INTERNET IN BUSINESS

INTERNET
 The Internet is a network of networks. It us

made up of 25,000 networks that can transfer data via many routes. Its growth rate is close to 10% a month.  Internet access provides electronic mail and file transfer capability and access to the world wide web, including a variety of search engines and tools.

APPLICATIONS:
 Individual to group communications(group    

conferencing, telemeetings, news groups) Information transfer and delivery service (e-mails, EDI) Information data bases Information access using anonymous FTP(file transfer protocol)

BUSINESS USES OF THE INTERNET

 Today the internet is becoming an electronic

market place, and business uses of the internet are growing more than any other application.  Many companies are using the internet for electronic communications, data transfer, market research and the create the electronic storefronts.

Components of e-Business Models

Business Model -Customer value - Scope - Price - Resources - Capabilities - Implementations

Internet

Performance

Environment

Internet technology
Standardized communication architecture. Direct communication between related parties. Reduced transaction costs Airline ticket $8 $1 Banking $1.08 $0.13 Infrastructure for electronic business. Unbundling the information from the product.

MAIN FEATURES:
 Globalization  Competitive advantage  Information access  Cost containment  Sales and marketing  Electronic communication

Business model:
An abstraction of what and how the enterprise delivers a product or service,showing how the enterprise creates wealth.

Eight Key Ingredients of a Business Model

Business Model Components Value Proposition

Key Questions
Why should the customer buy from you?

Revenue model How will you earn money? Market opportunity What market space do you intent to serve, and what is its size?
Competitive environment Competitive advantage

Who else occupies your intended market space? What special advantages does your firm bring to the marketspace? How do you plan to promote your products to attract customer? What types of organizational structures within the firm are necessary to carry out the business plan? What kinds of experiences and background are important for the companys leaders to have?

Market strategy Organizational development Management team

Changing Economics Of Information Information Asymmetry: Situation in which the relative bargaining power of two parties in a transaction is determined by one party possessing more information essential to the transaction than the other party. Richness: Measurement of the depth and detail of information that a business can supply to the customer as well as information the business collects about the customer. Reach: Measurement of how many people a business can connect with and how many products it can offer those people.

INTERNET BUSINESS MODELS

Category

Description

Examples

Virtual Store Sells physical goods or services on-line instead of Amazon.com front through a physical storefront or retail outlet. Wine.com, Delivery of nondigital goods and services takes Wingspanbank.com place through traditional means. Marketplace Concentrates information about products and concentrator services from multiple providers at one central point.Purchases can search,comparison-shop,and sometimes complete the sales transaction. On-line exchange Bid-ask system where multiple buyers can purchase from multiple sellers. Shopnow.com Dealernet Industrial mall Insure market Asia capacity Exchange Covisint E-steel Fibermarket

Information broker

Provides product, pricing, and availability information. Some facilitate transactions, but their main value is the information they provide.

Partnet Travelocity

Transaction broker

Buyers can view rates and terms, but E*TRADE the primary business activity is to Ameritrade complete the transaction. Provides electronic clearinghouse for products where price and availability are constantly changing, sometimes in response to customer actions Consumers submit a bid to multiple sellers to buy goods or services at a buyer specified price. Ebay Ubid Bigequip.com

Auction

Reverse auction

Priceline.com Importquote.com

Aggregator

Mobshop.com Groups of people who want to purchase a particular product sign up and then seek a volume discount from vendors.

Digital product delivery

Sells and delivers software, multimedia, and other digital products over internet.

Regards.com Photodisc Salon.com Thestreet.com

Content provider Creates revenue by providing content. The customer may pay to access the content, or revenue may be generated by selling advertising space or by having advertisers placement in an organized listing in a searchable database. On-line service Provides service and support for hardware and provider software users. Virtual community Portal Provides on-line meeting place where people with similar interests can communicate and find useful information.

