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by its management team have supported eBays continued growth. Review the whole eBay business or the core business (The Marketplace). It is best to divide this question into two parts. 1. How the characteristics of digital media have supported eBay’s growth. A suitable framework for reviewing the unique aspects of digital media is Table 1.2, an interpretation of the differences between the old and digital media. Also if this chapter is used later in a course, the section at the start of Chapter 8, p359. 2. The characteristics of interactive marketing communications may be useful. The particular characteristics of digital media compared to traditional media that are important to eBay are straightforward: Change from a one-to-many communication model to one-to-one or many-to-many communication model The ability to create usergenerated content listing products is also related to the one-to-one aspect is also important From Push to Pull – eBay offerings are often visible within search engines 3. From monologue to dialogue (a two-way information exchange for enquiries about products facilitated by e-mail) 4. Ratings for sellers are important to generate trust (although there are methods of falsifying these). 5. Community – the sense that users are part of a community and additionally are bypassing traditional retail channels will be important from some users. 2. How strategic decisions have supported growth. As with other cases based on SEC filings i.e. United States Securities And Exchange Commission submission, this case is useful for showing how growth is dependent not only on exploiting the right opportunities, but also about managing risks successfully. Students may structure strategic decisions in different ways according to the level of course they are following, but since case is early on in book, they could be advised to simply look for success factors. Alternatively, if they have completed Chapters 5 on Strategy and Chapter 8 on the Marketing mix (p366), then these provide alternative frameworks. Strategic success factors students may mention include the following: Branding – a distinctive brand – the earlier brand name was perhaps less appropriate although more direct. First mover advantage – gaining a critical mass through the foresight of the owner. Security and fraud – realising that this is important to its reputation so investing in managing this and controlling PR related to this, eBay has developed ‘Trust and Safety Programs’ to manage this. Partnerships and acquisitions, which fit relate well to the service, i.e. PayPal and Skype Communication of customer value proposition – the case describes how eBay explains this. Revenue model – the market has judged that this gives a good balance for sellers, purchasers and eBay. Setting fees at the right level has enabled eBay to scale for some time. Process Efficiency – the case describes how eBay measures and then seeks to improve the key areas of Acquisition, Activation and Activity.
but eBay has been successful in deploying technology that has supported the companies’ rapid growth. software and communications technology are not new – witness use of EDI (Chapter 3) • IS strategies have always looked at portfolio of applications across the business and links with third parties and how they can be utilized for competitive advantage (Chapter 4) • Control of e-business usually resides with the IT department • Only the largest companies tend to have specific responsibilities and departments for e-business – typically part of IS function Summary of arguments against are as follows: • The emphasis is different – away from technology to how information can support business • The expenditure on e-business has exceeded traditional IS expenditure • New organizational structures and new processes have been introduced (see Chapter 4) • E-business is seen as a board-level issue with board-level responsibility Confusion centres over the distinction between e-commerce and e-business implied by different interpretations of Figure 1. Technology scalability – not referred to in the article. E-business is just a new label – there is no distinction between the role of ebusiness and traditional Information Systems management. • Using the Internet for procurement (buy-side e-commerce). Ecommerce refers to financial and non-financial transactions between organizations. Suggest how a organization can evaluate the impact of the Internet on its business. Summary of arguments for are as follows: • The tools are the same – hardware. Buy-side e-commerce refers to electronic transactions concerned with the purchase and inbound logistics of goods such as a supermarket coordinating purchases from its suppliers. E-commerce is generally understood to be a subset of e-business. • Privacy fears – personal data held by companies or criminals.Growth strategies – these are covered in Chapter 4 and include market development (geographic) and product development (new categories for consumers and businesses). These transactions are often considered in the context of a supplier organization distributing and selling its product to consumers. Is it a passing fad or does it have a significant impact? 2 . • Cost of access devices and online costs. Ebusiness includes transactions from a buy-side and sell-side e-commerce perspective and also the use of communications technology to improve internal process efficiencies. • Using web enabled technologies to support internal process efficiencies. • Security fears – fraudulent use of credit cards. The implication is that if ebusiness and e-commerce are interpreted as referring to ‘selling over the Internet’ then opportunities may be missed for: • Supporting the whole buying process online including pre-sales and post-sales.2. • Lack of perceived need. Sell-side e-commerce concerns transactions related to the sale and distribution of goods such as a supermarket selling direct to its customers.
