ELC 498 Course Overview DAY 1

Agenda Blackboard Not ready till next week Review Syllabus & Contract Class time and location? MR Powell 100 9:30 -10:50 AM Course overview & introduction 4 Perspectives A bunch of Cases

An Introduction We live in an extraordinary time. The Internet and related technologies have opened new forms of communication, caused the costs of many kinds of market interactions to plummet, and have brought firms and consumers around the globe into closer proximity than ever before. At the same time, many of the frictions that impede efficient market performance—for example, imperfect information about who is willing and able to supply which goods and services and at what price—are being swept aside.

Cost reduction -> Increased economic value Existing business models becomes more profitable Business models that were not profitable and abandoned have new hope New business models??

Not the first time Printing press Electricity Telegraph Railroads Trans-oceanic shipping Airplanes ??? All were technological changes that affected markets The firms that profited were able to Create value from the change Capture the value from the change Brought efficiencies to the supply chain

Joseph Schumpeter’s "creative destruction" Wiki Innovations leads to temporary market power Is ecommerce is a Schumpeterian disruption? Chuck Moss Presentation More Good information oceedings.html oceedings.html

Kindelberger’s three phases to Manias, Panics, and Crashes: euphoria, overtrading, and revulsion Babies go out with the bathwater during revulsion phase VCs are now flush with cash. We’ve already seen post-crash run ups in valuations for wireless, optical networking, XML software Important to understand how product market and capital market strategies interact during different phases Overtrading phase brings risks for everyone Revulsion phase offers opportunities for those with cash and courage Money seems scarce now (an illusion) and revulsion grips the capital markets, but cycles will repeat themselves

Why we’re here Notwithstanding Michael Porter’s recent pronouncements (“The Internet is just a tool; does not require a radical new approach”), networked businesses have very different economics than traditional manufacturing and service businesses Almost all of you will spend most of your careers managing in networked businesses. You’ll need new frameworks to help understand New Economy businesses. That’s why we’re here!

The Challenge: Looking ahead Evolution or revolution ? The problem is that in such periods of ferment, so many things are changing and so many different strategies are being pursued that there are numerous paths that firms and industries can go down. With hindsight we can see which path was taken and can often explain why the firm in question took it; however, to those living at the time, neither the path forward nor the reasons for taking it are clear.

The automobile industry One 100 years 1 st car engines were in France (1860) and Germany (1876) Americans jumped in (1896) 100’s of car companies Now there is 3 Global mergers (from company annual reports) Ford -> Lincoln, Mercury, Mazda, Volvo, Jerquer, Land Rover GM -> Buick, Chevy, Pontiac, GMC, Saturn, Hummer, SAAB, Cadillac, Daewoo, Holden, Opel, Vauxhall, Oldsmobile DaimlerChrysler -> Dodge, Jeep, Mercedes-Benz, freightliner, Mitsubishi, Western Star, Maybach, Smart Car

4 Perspectives 1. Technological Drivers Of Change 2. Creating Value: Economics Of Internet- based Commerce 3. Capturing Value: Market Structure And Competition 4. Creating And Capturing Value In The Supply Chain

A bunch of Cases Section 1. Technology and Logistics Case 1: ERP Overview Case 2: SAP and Online Procurement Case 3: Siebel Systems, Inc. Case 4: QRS Corporation Case 5: AOL: The Emergence of an Internet Media Company Case 6: Webvan.com Section 2. Markets and Channels Case 7: Online Auctions in 1999 Case 8: E-Markets 2000 Case 9: Pricing and Branding on the Internet Case 10: GAP.com Case 11: Nike: Channel Conflict Case 12: Disintermediation in the U.S. Auto Industry Section 3. Strategy and Organization Case 13: E-Commerce Building Blocks Case 14: Karen Brown Case 15: Brokerage.com Case 16: BabyCenter Case 17: HP E-Services.Solutions Case 18: Cisco Systems Case 19: Tradeweave Section 4. Public Policy Issues Case 20: Double-Click and Internet Privacy Case 21: Ebay and Database Protection Case 22: Internet Taxation