Chapter 4 The Business Environment (and IT Strategies for EC/EB)

Chapter 4

The Business Environment (and IT Strategies for EC/EB)

Copyright © 2003, Addison-Wesley

A Business Plan

The (long-term) path to profitability Contents

Product Market Competitors Customers Risks Financials


Figure 4.2 Elements of a business plan.

Business description

Sales and marketing

Finance

The market

The product

Management team

Industry overview, mission statement, the company's products orservices, company's position in the market, pricing strategies,competitive advantage.

Current status of product or service, production or service deliveryprocess, design/development budget, labor requirements, operatingexpenses, capital requirements, cost of goods.

Target customers, market size, target market, competitors, estimatedsales.

Plans for identifying potential customers and converting them toactual customers, distribution channels, advertising and promotionplan.

Risk assessment, cash flow, balance sheet, income statement,funding needs, return on investment, payback, net present value.

Owners and controlling stockholders, management structure, boardof directors, management support services.


Competitive Advantage

Something that Your company can do Your customers want (or value) Your competitor cannot or will not match

Sources of competitive advantage Unique product Price Quality Cost controls and efficiency


Figure 4.3 The value chain.

Conflicting objectives Local process vs. organization-wide efficiency Efficiency vs. effectiveness Faster, cheaper, better: Pick any two.

Inboundlogistics

Productionprocesses

Outboundlogistics

Sales andmarketing

Customerservice

Information technology infrastructure

Upstream Downstream


Figure 4.4 The supply chain.

Conflicting objectives again Company vs. company

Upstream Downstream


E-Commerce Business Environment

Low cost of entry Global reach Huge potential markets Intense competition


Figure 4.5 The three categories form an integrated structure.

B2C(Customer focus)

Intra-business(Value chain focus)

B2B(Supply chain focus)

Integration is the future of e-commerce.


Figure 4.6 The three categories are applications that communicate with each other via the infrastructure.

Another way to view integration

B2C

The World Wide Web

The Internet

The global data communication network

Intra-business

B2B


Digital Products

Potential killer applications/services (?) Software Recorded media: music, movies, books Information services Online computer games

Diminishing returns does not apply EC is a digital technology


Digital products do not experience diminishing returns.

High startup cost First copy

Low incremental cost After breakeven

Pure profit

Unitcost

Quantity


Intermediaries

An intermediary is a middleman Disintermediation

Eliminating the middleman Sometimes claimed as e-commerce

benefit Reintermediation

New middlemen replace the old ones An e-commerce reality


Negating Location

Geography no longer matters Global competition

Example—writing this textbook Participants

The authors (Florida and Ohio) The publisher (Boston) Production (New England) Printing and warehousing (Indiana)


Figure 4.10 A manuscript page.

Created by the authors Florida Ohio

MS Word


Figure 4.11 Rough art.

Created by the authors

Florida Ohio

Visio


Figure 4.12 A copy edited page

Copy editor in Massachusetts

MS Word


Figure 4.13 A finished page.

Paging done in Massachusetts

Adobe Acrobat

All electronic communication


Figure 4.15 The competitive advantage model.

Stimulus for action

First major move

Customer acceptance

Competitor catch up moves First mover expansion moves

Commoditization

The two yellow boxes represent activities that happen simultaneously.


Information Technology as Strategic Tool

Modern business is Extremely competitive Changing at an accelerating rate

Impossible to keep current manually Information technology infrastructure

Essential A strategic resource

Documents

Chapter 4 The Business Environment (and IT Strategies for EC/EB)