Consumer opinion surveys such as those published by Which? (www. Barriers include: lack of recognition of need. faster response can be provided 24 hours. Generally B2B usage is greater because companies can make greater savings through economy of scale and the risk is perceived as lower since it is not the purchaser’s own money that is at risk. • Control – better visibility/information for managers of trading relationships. purchase and post-purchase support. office stationery. • Competitive advantage – any of the above factors may provide this. to sell into an overseas market. Main benefits can be checked using the 6Cs: • Cost reduction – less use of physical resources and staff. but some organizational styles are more responsive to change • Staff – new responsibilities • Skills – new skills • Structure – how will the e-business change be managed? Is a separate division required or can the change be matrix managed (Chapter 10)? • Systems – do new operating procedures or business processes need to be introduced? Can existing IS be used to implement change or will new systems be required? • Style – is the current. A case study approach using a particular company e. More research is available for B2C. easyJet to highlight these factors would be an improvement. Outline the internal changes a company may need to make when introducing e-business. security and privacy. possibly conservative.g. Assessment of whether the impact is transitory or permanent can be assessed through developing projections of the online revenue and promotion contribution (Chapter 8. • Strategy – new strategic responses are required • Structure – new structures and responsibilities may be required • Systems – new information systems and new processes will be required • Style – less likely to change. • Customer service – more detailed information.g.which. Differences between B2B and B2C can be compared by reviewing the level of use of e-commerce for a sector that is common for each. Competitor activity can also be benchmarked. p350) Similar benefits and barriers exist for the adoption of sell-side e-commerce for both B2B and B2C organizations. • Improved communication – internal and external. style of the company consistent with the way the company wants to project its image? Will decisions be made 3 . and 7 days a week. Cisco. so it is best to start with benefits and barriers for this and then look at similarities for B2B. Discuss. Macro-environment SLEPT factors should also be reviewed. cost of access.net) can be used to support these.g. but they are not the main thrust of the question.1) including demand for online services from customers.Situation analysis should concentrate on the micro-environment (Figure 2. but it is likely to be short lived. • New Capability – e. Services should be considered across the buying cycle from pre-purchase (supplier and product selection). e. Demand levels can be assessed by reviewing figures of percentage of customers with access and those who are prepared to use it for information gathering and purchase.
As well as the obvious ability to achieve lower prices through competition with a greater number of suppliers who the purchaser may have been previously unaware of. Mr Dempsey says. Related to this is how well the company responds to the industry restructuring that has occurred as part of ecommerce. advertising the requirement and then drawing up an approved list of those who can meet it. but the mechanism for exchange is different. Potentially. Usually auctions are set to last 30 minutes but are extended for 10 minutes each time a bid comes in during the last five minutes. It can also be argued that some of the business models referred to are simply instances of the mechanism of 4 . third-party marketplaces and business communities since they all facilitate the exchange of products between sellers and buyers. An average auction runs for about 90 minutes. Can it take advantage of disintermediation and reintermediation within the industry (Chapter 2)? Summarize the operation of a B2B reverse auction from both the buyer’s and seller’s perspective. e-malls. but they are often best provided by neutral intermediaries. How well the company forms and leverages partnerships with suppliers and customers is now seen as a key element of strategy. For some business models such as virtual communities and e-auctions it could be argued that these services could be provided by intermediaries or businesses. The parameters of the auction are then set. it also enables a more rapid procurement cycle. do the senior managers ‘get’ the significance of the Internet and will they act? A possible criticism of the 7S model is that it is internally focused. They then monitor the prices posted by competitors and reduce their prices as appropriate. Seller’s perspective: The seller bids to supply at a particular price. It can be argued that the business model is similar. although some have lasted for several hours’. According to the article: ‘The process works by the purchaser spelling out precisely what is needed.fast enough? Will risks be taken to trial new business models and new technology? • Staff – is the appropriate mix of staff available? • Skills – are the correct skills available internally? What training is required? Do we need to outsource some services? • Superordinate goals – this refers to the higher goals of the company that may be encapsulated in the mission statement. Can you group the different business models into different types of services? Do you think these business models operate in isolation? An immediate distinction can be made between the operation of individual companies (e-shop) using the web to sell direct to the customer and deal with suppliers (e-procurement) and intermediary services such as e-auctions and third-party marketplaces that make up most of the remaining services. Buyer’s perspective: The buying company posts an invitation to bid for the product they want to purchase. Identify overlap between the different business models identified by Timmers (1999). the suppliers trained – and battle commences. In modern parlance. that opens up the market to small and medium-sized companies that might not normally see the government as a customer. Overlap can be identified between e-auctions.
