Creating a Winning E-Business Defining Your E-business Idea Chapter 2

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

Entrepreneurial Process 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

The Entrepreneur E-business entrepreneur examples Jeff Bezos, Amazon.com Pierre Omidyar, eBay Kelby Hagar, GroceryWorks.com and Digital Witness Jason Zasky, Failure Magazine What did all of these guys have in common? The ability to see the future and challenge the status quo

Entrepreneurial Process Entrepreneurial abilities Leadership traits (Tribes attributes) Good communication skills (Tribes attributes) High-energy level Self-confidence Organizational skills Ability to act quickly and decisively Independent, goal-oriented, creative, competitive

Factors Affecting E-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 uBid online auction site example As more people participate, the auction site becomes more valuable to buyers and sellers Twitter

Factors Affecting E-Business Success Innovative marketing ideas Hotmail and viral marketing example Hotmail users grew at a rapid rate because of electronic word of mouth coupled with the network effect Electronic word of mouth (Godin one of first marketers wrote about this) or viral marketing spreads from user to user in the same way a human virus spreads from person to person

Factors Affecting E-Business Success Scalability Ability of a business to function well in the face of rapid growth Systems and procedures meet customers needs AllAdvantage e-business failure example E-business idea: Paying for users to browse the Web and view advertising Millions of customers signed on; advertisers did not No scalability with rapid growth in customers

Factors Affecting E-Business Success Ease of entry into electronic markets Low-cost technologies make it easy to create new e-businesses eBay and online auction example Easy for consumers to interact at auction site Web auction software is cheap and easy to install /maintain E-businesses earn commissions without having to manage, warehouse, and distribute products

Factors Affecting E-Business Success Ease of entry into electronic markets (continued) Competitive barriers to overcome Failure to secure first-mover advantage Lack of name identification and name’s ability to sell the brand Lack of customer loyalty

Factors Affecting E-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 Amazon.com is an example of ongoing evolution from a basic e-business idea

Exploiting E-Business Advantages 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 experience JetBlue example