digital business

SEMESTER SI 2016-2017

BCO 217 eBusiness

Seven Key eBusiness Strategies & the Digital Economy

Prof. Dessy Todorova

Seven Value Creation Strategies

 Online purchasing strategy: allows for buying and selling of products and information on the Internet and other online services.

 Digital communication strategy: allows for delivery of digital information, products, services, or payments online.

 Service strategy: allows for the cutting of costs, improving of the quality of goods, disintermediation, and increasing the speed of service.

 Business process strategy: allows automation of business transactions and work flows.

 Market-of-one strategy: allows for developing products for a single customer with close to the same costs as mass production.

 Auction based strategy: allows automation of bidding for products or customers online.

 Pricing Strategy: Allows businesses to pursue market share by selling at low prices or giving away products and services for free.

 And more…

eBusiness on the Web

• Financial: online banking & accounting

• HR: online timesheets

• Admin: online procedure manual

• Supply: online ordering

• Sales: sell online

• Marketing: social media, e-newsletters, auto responders

• Collaboration: Google drive, Dropbox

• Research: online surveys, competitors

An Internet Framework (Hanson, 2000)

The Web is fundamentally

about individuals using a

network to access digital

products

Marketing

Technology Economics

Internet Marketing

Digital

Networked

Individuals

6

Isues Old economy New economy

Economy factors

Market Stable Dynamic and complex

Competition National International and global

Structure Manufacturing Service

Value driver Physical capital Human capital

Business Factor

Organisation Hierarchy Network or virtual

Production Mass Flexible, customised

Growth driver Capital and labour Innovation and

knowledge

Technology driver Machines Digital and electronic

Competitive advantage Low cost/high

production

Innovation, speed,

quality

Relationships Independent Collaborative

Consumer factors

Tastes Stable Dynamic, segmented

Skills Specialised Multiple and flexible

Educational needs Trade orientated Lifelong learning

Workplace relations Confrontational Collaborative

Nature of employment Stable Insecure, opportunistic

Key differences between the old and new economy

7

“How Business Practices are Changing” Table 2-1: Old Economy vs. New Economy

(Kotler, 2004)

Old Economy New Economy

Organize by product units

Focus on profitable transactions

Look primarily at financial scorecard

Focus on shareholders

Marketing does the marketing

Build brands through advertising

Focus on customer acquisition

No customer satisfaction

measurement

Overpromise, underdeliver

Organize by customer segments

Focus on customer lifetime value

Look also at marketing scorecard

Focus on stakeholders

Everyone does the marketing

Build brands through behavior

Focus on customer retention and

growth

Measure customer satisfaction and

retention rate

Underpromise, overdeliver

8

The growth of e-business Firm Consumers

Ease of access Ease of access

Ease of use Ease of use

Access to wider market Access to market information

Potential economies of scale Convenience

Marketing economies Lower prices

Improved logistics Personalisation

Automated processes Customisation

Network externalities Network externalities

Improved costomer knowledge One-to-one customer service

Lower costs Access to internet community

Increased efficiency empowerment

9

Use of the Internet

Check e-mail 92 Play games 48

Product information 87 Bank online 45

Surfing/browsing 83 Look for jobs 42

Look up facts 78 School material 40

Plan travel 77 Download videos 33

Buy online 74 Listen to radio 33

Local information 66 Chat 26

News 61 Genealogy 21

Instant messaging 56 Distance learning 21

Download music 51 Read blogs 17

% %