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Creating a Winning E-Business


Creating a Winning E-Business Second Edition Defining Your E-Business Idea Chapter 2 Learning Objectives ... – PowerPoint PPT presentation

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Title: Creating a Winning E-Business

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Creating a Winning E-BusinessSecond Edition
  • Defining Your E-Business Idea
  • Chapter 2

Learning Objectives
  • Identify entrepreneurial abilities
  • Describe the entrepreneurial process
  • Understand the factors affecting e-business
  • Identify ways to exploit e-business advantages

Opening Case
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The Entrepreneur and theEntrepreneurial Process
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E-business entrepreneur examples Jeff Bezos, ??,?? Jason Zasky, Failure Magazine
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The Entrepreneur
  • Entrepreneur
  • Assumes the risks of starting and operating his
    or her own business
  • Must be able to lead others
  • Must believe in his or her business idea
  • Must have the self-confidence to accomplish
    business goals

  • Entrepreneurial abilities
  • Leadership traits
  • High-energy level
  • Self-confidence
  • Organizational skills
  • Ability to act quickly and decisively
  • Independent, goal-oriented, creative, competitive

Entrepreneurial Process
  • Entrepreneurial process
  • Stage 1 Are you an entrepreneur?
  • Assess your entrepreneurial abilities
  • Evaluate time and effort involved in
    starting/running your own business
  • Consider the effect of the business commitment on
    your family life
  • Stage 2 Buy existing business or start own

  • Entrepreneurial process (continued)
  • Stage 3 For a new business startup you must
  • Define the business idea
  • Create a business plan
  • Secure financing
  • Stage 4 Operate and grow your business
  • Stage 5 Harvest your business
  • Continue to operate cash cow
  • Go public
  • Sell the business
  • Liquidate the business

Group Reading Discussion
  • E-Case From idea to Harvest
  • Please identify each stage of the entrepreneurial
    process that resulted in the successful
    e-business named Yesmail.
  • Who was involved in each stage of the process?

Factors Affecting E-Business Success
Factors Affecting Business Success
  • The network effect
  • Total value of a product, service, or technology
    grows as more and more people use it
  • Telephone system example
  • Single telephone has no value as more people
    join the telephone system, the value of each
    telephone increases
  • Taobao online shop example
  • As more people participate, the online C2C site
    becomes more valuable to buyers and sellers

(No Transcript)
Group Reading Discussion
  • E-Case A Network Effect Backlash
  • Who think the Third Voice e-business idea was a
    good one? Who do not?
  • Discuss the role the network effect played in the
    early success and later failure of Third Voice.

  • The value of the things you plan to offer
    increases with greater use or distribution
  • The inherent dangers of the network effect on
    your e-business

We can develop imaginative ways of exploiting
the network effect in order to market products
and services
Factors Affecting Business Success
Innovative marketing ideas
Factors Affecting Business Success
  • Innovative marketing ideas Hotmail example
  • Eager to get financing, Hotmails founders agreed
    that text be added to the bottom of each outgoing
    e-mail message Linking to Hotmail.
  • Launched in 1996 over the July 4th holiday with
    little money and little press coverage
  • First, a single users in school, then next day, a
    hundred users from the same school. By the end of
    the week, a thousand users from the same school.
    Before long, users from around the world.
  • Six weeks after first user, India had 1000,000
    users. Less than 18 month, 12 million users. Less
    than 3 years, more than 30 million users.
    Fastest-growing media company.

Factors Affecting Business Success
  • Hotmail and viral marketing example
  • Hotmail users grew at a rapid rate because of
    electronic word of mouth coupled with the network
  • Electronic word of mouth or viral marketing
    spreads from user to user in the same way a human
    virus spreads from person to person

Factors Affecting Business Success
  • Scalability
  • Ability of a business to function well in the
    face of rapid growth

  • Remember! What will happen to your e-business if
    demand for your products or services explodes?
  • AllAdvantage-----get advertising revenues by
    paying people to browse the Web
  • Download a viewing bar to record their Web
  • .53/h to surf web, intro others .1/h, and bonus
  • A classic pyramid schema
  • How about this idea?
  • They expect 3 months, 20,000 members, but
  • 1th week, 100,000 users, 3 months, 6.7 mil.
    users. Rate 15,000-16,000 users/m
  • 1th year Earn 14.4 mil. Pay 50 mil.
  • In 2 years, burn through capital and ceased
  • No scalability with rapid growth in customers

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Factors Affecting Business Success
  • Ease of entry into electronic markets
  • Low-cost technologies make it easy to create new

Group Reading Discussion
  • E-Case Entrepreneurial Risk Taking and Vision
  • Why is the online auction e-business idea so
  • What specific e-business factors supported the
    early and continuing success of eBay?
  • Why was Meg Whitman willing to take a chance on
  • How did Meg Whitmans background prepare her to
    become President and CEO of eBay? What, if any,
    entrepreneurial abilities and traits did she
    exhibit to be successful in her earlier corporate
    positions and at eBay?

