Example: biology

STRUCTURE AND COMPONENTS OF THE E …

INTRODUCTIONA successful e-commerce venture requires a viable business modeland a long-term sustainable planning and implementing e-commerce ventures, business executives must address severalstrategic questions, such as: What are the functions and COMPONENTS of a viable business model?How does one capture and capitalize on the unique features of the Internet and e-commerce toachieve sustainable competitive advantage and profits? How are values being created in the digitaleconomy? How can network effectsand scope economies change a company s competitive position ine-commerce? How can cost, revenue, and growth models in e-commerce differ from those fortraditional businesses? This article extends Lee (2001) and Lee and Vonortas s (2004) works on busi-ness model and strategy to discuss the STRUCTURE , COMPONENTS , and key issues of a viable e-commercebusiness business modeldescribes the basic framework of a business.

INTRODUCTION A successful e-commerce venture requires a viable business model and a long-term sustainable strategy. When planning and implementing e-commerce ventures, business executives must address several

Tags:

  Strategy

Information

Domain:

Source:

Link to this page:

Please notify us if you found a problem with this document:

Other abuse

Transcription of STRUCTURE AND COMPONENTS OF THE E …

1 INTRODUCTIONA successful e-commerce venture requires a viable business modeland a long-term sustainable planning and implementing e-commerce ventures, business executives must address severalstrategic questions, such as: What are the functions and COMPONENTS of a viable business model?How does one capture and capitalize on the unique features of the Internet and e-commerce toachieve sustainable competitive advantage and profits? How are values being created in the digitaleconomy? How can network effectsand scope economies change a company s competitive position ine-commerce? How can cost, revenue, and growth models in e-commerce differ from those fortraditional businesses? This article extends Lee (2001) and Lee and Vonortas s (2004) works on busi-ness model and strategy to discuss the STRUCTURE , COMPONENTS , and key issues of a viable e-commercebusiness business modeldescribes the basic framework of a business.

2 It is the method of doing business bywhich a company can generate revenue to sustain itself (Rappa 2003; Turban et al. 2004). It also iden-tifies the market segment that is being served (who), the service that is being provided (what), themeans by which the service is produced (how) (Chaudhury and Kuilboer 2002), and how it plans tomake money over the long term using the Internet (Afuah and Tucci 2003). A firm s business modelshould also describe how the organization is positioned in the industry value chain. Timmers (1998)defines business modelas an architecture for the product, service, and information flows, including adescription of the various business actors and their roles, a description of the potential benefits for thevarious business actors, and a description of the sources of revenues.

3 Weill and Vitale (2001) define ane-business modelas a description of the roles and relationships among a firm s consumers, customers,allies, and suppliers that identifies the major flows of product, information, and money and the majorbenefits to terms of business areas, Rappa (2003) identifies nine basic Internet business models: brokerage,advertising, infomediary ( , recommender system, registration model), merchant, manufacturer(direct marketing), affiliate (provide commission for online referrals), community (voluntary contribu-tor model or knowledge networks), subscription, and utility ( , pay by the byte). Turban et al. (2004)identify several types of Internet business models, including name your price, find the best price,dynamic brokering, affiliate marketing, group purchasing, electronic tendering systems, online auctions,customization and personalization, electronic marketplaces and exchanges, supply chain improvers, andcollaborative e-commerce business model should consist of multiple COMPONENTS that perform different func-tions.

4 Rayport and Jaworski (2001) argue that a new economy business model requires four choices onthe part of senior management. They include the specification of a value proposition or a value cluster fortargeted customers; a scope of marketspace offering, which could be a product, service, information, or allthree; a unique, defendable resource system that is, the associated resource system to deliver the benefits;and a financial model, which includes a firm s revenue models, shareholder value models, and futuregrowth and Rosenbloom (2002) identify the functions of a business model: (1) articulating thevalue proposition; (2) identifying a market segment; (3) defining the STRUCTURE of the firm s value chain;(4) specifying the revenue-generation mechanisms(s) for the firm; (5) describing the position of the firmwithin the value network.