xoom. 2. Marketing Sherpa (www.com) • Online revenue models include annual subscription and pay per view access to articles. Auctions could potentially occur for the e-shop and third-party marketplace as well as e-auction.barclayssquare. The site has limited advertising on a fixed monthly term basis. Virtual communities – these can be B2C communities such as Xoom (www. so this is a commission-based model. Advertising Relatively easy to setup. 5 . these are important for their potential in e-marketing and are described in the Focus on Online Communities section in Chapter 9. Surprisingly. it has limited advertising. 5. It does not have a subscription. Advertisers have to be recruited and payments managed.Continuous revenue stream Difficult to get visitors to commit to an ongoing agreement Pay per view Instant fulfilment likely to appeal if article or reports meets someone’s immediate need.e-consultancy. Revenue only generated if sale is made. e.g. E-procurement – electronic tendering and procurement of goods and services.com) • This mainly offers a pay per view model for articles and reports. Summarize the revenue models which are used for each site by looking at the information for advertisers and affiliates. e-auctions as distinct from fixed-price sales (e-shop).vertical.com) • This makes more use of online advertising than Ee-consultancy. Difficult to provide sufficiently compelling unique content that is not already freely available on the web. E-shop – marketing of a company or shop via web. for example. particularly if an established programme like Google AdSense where no advertisers have to be recruited.com) or B2B communities such as Vertical Net (www. E-consultancy (www. 3. Google AdSense for publishers programme. 1. Affiliate Individual transactions can be significant value. so as not to annoy site visitors. Some of its reports are syndicated from other online sources.exchange. E-auctions – these can be both for B2C and B2B as is the case with eBay.com). If this fails. E-malls – a collection of e-shops such as Barclays Square (www. Difficult to recruit affiliates and work best with high volume consumer markets rather than business markets. • Traditional revenue models include training courses and conferences related to e-business. A cost per click arrangement is better for publisher. • It runs showcase events for which it charges suppliers to promote their services.marketingsherpa. 4. Reports often more specialized and more immediate than books.net). Revenue model Online subscription .netimperative. Net Imperative (www. then online ad inventory may be unsold and so wasted.