Factors Affecting Business Success
  • online auction popular
  • Easy for consumers to interact at auction site
  • Web auction software is cheap and easy toinstall
  • E-businesses earn commissions without having to
    manage, warehouse, and distribute products
  • Competitive barriers to overcome
  • Failure to secure first-mover advantage
  • Lack of name identification
  • Lack of customer loyalty

Factors Affecting Business Success
  • Ability to quickly adapt to marketplace changes
  • Rapid knowledge transfer
  • Need to make decisions quickly
  • Exploit new ideas and opportunities
  • Handle new challenges
  • is an example of ongoing evolution
    from a basic e-business idea

Factors Affecting Business Success
  • Books -gt music, toys and games -gt all kinds of
  • -gt auction website -gt Web Services with its web
    tech. expertise

  • Because the rapid pace of change can affect the
    most fundamental ways in which your e-business
    idea functions, you must consider how well your
    e-business idea could respond and adapt to
    changes in the marketplace.
  • The next step is to then think of ways to exploit
    the built-in advantages you will have by doing
    business online.

Exploiting E-BusinessAdvantages
Exploiting E-BusinessAdvantages (continued)
  • Expand the market
  • Business and consumers are no longer bound by
    constraints of time, space, physical location
  • Opportunity to reach larger market
  • Revamp existing business model to incorporate an
  • Please list some examples

Exploiting E-BusinessAdvantages (continued)
  • If your e-business idea is based on a successful
    traditional business model, you should determine
    whether it takes full advantage of the Internet
    to expand your market and gain greater visibility
    for your products or services.

Exploiting E-BusinessAdvantages (continued)
  • Acquire greater business visibility
  • Get business name, products, and services in
    front of potential customers more quickly
  • Auto industry example
  • acquire greater business visibility by hosting
    useful and informative Web sites.
  • ? owners information about vehicle care,
    accessories, and warranties
  • ? vehicle images and descriptions
  • ? tools to customize a specific vehicle
  • ? tools to search for nearby dealers
  • ? tools to search dealers inventories for a
    specific vehicle
  • ? online gift shops
  • ? calendars of sponsored events

Exploiting E-BusinessAdvantages (continued)
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A chain of traditoinal stores -gt bought Fingerhut
company (catalog merchant with and online store)
-gt get catalog retailing and logistics expertise
and experiences running online stores -gt
supplier of logistics services to other EB. But bust -gt Fingerhut tanked -gt logistics
failed -gt Closed Fingerhut
  • But simply hosting a Web site is no guarantee
    that a company will successfully expand the
    market for its products and services.
  • Market conditions, execution, and timing all play
    significant roles in this process.
  • Federated Department Stores example

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  • Always keep in mind that changing market
    conditions may impact how well you will be able
    to execute your idea.

Exploiting E-BusinessAdvantages (continued)
  • Use power of the Internet and Web to maximize
    customer relationships and improve responsiveness
  • Create customer loyalty
  • Stay in touch with customer needs
  • Build one-on-one relationships
  • Provide information to enrich customers online
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Exploiting E-BusinessAdvantages (continued)
  • Create new products and services
  • Opportunities for new e-business ideas where
    products or services are accessed over the Web
  • Business software applications
  • Server facilities for data file backup
  • Legal dispute resolution
  • Cybersettle example
  • Web hosting services
  • Rackspace Managed Hosting example

Exploiting E-BusinessAdvantages (continued)
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Reading Writing Discussion
  • E-Case A Brilliant Execution of a Simple Idea
  • why Josh Kopelman enjoys success as a serial
    entrepreneur. Everybody write one or two
    paragraphs that discuss the reasons for
    Kopelmans successes.
  • Then use your written summaries to discuss
    entrepreneurship and entrepreneurial abilities
    and traits with the classmates in your group.

  • Picture

A Brilliant Execution of a Simple Idea
A Brilliant Execution of a Simple Idea
Exploiting E-BusinessAdvantages (continued)
  • Reduce costs of running a business
  • Sales and customer support costs
  • Transaction costs
  • Order handling costs
  • Dell Computers, Cisco Systems, and Microsoft
    Corporation examples

Closing Case
  • Review the Ideas! Ideas! opening case.
  • Read the Ideas! Ideas! closing case.
  • Consider Hagars e-business ideas and how he has
    or has not exploited inherent advantages of doing
    business online to create successful

Chapter Summary
  • An entrepreneur assumes the risks of starting and
    operating his or her own business
  • Entrepreneurial abilities
  • Leadership
  • High-energy
  • Self-confidence
  • Organization skills
  • Ability to act quickly

Chapter Summary (continued)
  • Five stages of the entrepreneurial process
  • Decide if you are an entrepreneur
  • Decide to buy or start new business
  • Plan the business
  • Operate the business
  • Harvest the business

Chapter Summary (continued)
  • Factors that can affect e-business success
  • Network effect
  • Innovative marketing ideas
  • Scalability of the e-business idea
  • Cost of entry into the marketplace
  • Ability to overcome competitive barriers
  • Ability to exploit inherent advantages

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