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Chapter 3

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22 views20 pages

Chapter 3

Uploaded by

ibrahimwahab05
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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E-business markets and models

Course instructor: Muhammad Bilal


E-business infrastructure
E-environment
Social

Legal

Economic

Political

Technological
Key elements of the e-business
environment
The internet has transformed the competitive
environment for firms and requires managers to
understand its distinctive attributes in order to build
effective models and exploit the opportunities that its
use presents.
Lee (2001) outlines the main attributes of the internet
that
present both a challenge and an opportunity for
businesses. These include:
1. Economics of exchanging information
Firms can take advantage of both richness and reach of
information using the internet. The cost of sending
additional units of information via the internet is
practically zero and the reach is global
2. Connectivity and interactivity

The number of people that have access to the internet


is rising year on year on a global scale. Connectivity
extends the reach of electronic communication and
interactivity allows two-way communication in real-
time among parties to electronic communication.
3. Network economies of scale

The network effects are stronger in the internet


economy. There are opportunities for achieving a
critical mass of customers by accessing a wider
customer base electronically at low cost.
4. Speed of change

The internet has speeded up the transactions process


and raised expectations of customers. Firms need to
readjust their lead times, response times and
distribution and delivery times in order to meet the
exacting demands of customers, suppliers and partners
across the supply chain in the internet economy.
5. Merchandise exchange

The internet provides a mechanism for displaying a


huge array of products and services without having to
incur the costs of display that traditional stores incur.
Search facilities can channel consumers to the exact
types of products and services they are interested in
and the website can offer additional services such as
discount facilities, links to complementary products,
product reviews, transactions, payments and delivery.
6. Presumption

The internet can be used as a means of communicating


with
customers and enriching the relationship between
buyer and seller. This can lead to customising or
personalising products or services to match the
requirements of individual customers. The internet
facilitates the ability of customers to determine the
design, development and production of products and
services (Tapscott, 1996).
7. Communications channel

The efficient exchange of information between buyers


and sellers is the most important advantage offered by
the internet. The internet, and the WWW in particular,
has proved to be an effective medium for accessing,
organising and communicating information.
8. Distribution channel
Companies who produce digital products can use the
internet as a distribution channel to offer instant supply
at significantly reduced delivery cost. Products and
services such as financial information, news, music,
software, ticketing and reservations, and consultancy
services are just some of the multitude of information-
centred products that can be delivered quickly and
cheaply to online
customers.
E-marketplaces
 Electronic marketplaces (e-marketplaces) are electronic exchanges
where firms can register as buyers or sellers and undertake business
activities using the internet. Typically, e-marketplaces attract firms
from each element of an industry supply chain to enhance the
efficiency of communications and to undertake transactions.
 Some may be set up as a business offering with an intermediary
providing an added-value service such as payment systems. Others
may operate on a cost-recovery basis by an industry third-party
(industry associations are an example of this). There are a large
number of services offered by e-marketplaces, including business
directories, transaction services and electronic catalogues, for listing
inventory of products and services.
There are three main types of
e-marketplaces:
Public exchanges: independently-operated B2B trading
platforms for facilitating online transactions between trading
partners. These are open to any business or group of
businesses.
Consortium exchanges: an exchange owned and operated by
a group of competing businesses who combine their buying
power to gain group-wide savings on the supply of materials.
Private exchanges: an exchange owned and operated by
a single firm to link its trading system directly to that of its
suppliers.
The key advantages offered by e-
marketplaces include:
Much greater scope for firms to form trading partnerships;
Opportunities for lower costs associated with the negotiation
and transactions of products and services through the
use of automated systems;
Benefits from a more open and transparent pricing
environment;
Opportunities presented by access to value-adding services
using electronic systems;
Opportunities for access to global markets, particularly for
small and medium sized enterprises (SMEs).
E-business models
A business model can be defined as the organisation of
product, service and information flows, and the
sources of revenues and benefits for suppliers and
customers. An e-business model is the adaptation of an
organisation’s business model to the internet economy.
 The e-business models relating to e-business markets can be
summarized as:

 Business-to-Consumer (B2C): e-shops, e-malls, e-auctions,


buyer aggregators, infomediaries, classifieds, portaling,
manufacturer model, subscription;
 Business-to-Business (B2B): e-auctions, infomediaries,
e-procurement, e-distribution, portaling, e-marketing, trading
communities, third-party marketplaces, collaboration
platforms, value chain integrators, value chain service
providers, affiliates;
 Consumer-to-Consumer communities.(C2C): e-auctions, virtual
Thanks…

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