Pcsupport.com @backup Xdrive.com Geocities Fortunecity Tripod

Provides initial point of entry to the web along with Yahoo specialized content and other services. Barrabas Aggregates content or applications from multiple sources and resells them to other companies. Thinq Screaming Media

Syndicator

Internet Business Models

Dynamic pricing Pricing of items based on real time interactions between buyers and sellers that determine what an item is worth at any particular moment. Portal Web site or other service that provides an initial point of entry to the web or to internal company data. Banner ad Graphic display on a web page used for advertising. The banner is linked to the advertisers web site so that a person clicking on it will be transported to the advertisers web site. Syndicator Business aggregating content or applications from multiple sources,packaging them for distribution,and reselling them to third-party web sites. Pure-play Business model based solely on the internet. Clicks-and-mortar Business model where the web site is an extension of a traditional bricks-and-mortar businesses.

Electronic Commerce
Business-to-Consumer(B2C)electronic commerce Electronic retailing of products and services directly to individual consumers. Business-to-business(B2B)electronic commerce Electronic sales of goods and services among businesses. Consumer-to-consumer(C2C)electronic commerce Consumers selling goods and services electronically to other consumers. Mobile commerce (m-commerce) The use of wireless devices, such as cell phones or handheld digital information appliances, to conduct e-commerce transactions over the internet.

Customer-Centered Retailing Direct sales over web Interactive marketing and personalization. M-Commerce and next generation marketing Custom self-service

Manufacturer

Distributor

Retailer

Customer

Manufacturer

Retailer

Customer

Manufacturer

Customer

Disintermediation
The elimination of organizations or business process layers responsible for certain intermediary steps in a value chain.

Reintermediation
The shifting of the intermediary role in a value chain to a new source.

Business-to-Business electronic commerce.

Exchange Type of on-line marketplace where multiple buyers can purchase from multiple sellers using a bid-ask system. Sellers S1 S2 S3 S4 S5 Exchange Catalogs Sourcing Automated purchasing Processing and fulfillment Buyers B1 B2 B3 B4 B5

BEFORE
Phone or fax mill Arrange Carrier Negotiate price Schedule shipments
S h I p m e n t

Fill out bills of lading

FIBERMARKET EXCHANGE

Bill Customer

Reconcile received goods against receiving report

AFTER
Recovered paper supplier Fibermarket exchange Paper mill

Digital wallet Software that stores credit card, electronic cash, owner identification,and address information and provides these data automatically during electronic commerce purchase transactions. Micropayment payment for a very small sum of money, often $1.00 or less. Electronic cash (e-cash) Currency represented in electronic form that can be exchanged with another e-cash user or retailer over the internet. Smart card A credit card-size plastic card that stores digital information and that can be used for electronic payments in place of cash. Person-to-person payment system Electronic payment system for people who want to send money to vendors or individuals who are not set up to accept credit card payments.

Examples of electronic payment systems for Ecommerce

Payment system
Credit cards

Description

Commercial example

Secure services for credit card payments on PC Authorize Web authorize the internet that protect information transmitted among users, merchant sites, and IC Verify processing banks Digital currency that can be used for micropayments Flooz.com e-Coin

Electronic cash(e-cash)

Person-toSend money via the web to individuals who person payment are not set up to accept credit card payments systems.

Paypal Billpoint Yahoo payDirect

Payme t ystem

escriptio

ommercial ample etchex

Electronic check

heck ith secure digital signature.

mart card

icrochip that stores electronic cash to use or on-line and o -line micropayments

ondex

Electronic bill payment

upports electronic payment or online and physical store purchases o goods or services a ter the purchase has taken place

heck ree illserve.com

Electronic Commerce Information Flow

Business-to-consumer Business-to-Business

Buyer

Retailer Information Orders Service and support

Manufacturers, suppliers, and Distributors Purchases Bids

Banks Credit checks payment authorization Electronic payments transfer

MANAGEMENT CHALLENGES AND OPPORTUNITIES

Unproven Business models Business Process change Requirements Channel Conflicts Legal Issues Security and Privacy