Lesson 3 E-MARKET MAP

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SESSION OBJECTIVES ANALYSING INFORMATION AND TRANSACTION FLOWS BUILDING AN E-SYSTEM MAP ROLE OF INTERMEDIARIES COMPETITION AND SUPPLIER ANALYSIS

E-COMMERCE STILL A PROCESS OF MANAGING TRANSACTION EXAMINE HOW TECHNOLOGY: – REDUCES INFORMATION COST – INCREASES INFORMATION SPEED – PROVIDES 24 HOUR/365 DAY ACCESS – MAKES HIGH VOLUME INFORMATION PROVISION TECHNICAL FEASIBLE – PERMITS INFORMATION CUSTOMISATION

EXAMINE TRANSACTION OPPORTUNITIES: – REDUCE COSTS / SPEED-UP DELIVERY – ENHANCE CONVENIENCE – EXPAND MARKET COVERAGE – EXPAND PRODUCT CHOICE E-COMMERCE STRATEGY MUST BE INTEGRATED INTO OVERALL ORGANISATIONAL STRATEGY

FIGURE 3:1 A MAP OF A MARKET SYSTEM KEY= Transaction Flows = Information Flows

MACROENVIRONMENT ECONOMIC CONDITIONS WILL IMPACT CORE MARKET PERFORMANCE POLITICS WILL INFLUENCE E-COMMERCE (CHINESE GOVERNMENT DATE EXCHANGE RULES) LEGISLATION OVER WEB OPERATIONS – WHO PAYS SALE TAX? – SHOULD ALCOHOL BE SOLD ON-LINE? – CROSS BORDER VARIATION IS LEGISLATION

TECHNOLOGY CRITICAL BECAUSE IMPACTS SYSTEM (E.G. ADVENT OF WAP ON MOBILE PHONES) FINANCE NOT AN ISSUE FOR NEW DOT COMS EXISTING FIRMS HAVE TO FUND FROM NORMAL SOURCES AND NOT ABLE TO USE START-UP STOCK OPTION PACKAGES CULTURE IS INFLUENCE OF SOCIAL VALUES AND “NORMS” ON USAGE OF E-COMMERCE (E.G. DELL’S BLACK BORDER WEB-SITE IN JAPAN)

FIGURE 3:3 AN E-COMMERCE CONTENDING COMPETITIVE FORCES MODEL (Adapted from Kleinal 1999) E-commerce New Market Entrants E-commerce Competitive Rivalry E-commerce Upstream System Threat E-commerce Downstream System Threat E-commerce Substitute Goods

CORE MARKET GENERIC MARKET OF ALL POTENTIAL CUSTOMERS CORE MARKET OF ACTUAL CUSTOMERS GIVEN USAGE/BEHAVIOUR VARIATION PROBABLY NET ON-LINE AND OFF-LINE MARKETING PROGRAMMES

INTERMEDIARIES LINK SUPPLIER TO CUSTOMER ROLES OF LOGISTICS AND PROVISION OF END-USER OUTLETS SUPPLIER E-CHOICE OF GO DIRECT OR USE INTERMEDIARY WEB-SITE SUPPLIER GOING DIRECT COULD ALIENATE TRADITIONAL CHANNEL MEMBERS

ERNST & YOUNG RESEARCH INDICATES MAJORITY OF CONSUMERS LIKE MIXED MODEL (E.G. VISIT WEB-SITE, THEN RETAIL STORE) ISSUE OF “DISINTERMEDIATION”, I.E. REMOVAL OF INTERMEDIARY EXAMPLE OF AIRLINES SELLING DIRECT NOT VIA TRAVEL AGENTS

JAKORSKI PROPOSES CHANGE OF: – MARKET REDEFINITION (FRESH FLOWERS) – PLAYER ELIMINATION (MP3 IN MUSIC) – ROLE MODIFICATION (MICROSOFT INTO CAR MARKET)

COMPETITION MODEL (PORTERIAN THEORY) OF CONTENDING FORCES: – COMPETITIVE RIVALRY (DELL vs. OTHER PC MAKERS) – DOWNSTREAM THREAT (CONSUMERS WITH PRICE KNOWLEDGE) – UPSTREAM THREAT (WEB-SITE DESIGNERS) – SUBSTITUTE GOODS (FROM DEVELOPING NATION WEB- SITES) – NEW ENTRANTS

SUPPLIERS CAN CONSTRAIN SUPPLIES BUT MORE USUAL ROLE AS SOURCE OF BETTER TECHNOLOGY (INTEL’S PENTIUM CHIPS)

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