Course CoverageCourse Coverage

The Changes in the New EconomicsThe Changes in the New Economics Transformation of Business PracticesTransformation of Business Practices The Driving Forces of New EconomyThe Driving Forces of New Economy The Market Structure of New EconomyThe Market Structure of New Economy The Nature of E-commerceThe Nature of E-commerce Internet Business ModelInternet Business Model E-MarketingE-Marketing E-BankingE-Banking Internet Auction Internet Auction B2B business modelB2B business model Internet IPR Internet IPR Blog & Web 2.0Blog & Web 2.0

The Change in the New EconomyThe Change in the New Economy

What does the new economy mean?What does the new economy mean? 1980s, the service industry1980s, the service industry 1990s, the industries of technology base, fast 1990s, the industries of technology base, fast

growth, and low inflation rategrowth, and low inflation rate The birthday of new economy—1995/08/09The birthday of new economy—1995/08/09

The memorial day of Netscape IPOThe memorial day of Netscape IPO GNP growth rate—3.0% vs. 4.3%(non-agriculture GNP growth rate—3.0% vs. 4.3%(non-agriculture

sector: 1.,7% vs. 2.8%)sector: 1.,7% vs. 2.8%) Unemployment rate—6.6% vs. 4.8%Unemployment rate—6.6% vs. 4.8% Inflation rate—3.3% vs. 2.3%Inflation rate—3.3% vs. 2.3%

Four Dimensions of New Economy

Four Dimensions of New Economy

Visible dimensionVisible dimension Borderless dimensionBorderless dimension Cyber dimensionCyber dimension

Digital technological convergence is not Digital technological convergence is not the sufficient condition.the sufficient condition.

Dimension of high multiplesDimension of high multiples The scale of arbitrage & investmentThe scale of arbitrage & investment

High interrelatedness among above foursHigh interrelatedness among above fours

Inter-networkingInter-networking

Open NetworkOpen Network InfrastructureInfrastructureProtocol Protocol

Open AccessOpen Access Two-way communicationsTwo-way communications

Run into the New EconomyRun into the New Economy

Information flow across territoriesInformation flow across territories Customers lead producersCustomers lead producers Create paradise against paradigm—Create paradise against paradigm—

challenge the intuition, abandon the challenge the intuition, abandon the successful burden, new business innovationsuccessful burden, new business innovation

Evolutionary path—invisible loyalty assetsEvolutionary path—invisible loyalty assets Pay attention to personal identityPay attention to personal identity Infrastructural facilitators—transportation, Infrastructural facilitators—transportation,

telecommunication, financetelecommunication, finance

Three Common PlatformsThree Common Platforms

Non-proprietary platformNon-proprietary platform open access, exchangeability, transparencyopen access, exchangeability, transparency Scope and leveragability derived from compatibilityScope and leveragability derived from compatibility Spontaneous extended orderSpontaneous extended order

English language penetratesEnglish language penetrates 70% data stored by English, 80% information 70% data stored by English, 80% information

communicated by Englishcommunicated by English US $ currency—a trusty media for valuationUS $ currency—a trusty media for valuation

US stock markets—free areas of international trade; US stock markets—free areas of international trade; the attractor and buffer controller of global capitalsthe attractor and buffer controller of global capitals

The Prosperity of New EconomyThe Prosperity of New Economy

Stock marketStock market Venture capitals/capitalistsVenture capitals/capitalists IPO (initial public offering) optionsIPO (initial public offering) options Flexibility of labor marketFlexibility of labor market Operability of M & A Operability of M & A High speed of Technological changesHigh speed of Technological changes Continuous competition and capital investment Continuous competition and capital investment Technology marries finance Technology marries finance From the era of telephone into of mediaFrom the era of telephone into of media Irrational exuberance?Irrational exuberance?

High risk, high return, high expectationHigh risk, high return, high expectation Technological transition cycleTechnological transition cycle

Is There a New Economy?Is There a New Economy?

Our economy is changing everyday, and in the sense Our economy is changing everyday, and in the sense it is always “new.”it is always “new.”