Discuss the extent to which SOA will reduce reliance on a single provider of enterprise software and increase flexibility in deploying new applications and functionality. software and support costs that were partly caused by 6 . The case study gives the example of an office worker booking a holiday and then this request being communicated to another application like an enterprise resource planning system. This depends on how widely SOA is deployed. Value-chain integrators – offer a range of services across the value chain.g. 8. 11. and it may still be more cost-effective to adopt a single solution such as those mentioned in the article such as SAP of CA for the majority of application functionality. often to assist in making the buying decision or for business operations or leisure. Tens of thousands of functions are required. 9.which. Similarly.com). E-groups (www. Value-chain service providers – specialize in providing functions for a specific part of the value chain such as the logistics company UPS (www. it is a re-branding of existing technologies. As the article suggests. there may be increased costs of developing a system that integrates different solutions. Software from other vendors is then best used for specialist functionality. Although the article mentions the increase in hardware. which can be standardized such as procurement.egroups. Trust and other services – examples of trust services include Which Web Trader (www.com). Third-party marketplaces – Marketplaces are described in the Focus On section of Chapter 7. 7. Collaboration platforms – these enable collaboration between businesses or individuals e.yahoo. now part of Yahoo! (www. and it is very difficult to standardize these. There will also always be switching costs associated with moving from one functionality provider to another.ups. even for a simple application. the article shows that SOA can assist.com) services. open standard. rather. The main tenet of the question is whether it will make it easier to have multi hardware and software vendor solutions. However. It will never be as simple as flicking a switch! Enterprise software is not as straightforward as Plug and Play hardware on a Windows PC. It gives the example of `a single company or spanning several business partners: a customer placing an order in one system could automatically trigger production requests in another and an invoice in a third'. SOA is really an evolution of previous standards that have aimed at being hardware platform and software platform neutral.6. so in theory it should do this. for some applications. Through using web standards like XML. adopting new business processes via software will always require some tailoring and managing of associated change. Information brokerage – providing information for consumers and businesses.truste. A service-oriented architecture is a collection of services that communicate with each other as part of a distributed systems architecture comprising different services. In this sense it will not increase flexibility since it is not significantly different to previous approaches. it is a widely adopted. 10. That said.org) that authenticate the quality of service provided by companies trading on the web. as some interviewees in the article claim. data and functionality can be exchanged between different applications from different providers.net/webtrader) or TRUSTE (www.
• Price. All strategy models should: • Be based on assessment of internal and external environment • Have clearly defined SMART objectives backed up by vision • Have strategies. Using the framework of the marketing mix.14. The magazine appears overambitious and did not pay for itself through sales generated. Place. The use of PR was more effective and is one of the successes of Boo. The marketing mix is covered in Chapter 5.com had a worldwide distribution that was good for achieving reach. fig 5. this does not mean that SOA will suffer a similar fate since it already uses a similar model.5. The answer should start with definition of e-business. Process.com applied the mix that students may comment on: • Product – Premium brands were used leading to premium prices. • Promotion. p232). However. Today. appraise the marketing tactics of Boo.g. p198. No mentions of discounting are made consistent with the brands premium positioning.19. These are aspects of how Boo. To build the Boo brand and drive visitors was reliant on online advertising that gave rise to a high cost per customer acquisition that ultimately led to the brand’s failure. Boo. A global launch of a new brand was ambitious and can be contrasted with the more conservative approach from the likes of Amazon and eBay. some would argue that it may have increased memory and storage requirements than existing solutions. tactics and implementation that select the best techniques to achieve these strategies 7 . As mentioned in the case. p212.11. distinguishing it from ecommerce (see Chapter 1).4 on p210 and details in subsequent figures in Chapter 5 (e. You should then look at elements of strategy using traditional strategy process models such as those of Johnson and Scholes and Lynch described on pp202–03. but added to the cost-base of the company so impacting on promotion. p219 and fig 5. Scope relatively narrow. so limiting target audience. However. It is well known that the technology was too advanced for a time when the vast majority was accessing the web over dial-up modems. competitive selective promotions are today commonly used by many e-retail brands. Pricing. Fig 5. so this part of the question should only be set if this concept has been covered previously. • Process. there were issues of pricing in different region. Define the main elements of an e-business strategy.migration to client/server architecture. This led to a ‘clunky’ experience that resulted in the low conversion rates referred to in the article. You can then look at elements of strategy process as indicated by Fig 5. Unclear on mix between sportswear and high street fashion. Promotion. these are more effective for companies.com in the areas of Product. • Place. It also seems likely that the cost of providing customer service was not factored into the business model. People and Physical evidence. At the time their promotion through online marketing techniques such as search engine advertising and affiliate marketing techniques was limited in its possibilities. fig 5. People and Physical Evidence.
