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Seminar in E-Business New x (Economy +Business Rules + Customers + etc.) EXECUTIVE DEVELOPMENT PROGRAM Şule Özmen Marmara University Department of Business Administration [email protected] [email protected] LECTURE 1 AGENDA New (Digital) Economy New Business Rules Internet and Globalization E-Business, e-commerce Redefining Business Customers in Digital Economy Myths and Realities Old Economy - New Economy Old business rules New business rules Old business models New business models Old customers New customers ? ? REALLY? The New Economy –Digital Economy Industry era Information era Biological era Information economy – First stage (based on computers) • Data processing, spreadsheets, word processing – Second stage ( based on networks) • Connectivitiy, networks and teradata Business Rules in New Economy Time –Speed – Time between business processes gets shorter – real time responses Space - Distance – Connectivity decreased the importance of locations Value – Intangibles – Economic value shifted from tangibles to intangibles value is added by information (CRM,SCM) Consumers are empowered Business Rules in New Economy (continued) Value comes from abundance rather than scarcity (ecomomic value was stemming from scarcity in old economy). The more connection the more value gained. Factors of production – Talent, innovation also become the factors of production INTERNET & GLOBALIZATION Geographical distances have been overcome by the internet technologies (Neither central management nor ownership) Markets expanded. Global Markets. Purchasing manufacturing marketing can be achieved at any convenient places. Global competition. Global markets changed who are the competitors. E-conomy, e-business e-commerce, e-competition Sense Process WHY??? Respond Traditional : Make and sell New: Sense and respond HOW ????? By e-commerce, by e-business, by new business models CRM, SCM, ERP, Data Warehousing Definition of e-business e-business is a new way of doing business on the e-economy. Key business processes are transformed for this new way of doing business through the extensive use of computer and internet technologies e - business involves openness, connectivity and integration Saying electronic commerce is merely buying and selling products on the World Wide Web is like arguing the PC makes a good typewriter Transformation of business to e-business Changing the way of doing business, business tasks Changing the organization’s business model Changing the way of performing the managerial functions and activities Key success factors Vision, leadership, commitment Strategy and management It is both cheaper and profitable to absolete yourself than it is to let your competitor do it for you Peter Drucker e-business reconstruct value chains e-business adds value for everyone involved in all the way throughout the chain. what we call the value chain, which is the interconnection of raw materials suppliers, through manufacturers, all the way out to the retailers and the consumers. Businesses, customers, producers, suppliers, employees, managers, Suppliers, supplier’s supplier, customers, customer’s customer Benefits, ease, convenience, timely, cheaper, higher quality, etc. Impact of e-economy, e-business ecommerce on consumers and marketers What type of changes are you expecting in purchasing behavior of consumers – ? – ? – ? What do you propose to marketers to do? – ? – ? – ? Who is your customer in digital economy? Who doesn’t buy every product or service you offer like in “old good days” Equipped with information Less brand loyal, runs away to your rival by a click But when? if not satisfied Redefinition of business Products and services (offers) are redefined (info. about the product or the service can be more valuable than the product itself) Market (buyers) are redefined Web borned business models arised. Relationships are redefined – B2B, B2C, C2C – Supply Chain Management – Customer Relationship Management MYTHS AND REALITIES of EBusiness Lecture 2 We will discuss and comment on whether E-Business is easy or not E-business is expensive or inexpensive Everyone is doing it It is lucrative or not The Web levels the playing field. It leads disintermediation It means the end of mass marketing It leads to product commodization AFTER summarizing the phases of business on the road of e-Business From Web Presence to e-Business Having a web site Having a web site + Search engine on site Trying e-commerce Doing e-business MYTHS AND REALITIES MYTH NO. 1: It's Easy. The Barriers To Entry Have Never Been Lower. Yes, putting up a Web site is easy. And putting up a Web site to handle commerce transactions is pretty easy, too. But add words like effective, scalable, and successful, and it gets a lot harder. MYTH NO. 2: It's cheap. Perhaps E-commerce is cheap when compared with a fullblown enterprise resource planning implementation or the purchase of a mainframe. But for a number of reasons, a full-scale online commerce effort is never a low-cost proposition. Source: http://www.informationweek.com/712/12iumyt.htm MYTHS AND REALITIES (Continued) MYTH NO. 3: Everyone's doing it. MYTH NO. 4: It's lucrative. Despite the online sales success of a handful of E-commerce poster children, for every Dell Computer and Cisco Systems there are dozens of companies like Burlington Coat Factory. The company's Web site sells less merchandise than just one of its 250 retail stores, says CIO Mike Prince. "So far, it just hasn't been a major focus for us," he says. MYTHS AND REALITIES (Continued) MYTH NO. 5: The Web levels the playing field. Startups Can Instantly Compete On The Same Footing As Long-Established Companies. With a few notable exceptions, such as Amazon, E-Trade, and online greeting-card maker Blue Mountain Arts, the biggest Ecommerce players are big, established companies: Cisco, Disney, Dell, Microsoft, Charles Schwab. Companies that want to be successful at Web commerce need the marketing clout, brand identity, and scale to do back-end fulfillment and customer service--and above all, they need the capital (see Myth No. 2). That's why so many startups are either merging (like music retailers CDNow and N2K) or are being bought by big physicalworld competitors (note Reel.com's acquisition by Hollywood Video). MYTHS AND REALITIES (Continued) MYTH NO. 6: It leads to disintermediation. The theory was simple: The Web provides an instant global sales channel to all producers of goods and services, so why use conventional distributors, resellers, and other middlemen when you can sell directly? Well, it simply hasn't happened, for three main reasons: the actions of producers, the actions of distributors, and the rise of dozens of new intermediaries on the Web, giving rise to the second-generation buzzword "reintermediation." MYTHS AND REALITIES (Continued) MYTH NO. 7: It means the end of mass marketing. Once again, the theory is simple enough: The Web is the first communications channel that enables cost-effective one-to-one marketing on a huge scale. Marketing to a "segment of one" has long been the goal of database marketing, data mining, and telemarketing, but Web technology enables marketing of unprecedented exactitude and low cost. MYTHS AND REALITIES (Continued) MYTH NO. 8: It leads to product commodization. Some disciples of this dogma point to Priceline.com, the site where consumers set the price they want to pay, then let airlines and other suppliers compete to meet that price. Certainly, it's an innovative model that wouldn't be possible without the Web. Online auction sites such as OnSale and eBay have also been successful and have their place for some types of products. But price isn't the No. 1 selling point for most companies online.