The deeper question is whether there has been a The deeper question is whether there has been a profound and profound and fundamentalfundamental alteration in the way our alteration in the way our economy works that creates discontinuity from the economy works that creates discontinuity from the past. (NO! answered by Alan Greenspan)past. (NO! answered by Alan Greenspan)

The effects of The effects of human psychologyhuman psychology Expectation, confidence and commitment of the future Expectation, confidence and commitment of the future

guide human actions nowguide human actions now In the period of prosperity—a virtuous cycleIn the period of prosperity—a virtuous cycle In the period of recession—a vicious cycleIn the period of recession—a vicious cycle

Is There a New Economy?Is There a New Economy?

The The productivityproductivity of employee had increased of employee had increased continuously.continuously.

The inflation rate and unemployment rate had The inflation rate and unemployment rate had fallen for an unexpected periodfallen for an unexpected period

However, a harbinger of a new economy or However, a harbinger of a new economy or just a hyped-up version of the old?just a hyped-up version of the old?

This question will be answered only with the This question will be answered only with the inexorable passage of time.inexorable passage of time.

Migration from Marketplace to Marketspace

Migration from Marketplace to Marketspace

E-business revolutionE-business revolutionFrom data collection, transaction From data collection, transaction

arrangement, and relation delineationarrangement, and relation delineationTo leveraging influence, insight, To leveraging influence, insight,

imagination and feesimagination and feesFrom bricks-and-mortar to From bricks-and-mortar to click-and-click-and-mortarmortar

Clicks & bricksClicks & bricks Internet extensionInternet extension

Merrill Lynch, Charles Schwab, Toys ‘R’ Merrill Lynch, Charles Schwab, Toys ‘R’ Us, Wal-Mart, B&N bookstore, etc.Us, Wal-Mart, B&N bookstore, etc.

Amazon + Toys ‘R’ Us—combination into Amazon + Toys ‘R’ Us—combination into the whole product, & complete servicethe whole product, & complete service

Integration between virtual clicks and Integration between virtual clicks and supporting brickssupporting bricksDinners by parcel post?Dinners by parcel post?E.g., Webvan, HomeGrocer E.g., Webvan, HomeGrocer

Survivability? Sustainability? Survivability? Sustainability?

Defining E-businessDefining E-business

Marketing, buying, selling, servicing, and Marketing, buying, selling, servicing, and paying for products, services, and information paying for products, services, and information across (nonproprietary) network linkage an across (nonproprietary) network linkage an enterprise and its prospects, customers, enterprise and its prospects, customers, agents, suppliers, competitors, allies, and agents, suppliers, competitors, allies, and complementors.complementors.

Broadly encompassing the interactions of Broadly encompassing the interactions of B2B, B2C, C2C, and B2E, etc.B2B, B2C, C2C, and B2E, etc.

Motivations for e-Business Evolution

Motivations for e-Business Evolution

Huge growth in e-businessHuge growth in e-business Easy to access to InternetEasy to access to Internet Non-proprietary standard—TCP/IP, Non-proprietary standard—TCP/IP,

WWW/HTML, etc.WWW/HTML, etc. Big potentialBig potential

By OECD, US$ 1 trillion after 2005 for ECBy OECD, US$ 1 trillion after 2005 for EC By IDC, US$ 774 billion after 2002 for ECBy IDC, US$ 774 billion after 2002 for EC By III of Taiwan, NT$51.03 billion after 2005 for By III of Taiwan, NT$51.03 billion after 2005 for

Taiwan B2C scale; NT$6217.8 billion for B2B Taiwan B2C scale; NT$6217.8 billion for B2B scalescale

Growth in Dot-ComsGrowth in Dot-Coms

Valuation in May 2000 / IPO Valuation in May 2000 / IPO E*trade—6,124%E*trade—6,124% eBay—34,333%eBay—34,333% Yahoo!—228,667%Yahoo!—228,667% Preview Travel—2,133%Preview Travel—2,133% iVillage—267%iVillage—267% Amazon—35,600%Amazon—35,600%

Transition into dot-comTransition into dot-com Reuters—55% within a monthReuters—55% within a month

2004 Taiwan E-Commerce Profile 2004 Taiwan E-Commerce Profile

2005 Taiwan E-Commerce Profile2005 Taiwan E-Commerce Profile

Some Interesting PhenomenaSome Interesting Phenomena

50% revenue from investment of Internet 50% revenue from investment of Internet InfrastructureInfrastructure and application and application enablerenabler of Internet of Internet

