Making sense of the Internet business landscape

Massive channel disintermediation?Delineation between technology producers

and technology users?Conducts of Dot-comPerformance of vogue virtual integrations?

Evan & WursterLess about any specific new technology than a

new behavior for reaching critical mass;The universal pervasion of open standards;The precipitate changes of the structure of

entire industry and the ways companies competeM. Porter:

Return to the fundamental principles underlying the novelty of phenomena

Be shaped and reshaped by customers and the business community

Emerging through evolution and adaptation

A flexible Value web (network) dominated a single/dedicated value chain

The properties of modelsEnable study of the structure of a complex system,

relationships among structural elements, assumptions, and a description of the system in action

Can be built before the real system to help predict how the system might respond if we change the structure, structure, relationships, and assumptions

A model in the world of businessA description of a complex business that enables study

of its structure, the relationships among structural elements, and how it will respond in the real world

A business model depicts the content, structure, and governance of

transactions designed so as to create value through the exploitation of

business opportunities. Amit & Zott (SMJ, 2001, p.511)

The good or information that are being exchanged

The resources and capabilities that are required to enable the exchange

E.g., transparency of transaction, vertical & horizontal expansion of product/service, the degree of customization, technologies of transaction

The parties that participate in the exchangeThe ways in which these parties are linkedThe order process and the adopted exchange

mechanismE.g., the providers of complementary assets,

transaction speed, mode, simplicity, safety & reliability, integration of online & offline supply chains

The ways in which flows of information, resources, and goods are controlled by the relative parties

The incentives for the participants in transactions

E.g.,cooperative and shared incentive among allied partners, commitment and investment of co-specialized assets, loyalty maintenance

A description of roles and relationships among a firm’s consumers, customers, allies, and suppliers that identifies the major flows of

product, information, and money, and the major benefits to participants, almost, over

Internet . (Weill & Vitale, Place to Space, 2001, p.34)

Distributors modelsFocused distributor models

Retailer, marketplace, aggregator/infomediary, exchange, E*trade, Amazon

Portal models Horizontal, vertical, affinity, AOL, Yahoo!, iVillage

Producer modelsManufacturers, service providers, educators,

advisors, information/news service, custom suppliers, Ford, GE, Boeing, Ernst & Yong, WSJ, McGraw-Hill

Infrastructure provider models: to construct business that deliver the technology infrastructureFocused distributor

Infrastructure retailer/marketplace/exchange, CompUSA, Staples, IngramMicro, Egghead

Portal Horizontal/vertical infrastructure portals, AOL, AT&T, Oracle

Producer Equipment/component manufacturers, infrastructure

software/services firms, IBM, Dell, Compaq, Oracle, Ariba, MS, Doubleclick

Custom software/hardware suppliers, Dell, Andersen Consulting

Three technological prerequisites to facilitate market economyExcludabilityRivalryTransparency

Could Internet technologies promote above three properties for the information-based economy?If not all, some business mechanisms will be needed

Customer value—segmentation, value propositionScope—core or by-productsPricing—attractive willingness-to-pay pricesRevenue sources—exploitation & leverage of

complementsConnected activities—the complete value chainConstruction—IT infrastructure, organization, and

key champion Capability—acquisition of necessary competenceSustainability—setup firewall to prevent imitation

The customer perspectiveEfficiency, responsiveness, security Anything valuable more than social contact &

face-to-face interactions?The business community perspective

Assets investment: current/tangible/intangible assets

Revenue flow: commerce/content/community/ infrastructure revenue sources

Cost allocation: M/I/T categories

Attach to the gatewayLeverage with the complements Search the common interface

Enhancement on functionalityExpansion of diversity on existing businessesExtension on new businessesExit for far-leap

Evans, P. and T. Wurster (1997), “Strategy and the New Economics of Information,” Harvard Business Review, 75(5), Sept.-Oct., pp.70-83.

Porter, M. E. (2001), “Strategy and the Internet,” Harvard Business Review, 79(3), March, pp.62-78.

Chatterjee, Debabroto, Rajdeep Grewal and V. Sambamurthy (2002), “Shaping Up for E-commerce: Institutional Enablers of the Organizational Assimilation of Web Technologies,” MIS Quarterly, Volume 26, Number 2, pp.65-89.

Fichman, R. G. and Kemerer C. F. (1999), “The Illusion Diffusion of Innovation: An Examination of Assimilation Gaps,” Information Systems Research, Sept. pp, 255-275.

Kline, R. B. (1998), Principles and Practices of Structural Equation Modeling, The Guilford Press, New Work.

Grover, Varun, and Pradipkumar Ramanlal (1999), “Six Myths of Information and Markets: Information Technology Network, Electronic Commerce, and the Battle for Consumer Surplus,” MIS Quarterly, Volume 23, Number 4, pp.469-495.

Stigler, George (1961), "The Economics of Information", Journal of Political Economy.

Attracting the base of customers by heavy discounts rather than true costs

Click-through is not the same as cashBooming by the curiosity rather than utilityRevenue inflow from stocks rather pricesEnjoying subsidized inputsMasking true costs but transferring them to

shareholdersUnderstatement of the need of capital for

asset building

Dot-Coms multiplied so rapidly because of Every low barriers to entryRaising capital without having to demonstrate

performance and viability.Just going through a period of transition

Return to the fundamentals eventually

Industry structureFive/six forces analysis

Competitors/complementaritiesCustomersSuppliersSubstitutesEntrants

Sustainable competitive advantageOperational effectivenessStrategic positioning