Perhaps a more valid statement is that it comes down to value chain vs value chain since this emphasizes delivery of value to customers in different segments. in particular corporate strategy and marketing. • Reintermediation offers the chance to use business-to-business exchanges to source products at lower costs. To marketers efficiency of the supply chain may help financial performance of the business. the strategy objectives should define the balance of online and offline trading with customers. This question prompts discussion of the significance of SCM in the context of other aspects of management. more personalized new product development and on-time delivery of quality products to customers. The tactics should look at how investment in information systems and revising business processes should occur to hit these targets. Supply chain managers argue that increasing the overall efficiency of the supply chain can be used to deliver customer value by enabling faster. ‘In the end business all comes down to supply chain vs supply chain’. but does not create new customers. What benefits does Tesco’s information exchange offer to the retailer and its suppliers? Benefits to Tesco: • Reduced lead times – seven to three days • Shifts management of supplying product to supplier.4 (b) is the most appropriate choice since this involves assessing demand through market research and then devising products and communications to satisfy demand. Discuss. 8 . These factors are all likely to increase customer satisfaction and so loyalty. For e-business in particular.• Have monitoring and control that assess whether the objectives are being achieved and a feedback loop to ensure corrective action occurs. • Reduces inventory • Improves product availability • Gives more power over suppliers Benefits to suppliers: • Can monitor demand in real time and then have more time to react to ensure product is delivered to customers • Can analyze sales by store or TV region. which is important for promotions (St Ivel has reduced these costs by 30%) • Gives a catalyst to change their processes (although only two have done so) • Arguably strengthens their relationship with Tesco (soft lock-in). suppliers and distributors. Concepts that should be included are as follows: • Push vs supply models • Vertical integration vs disintegration vs virtual integration • Partnership management and value networks • Procurement and fulfilment strategies Upstream supply chain: • Disintermediation offers the opportunity to buy direct from the supplier with reduced costs and shorter cycle times. Marketers argue that the marketing concept and customer-led strategy as suggested by Figure 6.
reintermediation. production and sales and marketing. alerting a large order) • delivering it more rapidly (e. A change in supply chain thinking. and also in marketing communications thinking is the move from push models of selling to pull models or combined push-pull approaches. The 6Is is a suitable framework to answer this question: • Interactivity (online communities. manufacture. reintermediation. etc. The push model is illustrated by a manufacture who perhaps develops an innovative product and then identifies a suitable target market. together with associated transport.g. Plus separate identification of secondary activities such as HR and IS. mass-customization.3 (a) where it can be characterized by the statement ‘This is a great product.g.) • Individualization (personalization. Information systems are used to increase the efficiency of information flow by: • delivering more information (e. now who shall we sell it to?’ or the quip about the original model T Ford – ‘you can have any colour. or the strategic management of the total supply chain. auctions and B2B exchanges Outline how the electronic medium requires different tactics for effective marketing communications. Logistics – large overlap according to definition from Institute of Logistics and Transport: ‘Logistics is the time-related positioning of resource. This situation is shown in Figure 6.g. It can include procurement. opt-in e-mail promotions.’ Value chain concept – has similar components such as inbound and outbound logistics. • Reintermediation offers the opportunity to compete in new marketplaces through B2B exchanges The coordination of all supply activities of an organization from its suppliers and partners to its customers. Different orientation which is how to deliver customer value. Value networks – interactions between different value chains of a range of organizations. The typical motivation for a push approach is to optimize the production process for cost and efficiency. What are the key strategic options in supply chain management? • How to restructure supply chain (vertical integration/disintegration/virtual integration) • How to restructure (disintermediation. A distribution channel is then created to push the product to the market.g. storage and information technology. reduced lead times in e-procurement) 4. sales data in Tesco TIE system) • analysing information (e. value networks) • Independence of location (the role of place) 9 . The supply chain is a sequence of events intended to satisfy a customer. so long as it is black’. one-to-one marketing) • Integration (integration inbound and outbound communications) • Industry restructuring (disintermediation.Downstream supply chain: • Disintermediation offers the opportunity to sell direct to the customer with lower cost of sales and improved lead time for customers. distribution and waste disposal. countermediation) • How to restructure relationships in a value network • New procurement models e. profiling) • Intelligence (analysis of customer buyer behaviour through log-files.
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