Defining Your E-business Idea Chapter 2

The Entrepreneur Someone who assumes the RISKS of starting and running their own business An entrepreneur needs –High energy personality –Self-confidence –High levels of organizational skills –Ability to act

The Entrepreneurial Process

E-business Success Factors The network effect Scalability Innovative Web Marketing Ideas Ease of entry into (electronic) markets Adaptability to change

The Network Effect The greater the number of nodes (participants) the greater the value of the network. Metcalf law of network power –Power= number of nodes 2

Scalability Scalability is the ability of your idea to continue to function regardless of size. Scalability is also can refer to the ability of a server or internet service to support increased loads.

Innovative Web Marketing Ideas Use the power of the Web and Internet to leverage new ideas. Hotmail gave away free accounts that used a Web interface and was linked to a site.

Hotmail

Ease of Entry Into Markets The Internet opened up access to markets by lowering barriers to entry. Good ideas can be cloned. Advantage frequently goes to First Mover Ebay was a “first mover”

Ebay Auction Site

Adaptability to Change Internet and Web Technologies facilitate rapid change in business models. –New products or services –New features –Amazon.com added auctions to their product/service mix.

Amazon.com

Exploiting E-Business Advantages Expand the Market Acquire greater business visibility Maximize customer relationships and improve responsiveness Create new services Reduce costs

Expand the Market Reach more customers Lower location barrier Lower time zone barrier

Acquire Greater Visibility The internet allows companies to get their name and products or services in front of more customers that ever. (The problem is getting customers to look.) Use or outsource distribution to others. –Fingerhut ditributes for eToys and Pier1

Maximize Customer Relationships Build one-on-one relationships with customers Use technology to build and sustain links with customers.

Improve Responsiveness Use technology to respond more quickly or effectively to customer needs and inquiries. –Use services such as parcel tracking and delivery confirmation –Allow for on-line purchases

Create New Services The Web allows for expansion and refinement of tarditional business. Add new products quickly

Reduce Costs The Internet can lower costs of doing business by lowering –Distribution costs –Marketing costs

Example Web Sites Fingerhut Half.com Southwest Airlines WW Grainger Trailmaker Sun Micorosystems Foodlocker

Fingerhut

Half.com

Southwest Airlines

Grainger.com

Trailmaker

Sun Microsystems

Foodlocker.com

Grocery Works.com