Week 1

Introduction to the Digital Economy

 Learning Outcomes
• Define the meaning and scope of digital business and the difference
between digital business and e-commerce
• Summarise the main reasons for becoming a digital business and
barriers that may restrict it
• Outline the ongoing business challenges of managing digital business in an
organisation, particularly tech start-ups
Management issues
• How do we explain the scope and
implications of digital business to staff?
• What is the full range of benefits of
introducing digital business and what
are the risks?
• How do we evaluate our current digital
capabilities?
Digital business innovation and
opportunity
• Which digital start-ups have transformed the way we work, live and play?

Launched in 1998
 The impact of digital
communications on traditional
businesses
Industry Explanation Example
Retail  to allow customers to place online orders
(often fulfilled from a local store)
 easier for retailers to gather and analyse data on
customers, to provide personalised service and
advertising.
 enabled retailers to manage logistics and supply
stores with products, which has had a
significant, positive impact on productivity.

Transport and Logistics  the tracking of both vehicles and cargo across
continents, the provision of information to
customers and facilitates the development of
new operational processes such as Just In Time
delivery in the manufacturing sector.
 Vehicle telemetry also helps maximise fuel
efficiency, ensure efficient use of the transport
network and support fleet maintenance
activities.
 The information collected by fleets can also be
used to create datasets with commercial value.
Industry Explanation Example
Financial Services  Banks, insurance providers and other companies,
including non-traditional payment service
providers, increasingly enable customers to
manage their finances, conduct transactions and
access new products on line, although they still
continue to support branch networks for
operations.
 Better use of data also allows growth in
customer insights and associated products,
such as personalised spending analysis, which
can be used to generate advertising revenue.
 easier to track indices and manage investment
portfolios and has enabled specialist businesses
such as high-frequency trading.

Manufacturing and Agriculture  enhanced design and development, as well as the

ability to monitor production processes in
factories and control robots, which has enabled
greater precision in design and development and
ongoing product refinement.
 The products being produced are also
increasingly knowledge-intensive. In the
automobile industry, for example, it is
estimated that 90% of new features in cars
have a significant software component. On
farms, systems can monitor crops and animals,
and soil/environmental quality. Increasingly,
routine processes and agricultural equipment
can be managed through automated systems.
Industry Explanation Example
Education  universities, tutor services and other education
service providers are able to provide courses
remotely without the need for face to face
interaction through technologies such as video
conferencing and streaming and online
collaboration portals, which enables them to tap
into global demand and leverage brands in a way
not previously possible.

Healthcare  Enabling remote diagnosis to enhancing

system efficiencies and patient experience
through electronic health records. It also
allows opportunities for advertising, for
example of drugs and other treatments.
 The impact of digital
communications on traditional
businesses
Industry Explanation Example
Broadcasting and Media:  increasing broadband access in particular
opening new avenues for delivery of content for
traditional media players, while also enabling
the participation in the news media of non-
traditional news sources, and expanding user
participation in media through user-generated
content and social networking.
 enhanced the ability of companies to collect and
use information about the viewing habits and
preferences of customers, to enable them to
better target programming
New communications
approaches and consumer
behaviour
• Inbound marketing
‒ The consumer is proactive in actively seeking out
information for their needs, and interactions with
brands are attracted through content, search
and social media marketing
• Zero Moment of Truth (ZMOT, Figure 1.2)
‒ A summary of today’s multichannel consumer
decision-making for product purchase where
they
search, review ratings, styles, prices and comments
on
social media before visiting a retailer
New communications approaches
and consumer behaviour (Continued)
• Content marketing
‒ …the marketing and business process for
creating and distributing relevant and
valuable content to attract, acquire, and
engage a clearly defined and understood
target audience – with the objective of
driving profitable customer action (Pulizzi,
2012)
 Figure 1.2 Zero Moment of Truth

Source: Google, Lecinski (2012).

 The difference between digital
business and e-commerce

• Digital business
‒ The transformation of key business processes
through the use of digital technologies
• E-commerce
‒ All digital (and electronic) mediated
transactions between an organisation and a
third party
Figure 1.4 The relationship between
intranets, extranets and the Internet
 Digital marketing
• Digital marketing involves:
‒ Applying technologies which create digital channels to market
 For example, Websites, search engines, email, social media sites and text
messaging
• To achieve these objectives
‒ Support marketing activities aimed at achieving profitable acquisition,
conversion and retention of customers within a multichannel buying
process and customer lifecycle
• By using these tactics
‒ Recognising the strategic importance of digital technologies and
developing a planned approach to reach and migrate customers to
digital services through digital and traditional communications
‒ Retention is achieved through improving our customer knowledge (of
their profiles, behaviour, value and loyalty drivers), then delivering
integrated, targeted communications and digital services that match
their personal needs
Figure 1.7 The three main options
for online media investment
Figure 1.8 Digital and offline
communications techniques
Figure 1.9 Evolution of web
technologies

Source: Adapted from Spivack (2009)

Figure 1.10 Summary and examples of
transaction alternatives between
businesses, consumers and
governmental organisations
Figure 1.11 Gumtree and Craigslist
side by side

Source: sjscreens/Alamy Stock Photo; True Images/Alamy Stock Photo

Figure 1.12 A simple stage model
for buy-side and sell-side e-
commerce
 Digtial business opportunities

• Reach
‒ Billions of global consumers
‒ Millions of products
• Richness
‒ 100s of billions of pages indexed by
search
engines
• Affiliation
‒ Links with partners
 Risks in digital business

• Too many customers

• Hacking
• Privacy issues
• Goods/services not being delivered when
outside the control of the digital business
• Communications not getting to the right
person in the organisation
 Drivers

• Cost/efficiency drivers
‒ Increasing speed with which supplies can be
obtained
‒ Increasing speed with which goods can
be
dispatched
‒ Reduced sales and purchasing costs
‒ Reduced operating costs
• Competitiveness drivers
‒ Customer demand
‒ Improving the range and quality of
services offered
‒ Avoid losing market share to businesses
already
using e-commerce
Example: On demand service
companies
Example: On demand service
companies
 Startup Glossary

• Unicorn (finance): A unicorn is a privately held

startup company valued at over $1 billion.
• Decacorn is a word used for those companies
over $10 billion, while,
• Hectocorn is used for such a company valued
over $100 billion.
• According to TechCrunch, there were
279 unicorns as of March 2018.
Startup Glossary
Gartner’s Hype Cycle

Gartner is the world’s leading research

and advisory company.

These trends have a profound impact on the

people and the spaces they inhabit.

Technology trends that will drive

significant disruption.
Gartner’s Hype Cycle
 Summary

• You should be able to define the meaning and

scope of digital business and the difference
between digital business and e-commerce
• You should be able to summarise the main
reasons for becoming a digital business and
barriers that may restrict it
• You should be able to outline the ongoing
business challenges of managing digital
business in an organisation, particularly tech
start-ups