Much attention on dis-intermediation, however, 20% Much attention on dis-intermediation, however, 20% revenue flows into new emergent intermediaries, revenue flows into new emergent intermediaries, such as intelligent search agents, specialist agentssuch as intelligent search agents, specialist agents

Most attention on B2C, however, most dollar on B2BMost attention on B2C, however, most dollar on B2B 1/3 revenue of the new economy captured by e-1/3 revenue of the new economy captured by e-

commerce, while 2/3 of e-commerce captured by commerce, while 2/3 of e-commerce captured by Internet companies invested on Internet companies invested on intermediation intermediation enablersenablers

Some Interesting PhenomenaSome Interesting Phenomena

90% of Fortune 500 firms have Web 90% of Fortune 500 firms have Web sites, but 5% of those sites make profitssites, but 5% of those sites make profits

Most web sites of Internet companies Most web sites of Internet companies fail to attract customers continuouslyfail to attract customers continuously

Electronic-oriented, networked firm is Electronic-oriented, networked firm is just the just the necessary conditionnecessary condition for for survivalsurvival

Distorted Market SignalsDistorted Market Signals

Attracting the base of customers by heavy discounts Attracting the base of customers by heavy discounts rather than true costsrather than true costs

Click-through is not the same as cashClick-through is not the same as cash Booming by the Booming by the curiositycuriosity rather than rather than utilityutility Revenue inflow from stocks rather pricesRevenue inflow from stocks rather prices Enjoying subsidized inputsEnjoying subsidized inputs Masking true costs but transferring them to Masking true costs but transferring them to

shareholdersshareholders Understatement of the need of capital for asset Understatement of the need of capital for asset

buildingbuilding

The Illusion of ProsperityThe Illusion of Prosperity

Dot-Coms multiplied so rapidly because of Dot-Coms multiplied so rapidly because of Every low barriers to entryEvery low barriers to entryRaising capital without having to Raising capital without having to

demonstrate performance and viability.demonstrate performance and viability. Just going through a period of transitionJust going through a period of transition

Return to the fundamentals eventuallyReturn to the fundamentals eventually

A Return to Fundamentals (by Michael Porter)

A Return to Fundamentals (by Michael Porter)

IndustryIndustry structure structure Five/six forces analysisFive/six forces analysis

Competitors/complementaritiesCompetitors/complementarities CustomersCustomers SuppliersSuppliers SubstitutesSubstitutes EntrantsEntrants

Sustainable competitive advantageSustainable competitive advantage Operational effectivenessOperational effectiveness Strategic positioningStrategic positioning

Strategic Imperatives for e-Business

Strategic Imperatives for e-Business

For dot-comsFor dot-coms Benefiting from meeting/creating the customer Benefiting from meeting/creating the customer

value—a valuable value-propositionvalue—a valuable value-proposition Real differentiationReal differentiation Establishing Establishing proprietaryproprietary assets assets Segmentation and trade-off between nichesSegmentation and trade-off between niches

For incumbentsFor incumbents Existed valuable Existed valuable assetsassets incorporated with incorporated with

Internet technology for distinctivenessInternet technology for distinctiveness

The Waves of E-businessThe Waves of E-business

Pioneers—Cisco, Netscape, Dell, Ernst & Young, Quicken, Pioneers—Cisco, Netscape, Dell, Ernst & Young, Quicken, etc.etc.

The second waveThe second wave Realistic operation, and valuationRealistic operation, and valuation One or two dot-coms gain success in each sector, while One or two dot-coms gain success in each sector, while

the rest struggle to survivethe rest struggle to survive Best integration between place and spaceBest integration between place and space Distinctions between B2B, B2C, C2C, etc., disappearDistinctions between B2B, B2C, C2C, etc., disappear Combine Combine mobilitymobility, AAA (anything, anytime, anywhere), AAA (anything, anytime, anywhere) Basic principles of economics still be alive, but the Basic principles of economics still be alive, but the

operation context had been changedoperation context had been changed Only Only useruser paranoids survive! paranoids survive!