Download Chapter 6

Building Your E-Business
Chapter 6
Understanding Legal Issues

One of the first things an e-business entrepreneur
should do is establish a relationship with an attorney
experienced in business startups and, if possible,
with e-business startups.

E-businesses may be more complex legally as their
business moves across jurisdictional boundaries,
even internationally.
Copyrights and Trademarks

A copyright is a form of protection for the author of
published or unpublished original work, including
writing, drama, music, art, and other intellectual
property.

A trademark is a distinctive symbol, word, or phrase
used to identify a product and distinguish it from
products of another business.
A business guards its own copyrights and
trademarks, and needs permission to use those
belonging to others.
http://www.cnn.com/2004/TECH/internet/01/19/offbe
at.mike.rowe.soft.ap/


Copyright Information
Content Liability

An e-business may be exposed to potential liabilities
for defamation, libel, copyright infringement,
obscenity, indecency, and other liability, on the basis
of the content and hyperlinks at its web site.

To protect against potential lawsuits, an e-business
should have its attorney draft an appropriately
worded disclaimer of liability to be posted on its web
site.
www.amazon.com
www.buy.com


Information Privacy

Potential customers may be hesitant to purchase
products or services online or to provide valid
information, for fear that the information will be
misused or sold to others.

An e-business should have a clear policy on how it
handles and secures the information it collects at its
web site.

www.truste.com
Taxation

Taxation is a complex issue.
–



The collection of sales and use taxes is a state matter and
varies as to jurisdiction.
The Internet tax freedom act, originally passed by
congress in 1998 and recently extended to 2006,
places a moratorium on new internet taxes.
An e-business should establish a relationship with an
experienced attorney to help sort through the legal
and tax issues it faces.
Tax Facts
Leasing Commercial Office Space

Many startup e-businesses begin at an
entrepreneur’s kitchen table and quickly expand to
temporary office space, often a spare room.

Signs that an e-business has outgrown its temporary
home office space include:
– The need to add employees, a need for more
storage
– Insufficient electrical outlets
– Insufficient phone lines
– A need to add telecom services
– The need for more office equipment

If an e-business needs conference room
facilities, or if meeting with clients and
business associates in a home office
undermines an e-business’s credibility, then
it’s time to move to commercial office space.
Facilities Plan





The amount of space you need now and in the near
future
How space is to be divided into offices or work
areas
Requirements for electrical wiring infrastructure
Telecommunications and other office equipment
needs
Amenities such as break rooms, reception areas,
conference rooms, and elevators
Facilities Plan (cont’d)

Physical location of facilities, including exterior
appearance, access to adequate parking, and
access to nearby businesses that employees could
patronize, such as restaurants and childcare centers

Facilities’ proximity to major roads and public
transportation
Facilities’ proximity to a pool of qualified prospective
employees
Security requirements
Property damage and liability insurance
requirements



Hiring Employees


The key to success for any business is its people.
A key issue for a startup is hiring.
–
–
–
–
–

Chief technologist
Chief financial officer
Marketing
Staff
Some VC’s require that firm hire Other Senior management
with “experience”
Must be concerned with the “burn rate”
Hiring Employees (cont’d)

Issues for hiring:
–
–
–
–


Compensation
Salary
Perks – such as?
Stock options / equity
Evaluation of fit with firm
Attracting qualified individuals to work at a startup
firm
Building Your Brand

A brand is a combination of name, logo, and design
that identifies a business’s products or services and
differentiates the products and services from those of
competitors
Begins with the selection of a name; make it
memorable. i.e. Dell Corporation or Ask Jeeves
May use a reference to Web, Cyber, Net, etc. in
name
Questions – p. 201

Consider a consultant



Domain Names






Identifies the firm on the Internet
May use all or a portion of the firm’s actual name
Obtain domain name from an ICANN accredited
name registrar
Someone else may own the rights to the name
You may register your name and variations of it.
You may also want to register the alternate top level
domains (.Com, .Net, .Org, and others) to preserve
your rights and brand identity.
Domain Names



Memorable & easy to enter
Cybersquatters vs. Domain name brokers
Mlb.com
Top Level Domain Names
Selecting the Technology



An entrepreneur must make many technology
decisions.
Software must be selected to handle sales
transactions, inventory monitoring, accounting, and
internal record keeping.
The e-business must decide whether to develop the
e-business’s computer systems and web site
internally, or to outsource these functions.
Technology Software Options
ERP Systems



Enterprise resource planning (ERP) refers
to a system that integrates all aspects of a business,
including planning, manufacturing, human resources,
accounting, finance, sales, and marketing.
ERP systems are usually built on top of databases
that store all of the data needed by the different
systems.
J.D. Edwards, PeopleSoft, Oracle, and SAP
Customer Relationship
Management Systems

Customer relationship management (CRM)
systems, sometimes called e-CRM systems, use
software and the Internet to help an enterprise
manage its customer base

SAP, Oracle
Data Mining


Making data work
Finding interesting statistics & correlations (hidden
patterns) that can help a business better attract &
sell to customers
–

Data warehouse
–
–

Ex. 60% buy A also buy B
Database that contains huge amounts of data, such as
customer or sales data
Terabytes of data – Blockbuster (p. 207), reel.com (p. 209)
Web mining
–
Same as data mining, except data from web sources
Independent Software Vendors

Independent software vendors (ISVs) are
companies that develop and sell software
applications for a variety of operating system
platforms such as Microsoft, Apple, IBM, and HewlettPackard.
Value Added Reseller (VAR)

A value-added reseller (VAR) is a company that
modifies an existing software product by adding its
own “value,” such as a special computer application,
and then resells the software as a new product or
software package.

MicroAge, ASG, Merisel
Technology Service Providers


There are many different kinds of technology service
providers available to a startup e-business.
These different service providers offer a range of
overlapping services and are known by an array of
confusing acronyms
–
–
–
–
–
Internet Service Providers
Internet Access Providers (same as ISP)
Web Hosting Companies (2000 $1.8 billion industry)
Application Service Providers (PeopleSoft example)
System and Web Integrators
Service Providers
Outsourcing Web Operations


Using a Web hosting service provides an e-business
with several advantages.
An ISP or Web hosting service has a staff available
24 hours a day with the technical knowledge to keep
the servers and network connections running.
Outsourcing Web Operations (cont’d)

An ISP or Web hosting company can provide a level
of redundancy that an e-business may not be able to
provide for itself, including redundant hard drives on
the servers, backup power from generators, and
redundant connections to the Internet.
Outsourcing Web Operations (cont’d)


One disadvantage of outsourcing Web site
operations is lack of control.
One solution to this lack of control is for an ebusiness to provide its own servers and software and
simply co-locate its servers at the ISP or Web
hosting company facilities.