1. Five Forces Determine Industry Profitability
New Entrants
Threat of
New Entrants
Industry
Competitors
Rivalry Among
Existing Firms
Bargaining Power
of Suppliers
Suppliers
Buyers
Bargaining Power
of Buyers
Threat of
Substitute Products
or Services
Substitutes

2. The Value Chain Firm Infrastructure M Human Resources Management A R
Technology Development
Procurement M A R G I N N I G R A M
Marketing
and
Sales
Inbound
Logistics
Outbound
Logistics
Operations
Service

3. How Value is Created Customer Customer Marketplace Marketspace
EXCHANGE
EXCHANGE
Content
Context
Infrastructure
Content
Context
Infrastructure
Brand
Brand
Marketplace
Marketspace

4. The Virtual Value Chains t o m e r
Content
Place
Space
Context
Infrastructure
Value Chain
Interface
Demand

5. Low Low Strategic impact of existing systems
Factory Strategic
Support Turnaround
High
Strategic impact
of existing systems
Low
Low
High
Strategic impact of applications
development portfolio

6. Competitive Positioning ECONOMIC POSITIONING
What business are we in?
Product/Service
Market What is our position?
Competition
Value Are we creating value for
all stakeholders
ECONOMIC POSITIONING
How will we make money?
Revenue model Cost of designing, developing
Cost model delivering, and maintaining
Asset Model each product/service?
Are we building and
safeguarding assets?
Business Performance
Operating margins
Operating Performance Budget performance
Process performance
Goals accomplishment
Corporate Performance Financial performance
Market share
Attract qualified employees,
Stakeholder loyalty partners, and investors
Image, and reputation
Enterprise Design
Structure Is the extended enterprise
Processes designed for:
People & Culture efficiency in decision making/action
Technology successful execution of strategy
Resources quick response to change

7. Economic Positioning Revenue Model
How does (or will) the company achieve revenues from its products and services?
Product sales Advertising Subscription fee
Membership fee Commission Transaction fee
Service/consulting fee
Cost Model
How much does it cost to operate the company and execute its strategy?
People Advertising/Marketing/Sales Fees
IT infrastructure Materials and supplies Physical infrastructure
Asset Model
Are we building and safeguarding assets?
Financial assets
Physical assets
Intangible assets: Relationships Knowledge and expertise
Agility Strength of brand

8. Evolution of Basic Portal Concept
Where users would link to all manner of Internet
services and activities (search, content, personal
authoring, transaction, and social-interactive sites)
Advertising income: more than cover the cost of
maintaining the portal
To keep them in the Portal, and coming back.
So advertisement and sales increase.
“Attract, engage, entice, and entrap.”

9. The “Harvest” Decision
Advantages Disadvantages
- Access to short- & long-term capital - Lose of operating confidentiality
- Future offerings to fund growth - Cost of public auditing, reporting
- Establish market value and shareholder fiduciary responsibility
- Controls to protect shareholders and
and from shareholders
- Image management more serious
- Info controlled to prevent inside trading
- SEC limits timing and amount of stock
insiders may sell
- Founders get money immediately - Key managers/employees needed to keep
- Acquiring company assumes all risks. core employees
- Non-compete clauses limit expenditure
. - If sale through stock exchange, founders
receive a fraction of the purchase price
- Access to resources required to grow - Synergies do not materialize
- Increase scale, scope and market share - Clash of cultures, operations, or system
- Management continues to be involved - Lack of freedom to operate the company
Public
offering
Outright
sale
Merger,
acquisition or
partnership

10. Stages of Entrepreneurial Evolution
Phase Phase Phase Phase 4
Bureaucracy
Complex
Complexity
Simple
Coordination
Achieving
liquidity
Control
Growing the
business
Expertise
Launching the
product/service
Building the
business concept
Young Organizational Age Mature

11. MARKETING: TRADITIONAL MODELC C P
Content
Channel C C C

12. ELECTRONIC COMMUNITIES: NEW MODELP P
Con-
tent C
Content
Channel
Content C P P
Con-
tent C C
Fuente: Hoffman, Novack & Chatterjee 1995

13. RealNetworks Revenue Model
Revenue Description Example
Product sales Sell or license physical or Sell and license streaming
information-based product media products
Advertising Market other company’s Advertising on website,
products or services carrying special promotions,
Programming content
Subscription fee Charge for regular receipt Selling annual upgrade
of products or information subscription
Commission or Agent, broker, or intermediate Programming customers
Transaction fee charge. Can be a set fee or pay transaction fee based
a % of cost on viewers
Consulting and Charge for services provided Services to design/develop
service fee Set or variable streaming media content
Membership fee Charge to belong to a group None

14. Consumers’ Needs for Community
Communities of Transactions: facilitate the buying/selling
products/services and provide information related to
transaction (example: virtual vineyards)
Communities of Interest: participants interact extensively with
one another on specific topics (example: GardenWeb)
Communities of Fantasy: where participants create new
environments, personalities, or stories (Example: ESPNet)
Communities of Relationship: participants come together around
certain life experiences that often are intense and can lead to
deep personal connections (Example: the Cancer Forum/CompuServe)

15. Traditional Sources of Economic Value in Electronic Communities
- Charge Usage Fees
- Charge Content Fees
- Revenue from Transactions and Advertising
- Synergies with other part of their business

16. New Roles in Managing Electronic Communities
Executive moderators: Moderate discussion, keep discussions focused,
inject new topics/provocative views,seed discussion with facts/content.
Community merchandisers: Identify attractive goods/services, negotiate
with providers, and market them creatively and unobtrusively.
Executive editor: Develops a programming strategy for community and
manage external providers of content, information, and services.
Archivist: maintains and organizes the content generated over time.
Usage analyst: Studies data on participants’ behavior.
New-product developer: Keep the community fresh/distinct from rivals.

18. The Learning Organization