a c t i v e : A n I n t e g r a t e d V i e w

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Evolving American Express Interactive : An Integrated View

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Evolving the Amazon.com business models : Timeline of Events

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/I rwin, 2002. Chapter 2 Figure 2-10

Evolving Amazon.com: Timeline of Events

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Evolving the Amazon.com business models :Product /Service Enhancements

S o urce: A pp l egate, L y nd a M ., R ober t D . A u sti n, and F . W ar r en M c F ar l an , C or por a te I n for ma tion S tr a tegy a n d M a n agement . B ur r R i dge, I L : M cG r aw -H i l l /I rw i n, 2002. C h ap ter 2 F i gur e 2-11

E vol v i ng A m azon.com: P rod uc t/S erv ice E n h ancem en ts

EnhanceEnhanceEnhance

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Evolving the Amazon.com business models :Category and Geographic Expansion

S o urce: A ppl egate, L y nd a M ., R ober t D . A u sti n, and F . W ar r en M c F ar l an, C or por a te I n for ma tion S tr a tegy a n d M a n agement . B ur r R i dge, I L : M cG r aw -H i l l /I rw i n, 2002. C h ap ter 2 F i gur e 2-12

E volv i ng A m azon.com: C ategory and G eogr ap h ic E x pan si on

ExpandExpandExpand

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Evolving the Amazon.com business models :Business Model Extension

S o u r c e : A p p l e g a t e , L y n d a M . , R o b e r t D . A u s t i n , a n d F . W a r r e n M c F a r l a n , C o r p o r a t e I n f o r m a t i o n S t r a t e g y a n d M a n a g e m e n t . B u r r R i d g e , I L : M c G r a w - H i l l / I r w i n , 2 0 0 2 . C h a p t e r 2 F i g u r e 2 - 1 3

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Evolving the Amazon.com business models :An Integrated View

S o u r c e : A p p l e g a t e , L y n d a M . , R o b e r t D . A u s t i n , a n d F . W a r r e n M c F a r l a n , C o r p o r a t e I n f o r m a t i o n S t r a t e g y a n d M a n a g e m e n t . B u r r R i d g e , I L : M c G r a w - H i l l / I r w i n , 2 0 0 2 . C h a p t e r 2 F i g u r e 2 - 1 4

E v o l v i n g A m a z o n . c o m : A n I n t e g r a t e d V i e w


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A Step-by-Step Approach to Analyzing business Models

Step 1: Profile your current business models.

Step 2: Determine how you might evolve your current model and/or identify new models to pursue.

Step 3: Use the business model analysis framework to prioritize new models and initiatives.Evaluate the concept (opportunity).Evaluate the capabilities and resources required.Evaluate the value proposition (return to all

stakeholders).

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A Step-by-Step Approach to Analyzing business Models

Step 4: Use the analysis in Step 3 as a benchmark to develop real-time performance monitoring systems.

Step 5: revise your strategy, implementation plan, and performance measurements systems on an ongoing basis.

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Case Study : Valuing the AOL-Time Warner Merger

Case Study :

Valuing the AOL-Time Warner Merger

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AOL(Pre-Merger) In 1985, two entrepreneurs, Steven Case and Jim Kinsey,

launched an online information services that they named Quantum Computer Services. In 1989, Steve Case won a contest to rename Quantum as America Online(AOL).

The company also actively pursued content and services partnerships, signing agreements with American Airlines to offer its Easy Sabre travel reservation services and with CNN to offer online news and stock quotes, among other things.

Dec 2000, executives at AOL were publicly proclaiming that the company was “the world’s leader in interactive services, web brands, internet technologies, and electronic commerce services”.

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AOL(Pre-Merger)Four major line of business:

• Interactive Services develop and operated branded online services, including AOL.com with over 27 millions members, CompuServe with over 3 million members.

• Interactive Propertis provided branded online services that were available not only on AOL.com but also on partner and competitor websites.

• AOL International provided access to country-specific versions of AOL.com within 16 countries outside the United States.

• Netscape Enterprises provided software products, technical support, consulting, and training services to enable business users to share information, manage networks, and facilitate electronic commerce.

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Time Warner(Pre-Merger) In 1923, two entrepreneurs, Henry Luce and Britton

Hadden launched Time magazine. The history merger in 1989 of Time, Inc., and Warner

Communications created the world’s largest media, information, and entertainment company.

Dec 2000, Time Warner, Inc., had become a world leader in media, entertainment, news and information delivery, and broadband infrastructure.

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Time Warner(Pre-Merger) Six major line of business:

• Publishing, Time, Inc., created and distributed publishing and information brands, including brand-name magazine(e.g., Time, Fortune, Money, People, Sports Illustrated)

• Music. As part of one of the world’s five largest record companies, Warner Music Group artists like Madonna and Cher recorded music on brand-name labels Atlantic, Elektra, Warner Bros. Music.

• Filmed entertainment like Warner Bros, New Line Cinema, and Castle Rock was a world leader in the creation, distribution, licensing, and marketing of movies, television programming, videos, and related products.

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Time Warner(Pre-Merger) Six major line of business:

• Cable Networks like Turner Broadcasting, TNT, Cartoon Network, HOB, Cinemax, and etc.

• Cable Systems was the second largest cable operator in the United States.

• Digital Media, managed all of the company’s integrated internet-related and digital media businesses.

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The AOL Time Warner merger was completed on January 11, 2001. Was the merger a good idea? Did the AOL stockholders receive value? did the Time Warner stockholders receive value?

Do you believe that the new company will be a success? If so, how will value be created in the short term? The long term?

What could go wrong with this "mega merger?" What are the most significant threats on the horizon for AOL Time Warner?

Do you believe that the company will achieve its aggressive goals for 2001?

What advice do you have for AOL Time Warner executives in 2001?

What actually happened?

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Chapter Summary

The following questions can be used by executives to evaluate current and evolving business models : What business model/models is your organization using

today? Does your business infrastructure enable you to evolve

your business model to increase revenues generated per customer and to respond quickly to opportunities and threats?

Do you have the capabilities and resources that you need today and in the future?

How will you build capabilities and acquire resources to reduce gaps?

Are you delivering benefits to all stakeholders? Can you demonstrate and communicate those benefits in way that are objective and easy to evaluate and measure?

module 5 : crafting business models(cont.)

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