E-Commerce

CSC330 4(3,1)

Lecture 5

Part 1: Introduction to E-Commerce

Chapter 2: E-Commerce Business Strategies
Recap
 E-Commerce Business Model
 Business Model
 E-Commerce Business Model
 Eight Key Elements of a Business Model
 Value Proposition, Revenue Model, Market Opportunity,
Competitive Environment, Competitive Advantage, Market
Strategy, Organizational Development, and Management Team

2
Topics
 Eight Key Elements of a Business Model
 Value Proposition, Revenue Model, Market Opportunity,
Competitive Environment, Competitive Advantage, Market
Strategy, Organizational Development, and Management
Team
 Start-Up Business Raising Capital
 Seed Capital, Elevator Pitch, Incubators, Venture Capital Firms,
Crowdfunding, Commercial Banks, and Angel Investors

3
Eight Key Elements of a Business Model – 4
Competitive Environment
 “What else occupies your intended marketspace?”
Competitor Analysis
 A competitor analysis is a detailed analysis of a firm’s competition.
 It helps a firm to understand positions of its major competitors and
the opportunities that are available.
 Example: “competitive analysis grid” is a tool use for SWOT analysis
(Strength, Weakness, Opportunity, and Threat).
 Competitors Types:

4
Eight Key Elements of a Business Model – 5
Competitive Advantage
 “What special advantages does your firm bring to marketspace?”
 Is your product superior, or cheaper to produce than your
competitors?
 First-Mover Advantage
 A competitive market advantage for a firm that is first-mover in a
market with a serviceable product or service.
 Example: Amazon.
 Unfair Competitive Advantage
 Occurs when one firm develops an advantage based on a factor
that other firms cannot purchase.
 Perfect Market
 A market in which there are no competitive advantages, because
all firms have equal access to all the factors of production.

5
Eight Key Elements of a Business Model – 6
Market Strategy
 “How do you plan to promote your products or services to attract
your target audience?”
 Example
 Facebook, Twitter, YouTube, Instagram, Pinterest and many
others social platforms encourages users to post their content
for free, build personal profile/company pages, contact with their
friends, share their stories/ideas, and build a community.

6
Eight Key Elements of a Business Model – 7
Organizational Development
 “What types of organizational structures within the firm are
necessary to carry out the business plan?”
 Typically, divided into functional departments such as production,
shipping, marketing, customer support, and finance.
 Jobs within these functional areas are defined, and then
recruitment begins for specific job titles and responsibilities.
 Typically, in the beginning, generalists who can perform multiple
tasks are hired.
 As company grows, hiring moves from generalists to specialists.

7
Eight Key Elements of a Business Model – 8
Management Team
 “What kind of experiences and backgrounds are important for the
company’s leaders to have?”
 Management Team:
 Make the business model work.
 Can change the business model.
 Has market-specific knowledge.
 Has experience in implementing business plans.

8
Eight Key Elements of a Business Model…

9
Start-Up Business Raising Capital
 Raising capital is one of the most important function for a founder of
a start-up business and its management team.
 Mostly start-up businesses fail, because of not having enough
capital to operate effectively.
 Typically, an entrepreneur’s personal funds derived from savings,
credit card advances, or from family and friends.

 Seed Capital
 “An initial amount of money, an entrepreneur uses to start a
business (product or service)”.
 Once seed capital finished, additional capital will be needed.

10
Start-Up Business Raising Capital…
 Elevator Pitch
 Short description of an idea.
 About two-to-three-minute presentation.
 Aim to satisfy investors (who invest at the proposed project).
 Incubators
 Typically, provide a small amount of funding and services to
start-up companies.
 Venture Capital Firms
 Typically invest funds to startups, early-stage, and emerging
companies.
 Crowdfunding
 Involves using the Internet to enable individuals to collectively
contribute money to support.

11
Start-Up Business Raising Capital…
 Commercial Banks
 Financial institutions that accept deposits, offer different types of
loans, and provides other various banking services.
 Angel Investors
 Typically, wealthy individuals who invest their own money in
exchange for an equity share in the stock of a business.

12
Start-Up Business Raising Capital…
 Angel Investors…
 Equity Share
 Rate of Dividend - depend upon the profit.
 Preference Right - after the preference shareholders.
 Winding Up - paid after the preference shareholders.
 Voting Rights - have right to vote.
 Right to Participate in Management – have rights to

participate.
 Preference Share
 Rate of Dividend - fixed.
 Preference Right - before the equity shareholders.
 Winding Up - paid before the equity shareholders.
 Voting Rights – no rights to vote.
 Right to Participate in Management – no rights to participate.

13
Summary
 Eight Key Elements of a Business Model
 Value Proposition, Revenue Model, Market Opportunity,
Competitive Environment, Competitive Advantage, Market
Strategy, Organizational Development, and Management
Team
 Start-Up Business Raising Capital
 Seed Capital, Elevator Pitch, Incubators, Venture Capital Firms,
Crowdfunding, Commercial Banks, and Angel Investors

14