5 And (6) formulating the competitive strategy to gain advantage over scholars, such as Dubosson-Torbay et al. (2002) and Alt and Zimmermann (2001), also havemade significant contributions to the theoretical discussions and business practices of e-commercebusiness AND COMPONENTSOF THE E-COMMERCEBUSINESS MODELBBAPPENDIXB-1 Lee, Y. Ze, Y. G. Chen, and Fan. STRUCTURE and COMPONENTS of E-Commerce Business Model, inEncyclopedia of E-Commerce, E-Government, and Mobile Commerce, M. Khosrow-Pour (ed.), pp. 1058 1063. CopyrightIGI Global, by permission of the modelThe method of doingbusiness by which acompany can generaterevenue to sustain effectsProducts or serviceswhose value to an indi-vidual buyer increaseswhen many other peoplealso consume the sameproducts or economyThe economy for the ageof networked digital economy is alsoa knowledge , in all formsdigital, is the input of anorganizational transforma-tion or B.

6 STRUCTURE and COMPONENTS of the E-Commerce Business ModelMAJOR COMPONENTS AND KEY ISSUES OF AN E-COMMERCEBUSINESS MODELIn order to sustain a successful business venture, a viable business model should address a number of issuesand the dynamics of the respective elements, including what value to offer customers (strategic goals andvalue proposition), which customers to provide the value to (scope of offerings), what capabilities areneeded to build a successful and unique resource system, how to price the products or services and gener-ate streams of revenues, how to increase the scale and the scope of the venture, and what strategies andprocesses are needed to build and sustain a successful e-commerce business AND COMPONENTS OF A VIABLE E-COMMERCEBUSINESS MODELE xhibit identifies the major COMPONENTS of and several key issues affecting a viable e-commerce busi-ness model.

7 It can be used to assist business executives and entrepreneurs in planning and implementinge-commerce business ventures. It also serves as a basic framework for further study of the e-commercebusiness model and CREATION IN E-COMMERCEIn the physical or traditional industrial economy, the inputs to a value-creation process are the raw mate-rials or the necessary physical inputs that are required to produce the finished products or are finished goods or intermediate goods used as inputs to the subsequent downstream value-creation processes. In the value-creation process, information serves as a supporting element. Information,such as design and engineering know-how, as well as production methods and procedures, is applied tofacilitate the physical transformation process, which involves one or more of the four value-adding activ-ities describe in Meredith and Schaffer (1999): inspect, alter, transport, and store.

8 Under this paradigm,management s main focus is to make the transformation process more contrast, input to the value-creation process in the digital economy (Tapscott 1996) is information( , customer information or digital assets, and the status of production and distribution process) thatfirms gather, organize, select, synthesize, and distribute (Rayport and Sviokla 1995) in the transformationprocess to provide individual customers a customized solution. In the digital economy, information is asource of value, and every business is an information business (Earl 1999). Organizations in the DigitalEconomy should understand and be able to apply the concept and practice of virtual value chain (Rayportand Sviokla 1995) to create value and to generate new business opportunities.

9 Because physical and digitaleconomies coexist within a firm and across an industry supply chain, business executives must go beyondfocusing on improving the transformation process itself to concentrate on leveraging information assets andcapitalizing on the unique features of e-commerce and the Internet to create more value for the STEPS TOWARD E-COMMERCE SUCCESSLee (2001) proposes five essential steps toward e-commerce success. First, companies must redefine theircompetitive advantage in the Digital Economy, because e-commerce is changing the basis of executives must redefine their competitive advantages in terms of cost, differentiation, market-ing, and distribution. For example, Compaq built the best retail-distribution network in the computerindustry in the 1990s but was unable to compete with Dell s fast and light direct-sales approach enabledby Internet technology (Browning and Reiss 1999).

10 Second, companies must rethink the traditional ways of formulating business strategy . Executivesmust generalize thinking beyond building a Web site to designing an architecture that will support thecompany s e-commerce strategy . They must take a comprehensive look at how their companies can focus ofan investment behind a single winning strategy that makes it easy for customers to do business with example, offers customers assistance throughout the automobile-purchase , business executives must reexamine the traditional business and revenue models. For example,information itself is a source of value and presents opportunities to develop new relationships with cus-tomers at very low cost ( , UPS and FedEx). It also presents opportunities to create new services and toimprove internal efficiency ( , Boeing s intranet).


Related search queries