Analyze E-Commerce Business Models

Ecommerce 2020
Nguyen Thi Hong Van
Topic
Analyze E-commerce Business
Models
Copyright © 2020, 2018, 2016 Pearson Education, Inc. All Rights Reserved
Learning Objectives
3.1 What is the impact of information systems on organizations?
3.2 How to know yourself with SWOT analysis?
3.3 How do Porter’s competitive forces model, the value chain
model, synergies, core competencies, and network economics
help companies develop competitive strategies using
information systems?
3.4 What are the challenges posed by strategic information
systems, and how should they be addressed?
Figure 3.1 The Two-Way Relationship
Between Organizations and
Information Technology
Figure 3.2 The Technical
Microeconomic Definition of the
Organization
Figure 3.3 The Behavioral View of
Organizations
Figure 3.5 Environments and
Organizations Have a Reciprocal
Relationship
SWOT Analysis
Porter’s Competitive Forces Model
(1 of 3)
• Why do some firms become leaders in their industry?

• Michael Porter’s competitive forces model
– Provides general view of firm, its competitors, and
environment
• Five competitive forces shape fate of firm:
– Traditional competitors
– New market entrants
– Substitute products and services
– Customers
– Suppliers
(2 of 3)
• Traditional competitors
– All firms share market space with competitors who are
continuously devising new products, services,
efficiencies, and switching costs
• New market entrants
– Some industries have high barriers to entry, for
example, computer chip business
– New companies have new equipment, younger
workers, but little brand recognition
(3 of 3)
• Substitute products and services

– Substitutes customers might use if your prices become
too high, for example, i Tunes substitutes for C D s
• Customers
– Can customers easily switch to competitor's products?
Can they force businesses to compete on price alone
in transparent marketplace?
• Suppliers
– Market power of suppliers when firm cannot raise
prices as fast as suppliers
Figure 3.8 Porter’s Competitive
Forces Model
Information System Strategies for
Dealing with Competitive Forces
(1 of 3)
• Four generic strategies for dealing with competitive forces,

enabled by using I T:
– Low-cost leadership
– Product differentiation
– Focus on market niche
– Strengthen customer and supplier intimacy
(2 of 3)
• Low-cost leadership
– Produce products and services at a lower price than
competitors
– Example: Walmart’s efficient customer response
system
• Product differentiation
– Enable new products or services, greatly change
customer convenience and experience
– Example: Google, Nike, Apple
– Mass customization
(3 of 3)
• Focus on market niche

– Use information systems to enable a focused strategy
on a single market niche; specialize
– Example: Hilton Hotels’ O n Q system
• Strengthen customer and supplier intimacy
– Use information systems to develop strong ties and
loyalty with customers and suppliers
– Increase switching costs
– Examples: Chrysler, Amazon, Starbucks
The Internet’s Impact on Competitive
Advantage
• Transformation or threat to some industries
– Examples: travel agency, printed encyclopedia, media
• Competitive forces still at work, but rivalry more intense
• Universal standards allow new rivals, entrants to market
• New opportunities for building brands and loyal customer
bases
Smart Products and the Internet of
Things
• Internet of Things (I o T)
– Growing use of Internet-connected sensors in products
• Smart products
– Fitness equipment, health trackers
• Expand product differentiation opportunities
– Increasing rivalry between competitors
• Raise switching costs
• Inhibit new entrants
• May decrease power of suppliers
Interactive Session: Technology:
Smart Products—Coming Your Way
• Class discussion
– Describe the role of information technology in the
products described in this case. How is it adding value
to these products? How is it transforming these
products?
– How are these smart products changing operations and
decision making for these organizations? How are they
changing the behavior of their users?
– Are there any ethical issues raised by these smart
products, such as their impact on consumer privacy?
Explain your answer.
The Business Value Chain Model
• Firm as series of activities that add value to products or
services
• Highlights activities where competitive strategies can best
be applied
– Primary activities vs. support activities
• At each stage, determine how information systems can
improve operational efficiency and improve customer and
supplier intimacy
• Utilize benchmarking, industry best practices
Figure 3.9 The Value Chain Model
Extending the Value Chain: The Value
Web
• Firm’s value chain is linked to value chains of suppliers,
distributors, customers
• Industry value chain
• Value web
– Collection of independent firms using highly
synchronized I T to coordinate value chains to produce
product or service collectively
– More customer driven, less linear operation than
traditional value chain
Figure 3.10 The Value Web
Figure 3.11 An Ecosystem Strategic
Model
Challenges Posed by Strategic
Information Systems
• Sustaining competitive advantage
– Competitors can retaliate and copy strategic systems
– Systems may become tools for survival
• Aligning I T with business objectives
– Performing strategic systems analysis
 Structure of industry
 Firm value chains
• Managing strategic transitions
– Adopting strategic systems requires changes in business
goals, relationships with customers and suppliers, and
business processes

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Ecommerce 2020

Nguyen Thi Hong Van

• Why do some firms become leaders in their industry?

• Substitute products and services

• Four generic strategies for dealing with competitive forces,

• Focus on market niche

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